What's going on?

Luxottica, the top provider of eyewear across the world, just reported that its sales declined in the third quarter! However, it said it was still on track to finish the year strong and convince regulators to give the green light for its controversial merger with Essilor…

What does this mean?

Luxottica sells its own sunglasses through brands like Ray-Ban, and designs frames for famous fashion companies like Chanel and Armani. On top of that, it runs the ubiquitous North American glasses store LensCrafters.

Because of the recent hurricanes in America, Luxottica had to close around 800 of its stores for roughly 3 days each, causing its third quarter sales in America to drop by around 4% (versus a year ago). However, sales growth in Europe and Latin America helped investors look past the �one-off� impact of the American hurricanes.

Why should I care?

The bigger picture: Luxottica�s planned merger is hitting some regulatory barriers.


Luxottica is hoping to merge with Essilor, which is the world�s largest lens maker (Luxottica makes frames, Essilor makes lenses � the logic of combining forces is pretty clear). However, competition authorities in both Europe and America are worried that this mega-company might be just too powerful � for example, Luxottica might market its many frames to opticians at lower prices if they were to be purchased alongside Essilor lenses. That could put pressure on Essilor�s competitors and push them out of business, leaving consumers with fewer choices � and, ultimately, more expensive products.

For markets: Both Luxottica and Essilor�s stock prices jumped as Essilor�s CEO said he was confident the merger would happen.


Despite regulator concerns, Essilor thinks the merger will be completed by the end of this year, the same timeframe as initially expected. Stock prices of both Essilor (which also reported results) and Luxottica jumped by about 5% on Tuesday. Reasonably good earnings likely helped, but so did a signal that the deal will get completed as planned.