Ray-Ban maker EssilorLuxottica scrapped its financial guidance on Friday and warned of a hit to second-quarter profit due to the coronavirus crisis, adding it was putting some investments on hold as it halts production at selected sites.
“At present, the company has insufficient visibility to provide an assessment of the full scope of COVID-19 impact, as the situation remains volatile,” the eyewear maker said in a statement.
“During the second quarter, the company expects revenue to further decelerate with a material impact on profitability.”
The company had projected in early March that sales would grow between 3% and 5% in 2020.
EssilorLuxottica said it was implementing a contingency plan, including cost and cash control measures, putting on hold non-crucial investment initiatives and adjusting global capacity to meet current demand.
Executive vice-chairman Hubert Sagnieres said he was sanguine about the company’s chances of rebounding once the crisis had passed, however.
“The optics business, and specifically lenses, is a very resilient business - if your sight changes, you need new glasses or contacts,” he told France’s BFM Business TV, adding the group’s activity would be closely tied to stores re-opening in countries such as Italy, Spain, and France, where retailers have had to close as governments try and contain the pandemic.
The company is also growing in e-commerce.
Sagnieres said EssilorLuxottica had a strong cash position, after starting the year with some 6 billion euros ($6.6 billion) on hand. The group could drawdown on a further 4 billion euros if needed, he added.
The company’s plants in France and Italy have shut temporarily, but the group said it was keeping production going thanks to factories in China that had now re-opened and at smaller laboratories and workshops in other locations.
EssilorLuxottica has yet to decide whether to scrap its dividend. Companies in France are coming under pressure from unions to forgo payments to shareholders during the coronavirus crisis.