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EssilorLuxottica's Smart Vision: Profits vs. Progress?
21 Apr
Summary
- EssilorLuxottica faces investor pressure on smart glasses margins.
- Ray-Ban Meta smart glasses sales support growth but are less profitable.
- Competitors like Google and Apple are entering the smart glasses market.
Franco-Italian eyewear group EssilorLuxottica is experiencing significant investor pressure concerning the profitability of its smart glasses segment. Although sales of its Ray-Ban Meta smart glasses, a product of its partnership with Meta, have bolstered recent growth, concerns persist about maintaining profit margins as competition intensifies.
The company's market capitalization has seen a notable decline, falling from 149 billion euros in November to 100 billion euros as of Friday. This downturn is attributed to the anticipated entry of competitors like Google and Apple into the smart glasses market, alongside a general re-evaluation of market multiples. Analysts suggest that while the premium valuation for EssilorLuxottica is justified, it may have been excessive.
Despite the challenges, EssilorLuxottica is also diversifying into medical technology with products like Nuance Audio glasses and investing in vision diagnostic instruments. The company anticipates solid revenue growth and stable adjusted operating profit over the next five years, suggesting that any dilution from less profitable smart glasses will be offset by other business segments.
