Luxottica Group seen pressured by weak economy

Thursday, the Italian company reaffirmed its underlying profit outlook--excluding the impact of the dollar's devaluation--for fiscal 2008. Luxottica operates more than 6,200 stores worldwide and either owns or licenses brands such as Ray-Ban, Oakley and Revo.

Daniel Hofkin of William Blair & Co. wrote in a client note Friday he now expects the company to earns 43 cents per American Depository Share in the second quarter, down 3 cents from his prior estimate. Luxottica's own guidance implies it expects to earn 43 cents to 44 cents per ADR.

The analyst also lowered his earnings per share targets for 2008 and 2009 by a nickel each, to $1.50 and $.75, respectively.

"We believe near-term visibility remains limited in the company's U.S. retail business, and we estimate that second-quarter comp-store sales were as challenging as the first quarter's 3 percent overall comp sales decline (4 percent decline in the U.S.)," the analyst wrote. "Management indicated that sunglass comps are actually outpacing the prescription eyewear business and tracking closer to flat comps, which we believe is helped by substantial underpenetration of sunglasses as an affordable luxury in the U.S. relative to Europe."

Comparable, or same-store sales, is a key indicator of retailer performance since it measures growth at existing stores rather than newly opened ones.

Hofkin maintained his "Outperform" rating, citing Luxottica's dominant position in its market.

In midday trading, Luxottica shares declined 34 cents to $23.91.