Ray-Ban's Parent Company Warns of Financial Struggles in 2025
Decline in UK sales of Ray-Ban prompts issuance of cautionary statement by the brand owner
Italian luxury eyewear giant Luxottica Group, the owner of iconic brand Ray-Ban, has expressed concerns about potential financial challenges in 2025. The UK arm of the company recently reported a decline in sales and profit for 2024.
Last year, the company's UK sales fell to £165.8m, a drop from £168.1m recorded in the previous year. simultaneously, pre-tax profit slid from £7.4m to £6.7m. These figures are embodied in new accounts filed with Companies House.
The increase in the cost of goods and services is expected to negatively impact the gross and operating profit this year. According to the company, this is partly due to an augmentation in employer's National Insurance contribution to 15 percent, as announced by Chancellor Rachel Reeves in her Autumn Budget. This hike will further escalate an already high rate of labor cost inflation, they added.
The slowdown in foot traffic, primarily due to an unusually cool summer in 2024, contributed to the decline in sales. The company continues to experience inflationary pressures on most cost lines, with labor costs being a significant concern. The increased worker shortages following Brexit and ongoing long-term health issues post-pandemic have played a part in this.
An additional concern is the increase in employer's National Insurance contribution to 15 percent, effective as of April 1, 2025. This rise is expected to strain an already high rate of labor cost inflation.
Despite these challenges, Luxottica expects a positive improvement in performance in 2025, mainly due to key investments. However, the increased costs of goods and services may negatively affect the gross and operating profit. They're also concerned about the potential impact of geopolitical tensions on their international channels.
The company, which also owns Sunglasses Hut and brands like Persol, Oliver Peoples, and Oakley, remains profitable in 2024, despite these pressures.
[1] - Report: Inflationary pressures on labor costs and factors contributing to the rise in employee National Insurance contributions[3] - Q1 2025 sales surges for Luxottica, driven by "Direct to Consumer" segment and new products like Ray-Ban Meta series[4] - Trade uncertainty and potential tariff impacts zapping companies' coffers amid global tensions, as per recent studies
- The increase in labor costs, influenced by inflationary pressures and the rise in employer's National Insurance contribution, presents a significant challenge for Luxottica Group in 2025.
- The hike in employer's National Insurance contribution from 13% to 15% as announced by Chancellor Rachel Reeves is expected to add to the already high rate of labor cost inflation in Luxottica's business operations.
- The ongoing financial struggles faced by Luxottica Group, the parent company of Ray-Ban, have raised concerns about the potential impact of geopolitical tensions on their international sales channels.
- Despite facing economic pressures, Luxottica, which has brands such as Sunglasses Hut, Persol, Oliver Peoples, and Oakley under its umbrella, has managed to remain profitable in 2024 due to strategic investments and the success of new products like the Ray-Ban Meta series.
