EssilorLuxottica SA

PAR:EL

Earnings Call Transcript 2019-Q1

[Operator]

Good morning, ladies and gentlemen, and welcome to the EssilorLuxottica 2019 First Quarter Revenue Presentation. Today, I'm pleased to present Mr. Laurent Vacherot, Mr. Stefano Grassi and Ms. Hilary Halper. [Operator Instructions] I will now turn the call over to Véronique Gillet to begin. Please go ahead. Thank you.

[Véronique Gillet]

Good morning, everyone, and thank you for joining EssilorLuxottica conference call. Today's conference call is dedicated to the first quarter 2019 revenue of the group, which was communicated to the market this morning. We will comment and answer questions on company revenue for the combined group and both Essilor and Luxottica. We will not comment on governance-related matters as there are no significant updates at present. On this call, Laurent Vacherot, CEO of Essilor; and Hilary Halper and Stefano Grassi Co-CFOs of EssilorLuxottica, will share the presentation. Let's now start with Laurent.

[Laurent Vacherot, Deputy Chief Executive Officer of Essilor]

[Foreign Language] Good morning, everyone. So I will do a brief introduction to give you the key takeaways which you should remind about the business of EssilorLuxottica for the first quarter. So as you are seeing 2019 is off to a good start, with the revenue growing at 7.5% for the first quarter, of which 3.7% at constant exchange rate, which is in line with our annual guideline and ahead of plan. Q2 is starting well, and we should see an acceleration of growth in the next 2 quarters, both organically and through acquisitions. In addition, integration and synergies are now in execution mode. So we are optimistic for the remainder of the year, and we confirm the outlook. So what are the key drivers for growth in the quarters to come? In other words, what are the reason to believe that growth will accelerate quarter-after-quarter? So there is [ 6 ] I want to mention today. First, we'll continue to rejuvenate Transitions brand that we started in 2018, with the launch of, in H2 -- early in H2, Transitions Gen8 and as you know, it started the new generation of Transitions that's a big hit, positive hit on the market. This year, [indiscernible] supported by an outstanding stronger-than-ever [ 7 ] marketing program for Transitions. And this should fuel growth in H2 across the combined group, mainly in the U.S., a little bit in Lat Am, in [indiscernible] where we see penetration of Transitions increasing drastically. On the new project front, we also expect additional momentum from the [indiscernible] lenses from Eyezen, but also from our new refraction instrument Vision-R 800 and as you remind, I'm sure, it is a [indiscernible] new way -- revolutionary new way to measure the eye faster, more precise and more consumer friendly. Second, the Sun segments should accelerate with the start of the sun season. And we already saw encouraging sign in this month of April. Sunglass Hut just started a very exciting marketing campaign with Sunglass Hut [indiscernible]. We should also see better performance from FGX and Costa. And we saw the first impact of the new [indiscernible] at the end of the year. Third element. We continue to drive digitalization of our businesses with this year's 3 main topics. First, the digital acceleration of the consumer journey which basically is stitching together all the traffic hitting our website with our e-commerce site and our physical stores and those of our customers. This will be deployed first -- this is deployed at the moment first in the U.S., but also in other countries like India where we have added in the version of -- to our flagship worldwide vision and also worldwide access to Coolwinks. Second, investment in in-store digitalization in order to enhance omnichannel strategy where we're well engaged at Luxottica. Third, targeted partnership such as the acquisition of Brille24, a leading online retailer on optical product in Germany, which are developing an interesting [ hard to stock ] with participating ECPs to offer a retail solution to consumer, plus reason to believe of the acceleration in the next quarter. We also continue to invest in fast-growing market. Expect further improvement in several of them in the few next quarter. For instance, in China where we invested heavily in myopia management which has a very promising upside potential. The fast-growing market drive will also likely involve bolt-on acquisitions in wholesale, but also in retail further down the road.Finally, we keep enhancing our proximity with eye care professionals by enhancing the STARS programs, Essilor expert network [ doctor reliance] and [indiscernible] [ groups ]. So those are some of the initiatives that we believe will accelerate the growth of EssilorLuxottica in the next quarter. To end this introduction, I would like to say a few words about integration. Although today, it's about revenue and not about integration, let's show how it's progressing very well. So as you remember, in March, during the call for the year 2018, we said we identified 20 priority synergy work streams that will allow us to consume the synergy of EUR 420 million to EUR 600 million adjusted operating profit within the next 3 to 5 years. What we can say now with 2 months after is that all those programs are in execution mode. We moved from identification to decision and execution. The integration committee led by Mr. Del Vecchio and Mr. Sagnieres meets up every 2 weeks with a very special agenda prepared by Pierluigi Longo and Eric Leonard, our 2 Chief Integration Officers, to take appropriate decisions on the advancements of the work stream. More than the 300 people of both organizations are involved. Key executives were appointed to lead each project and are incentivized on the success of those synergies.Together with their team, they are developing strong working relationships and common view on the opportunities. Just to end this introduction, the team of Essilor and Luxottica are working together to grow the market through as you know better awareness and access to vision solution. Our initiatives to eradicate poor vision from the world in one generation [ helped ] to deliver vision solution to more than 2 million new wearer this quarter, many [ officials of Essilor ] have volunteered to participate to the program organized by OneSight, of which Luxottica is a founding sponsor, as you know. And this kind of initiatives positively strengthen the cultural ties between the 2 companies. So in short, we completed the third quarter. We have a lot of opportunity to grow in the next quarter and to implement synergy working together. With this, I'm happy to hand over the call to Hilary.

[Hilary Halper, Co]

Thank you, Laurent, and good morning, everybody. As Laurent said revenue for the group was up 7.5%, of which a solid 3.7% at constant exchange rates. If I turn now to the Essilor side. After what we believe was an outstanding Q4 in 2018, Essilor delivered a very sound growth of 4.3% at constant currency in Q1 and this includes a like-for-like growth of 3.3% and a perimeter effect of 1.1%, which is an acceleration versus 2018. We anticipate that this will continue to increase as our bolt-on acquisition strategy is gaining momentum. And actually, in April, we already see an uptick here, essentially this is in relation to the acquisition that Laurent mentioned of Brille24 in Germany, which happens late in the first quarter. At Essilor, all divisions trended positively in Q1. And the revenue in the lens business rose 3.6% like-for-like. And this is really driven by the ongoing takeup of our innovative products, which translated into sound growth of our key brands. I'd specifically like to flag Transitions, which enjoyed close to 6% growth in Q1 through the Essilor network. E-commerce also had a very positive contribution to the overall performance in the division, and specifically, revenue in the Eyeglasses segment was up almost 17%. Growth in the lens business is also driven by the robust dynamic in the emerging markets, but I'll really come back to that a little bit later in our presentation. If I move on to the Sun & Readers division, Sun & Readers delivered modest growth in Q1, with 1.7% at constant currency. But this was actually fully anticipated, and it's really consistent with our ambition to grow the division in the mid-single digits in 2019. We knew that FGX business in the U.S. would face a tough comparable in relation to business that was lost a year ago in the Readers business. However, that being said, point-of-sale data is strong across Sun and is moderate in the Readers category. And we know that this impact will not repeat in the next 3 quarters. Finally, if I come on to the Equipment business because of the elimination of the sales to Luxottica, which are now deemed intercompany, you see smaller revenue than usual. But we are pleased with both the sales momentum and the backlog, especially in the surfacing and polishing lines of the Equipment division. With that, I'll hand it over to Stefano.

[Stefano Grassi, Co]

Thank you, Hilary, and good morning, everybody. Like to comment our Luxottica group's first quarter results. Our top line grew 3.2% on a constant FX basis. While on a current FX basis for the first quarter, you look at an outstanding growth of 7.5% on the first quarter. Clearly, the U.S. dollar and currency, in general, created some tailwinds in our results, in particular, the U.S. currency revaluated approximately 8% against euro during the course of the first quarter. And generally speaking for EssilorLuxottica, we would expect the next couple of quarters to create further tailwinds in our results, thanks to currency, if the U.S. dollar remain at current level. But now let's look at our 2 divisions: Wholesale and Retail. Both of them actually posted on the first quarter an accelerated performance compared to the 12 months of 2018. The Wholesale division was up 0.9% in the first quarter on a constant FX basis. While last year, you might remember, our Wholesale division was negative 1.1%. Couple of highlights here. The growth in our Wholesale division was very much driven by volume, while from a price/mix standpoint, we experienced some deceleration during the first quarter. The second quarter highlights is the STARS program. Laurent mentioned it before, we have the STARS program up double digits during the course of the first quarter, thanks also to a lot of announcements to the overall program and a lot of expansion of our STARS program throughout the world. And now let's move to the Retail division. Retail was up 4.7% on a constant FX basis. Again, an acceleration story versus the 12 months trend of 2018 that you might remember was up 3% in our Retail division. On a current FX basis, our top line grew 7.5% for our retail division, thanks to the strong U.S. dollar revaluation that we experienced during the first quarter. Now if we look at our retail numbers, a couple of highlights here. First of all, comp sales. Comp in retail were up 1.7%, very much led by LensCrafters performance in the first quarter, 2.6% in Q1. And those are actually the best comps in LensCrafters since the third quarter of 2015. So remarkable start of the year for our leading optical retail chain in North America. The other highlight is Sunglass Hut. Sunglass Hut on a global basis was up 4% on a constant FX basis. We were double-digit in Europe, we were double-digit in [indiscernible], we were double-digit in Southeast Asia, mid-single growth in Brazil. And that largely offset the deceleration that we experienced in North America Sunglass Hut for the first quarter. So overall, a very compelling story for our Sun retail chain. But now let's keep the overview through the different region, and let's get directly into the pages then we'll comment each one of the different geographies. And let's start obviously with the most important one that is North America. And I'll comment first the overall EssilorLuxottica number, give you a little bit more color on the Luxottica performance and then hand it over to Hilary for more details around the Essilor one. So in North America, EssilorLuxottica delivered a plus 1.2% growth on a constant FX basis, while on a current [ FX ] basis, because of the benefit of the U.S. dollar, we are up 9.1% during the first quarter. From the Luxottica side, a couple of highlights. First of all on the wholesale side, volume was substantially flattish during the first quarter, while we did experience a deceleration during Q1 from a price/mix standpoint.If we now move to retail, retail optical was very strong in North America. We mentioned before LensCrafters that was up 2.6%. That performance was very much driven by strong price/mix in the first quarter, in particular, on the lens side. We experienced a Blue IQ penetration that increased during Q1. We have higher penetration of anti-reflective lens, and we have a higher penetration of Transitional lenses into our LensCrafters. So overall, a very compelling story from a price/mix standpoint that clearly [ halved ] the results of LensCrafters during the course of the first quarter. The other important announcement that we have during Q1 and that helped our growth in North America retail was Target Optical. Target Optical was up 13% during the first quarter and, together with LensCrafters performance, largely offset the deceleration that we experienced in Sears Optical where we do have 170 store less than what we used to have last year, top line was actually down about 50% from Sears Optical, all of that because of the challenging situation that Sears department store is going through, and you all were aware of. The last mention is to Sunglass Hut. We talked before about a deceleration in the first quarter for Sunglass Hut in North America. I would just share with you a couple of highlights here. First of all, a tough comp base. Q1 2018 for Sunglass Hut in North America were actually the best comp for all 2018 in Sunglass Hut. The second important aspect in my view is the weather condition. We experienced a quite wet and cold weather in North America if I'm not mistaken, I mean I don't necessarily look a lot through the statistics. But the month of February was probably the coldest and wet weather in The United States during the last 4 years. And that clearly had an impact on our Sun business. Last, but not least, our Easter shift. Easter was actually a little bit of a help in April but create some headwinds in the month of March. So again, it's just a matter of timing, but had a negative impact in the first quarter for Sunglass Hut. With that, let me hand it over to Hilary, who will give you a little bit more color on the Essilor side.

[Hilary Halper, Co]

Thank you, Stefano. So on the Essilor side for North America, Essilor delivered modest growth, which was a mix with healthy ongoing trends and a few temporary headwinds. Our core U.S. lens business showed satisfactory revenue gains in what we think is a rather soft market as Essilor continued to convert more eyecare professional practices in its Essilor Experts Program, which we have now crossed over the 4,500 practices threshold of practices that we have under contract. And as a result, our daily sales trended 2% above last year in the lens business. If I move on to the e-commerce side, our e-commerce activities continued to perform well, and we're focusing more and more on our marketing investments into our winning models, such as EyeBuyDirect, and we are really seeing the benefits of that. With this in mind, we feel good about our activity in North America in general and, in particular, in the U.S. If I talk about some of the areas where we have confidence -- continuing to gain some confidence around our business going forward, we really see the improvement coming from the Transitions Signature Gen8 launch. And this is a new Transitions lens that will be rolled out in early in Q3. And on top of the Gen8, the Transitions brand is supported by the very recent launch of the first photochromic contact lens ever by J&J, which is under the name of ACUVUE OASYS, which is really supporting the ongoing rejuvenation of the Transitions brand. That being said, as is customary ahead of a new launch of Transitions lens, we see a decline in Transitions sales to third-party manufacturers, and this is because they're adjusting for the expected launch. So while we're really, really excited about the opportunity in the back half, this does create some temporary headwinds for us.I also -- I already mentioned the context of FGX, which we really don't expect to repeat in the upcoming quarters. And these 2 factors together had a negative impact of about 2 percentage points on the like-for-like growth in North America in Q1. And that held back what was otherwise a very healthy quarter for the rest of the businesses. If I move on to Europe, again, I'll comment here on the EssilorLuxottica performance, and then I'll move on to Essilor and hand it back to Stefano to comment on Luxottica. So in Europe, revenue for EssilorLuxottica was up 3.9%, of which a solid 5.3% on a constant-currency basis. On the Essilor side, we had a very good first quarter in Europe with revenue growth close to mid-single digit at constant currency. And just to provide a little bit of context here and remind you that we now have Turkey being reported in the region, which brings a positive contribution to our growth. Interestingly, Turkey, Russia and all the Eastern part of Europe together account for more than 10% of Europe and should be seen as emerging markets in the optical industry. All of these markets are growing in the high teens, driven by material improvement of the product mix and also supported by effective media campaign.It's also important to note that growth was also in the double digits in the U.K., where both e-commerce and traditional businesses delivered good performance. Europe also benefited from an increased contribution from acquisitions at positive 0.4% in the first quarter. We complemented our distribution capabilities in Greece as our partner Shamir acquired Union Optic. And as we've already mentioned, we also acquired Brille24 in Germany towards the end of the quarter, and we'll really leverage this opportunity to build an omnichannel model with a panel of opticians willing to join in the project. So overall, Essilor had very solid performance in the lens business, and we're pleased to say that the positive trends continued in the first week of Q2. And that more importantly, Europe should benefit in the coming months from the actual delivery of the new Vision-R 800 optometry instrument, which Laurent mentioned earlier, whose order book has significantly increased over the last 6 months. In the Sun division, all of our businesses trended positively against the backdrop of the favorable weather conditions. So with that, I'll hand it to Stefano.

[Stefano Grassi, Co]

Thank you, Hilary. And let's talk a little bit about Europe for Luxottica, which is a great story. I mean we are positive, we are in the mid-single digit territory for Europe after 2018. You might remember, last year, we were actually on the negative territory minus 1. So strong rebound for our performance in Europe. I would just give you a couple of highlights for wholesale and retail. On the wholesale side, actually, if you remember first half of last year was quite challenging. We're now back on track with solid growth in the first quarter of 2018. All the major key geographies [ accounts ] within Europe were in the positive territory. We were positive in U.K., we were positive in Germany, positive in France and positive in Italy, top markets. And really, the only country in which we experienced a negative performance, but that was largely expected, was Spain. In Spain, you might remember, during the end of last couple of weeks of last year, 2018, we decided to realign our commercial strategy in Spain, a very promotional market, to the one that we have in the rest of Europe. That created a little bit of road bumps in our growth trajectory in Spain, but now we have fully anniversaried that and if I had to look at really the last 4 to 5 weeks of order intake in Spain, well, we're actually very optimistic. We are in the double-digit territory, and now we have a new [ answer ] to be add in Europe wholesale, which, again, we do expect to see in acceleration from a growth rate standpoint during the second quarter compared to the trend that we got in the first quarter. So again, very promising start of the year in that part of the world for the Wholesale division. Retail. Retail was the -- have an outstanding growth rate in the first quarter, with growth that was close to 20% in Q1. Sunglass Hut led the way, very much drawing around in excess of 20% during Q1. Every major geographies for Sunglass Hut in Europe was on the positive territory. And I would say, also Salmoiraghi & Viganò, our Italian retail chain was actually up double-digit with comp sales in the high single-digit territory. Clearly, the weather [ was a help ] during Q1, but I would also add, a very strong retail execution in both our retail chain: Sunglass Hut as well as Salmoiraghi & Viganò. So extremely happy, and we couldn't wish anything better to start a year in Europe. But now let's look at our fast-growing regions beginning with Asia, Oceania and Africa on the next page. I will comment first on the overall EssilorLuxottica number, give you highlights on Luxottica and then pass over to Hilary. For Asia, Oceania and Africa, our sales were up 5.9% on a constant FX basis, while on a current FX basis, our sales were up 8%. If you look at our Luxottica number, we're very extremely happy with the performance we're getting there, mid-single digit growth over there. A couple of highlights, first of all. On our retail business in Australia, both Optical and Sun posted comp sales in the mid-single digit territory, in particular, in Optical Australia, we experienced the benefit of all the major refurbishment program that we undertook in 2018 and that is continuing in 2019, while we do expect 80 to 90 stores to be fully refurbished with new equipment and with omnichannel technology in the store. The other important highlight is Greater China. Greater China is now back on positive growth for the first quarter, very much driven by our mainland China performance, in particular, thanks to the wholesale. Why do I mention wholesale? Well, because you remember, a couple of years ago, we went through an important strategic repositioning on mainland market, wholesale, in China with [indiscernible] but now we have a much cleaner marketplace, and now we are ready to really position ourselves for strong growth in this critical part of the world. And again, if I look at the results that we're getting from a wholesale perspective in China, those are very promising one. And the mainland China performance largely offset a deceleration that we experienced in Hong Kong. A little bit of that is due to the economic environment which is quite challenging. And the other part of that is around a lot of talking about a potential reduction in healthcare government subsidy for Hong Kong, and that is obviously creating a little bit of slowdown. With that, let me pass it to Hilary for more color around this region.

[Hilary Halper, Co]

So thank you, Stefano. So on the Essilor side, our growth was very solid with like-for-like growth just short of 10%, and this performance really reflects ongoing strong momentum in emerging markets as well as a sound performance in the mature markets in this region. I'll limit most of my comments here really to talk about our businesses in China and India. So let me start off with China where revenue growth was in the mid-teens. Double-digit growth in the domestic lens business with strong performances in all segments of the market. So I'll split this really into the high-end, and then I'll move into the mid-tier. So in the high-end, Transitions and myopia management solutions are driving revenue expansion. Then we have the blue-cut lenses, which continue to grow very fast. And our relationships with hospitals and key accounts are particularly fruitful in this region. In the mid-tier, our partners are growing fast in high-index lenses such as the 1.6 and the 1.67. If I move on to the Sun business in China, the Sun business is booming, and it's really driven by the continued strong growth at Bolon, which benefits from new opportunities as the brand is really building strong recognition not only in Sun, but in the optical frames segment on top of the Sun segment, which is really quite positive for us. And then MJS. MJS is also growing, but this is with a different balance compared to last year. So the teams here are really focusing their efforts to accelerate the comparable store growth, and this is really notably being done through a clearer brand identity from Aojo to Mujosh. And on the other hand, the opening of new stores has slowed down. If I turn now to India, India is a little bit of a dual-speed story. On the one hand, we have our Coolwinks e-commerce business, which is very robust in both the Prescription and Sunwear segments. We have the release of its new iOS application, which has had its strong impact on sales and traffic. And this is really promising for the future. But on the other hand, our traditional business is not growing at full speed. However, we have a new team in place that's working very hard on how to better seize opportunities in the fast-changing retail landscape in India. And I'll just limit my comments on the rest of the countries. The rest of the countries are really trending well overall. And as an example, the Oceania countries continue to grow at double-digit showing strong consistency from one quarter to another. With this, I'll move on to Latin America. For Latin America, EssilorLuxottica grew 8.1%, of which 11.7% at constant exchange rates. On the Essilor side, Latin America was definitely the star within our Q1. Not only did we maintain strong momentum that we had at the end of 2018 with double-digit like-for-like growth, but Latin America benefited from a meaningful contribution from new partnerships. And here, I'm really referring to the 2 acquisitions we had at Prescription Laboratories that we signed in Ecuador and Argentina in Q4 of 2018. So all in all, growth at constant currency is in the upper teens. In Brazil, our growth foundations are solid. And as we stand today, and as we mentioned in the press release, revenue gains were well spread across all of the different channels. Essilor is leveraging all of its own and the partners distribution capabilities to disseminate innovations very effectively. And as a result, Varilux volumes are growing at double-digits. In lower tiers of the market, the Kodak brand is also performing well. I'll move now to the Spanish-speaking countries, which had strong like-for-like growth, very similar to Brazilian quality. And Mexico is one of the fastest growing countries where lens and sunwear sales growth were just short of 20%. The lens business here enjoyed strong momentum with both independent ECPs and key accounts, notably Costco. And in Chile, Costa Rica, Nicaragua, the business in the Retail segment posted strong revenue gains as well. So very, very happy with our performance in the Latin America region. So I'll now hand it back over to Stefano.

[Stefano Grassi, Co]

Thank you, Hilary. I would probably just share one highlight on Latin America and a very important one. Happy with the growth we're getting over there. Probably the highlight pertains to Brazil. We couldn't be happier than what we got here in Q1. Brazil was up double digits in the first quarter, both retail and wholesale were very strong. In particular, if we look at our wholesale side, we were happy with the performance that we got there in the double-digit territory. We got Óticas Carol growing faster more and more partner joining Óticas Carol brand. And we do see solid growth on the double-digit territory, for example, with our independent channel, which accounts, give or take, for about 50% of the total client base also on the top of key accounts. So very compelling story in a challenging positive world and happy with the work that the team has done over there. But now before we move to Q&A, let's reiterate our guidance in the following page. Our outlook, as Laurent mentioned before for 2019, is confirmed. Our top line range is between 3.5% to 5% guidance on a constant FX basis for the full year. Our adjusted operating profit guidance is 0.8 to 1.2x top line growth and our adjusted net profit guidance for the full year 2019 is to position EssilorLuxottica anywhere between 1 to 1.5x top line for the full year. With that, let me hand it over to the operator for the Q&A session. Thank you.

[Operator]

[Operator Instructions] So the first question comes from the line of Elena Mariani from Morgan Stanley.

[Elena Mariani, Executive Director of Luxury Goods and Brands]

Three questions from me, please. The first one is on the U.S. market. I just wanted to better understand what you've been observing in the region over the past few months. I was surprised by the slowdown in Luxottica wholesale and you also mentioned several other pockets of weakness. To what extent do you think your performance related to a difficult market environment, i.e., how much do you think the market has grown in the quarter compared to the 1.2% organic growth you've posted? And still part of this question, you mentioned in the release that you have already seen some business expansion in the region as a result of the combined approach with key customers. Could you elaborate on these points please? Second question on the synergies. You mentioned that the vast majority of the 20 work streams identified have been already launched and activated. Could you give us further details on the progress you've done? I was hoping to get some more quantitative information on the potential phasing of both cost and revenue synergies now that you seem to have done more work? I understand you will disclose much more in September, but it's quite difficult for us to come up with assumptions, as you might imagine. And final question on your announced CEO search. Your top management seems to have agreed on the profile of the potential candidate. Could you elaborate more on this and on whether the search is now happening more outside than inside the company? And perhaps your views on whether you think the search is going to take a few months as opposed to 2 years? Any views on this would be much appreciated. Thank you.

[Stefano Grassi, Co]

Yes. So I will start with the question on the U.S. performance and just thinking about the market in particular for the wholesale. I mean we don't necessarily have a source of concern with respect to our performance in the wholesale. Remember, when we look at our wholesale, we always said that we need to look at probably over 6 months period, I mean, our performance. Remember, last year, for example, our Wholesale division in the fourth quarter actually delivered a growth of around 3% on top of our 14%. So on a 2-year basis, our wholesale in North America actually grew close to 20%. So again, we need to look at things a little bit more in perspective over the longer-range than just in the single quarter. And again, the positive thing is that, again, we experienced a little bit of a price/mix deceleration that was very much due to channel mix, I would say. But again, we don't necessarily have, at this stage, a source of concern on North America.

[Laurent Vacherot, Deputy Chief Executive Officer of Essilor]

So yes, Stefano, I totally support your vision of the U.S. market. And in the Essilor side, there is no specific concern either. Actually, if it's in the low part of the growth we used to have in the U.S., we don't see specific concern in its planned and most -- the biggest reason for that performance was the switch of generation of Transitions that Hilary mentioned and it's always happening like that, and we should see in Q2 and Q3, specifically, acceleration. So no specific concern on the U.S. market itself and on plan or better than planned. On the...

[Elena Mariani, Executive Director of Luxury Goods and Brands]

And do you think you have grown -- that the market has grown more than 1.2%? Just wanting to understand whether there was also correlation with the market there rather than just maybe being a bit company-specific?

[Laurent Vacherot, Deputy Chief Executive Officer of Essilor]

No, I don't have -- we don't have, at the moment, figures for the market. I don't think it was growing faster than 2%. So I think, basically, again, it was planned like that in our quarterly budget for both Essilor and Luxottica. And there is a specific reason for that relatively low performance, and it should improve in Q2, Q3 and further. So no specific concerns the U.S. market. Synergies -- yes, sorry?

[Elena Mariani, Executive Director of Luxury Goods and Brands]

And no, one point about the -- what you've mentioned the business expansion in the region with key customers?

[Laurent Vacherot, Deputy Chief Executive Officer of Essilor]

That you know for sure the customers are waiting a very, very long time during this antitrust process. So we can offer them better solutions when we combine the strength and the asset of Essilor and Luxottica in any region and specifically in the U.S. So we see a lot of customers, big, midsize and small size, independent, that want to benefit of that better solution, better product, faster service, better quality, and it's just what's starting to happen. And they have to wait for 2 years to make it happen, and it's happening. And it's all over the place. Some are bigger customers, some midsize customers, some independent. And I think that's really what the market was expecting.

[Elena Mariani, Executive Director of Luxury Goods and Brands]

Okay.

[Laurent Vacherot, Deputy Chief Executive Officer of Essilor]

On synergy, no, I think, we are not in a situation to go much further either quantitative, quarter-per-quarter, what will be the benefit to sales and the savings and so on. Really, we need to wait for September. What really you should really take away from this call is, it's working. The teams are active, they are working well together. The integration committee is very efficient, very well prepared, and we're focused in the last 2, 3 months in putting all that in motion, more than planning and win figures. Because at the end, the figures will come from the action, not from the spreadsheet, the Excel spreadsheet budget. So really, I really encourage you to wait for September for a much more detailed vision on integration. [indiscernible] this is not the place to comment. We have nothing more to say that was public. So we -- you should wait maybe for the AGM in 10 days from now for those kinds of questions.

[Elena Mariani, Executive Director of Luxury Goods and Brands]

Yes. Okay. Maybe just one very, very small follow-up, again, on the business expansion in the U.S. and have you started to approach customers as a combined entity and the business expansion you've mentioned is because maybe you were doing already some cross-selling with wholesale and third-party customers, is that how we should interpret that?

[Laurent Vacherot, Deputy Chief Executive Officer of Essilor]

Yes, absolutely, absolutely. From the product side, from the service side, from the managed care side, all of that, yes. And really they're asking and they were waiting for. It was one of the beautiful things of that combination is that they can benefit from the best world of frame and lenses and managed care in the U.S. and it's working pretty well.

[Operator]

The next question comes from the line of Cedric Lecasble from MainFirst.

[Laurent Vacherot, Deputy Chief Executive Officer of Essilor]

Hello?

[Cedric Lecasble, Research Analyst]

Yes, can you hear me?

[Laurent Vacherot, Deputy Chief Executive Officer of Essilor]

Yes.

[Cedric Lecasble, Research Analyst]

Yes, sorry for this small problem. I have 2, actually. So first one is on experiments where the combination is already working or helping, such as LensCrafters in North America. Actually, I wanted to know if the combination really accelerated things. You mentioned for the success of LensCrafters in Q1 the fact that you have higher penetration of Transitions, higher penetration of Blue and these topics were priorities for Essilor, especially -- well in all geographies. So we see that LensCrafters is already benefiting from some critical points that were priorities for Essilor. You have some other examples into where that such increased penetration of Essilor products was in Luxottica chain? That's the first question. And the second question is kind of relative to the first one. On your margin guidance, I know it's a sales call, but your margin guidance is relatively cautious. You are speaking of good performance at the high-end; you are expecting a good performance from new products, which are generally positive for margin; you have some volume growth, so I was wondering where this relatively, I would say, neutral guidance on margin comes from? Is it that you're going to invest more in marketing, is it the dilution from e-com, or is it everything despite the start of synergies kicking in?

[Stefano Grassi, Co]

Okay. It's a great -- I'll probably get both of the answers here. First of all on the North American, that corporation and obviously it's great that we have on the same table the EssilorLuxottica team discussions. But yes, I mean, there's definitely tighter partnership between our retail network and Essilor. We already knew each other, but there's no doubt that today, we get progressively a deeper understanding of each other's operations. We're able to better understand priorities. Some of the launches that Laurent mentioned before, for example, Transitions Gen 8, is going to be an important launch in LensCrafters during the back-to-school time period. So we do have a tighter partnership over there? Yes, for sure. And that clearly helps our penetration on lenses and obviously at the same time do not underestimate the importance and the capabilities that the LensCrafters team has on improving execution in the store. Remember, in the last couple of years, we undertook a lot of different initiatives on LensCrafters that were very much focused on the retail execution. And just to give you an example, conversion rate continuously improved over the last few quarters in LensCrafters. Another example is the Net Promoting (sic) [Promoter] Score. The appreciation that our consumer just tapped and had a purchasing experience in LensCrafters, continues to improve. So those are the indicators that, yes, we've got a tighter partnership with our friends in Essilor, and at the same time we're getting stronger and better in retail execution in LensCrafters. Obviously that kind of journey that we've done with LensCrafters and that kind of tighter partnership is happening also on the other parts of the world. Obviously from a prioritization standpoint, you can imagine the LensCrafters is the priority #1 because of the size from an [ owner ] retail network. And obviously we have other important retail chains in Australia, in China and in South America, which will obviously benefit from this partnership. The second question with respect to margin guidance. I mean they look cautious, but I think, we reiterate quite a few times that EssilorLuxottica it is a very complex machine. It is a complex machine from a channel distribution standpoint because it encompass wholesale, it encompass retail, so we do require an important amount of investment to further boost and enhance our logistic and supply chain infrastructure. We do require investments to be made on our retail brick-and-mortars, on the digital side of the company and, at the same time, yes, also marketing. I mean we do have important campaigns that are starting. One of them started last weekend in North America with Sunglass Hut, a very promising start. We then have -- we have another sunny campaign in LensCrafters that do require certain investments. And again, the balancing game, if you wish, that we're doing here is on one side getting efficiency and more effective way of doing business, on the other side, continuing to fuel our pipeline investment, which will probably not maximize the short term, but they are very much needed for the longer term health and growth of EssilorLuxottica.

[Laurent Vacherot, Deputy Chief Executive Officer of Essilor]

And also we -- Stefano we see that if we, as you remember, we reaccelerated bolt-on acquisitions and for those that follow Essilor the old way a long time ago, you know that always when you have more acquisitions, it is...

[Cedric Lecasble, Research Analyst]

More dilutive. Yes.

[Hilary Halper, Co]

Yes, I think that's right.

[Laurent Vacherot, Deputy Chief Executive Officer of Essilor]

And also Stefano mentioned marketing and obviously I mentioned stronger than ever plan to support the launch of Gen 8, which is an unusual marketing plan that we wanted to try. And also marketing spend in India for the e-commerce company and also in the U.S. that we -- because we know it's working and we see it working. So it's really marketing, driving more consumers and building consumers at the base through those capabilities. So I think you all want to see EssilorLuxottica growing faster and faster. And it requires, like Stefano mentioned, on one side efficiency that we'll invest in programs that are working everywhere in the world.

[Stefano Grassi, Co]

And clearly synergies were a ramp up and that's the other important thing obviously. As Laurent mentioned before, there would be a progressive ramp up of synergies, which will come on top of what we are.

[Operator]

The next question comes from the line of Antoine Belge from HSBC.

[Antoine Belge, Global of Consumer and Retail Research]

Three questions and actually just before one clarification was Barberini included in the numbers in that quarter? So my true first question is back about the U.S. I understand there are a lot of one-offs and things which have affected the performance. To what extent those were known when you provided the full year guidance and when you gave this overall worldwide 3.5% to 5% organic growth, how much was -- how much do you have in mind for the U.S. market? Second question, I mean, I think, you mentioned the price mix effects at Luxottica and then mentioned some channel mix, I'm not sure I got that which channel outperformed and which one underperformed leading to that price mix reduction? And thirdly, with regards to the amount of synergies, I mean, since you had given the initial guidance there were sort of figures in the press, et cetera, mentioning that for 2019, specifically, the synergies were ranging maybe from EUR 25 million to EUR 50 million that I think as always is a sort of net of any reinvestments. If you could be a bit more specific on that number, please?

[Laurent Vacherot, Deputy Chief Executive Officer of Essilor]

So I'll take the question on the U.S. if you want Stefano and then you will take the question on Barberini and price mix evolution. On the U.S., it was totally planned. And actually, we are better than -- slightly better than budget for the Q1 in the U.S., overall. So no, no bad surprise and no specific concerns. We are on track and -- with all the plans that we explained, Stefano, Hilary and I for the next quarter, we are on a good shape in the U.S. So Barberini?

[Stefano Grassi, Co]

Yes, Barberini wasn't planned to be on the first quarter at all as a contribution. So again, we are where we needed to be, also from a forecasting standpoint at the end of the first quarter, as Laurent reiterated. With respect to the channel mix, I mean this is pure agreement by selling in certain accounts that have a lower price mix than others, but we do expect that to be recovered already beginning from the second quarter. So I think we are pretty optimistic with respect to North America second quarter as also Laurent reiterated. Now with respect to synergies, I mean, when you look at the numbers there, we didn't specifically provide guidance or disclosure on 2019 synergies. When we gave the guidance, we said that it was going to be -- those guidances do include synergy number as part of that and obviously we reiterate the guidance and as part of that guidance, there is a contribution from synergies that will obviously be bigger as the guidance and that business progresses in the following years.

[Antoine Belge, Global of Consumer and Retail Research]

Okay. Maybe just a clarification. So back to the U.S., is it fair to say that you're expecting maybe a full year including your catch up, maybe around 3% from the U.S.? And then back to Barberini, what is the best guess in terms of first date of integration and consolidation of that business into your numbers?

[Stefano Grassi, Co]

So I think the way we want to see, in general, EssilorLuxottica growing over the longer run is that we probably position the more mature markets, the developed markets in a way on the low single-digit territory and then what we call the fast-growing markets, I mean, Africa, Oceania and Latin America, those are the markets where we're going to have a faster pace. That's why when you listen to Laurent, when you listen to us, really, we're not concerned about North America because in a way within a range is what we're expecting to have for North America. Then with respect to Barberini, we don't expect -- I mean, we do have a conversation going on with the U.S. FTC Authority. And for this year, we do not expect a material contribution of Barberini to our overall 2019 numbers for us, Luxottica.

[Antoine Belge, Global of Consumer and Retail Research]

Okay. Sorry, again, but I mean, the answer on the U.S. was -- I understand for Luxottica, but you saw 4 years ago in a strategic plan, Essilor, I think, mentioned there was a big distinction to be made between Europe on the one side and then the U.S. I think Europe was guided to be relatively flattish 0% to 1%, but then the U.S., especially in the capital market in the U.S., I think, the medium-term growth was more like around 3%, 4%. So I was wondering if that's still the case or this is all part of the business that the U.S. is structurally more under-penetrated and there is more potential than Europe?

[Laurent Vacherot, Deputy Chief Executive Officer of Essilor]

Yes, Antoine, you're totally right. And yes, this is still the kind of target we are shooting for in the U.S. So quite consistent with what Luxottica is saying. And it doesn't prevent -- we had a good surprise in Europe like you see at the moment, Europe performing very well, especially accelerated by the solid business in France and acceleration in the Eastern part of Europe, including Eastern Europe, Russia and Turkey. And no, nothing changed since the we -- since the plan to grow a little faster in the U.S. on the long term than in Europe.

[Operator]

The next question comes from the line of Julien Dormois from Exane BNP Paribas.

[Julien Dormois, Research Analyst]

I have 3. The first one related to the retail performance that Luxottica recorded in Europe, which was quite impressive with double-digit growth across most countries, if I understood correctly. I'm not an expert here yet, I'm afraid, so my question may sound a bit dumb, but I'm just wondering how you can deliver that kind of very strong growth in any given quarter like this? Is it mainly, I think, you mentioned weather and strong execution but are we talking about really a volume play or is it based also on the price mix? So any insight here would be very helpful. My second question relates to the Sun & Readers business. I just wanted to make sure that -- actually would like to have the like-for-like growth in this business in Q1? You reported 1.7% constant currency, but just curious whether there was an inorganic effect in that 1.7%? And the last question, and I'm going to play the devil's advocate here, but you mentioned in the release that in the U.S. you have felt the benefits already of the engagement alongside Luxottica. Why put that openly for the U.S. and not mention that for other regions? Is it just about the phasing and the integration process or...?

[Laurent Vacherot, Deputy Chief Executive Officer of Essilor]

Okay. There is a question on the retail in Europe, yes, this is fantastic growth and thank you for the comment. And maybe Stefano will add. Sun & Readers, maybe I will start like that because I think you refer to the Essilor or the southern regions number. So number one, it's on track. Number two, yes, there is a small effect of acquisition with this one [ click ] company we bought in -- last year in the U.S., which is delivering reading glasses through e-commerce online, and actually that owned the domain name for readers.com. So -- and without that, I think it will be close to 0 organic growth in the first quarter with very strong growth in China with Bolon and more mixed -- quite strong decrease planned at FGX because of anniversary of deal from last year comp, and also, the loss of the reader business [indiscernible] . All of that should come back to high single-digit growth for the full year, which means we should see the next quarter slight double-digit for the Sun & Readers division inside Essilor and that particularly is under the control of Hilary, I will say, yes, yes and yes.

[Hilary Halper, Co]

That's correct.

[Laurent Vacherot, Deputy Chief Executive Officer of Essilor]

Okay. And what -- the retail in Europe.

[Stefano Grassi, Co]

Yes, retail in Europe actually is a very solid story. I mean if we look at our comp sales in that region, it was up double digits. Now when we talk about the drivers, clearly volume was the primary driver of that. We also got some [ lessons ] from a pricing standpoint, a lot of new collections. Were very much appreciated by our consumer in several different countries. It is a widespread double-digit growth rate. I mean we look at Spain, we look at U.K., we look at France. Third, there is tailwinds in the weather conditions. I mean first quarter in Europe, the weather was very favorable. But again, I think we should never underestimate the amount of work that the GM [indiscernible] did to really improve and enhance the consumer experience in our stores. So the result of that is this double-digit growth. Now if you ask me do you plan, or do you foresee a 20% growth rate in the remaining part of the year? Probably not. I think we need to see how the weather is going to help. I can tell you that you're not going to have anything less than the commitment and the strong execution that was seen during the first quarter. Now we're getting obviously in the high season. And if we get the support of Sun, and in many parts of Europe, I think, you have seen a very much commitment dedicated to deliver a strong results in the second and the third quarter as well.

[Laurent Vacherot, Deputy Chief Executive Officer of Essilor]

So your last part of the question, Julien, about synergy, it's a little bit unfair to say it's only in the U.S. We have -- we have work streams working together in the world, and we didn't mention R&D and innovation, we didn't mention in-sourcing, we didn't mention a lot of the different work streams everywhere in the world, in China, in Australia, in Europe obviously, in Latin America as well. For sure, U.S. is half of the group -- or more than half of the group. But more importantly, it's also the place in the world, the country in the world where we have all the assets necessary to really improve and function in the industry. We have significant managed care presence, we have significant retail presence, we have a significant wholesale lens and frame presence. We have connection with independent eyecare professionals in many different ways. We have the strong presence of Transitions. So we have brands, not only in the Luxottica brands for sure and some of the Essilor brands, and we are present in all segments. So this is where really we can build the case that we, at the same time create value for EssilorLuxottica and also accelerate the development of the industry for the benefit of all customers and consumers. So this is maybe the reason why I see we kind of focus maybe too much in the communication in the U.S. But obviously there is plans everywhere, in other regions as well.

[Julien Dormois, Research Analyst]

Okay. Very clear. If I could just have a quick follow-up here, coming back to the retail for Luxottica, could you just give a ballpark estimate of how much Europe represents in your retail organization? Is it like a 1/4 or 1/3 or any estimate would be very helpful?

[Stefano Grassi, Co]

Yes, I think, Julien, you also had a question around the contribution of the overall comp sales to the total number. So we look at retail, first of all, the 1.7% of comp sales, then you add on top of that the new space for stores, which accounts for about a percentage point, then the remainder part between comps and follow-up sales, very much driven by EyeMed, [indiscernible] and the Sears Optical. Now with respect to retail contribution -- I think, you look at our retail contribution that in Europe, represents about 9%.

[Julien Dormois, Research Analyst]

Of the retail sales, right?

[Stefano Grassi, Co]

Of the retail sales, yes.

[Operator]

The next question comes from the line of Delphine Le Louet from Societe Generale.

[Delphine Le Louet, Equity Analyst]

Sorry, but I find it very hard to come back and reconcile the figure for the U.S. So I'm going to ask more questions regarding the evolution of the mix and how should I look at the margin impact considering both the wholesale down, and also, the situation at Essilor? You had a very favorable Q1 both of you in the U.S. last year. So I'm very much surprised about seeing such a limited growth and I really want to have a source of how should I look at the margin and regarding the mix that you're evoking in the future in the U.S. region versus Europe, where effectively you have a very good growth. And so, can we expect a sort of a rebalancing in terms of margin between the 2 region at the group level? First question. Second question, regarding Transitions. Laurent, do you mean that what we've seen in Transitions and which was already the case that we have seen in Q4 last year, means that we probably lost between 1% and 1.5% organic growth in the U.S. due to this new launch to come later this year? Third question, with the e-commerce, which is a bit disappointing in my point of view with the mid-single digits or high-single digits, question is, is it enough now that you have been invested so much into these platforms and into the digitalization of the businesses? So can we have an eye on that? And third (sic) [fourth] question regarding Oakley. It's been years now that Oakley is underperforming, can we have a strategic view on what's the future for Oakley?

[Laurent Vacherot, Deputy Chief Executive Officer of Essilor]

Okay. So maybe, Delphine, I could start with the Transitions and the e-commerce and then we could go to Oakley and go and finish with the U.S. Transitions, there is 2 parts. As you know, in Transitions, there is a part which is the inside group company selling Transitions to the market, and it's doing pretty well in the first quarter, 5%, 6% growth, I guess. And then there is the outside group where we sell to competitors and some key accounts where there is a shift of generation that is prepared. And I'm sure you remember that each time there's a shift, there's a huge -- significant decrease in the buying from the third parties. So it is 1.5% or 2% this year, I don't know maybe we'll check during the call, but it's totally planned and normal what's happening with a big transition. On the e-commerce side, no, I think at least for the Essilor side, it's growing at double digit, it's growing even faster with the branded companies we have like Foster Grant, Coastal and Bolon. And it's quite -- growing quite fast for EyeBuyDirect in the U.S. and for CoolWinks in China -- in India, sorry. So no, we are on plan, and I think we monitor, marketing and investment to have, at the same time, double-digit growth around 15% and improving slightly profitability year-after-year. So we're quite pleased with where we are with the e-commerce capability. And what else? U.S.?

[Delphine Le Louet, Equity Analyst]

For Ray-Ban and Sunglass Hut.

[Stefano Grassi, Co]

Yes, I mean ray-ban.com in North America is actually up double-digit, so it -- obviously -- that is the primary market for North America. So no issue to report over there at all. Now the other question that I think you had was with respect to price/mix for the remainder part of the year in North America. Again, we experienced that in the first quarter, particularly in North America. Remember that we have been going through several quarters, almost a couple of years in which the primary driver of our growth was very much, on the Luxottica side, was very much price mix. I mean if you look at our 2017 and 2018, pretty much every quarter price mix was a material [ pile up in our ] number. So now we are kind of more stabilizing the product mix factor during the course of the first quarter. I do expect that to improve progressively through the remainder part of the year in North America. But again, I don't necessarily have at this stage any source of concern because of the first quarter. Now the other question was with respect to Oakley. Well, I mean, if we look at our Oakley performance, we're already trending on the positive territory for the first quarter. Oakley Eyewear is positive in Q1, and so we're already working and doing a lot of progress throughout this brand. The awareness of the Oakley brand in North America is increased. We know we need to do a lot of work to increase their awareness outside the United States. I think there's a lot of testimonial engagement at this stage with the Oakley team. We've done a lot of work with the testimonials on the [ eyewear ] side. And it's the first time, actually, that we do have at the Oakley brand, an NFL testimonial on this brand, and I mean there's going to be more news to come. I mean obviously we won't be able to give you further disclosure at this stage, but you can expect a lot of news in terms of marketing, PR, communication and top of that, our products, which have always been very outstanding, have always been very much appreciated by our consumer and our clients during the Luxottica days. So again, there's a lot of work that needs to be down there, but if I already look at our performance, first quarter 2019 in Oakley, we are in positive territory for our eyewear.

[Laurent Vacherot, Deputy Chief Executive Officer of Essilor]

And on the U.S. maybe on the Essilor side, there seems -- I think Hilary mentioned that the performance -- the total performance of the U.S. overall has been affected by the transition that we mentioned. It's almost 0.5 point. And also the strategic situation planned on the Sun & Readers, which was 1.6 points. I want to comment on the Transitions part because actually, overall, with all the effort that the team Transitions team and Essilor team worldwide they tried in the last 18 months, we see more and more renewed interest from third-party to support the brand. And I believe it will be more and more like that when you see that now we have totally new product -- new range of products, younger with styles, new colors and so on. We have this new product that will be really the best photochromic lenses in the world for a long period of time, the Gen 8 are coming early in July in the U.S. And all the buzz and the positive buzz that happened with the contact lens photochromic OASYS ACUVUE (sic) [ACUVUE OASYS] by Transitions, which J&J is launching, which is not really a business of Essilor, but created a lot of visibility about the brand, about the importance of light management and so on. I think we are off to renewed interest from many, many third parties, including some competitors that are willing to support that brand now better than it was in the last few years.

[Operator]

The next question comes from the line of James Grzinic from Jefferies.

[James Robert Grzinic, Equity Analyst]

I had 2 very quick ones, really. First one is, if I look at M&A, it looks like you've accounted for about 0.6% of that group Q1 sales growth. So when I considered your target for the year, the 3.5% to 5%, how much of that is underpinned by M&A? And secondly, and just reverting back to the U.S. and Hilary, I think you referenced a rather soft market in your prepared remarks when talking about the U.S., can you perhaps expand on that?

[Laurent Vacherot, Deputy Chief Executive Officer of Essilor]

So Hilary, there's a question on M&A and I will do [ see ] M&A.

[Hilary Halper, Co]

Yes.

[Laurent Vacherot, Deputy Chief Executive Officer of Essilor]

And then could you repeat the second part of your question on the U.S.?

[James Robert Grzinic, Equity Analyst]

Yes, I've written down here that in the prepped remarks, Hilary was talking about a rather soft market in the U.S., so was just wondering whether you can add more details to that?

[Hilary Halper, Co]

Sure. Let me start off by the M&A question. So I think as most people are aware, our M&A over the past couple of years has been quite moderate obviously with respect to the ongoing antitrust process. And so there is a robust pipeline that's been put on hold, that's now been fully reaccelerated, and we've seen that reacceleration start to come through in the first quarter of 2019, and we continue to believe that it will continue to reaccelerate over the course of the year. And so, yes, there will be an acceleration in M&A-led growth coming through in 2019.

[James Robert Grzinic, Equity Analyst]

Can you perhaps give a little bit more context on that? I'm just wondering because I presume it's going to accelerate quite significantly from a starting point of 0.6. I was just wondering whether you're thinking it's going to be 100 basis points, 200 basis points, a multiple of what we've seen in Q1?

[Hilary Halper, Co]

So I mean, I think that we're not going to be so prescriptive to give a exact number, but we will see acceleration coming through on the back half of the year, so certainly above the 60 basis points that we've seen for Q1.

[Operator]

The next question comes from the line of Domenico Ghilotti from Equita.

[Domenico Ghilotti, Analyst]

Just one question left, and it's related to LensCrafters and in particular so you had a good performance in comp sales in Q1, I wonder if you can provide some color in terms of traffic conversion and if you think the performance is sustainable given the tougher comps that you are facing in the next quarter?

[Stefano Grassi, Co]

I think when we look at our fundamentals of LensCrafters drivers for the first quarter, definitely, there was an improvement in conversion during the first quarter. Traffic was on a slight decline compared to last year. But we did a very good job on our retail execution, improving conversion back to my comment before. The other important driver was price mix, especially on the lens side. We also look at the attachment rate of our Oakley Authentic and Ray-Ban Authentic lenses and they materially improved quarter-after-quarter. So those drivers, I believe, are going to continue in the remainder parts of the year. We acknowledge that the comp base will actually, probably be tougher as we progress throughout the year, but I think, the fundamentals, which is what we're talking about here, price mix thanks to improved attachment rate and penetration of premium lenses. If the fundamentals on conversion rates continue as we continue to see, we do expect that momentum to continue even when we have challenging comps. Clearly, we acknowledge the fact that as we progress throughout the year, especially in the second half of the year, comp sales become tougher. But again, the fundamentals now in LensCrafters are much more solid than all the conversations that we had in prior years.

[Laurent Vacherot, Deputy Chief Executive Officer of Essilor]

Okay. I think we have a last question to take, please.

[Operator]

I guess the last question is from the line of Ed Ridley-Day from Redburn.

[Edward Nicholas Ridley-Day]

Yes, just a quick -- a couple of clarifications. Just first of all, on North American like-for-like at Essilor, just backing out all your guidance on the quarter that would perhaps imply flat just like negative like-for-like in North America? Could you confirm or comment on that? Secondly, on FX at current rates, what would be your guidance on the full year FX effect for the group? And quickly a follow-up and thirdly, J&J on of the Transitions license, how should view the potential revenues for you from that agreement?

[Laurent Vacherot, Deputy Chief Executive Officer of Essilor]

Okay. So on the J&J partnership on ACUVUE OASYS with Transitions, our revenue will be relatively modest. What we do, we sell dyes that help those contact lenses to become economic and there is a certain threshold where we could have a royalty that will be real but it's maybe in 2020 or '21. I think the most important part is the visibility that launch of product the first contact lenses photochromic and [indiscernible] gives to the brand, and two, the light sensitivity and light management, which is very important from a consumer perspective. On the North America like-for-like, I think you -- yes, it's very low single-digit growth like-for-like for the first quarter, and again, as planned, or eventually better than planned. So then I think it's very difficult for us to answer because we don't have yet the capability to do it for the full year. So I bet -- I'm not the finance guy, so I bet it could be around positive -- be positive for the second part of the year 2%, 3% maybe kind of with the current rate we see today. It's just a bet from the management.

[Hilary Halper, Co]

Yes. We continue to see April trending better than the first quarter, but we really can't comment on the full year.

[Stefano Grassi, Co]

And again, if you do expect the dollar at current level, I mean tailwinds will come at least for the next couple of quarters. That is something we can reassure you on.

[Laurent Vacherot, Deputy Chief Executive Officer of Essilor]

So I think we have no more questions. So I thank you for your participation. I believe we have been able to convince you that the business is good for EssilorLuxottica that we foresee acceleration in the rest of the year and that integration is in progress and acquisition ramping up. And I think the next one we have, we wish to see all of you at the AGM in the 16th of May in 10 days from now, next week in Paris at the Maison de la Mutualité. And I hope you will have a great day and great rest of the week. Thank you.

[Operator]

That will conclude today's conference call. Thank you for your participation, and you may now disconnect your lines.