EssilorLuxottica Stock

Hello, everybody. This is Giorgio Iannella from the IR team. Thank you for joining EssilorLuxottica H1 2026 Results Management Call.

The Group Chairman and CEO, Francesco Milleri; the Deputy CEO, Paul du Saillant; and the CFO, Stefano Grassi, will walk you through the business and financial highlights of the period. After their presentations, there will be a 30-minute Q&A session.

[Operator Instructions] With that, I hand it over to Francesco.

Welcome back, everyone, and thank you for joining us today. I am pleased to reconnect with you to share the results of the first half of the year and give an update on the execution of our strategic vision as the group evolves at a speed that is completely new in our history.

First of all, I would like to say just a quick word on the financial performance of the first semester. Revenue growth at a constant currency remained extremely solid at 9.7%, fully aligned with our targets. This result was supported by the resilient performance of our core business of frame and lenses and by the exponential growth of our clinical platform and wearable category.

Adjusted operating profit progressed even faster at 15% alongside our investments in R&D, AI and medical capabilities, together with the strong development of our industrial and commercial footprint. Cash generation confirmed its strong trend, exceeding EUR 1 billion in the period.

Move to our strategy. We are taking a precise and ambitious direction. EssilorLuxottica is leveraging its unique platform, vertically integrated, fully omnichannel, leading insights and global footprint to move towards the new frontier of Oculomics based on eye-related biomarkers to offer medical services everywhere and at all levels. Entering as a main player in the whole health care market, bringing this new technology from laboratories to clinics and stores.

To understand what this means in practice, let me start from LensCrafters opening of its first vision and high health surgery center in Philadelphia. A fully integrated platform that bring comprehensive eye evaluations and surgical procedures under one roof, together with our unmatched portfolio of frames and lenses. This is the first step of a plan to build a system of surgical hubs based on our optical store network. A health care center like this will go far beyond high disease. A recent commentary that circulated widely in the U.S. predicts that in 5 years, the largest cardiovascular screening site in America will not be a hospital nor a primary clinic. It will be the LensCrafters banner and broader optical practice network.

This is not a speculative bet since the concept of Oculomics was established more than 400 peer-reviewed studies have validated the eye, as aprimary and reliable window into systemic health, making it today a recognized and increasingly adopted diagnostic approach across the scientific and medical community. A single 50-minute exam at one location, either of the group or of its partners, powered by Heidelberg High Resolution OCT, complemented by RetinAI's capability will be able to detect a wide span of disease like diabetes, cardiovascular issue and cognitive decline.

This is where our vision is going, complementing and supporting primary care, delivering prevention, early detection and predictive medicine where people already go. Our short-term ambition is to create a new layer in the health care system that will more efficiently connect patients and hospitals. Complementary to that, in order to strength trust, governance and accountability of our developing business model. We are building the foundation to manage data as a strategic asset, reliable, protected, compliant and usable across the group and geographies.

To expand these new medical services from the physical practice directly on the face of billions of people through wearable, we need a specific misses (sic) [ missing ] piece of technology. In order to achieve that, we started a strategic partnership with Applied Materials to jointly develop and manufacture the new generation of intelligent optical system for AI and AR wearable. This partnership is aimed at shaping the future of optics, ranging from waveguides to adaptive and electro-active lenses from prescription integration to advanced encapsulation, dimming and light modulation technologies.

The lens category itself will be redefined and our capability to master this new stack industrially at cost, at scale with ability to personalize will let us lead the future not only of smart glasses, but of the entire premium eyewear category. No other player in the world can combine comprehensive ophthalmic know-how and excellence with semiconductor-grade manufacturing capabilities. Our objective is to place EssilorLuxottica at the forefront of innovation in the next generation of lenses and the first products and pilot line are already being realized.

Regarding our hearing aid glasses, Nuance Audio is progressing along its discovery path, building awareness and adoption. The second generation will hit the market in mid-September with improvements in battery life, audio amplification, new feature and better design.

A final word on wearable and our partnership with Meta, which continues to deliver exponential growth. In H1, we further enriched the portfolio with Ray-Ban MetaOptics, our first optical style adjustable and perfectly fitting to be easily wore for the full day. Together with Meta, we also launched a new collection specifically designed to open the eyeglasses category to a broader, younger and price-sensitive audience. Together with Ray-Ban and Oakley as well as the display model, we now offer the most complete lineup of AI glasses in the market and more is to come. The category is scaling across geographies, brand, price points and consumer segment with higher profitability already visible in our numbers.

In conclusion, H1 2026 confirms that we are where we want to be with sales and profits growing. We remain confident in our ability to deliver in our financial ambition and our strategic vision. In less than 10 years, we deeply transformed our group from the best-in-class in frame and lenses to the pioneer of the wearable category and now into the high-med-tech Endoculomics health care leader.

With that, I hand over to Paul.

Thank you, Francesco. It is a pleasure to be with you today. The first 6 months of 2026 have been, in many ways, a period of consistent acceleration for our group in terms of strategy execution and financial performance.

Behind the numbers, Stefano will walk you through shortly what stands out to me is our team's unique ability to continuously execute across the board. Advancing the science, expanding the industry footprint and staying close to our patients and consumers. None of this happens with chance. It rests on assets and capabilities we have been building over decades, made up of an integrated production and lab network, a supply chain designed for both agility and resilience and a distribution model that spans wholesale, physical retail and e-commerce channels. These are the foundations that allow us to bring innovation to market at speed and scale, wherever our patients and consumers are worldwide.

At the heart of this delivery is our core business of eyecare and eyewear, which is a key driver of the group of resilient growth, both in revenue and profits. In ophthalmic lenses, our pipeline is rich. Over the recent quarters, we unveiled Crizal Natural Look, Varilux Immercia and Varilux Shift steps forward in the key fields of anti-reflective and progressive lenses to be rolled out across our trade channels. We also are having great product dynamic under Shamir and Nikon brand.

On the eyewear side, the last 6 months confirmed the enduring strength of the Ray-Ban brand in traditional glasses, supported by the successful rollout of the Ray-Ban Innovation Lab, new polarized ultra lens technology, the launch of the transition color touch capsule and continued momentum on the Wayfarer models and aviator shapes. Our new luxury eyewear collections were well received by our customers at the recent EssilorLuxottica Days with Miu Miu and Chanel at the forefront.

Beyond this solid base, I would like to focus on what I believe is the fil rouge of our story, turning science into human impact at scale through three deeply connected engines. Our portfolio of myopia management lens solution, our R&D capabilities and industrial platform and the go-to-market global reach, science, scale and access, one single continuum.

Let me start from myopia management, a field where we have further strengthened our leadership, keeping sales growth above 20% quarter after quarter, thanks to strong clinical evidence and a widening range of solutions across technologies, brand and price point. In the first half, we helped shape the next frontier of the field at flagship scientific events. At CCOI and APAO 2026 in Hong Kong, we broadened the conversation from slowing progression to prevention. And at ARVO 2026 in Denver, we presented the most comprehensive evidence-based, ever built around myopia spectacle lens, including a 7-year Chinese follow-up confirming Stellest sustained efficacy.

In the U.S., Stellest has already reached 11,000 doors across channels, progressively bringing the eye doctor community on board to prescribe it. And in June, we launched Stellest in Japan, another high prevalence market. While we continue to invest in R&D assets and capabilities in France and Italy, we complemented our global footprint with a new R&D hub in Lat Krabang, Thailand, a state-of-the-art 5,000 square meter center, located next to our major manufacturing facilities. This hub is bringing under one roof advanced material research, polymer chemistry, characterization and industrialization for next-generation lenses, wearables and medtech.

Another major decision we announced is the rollout of wearable production in Italy. Adding a new premium product category to the range assigned to our best-in-class Italian plant. This reinforces our leadership in AI glasses and paves the way for the launch of new made in Italy Smart eyewear.

Stefano will give you details on the excellent performance of our nearly 20,000 location retail network worldwide. I would just like to remind you that together with our leading wholesale presence, our brick-and-mortar global distribution platform is a key success factor in our omnichannel business model and a major driver of its evolution. As a part of that, in April, we took a major step acquiring a meaningful stake in Top Charoen, Thailand's largest optical retail chain with almost 2,000 stores across the country, an integrated eye care service model and a portfolio of well-known house and licensed banners. Founded in 1947, Top Charoen brings us closer to consumers in one of Asia's most important market, elevates vision care standards across the region and creates a natural runway to accelerate the wearable category in Southeast Asia.

Together with our Thai manufacturing footprint and the new R&D hub, Thailand is emerging as a fully integrated ecosystem. Last word on sustainability, which is a fundamental pillar of EssilorLuxottica journey. Our facilities are designed to the highest environmental standards, while our single-use plastic reduction efforts continue to progress well toward our 2030 targets as mirrored by our improved ranking like last year, CDP Climate A rating and DJSI recognition.

To conclude, EssilorLuxottica progress in H1 is centered on a unique combination of clinical science, integrated industrial scale and consumer reach. This is quite remarkable. As Francesco said, we are delivering on our long-term ambitions while redefining the boundaries of our industry.

With that, I hand it over to Stefano. Thank you.

Thank you, Paul, and hello, everyone. Welcome to our 2026 H1 results. We're wrapping up a strong first semester for EssilorLuxottica with revenue that are up 9.7% at constant currency and 5.7% at current exchange rate. The second quarter landed at 8.7% at constant and 7.2% at current exchange rate. Clearly, both second quarter and first half very much aligned with our medium-term guidance of solid revenue growth at constant currency.

Now if we take a bit of a closer look to our second quarter, we see that North America, EMEA, Latin America, they all deliver high single digit, while Asia Pacific posted a double-digit Q2 at constant currency. Our core business that just as a reminder, represent the entire EssilorLuxottica perimeter, excluding wearables, it's up mid-single digit during the course of Q2. Now last comment before we move into the geographies. As you might have seen, the gap between constant and current exchange results is reduced to 1.5 percentage point during the course of Q2 as the U.S. dollar devaluated against euro approximately 2.5% during the second quarter. So I'm knocking on the wood here, but at those currency levels, you might finally expect some currency tailwinds during the second half of this year.

But now as usual, let's move across the four regions, and let's begin with the largest one, North America. North America recorded during the course of the second quarter, a top line that was up 7.2% at constant currency. In Professional Solutions, we delivered a low single-digit revenue growth. And in the direct-to-consumer side, we delivered double-digit Q2.

When we look at our B2B, the independent ECP delivered a good quarter in acceleration versus Q1 with the Vision Source partnerships that was up mid-single digits, where our key accounts experienced a slowdown in Q2. But as usually, I remind everyone to really look at our B2B over a longer period of time, typically 6 months. And when you look at that, we have our key accounts that deliver high single digit for the first semester.

Moving to price/mix and volume. Price/mix was very much the main driver of our growth in the lens business and also in our frame business. Wearables recorded another outstanding quarter with the two new models of Ray-Ban Metaprescription that were up for an excellent start during the course of the second quarter.

Our luxury portfolio, Luxury delivered a high single-digit quarter, I would say, on the spotlight here, Miu Miu, Chanel and Jimmy Choo.

And now last touch on Stellest. Stellest is now ramping up with a distribution that is now available in about 11,000 doors in the United States. And I would say we have a very encouraging results during this first year of a very promising journey. But now let's switch to the other side of our distribution in North America.

Let's move to direct-to-consumer. We're clearly happy about the second quarter. LensCrafters delivered high single-digit comp sales, recording the 14th consecutive quarter of positive comp sales with traffic, conversion, volume and price/mix that all continue to trend in the proper and the right direction. I would also add this quarter the subscription plan. We're rolling that out in about 830 stores in LensCrafters in North America, and I believe this could be another important asset during the remainder part of this year and the future years.

On the sun part, Sunglass Hut delivered comp sales above 7% with Ray-Ban Metathat represents a strong driver, and we coupled that with a higher second pair penetration and I would say, a more diligent store execution, especially on discounts. Both our Sunglass Hut location, the international more exposed to international touristic traffic and the non-international Sunglass Hut location deliver high single-digit comp sales.

But now let's move to the second region on the pipe, Europe, 8% at constant currency. And I remind you, last year, we delivered 9% growth at constant currency in the EMEA region. So we're very pleased with the results and the delivery in the EMEA region with a high base. I would say direct-to-consumer, double-digit pace. Professional Solutions, low single-digit quarter. Italy, Turkey, Eastern Europe, they were all up double digit. U.K. and Scandinavia delivered a high single-digit Q2, while France was flat in this quarter.

When we look at our B2B, I mentioned during the first quarter, but I think it's important to be mentioned again, the switch event that was held in April in Monaco. It was the second event that we had this year for our B2B clients. It was an excellent opportunity to showcase to our wholesale partners, the innovation applied to Vision Care, artificial intelligence, med tech and wearable technology, a great success.

In Professional Solutions, we had a strong price/mix. I would say that price/mix was strong on both lenses and frames. On the frame side of our business, we posted a strong quarter in Ray-Ban Sun and Prescription. And the growth in this part of the business was very much driven by volume due to a strong demand across our distribution channels. The other key brands, Oakley was up double digit. While when I look at the licensing portfolio, luxury and premium fashion experienced a negative quarter in Q2. On the lens side now, low single-digit quarter. Here, we had a good traction, in particular on Eyezen, in Varilux and in Shamir.

Now let's move to the other side, direct-to-consumer. Our comp sales in direct-to-consumer were slightly below 10% with a material acceleration compared to the mid-single-digit comp sales that you might remember deliver in Q1. When we look at our optical retail side of our business, Vision Express was up double digit. Salmoiraghi & Viganò was up high single digit, while when we move to Germany, Apollo delivered a mid-single-digit quarter. I would say that in optical retail, price/mix was stronger than volume, and that was true for both lenses and frames. It's worth to mention that now the subscription model that, as I mentioned before, we're ramping up in LensCrafters and it's well established in the EMEA region is now close to 30% in terms of penetration of revenue, and that is approximately 6 percentage points higher than the same period of last year.

Let me close the journey in the region with the outstanding performance now of Sun Retail that very much delivered a double-digit comp sales on top of a double-digit sales in Q2 last year. On the spotlight Turkey and Italy that delivered double digit, our Iberia business was high single digit, while U.K. and France delivered a mid-single-digit quarter, outstanding. The eyeglasses and I would say a strong retail execution were very much the two main factors of those outstanding results.

Now the third country is the best performance (sic) [ performer ] for the second quarter, and that is Asia Pacific, 17% at constant currency. The second quarter in Asia Pacific was an outstanding quarter for the region that posted this double digit, also including the impact of Top Charoen in Thailand that was consolidated at the beginning of the second quarter, about 2,000 stores added in our store footprint in the region. But even excluding that, you will be looking at the Asia Pacific delivering a double-digit quarter. We were double digit in India. We were double digit in Japan. We were double digit in China, in Southeast Asia and Korea. Australia posted a mid-single-digit quarter.

So definitely many reasons to be happy about the performance in our Q2 in the Asia Pacific region. If we now deep dive a bit more in some of the key countries, the largest one in China. In China, Professional Solutions, one of the main growth drivers was the lens business that was up double digit, driven again by a strong quarter of myopia lenses. In particular, we continue to observe a strong demand, in particular, on the DOT technology. While on the frame side, I would probably mention our luxury portfolio that overall was up double digit in Q2.

Now a last touch on the direct-to-consumer segment. Optical comps were up mid-single digit with a good delivery of OPSM in Australia. While when you look at our Sun business, AI glasses continue to see a great appreciation from consumer, in particular in the markets that were recently opened like Singapore and Japan, while Sunglass Hut Australia was really the only country that recorded negative comp sales in a quarter that, as you know, it's in a low seasonality period.

Now the last region in the pipeline is Latin America. Latin America delivered 6.7%, a very consistent pace between Q1 and Q2. In Q1, we recorded 6.7% in constant currency. In the region, we had a double-digit growth on direct-to-consumer and a low single-digit quarter in our Professional Solution. When we look at our different countries in the region, Brazil, Mexico and Argentina, they were up mid-single digit, while Colombia and the rest of the Hispanic LatAm countries were up on the double-digit pace.

When you look at our B2B side, frame delivered a high single-digit quarter, very much driven by optical and wearable, and we continue to see a strong demand, in particular, on the two new countries that were recently opened, Brazil and Mexico, while consumer seems to really appreciate our MetaOakley and Ray-Ban Metaglasses. Closing on the direct to consumer, our Sun business delivered a double-digit quarter in acceleration versus Q1, very much driven by our Brazilian sun business that was up double digit. Thanks to the Oakley and Ray-Ban wearable, while the 1,600 optical retail stores that we have in the region posted a high single-digit comp sales. And as usual, the GV banners, in particular, the one that we have in Mexico and in Andes, delivered an outstanding second quarter. But now this is the end of our journey through the four key geography for EssilorLuxottica.

And let's now start a new chapter, and that is the profit and loss. I would say on the profit and loss that we delivered an outstanding first semester. The gross margin accretion was very important, and we delivered. We had a double-digit growth on the operating and net profit at constant currency. So let me share here few highlights for this first semester profit and loss. As I mentioned, gross profit up 10 basis points, both at constant and current exchange, and that is a material improvement compared to the 400-plus basis point dilution that we reported, if you remember, in the second half of last year. We had a strong price/mix. For sure, that was an important help. And we also have the net positive impact year-over-year from tariffs in the U.S., and those were really the two main driver of the gross profit accretion.

Our operating expenses as a percentage of revenues improved 80 basis points despite the investment that we continue to sustain to develop our MedTech platform and promote our innovation across the different brands. Bottom line, our operating profit was up 80 basis points at constant FX and 50 basis points at current exchange rate. When you look at our net profit, we recorded a 50 basis points improvement in constant and 20 basis points improvement at current exchange rate despite a higher cost of debt and a higher tax rate by 70 basis points, still delivering a double-digit growth at constant currency.

And let's now move to the last chapter of our journey here, and that is the free cash flow generation. Our free cash flow can be summarized in one number, EUR 1.067 billion free cash flow generation for the first half of 2026, the strongest one in the last 5 years for EssilorLuxottica, over EUR 100 million better than the free cash flow generation that we had last year.

Now before we hand it over to the operator, let me just close saying that we enter the second half of the year with a strong motivation and commitment to continue to deliver profitable growth. While we are fully aware that the comparison base in the second half is quite demanding, we're also confident that our innovation pipeline and the continued productivity improvements will support our momentum during the last 6 months of this year.

But now let me hand it over to the operator for the usual Q&A session.

Our first question comes from Oriana Cardani, Intesa Sanpaolo.

The first one regards to the profitability of the smart glasses in the first half of this year. You stated that wearable products improved the gross margin in the first half. Could you comment on the factors driving this increase and the extent of that expansion of gross margin for this category?

And my second question is on cost trends. How do you expect operating expenses to evolve in the second half of the year? Are you seeing any inflationary pressure?

So let me take both your questions. First one on smart glasses. Well, when I look at our smart glasses, I should say that all the KPIs with respect to smart glasses whether you're looking at top line revenues and costs are actually improving year-over-year. We're seeing an improvement in the average price. We're seeing an improvement in the higher penetration of our lenses, so the prescription part of our business. We're seeing an improvement in the penetration of transition. We're seeing an improvement in penetration of polarization lenses. And also from a cost point of view, we do see a better productivity in our smart glasses -- AI glasses in general. So very pleased with the result that we've seen. And clearly, all of that is result in what you see on the gross margin.

The second question regarding the inflation. No, I should say there's nothing that concerned me at this stage. I think everything is pretty much under control, and I think it would be like this also during the second half of this year.

Our next question comes from Julien Dormois, Jefferies.

I will limit myself to two. The first one is whether you guys could elaborate on the partnership with Meta. We have obviously seen the Metalaunching Metaglasses and starting with a different price points than what you have been advocating so far in your category. So just curious as to -- how we think about potentially diverging pathways between Metaand yourself in terms of the positioning of the glasses and whether that could possibly open up the floor to more partners going forward. And you're starting to work with other players in the tech industry.

And the second question relates to smart glasses. You indicated that the sales of smart glasses nearly doubled in the second quarter. And I think that probably means around 4 percentage points contribution to Q2 growth. So if we do the math here and because that was a 5 percentage point contribution in Q1, that would probably indicate that in absolute sales, Q2 sales of smart glasses were slightly lower than Q1 sales. So just curious how we should think about the phasing here, especially also in the context of a very tough comps on that side in the back half.

Julien, I'll try to answer to the first question. As usual, we look to manage a large portfolio, okay, go from luxury to mid- to low price of our eyewear. That is -- it will be also the case of the AI glasses. We started with our iconic brands, Oakley and Ray-Ban. We will launch in the future, other brands also in the high end of our pyramid. But at the same time, really, we look to expand our market, targeting a new consumer that have less -- more sensitivity to the price and maybe are younger, more interesting in having something technology. So it was a great idea to support the Metaglasses, so a tech brand that can easily targeting a segment of population that is so far not completely included on our offer.

Also on lower price, I'm not so -- I don't agree completely because if you look at the best selling that is the Oval one supported by famous ladies, that is quite at mid-high price and is going very well. So I believe that the Metapartnership is growing is working very well, is also now go behind the tech partnership and is helping us really to create a more differentiated portfolio with some brands, more tech for electronic consumer targeting, that can help the growth and establish more strong presence into the market.

About more partners, so far really is the -- our capability are totally on the Metapartnership. We are launching every few months new product, new feature. So we are so far very, very fine and happy about this partnership.

And I'll take the second part of the second question, Julien, with respect to the top line growth profile. I think in a way, it's very simple. So you're looking really the core traditional business trending on the upper part of the mid-single-digit range, and that includes the bolt-on M&A. And the complement of that to the 8.7% top line growth that we recorded in Q2 is very much represented by smart eyewear growth during Q2.

Our next question comes from Hugo Solvet, BNP Paribas.

I have two, please. First wondering if you guys are actively pursuing partnership or lenses supply agreement with other smart glasses manufacturers. That would be my first question.

And second, just a clarification. Did you receive any tariff refund in H1? And can you quantify that, please?

Thanks for the questions. I take the first and I consider a question about our partnership with Applied Materials. The partnership with Applied Materials is really a strategic one and is in the more wide concept that we have in the way we look at the market. As you know, we are manufacturer, producer, we are also suppliers of all other players in the optical market. And also, we are the big customers of almost all brands that operate in our market. This is a complex position, but is what is really make our company completely unique in the market. So now we -- when we understood that the future of the smart eyewear would be projection. We believe, especially for our focus on the medical part, projection will be really a key feature that will allow us to really play a main role on the future of health care.

So we started this partnership with Applied Materials to come out with a new class of lenses that are combining the capability to project monocular and binocular. The capability to really intercept true sensor, many information from the light outside and many other markers that we will help. So that is another pieces of our strategy, not just sell complete pair or frame of wearable, but also become a strategic supplier of a key component that any other manufacturer, producer or brands in the AI eyewear have to buy from us.

And I will complement Francesco's answer with the answer of your second question, Hugo. So tariffs, let me just frame the context here on what you have for the first half of this year compared to last year. So you have two effects coming into play. The first effect is the tariff payment and charge to the P&L that we have in the first quarter 2026. And those tariffs, we didn't have in the first quarter of last year. So there is clearly a headwind in that respect.

On the other side, the second effect is represented by the tariffs refunds. That got into the first half of 2026. The net impact of those two things is a net positive impact, which accounts 60 basis points in our profit and loss. And clearly, all of that effect is loaded on the gross margin side.

Our next question comes from Grace Smalley, Morgan Stanley.

The first one would just be a quick clarification, Stefano, on your comment on tariff and Understood on the net 60 basis points positive impact in H1, taking into account those two factors. Could you just help us clarify then what we should be expecting in terms of the impact from tariffs in the second half and whether you got the full refund in H1 and there's no further refund to come? Or just how we should think about that as we try to model the tariff impact, if any, in the second half of the year?

And then my second question, please, would just be on the top line. I understood your comments at the end of Q&A that, yes, you have a tougher comparison base, but then that you're also very confident in your product pipeline. So just as we're thinking about the second half revenue growth, how should we be thinking about maybe Professional Solutions versus DTC as I think Professional Solutions slowed a little bit in Q2. So if you could help us with any outlook on Professional Solutions in the second half, whereas DTC remained very strong in Q2 and whether or not we should see that continuing and whether that's what you've seen in July already?

So let me take the answer to both of your questions. So tariffs -- there might be something coming during the second half of this year. We'll keep you posted throughout the year on how things progress in that respect, but there is something more that might come in the second half.

Now the second question regarding top line. I mentioned it before, right? We fully acknowledged that we have a demanding top line, in top line base in the second half of last year. But I also think there's a couple of things that we need to take into the consideration. First of all, we started with a good month of July. We are happy about it. It's a nice entering into the third quarter. Secondly, I would say we have a lot of expectation. First of all, from an expected improvement in our Stellest productivity in North America. As I mentioned before, we have about 11,000 doors that have been opened. We activate the top and key accounts in North America. Those are largest accounts. Those represent thousands of doors in North America, and we do have an expectation of an improved productivity during the second half of this year.

On top of that, I would say that we have a pretty good and strong pipeline of product innovation that will hit the market during the second half of this year. I can't be too much specific here. But obviously, if you take, for example, some of our leading lens brands, for example, like Varilux, we'll have some exciting news that will come to the market during H2.

On our wearable, our AI glasses, -- we'll have some interesting newness coming to the market in H2. Nuance. Nuance will have a second generation, as mentioned before, coming up in the second quarter where efficacy and all the key features will improve compared to the existing version. And last but not least, some of our key assets on the MedTech space have some exciting news that will look at the second half as a go-to-market impact. So we have a lot of good reason to look at the second quarter with a good degree of optimism.

The next question comes from Hassan Al-Wakeel, Barclays.

Firstly, another question on the recent Metalaunch and how you see the mix transitioning over time and the extent to which this is a further margin headwind given some of these are lower price points and also not manufactured by you? And if you can confirm whether you're an exclusive lens manufacturer on these new launches?

Secondly, following up on costs. Thank you for the net tariff number. Is the gross tailwind of EUR 300 million in the right ballpark on the refund? And then I appreciate H2 may benefit from inventory and some hedging when it comes to cost inflation. But all else equal, how are you thinking about these as a headwind in 2027 given memory prices in particular and any mitigating actions that you're taking?

About the evolving of the launch of Metawith EssilorLuxottica, I would like to remind -- we are exclusive lens manufacturer for Meta, of course. But also without that, the partnership is so strong that is natural for us really support the Metabrand as it was an EssilorLuxottica home brand. So that is something that we are very happy about. Margin impacts for us are positive for many reasons. One, because we are selling that kind of product with a pretty good margin because -- and also because the platform, the technological platform that is almost the same with a bigger volume reduce its cost, that is impact on the margin.

So I believe that is another reason why we are -- we still continue to be very happy with Meta, with the Metabrand that discover a new part of the market not targeting right now with our product. I believe we have some other strong brand that maybe you can imagine on the apparel part, very exclusive that can open even a bigger segment of young population, and we will do that kind of move as soon as we can. Thank you.

And just complementing this other answer, with respect to cost dynamic. I don't see any issue here, honestly. I think we have our cost base well under control. Our planning, it's very accurate. And so I don't see, to be honest with you, headwinds that will impact our second half of this year in terms of costs. I still believe actually that we're going to see a pretty good margin progression also with respect to the second half of this year with respect to wearables. I think the trend that we've seen in the first half, the improved productivity, the mix trend that we've seen in the first half, I believe, should continue also during the second half of this year.

The addition of Meta Glasses to the portfolio of products is an enlargement of our product offering. It is a result of a segmentation. And if you think about it, now we have a wide price range that starts from $299. If you remember, that was the old pricing for the first generation of the partnership that we have. And now we have a precise positioning for those new Meta Glasses in there. But I believe, again, mix will play in our favor. Lenses are trending all in the right direction and July is confirming that trend. So again, don't see from where I sit right now, any source of concern with respect to cost inflation.

The next question comes from Veronika Dubajova, Citi.

I have two, please. One, I just want to touch back on the second quarter performance. And I think, Stefano, on the Q1 trading call, you talked about double-digit growth in April. Clearly, you've come below that for Q2. I'm just curious where have you seen areas of slowdown? And are there any regions where you're particularly concerned about the health of the consumer? Don't get me wrong, the 9% in Q2 is still very, very, very impressive. But I'm just trying to understand how that kind of growth evolved through the quarter?

And then my second question, I know we've touched a lot on smart glasses, but I'd love to ask about myopia and how you feel in particular, about the uptake in the U.S. and what your views are on -- or if you can give us an update, apologies, on what proportion of the myopia revenues are now coming from the U.S.

Veronika I'll take the first question, and then I'll pass Paul for the answer to the second one you just brought. So I mean, when I look at the performance, I mean, the difference between Q1, Q2 is not that material. If I probably have to really point it out to something we've seen a softer trend on some of the large accounts in North America B2B. But again, when I look at the performance over the 6 months period in North America Professional Solutions, we are high single digit, high single digit in North America. I don't think we should take that for granted, right? So again, sometimes, it's really a matter of timing and between sell-in and sellout. And therefore, when you look at over a period of 6 months, you have a much cleaner view of what the performance should look like. And I think the performance in North America in that respect over a 6 months period is extremely compelling.

Paul, you might want to take the second one.

Yes. Thank you, Veronika. So on myopia, myopia in the U.S., first, let me give you just two data points. In 2025, we had 22% growth of our myopia solution altogether worldwide with 80% of it coming from China. In the first half, we have 25% growth coming from myopia solution and China is 75% of it. So it means that we see an acceleration in two key geographies. One is Europe, which we started to go to market in Europe 5 years ago and where we have now some important position for this solution. And we have started the U.S. As you know, following the FDA approval in September last year, we have progressively embarked the doctor, the eye doctor community. We have, as it was set by us, established in 11,000 doors in the U.S. in the first half, this new prescription capability.

We have had very important event to embark the eye doctor community like Vision Source Exchange early May. We have had 40 roadshows with doctors city by city to really -- the first thing was to -- after getting the FDA to embark the eye doctor community because this is where all starts that they understand what it is about and they start to prescribe. So we are in this phase, and we see more and more traction coming in our own retail and also in key independent practice or key account.

So we will support that now also with some media in the second half, like Stefano was saying, really the second half, we will see the acceleration in the U.S. starting to really build up and we will stimulate the awareness with the parents, with the children. So when they go for their prescription like glasses for their children, they know about it. And then now the whole prescription acceleration will start to take place. So this is really what we are doing. And you see it's a fantastic journey that we are methodically country by country building and that is, as it was said, quarter after quarter growing north of 20%, which is quite now significant considering the size of it. So that would be my comment on your question, Veronika.

The next question comes from Thierry Cota, Bank of America.

I have two questions, please, which are pretty much follow-ups. First, on the tariffs, you highlighted that you may get some more refunds in the second half. I was wondering, now the tariffs are lower altogether. So maybe more structurally, what kind of benefit do you expect from lower tariffs starting in H2 and more visible next year at the gross margin level?

And secondly, you mentioned that on the cost side, you are reassured about H2. I was wondering with memory cost and the commitments for purchase next year, whether you would think that memory price inflation would have a negative impact on the gross margin of wearables? And would that offset the benefit from scale? Or do you think that this will be largely overwhelmed by growing scale and so that the margin of wearables next year should still be going up versus this year?

Let me take both of your questions. Second half tariffs this year compared to last year, yes, there is -- they are slightly lower, but I don't think it's materially lower this year than compared to last year.

Cost, I think the dynamic on cost, it's going to be a combination of a couple of things, continuous efficiency on the supply chain. There is a scale effect. And those two things coming together and couple that with a better mix in terms of average pricing will make the improvement in margin that I described with you before and that we expect to see for the second half of this year.

The last question comes from Domenico Ghilotti, Equita.

Two questions. The first is a follow-up on Applied Materials. Particularly, I would like to understand if the intellectual property will be yours will be shared with Applied. And if you can give us a sense of the timing required before hitting the market with some new products?

And second -- sorry, still on the profitability. So I'm trying to understand, is it fair to say because you have mentioned several tailwinds. So it's fair to say that excluding the tariff refund, we still see -- so we will see a recovery in profitability in gross profit in the second half. So it's fair to assume this kind of trajectory?

Domenico, on the Applied Materials of course, that the patents that we will use on developing new lenses will be shared. We believe that this partnership could evolve in much more than just a partnership for a project, it will become really a structural JV to really face the new demand that will be very strong and see us in a real unique position, combine the microprocessor capability and material treatment of Amat and the optical know-how and capability of logistics and distribution of EssilorLuxottica.

Products are very advanced. prototype are already visible. And we believe in a short and also some production line is already in place. So we will hope to have already at the beginning of the next year, something to sell on the market.

And the answer to the second question, Domenico, I think there are good reasons to see a good trajectory on gross margin also for the second half. As you know, I don't like to guide on quarters on the half, but I think the constituents that we see will continue to move, in my view, also in the right direction for the second half of the year. So I think when you look at our gross margin, there are good reasons to see it on a positive trend also for H2.

Okay. Thank you. I believe we are at the end of our call. I want to thank you all to follow us with this patience and attention. Also, I hope that in the next call at the end of the year or the beginning of the next, we will really start to talk about the new frontier of Oculomics surgery and the new vision that we have for the entire health care world that it will contribute a lot in the future to the revenues and profit of our company. Thank you very much.

Good morning and good afternoon, everybody. This is Giorgio Iannella from the IR team. Thank you for joining EssilorLuxottica Q1 Revenue Management Call. The group's CFO, Stefano Grassi, will walk you through the revenue performance of the first quarter of the year. After his presentation, there will be a 30-minute Q&A session. [Operator Instructions] With that, I hand it over to Stefano.

Hello, everyone, and welcome to our Q1 trading update. We closed 2025 with a double-digit year. The revenue for EssilorLuxottica last year grew 11.2% at constant currency for the full year. And we are now opening up Q1 2026 with another double-digit start.

The first quarter saw revenue up 10.8% at constant currency with a well balanced between professional solution and direct-to-consumer, both of them on a double-digit pace. Our regions show North America up 12.5% at constant currency, while EMEA, Asia Pacific and Latin America, they were all up on the high single digit in Q1.

Our growth profile was very much driven by our traditional business that posted mid-single-digit growth and coupled that on top by a strong demand of AI glasses with a product range to continue to expand sensory introduction of the new Ray-Ban Metaoptics, two models, in particular, Blayzer and Scriber that were specifically designed to enhance our prescription offer on AI glasses.

Those glasses together with few other innovations were all showcased at the SWITCH, The Vision, Innovation Summit that was organized for the first time ever in EssilorLuxottica history in the month of March in Orlando, Florida. And in the month of April in Monaco, hosting our Asian and EMEA clients and was very much the opportunity to showcase our products and innovation to thousands of clients that were actually coming over to experience at full at the best EssilorLuxottica.

If we now switch gear and talk for a second about foreign exchange, from an FX perspective, let me share that in Q1, we still experienced some currency headwinds. In particular, you might have seen that we have about 7 percentage points of difference between constant in current exchange results. And that was very much driven by the U.S. dollar that during the course of the first quarter, devaluated approximately 10% against euro in Q1. Now -- as usual, let's move to the four different regions. Let's start by the largest one, North America.

North America was up 12.5% in Q1. That represents the third consecutive quarter up double-digit pace with both segment Professional Solutions and Direct to Consumer that deliver another double-digit quarter. When we look at our professional solution, we experienced a strong growth with the Ray-Bans.

And Ray-Ban was very much on the spotlight for wearables, to triple the size during the course of Q1, but also on Ray-Ban Sun and Ray-Ban prescriptions, they both delivered double-digit growth during the course of Q1.

On the lens side, I would say that our growth on the [ lenses ] brand portfolio was solid, was strong. That was very much driven by Eyezen, by Varilux, Shamir and also Nikon. I would probably make a last comment on lenses with respect to Stellest.

During the course of Q1, we have about 6,000 doors that are daily dispensing Stellest lens in the U.S. And the Stellest lenses, the Myopia management lenses are gaining continuous traction, visibility and awareness in the optical industry. When we look at our two different distribution channels within the optical channel, I would say that our independents grew solidly during the course of Q1, in particular, the independents that are part of the Vision Source Alliance that delivered a high single-digit growth in the first quarter.

But also our key accounts grew in a high single-digit quarter. So overall, our two distribution channel within the optical division were very strong. Also, our e-commerce partners were solid at double-digit pace, while the last distribution channel, the department store were on the low single-digit territory. If we now move to direct-to-consumer, I must say the sun shined during the course of Q1 in North America for our Sunglass Hut business despite what I would say, weather conditions that were definitely not ideal in Q1.

We delivered double-digit comp sales in Q1 with January, February and March, all at double-digit pace. We had sixth consecutive quarter in Sunglass Hut of positive comp sales, and that's obviously extremely reassuring. We experienced a quarter, the first one with positive traffic in stores with both our international and domestic stores that delivered double-digit comps.

And last but not least, the growth profile was not only driven by AI-glasses, but we coupled that with a strong growth also on our traditional unlogical sunglasses. If we move for a second now to the optical part, let me say that we had another outstanding quarter at a high single-digit comp sales in LensCrafters. And that happened despite a tough comparison base as in Q1 last year, we delivered high single-digit growth in LensCrafters.

Price/mix, eye examination, they were all positive. And just a last comment on the fact that we built the first important milestone on our Med-Tech journey by opening the first surgical location in our LensCrafters stores in North America in Pennsylvania. And this, I can tell you, will be followed by a few other in the course of 2026.

So stay tuned for more news in that respect. Let's move now to EMEA. EMEA delivered 9.5% at constant currency. It is the 20th consecutive quarter of revenue growth in the region. Professional Solutions delivered a mid-single-digit quarter. Direct-to-consumer was up double digit. When we look at our different countries across the region, Italy, U.K., Turkey, Poland and Eastern Europe, they're all up double digit in Q1.

On the Professional Solutions side, price/mix was the primary driver on both frames and lenses, but also volume were positive in the two product categories. AI-glasses were a successful story in Q1 as we continue to expand our distribution, but at the same time, we continue to gain good productivity on the existing doors.

Taking a closer look at frames, I would say very pleased by Ray-Ban and but also very pleased by our luxury portfolio, in particular, thanks to Miu Miu that in Q1 shine in the EMEA region. On the lens side, Varilux and Transitions were both on the spotlight for a strong growth in Q1. Moving to the direct-to-consumer. I would say that in EMEA, we had another shining region for Sunglass Hut that delivered outstanding Q1 at double-digit pace with double digit in Iberia, in Italy and in Turkey.

The optical comps were up on a mid-single-digit territory for Q1. Vision Express was up double digit, and General Optic was low single-digit comp sales with negative traffic in the quarter. Now moving to Asia Pacific. We had a 9.8% growth at constant currency. We had a strong start in Asia Pacific in China, in India, in Southeast Asia. They were all double digit in Q1. When we look at our Professional Solutions side, in China, the full set of Myopia solution delivered an outstanding Q1 at double-digit pace.

While on the frame side, I would probably to mention two brands, one Bolon and the other is the overall luxury portfolio that was strong pretty much across the board with a growth that was in excess of 10%. In India, our Ray-Ban AI-glasses have already an important part in our growth profile of the country. And that's obviously very reassuring as we want to expand this product category in fast-growing markets and ideally to replicate the success story that we already have in very mature geographies like EMEA or North America.

If we now move quickly to the Direct-to-Consumer side. OPSM posted flat comps in Q1. I would say that tough comparison base and a hyster shift were very much the two main driver, while China and in particular, Mainland China delivered a double-digit comp sales. But now let's move to the last region in the pipe, and that is Latin America.

In Latin America, we had a first quarter a mid-single digit, 6.7% growth at constant currency, high single-digit growth in Professional Solutions, mid-single-digit growth in our Direct-to-Consumer. Let me give you just three highlights for the Latin America region. Country-wise, Mexico and Argentina, up double digit; Colombia, high single digit; Brazil, low single digit in Q1. The second important highlight pertain to our largest country, Brazil.

In Brazil, I would say we experienced a successful launch of Ray-Ban AI-glasses. You remember, in recent months, we introduced our AI-glasses in both Brazil and Mexico. In Brazil, the launch of AI-glasses were very much the opportunity to reengage our clients, in particular, our Oticarol franchisee. While on the lens side, we had a lens product category that was flattish in Q1.

I think we did pretty well in Q1 2025. So we had a pretty, I would say, strong comparison base last year. You remember in '25, Q1, we launched Transitions Gen S, which was a great success story in Brazil throughout 2025. On the Direct-to-Consumer side, happy to report a double-digit comps in Brazil, very much driven by Sunglass Hut and [indiscernible].

The third important part related to this region pertains to Hispanic Latin. We had a double-digit growth in Professional Solutions in Q1 all the key countries in the region on Hispanic LatAm, Mexico, Colombia, Argentina, they all delivered a double-digit pace in the quarter with a widespread positive trend across all product categories, frames and lenses.

While on the Direct-to-Consumer side, we had a high single-digit comp sales in GrandVision banners and low single digit in GMO. So that concludes our journey across the four geographies. And now let me hand it over to the operator for the usual Q&A session.

[Operator Instructions] Our first question comes from Oriana Cardani, Intesa Sanpaolo. Please go ahead.

Thank you for taking my two questions. The first one is about the growth trend of the quarter and current rate what has been the growth progression over the quarter? And what are you seeing in April in each region and for the group.

And my second question is on the revenue growth profile in the first quarter for the traditional business, you say it was up mid-single digit. Can you provide the split between volume, price effect and mix effect. Thank you very much.

Let me answer your two questions. I think the first part of your question was about the trend between Jan, Feb and March, I would say it was pretty consistent throughout the quarter. In April, we still haven't closed the month, but I would say ballpark aligned with the first quarter trend.

Your second question is around the profile of growth related to the traditional business. And I would say that probably price/mix was predominant versus volume, but volumes were positive, as I think I mentioned, both frames and lenses.

The next question comes from Hugo Solvet, BNP Paribas.

I have two, please. First, from the use case for smart glasses, did the recent release of the new Metal model triggered the change in adoption activation rate or use case. And second on the base business growth in the base business of mid-single digits. Can you share what's the revenue contribution from Stellest nuance, please?

So the first question is related to the new Meta model. Clearly, the new model have been launched in the month of April. So it's early to say. But let me give you an expectation just using common sense here.

Those are two models that have been specifically designed to be worn as a prescription glasses. So you might expect the de-penetration of prescription into the overall product assortment might increase. Just to give you an idea, and I think this is an interesting data point.

If we just look at the Ray-Ban Meta, which is obviously the most important product that we have. When we look at the revenue of the Ray-Ban Meta, the penetration of Varilux is in excess of 30% already. So it's pretty high.

And I believe those new models will further increase in our own brick-and-mortar store. That was what I was referring to, it was very much an addition to the penetration that we currently have.

The second question was the contribution from nuance in Stellest. So nuance, it's doing well, I would say. We are about 16,000 doors, on overall. The vast majority of those doors are on the B2B side of the business. I would say that we have an increased productivity when we do have a test performed in the stores, in particular, in our own stores and also on the B2B one.

So whenever we have test the adoption of nuance, it's exponentially higher. So that's obviously very reassuring. I think you will see some new products coming along 2026 in terms of innovation for nuance. And I think we'll talk about it more during the course of the second quarter, first half results.

Stellest, I think you're referring more probably to the United States. In China, you've seen the success story. In Europe, you've seen the success story, the growth that we continue to post. I would probably spend a bit more time on the U.S. I think in the U.S., it's a good story.

I think we're looking at already 6,000 doors. You remember we had 4,000 door ordering Stellest at the end of last year. In Q1, we're looking at 6,000 doors right now. I think there are really three priorities for now, continue to establish protocol with doctors. That is the first priority. Remember that Stellest is a journey. It's not just dispensing lens. It's a journey that will accompany kids from the young age 5, 6 years old up to 16, 17 years old.

So it's important that the protocol, it's well delivered to the patient, to the families. The second important thing is increasing awareness. Obviously, we are investing to make sure that more and more people, more and more family understand that Stellest exist that is the only lens that today is available in the U.S. market to manage Myopia to slow down materially progression of Myopia in young kids.

And the third important pillar is clearly distribution. Distribution is critical. I would say that between now and the second quarter -- early third quarter, we are going to be activating all the top accounts, all the top key accounts in the United States so that we have thousands of doors that will be activated in a ready to dispense Stellest between the second quarter and the second half of 2026.

The next question comes from Julien Dormois, Jefferies. Please go ahead.

The first one related to smart glasses. Just trying to do the math here. You mentioned that the traditional business has been growing at a mid-single-digit pace. And I would assume that M&A has contributed probably anywhere between 50 and 100 basis points. So is it fair to assume that smart glasses contributed in the mid-single-digit range to Q1 growth. So that would be the first question.

And also a housekeeping question on Stellest and more broadly on Myopia management. If I'm right, you previously mentioned that China accounted for roughly 90% of Myopia management sales. So you posted an impressive 26% growth in Q1 globally, and you precise that China was up 18%. So that will basically mean that ex-China sales have doubled in Q1 versus last year. So wondering whether my calculation is anywhere right and also whether this is only the effect of U.S. growth helping here?

Hello. So let me answer your questions. So with respect to the smart glasses growth in the first quarter, the mid-single-digit contribution in constant currency is correct. When we look at the overall contribution of China, that is the predominant one in terms of country. Overall, on the Myopia solution -- Myopia management solutions. What I can tell you is that it's around 30% of the overall revenues in China, and it's growing double digits during the course of the first quarter.

The next question comes from Hassan Al-Wakeel. Barclay.

A couple for me. Just firstly, on Stellest, having cleared key milestones previously that you've talked about. It would be great if you can talk about the commercial traction that you're seeing in the U.S. and then expectations over the short to medium term?

And then secondly, just on the conflict and what you're seeing in terms of both demand as well as inflation and whether you expect inflation across some of the key buckets to accelerate over the course of the year and how you intend to Meta get this.

All right. So let me take your two questions. The first one around Stellest. So I mentioned before the fact of what are our priorities, right, in terms of the development of Stellest in the United States. And again, the establishment of the protocol with doctors is critical. It's important the investments and awareness it's another important one and the distribution.

Today, we have an opportunity, which is very much size around the 50 million kids that today correct Myopia through single vision lenses in the vast major capital cases. The opportunity for us is to make sure that those kids are equipped with the products that improve the life, structurally improve their lives over the longer term.

And this is the message that we are conveying. This is what clinical study clearly prove after years of test done in China and other parts of the world. And this is the understanding that more and more doctors have in the United States. I believe it's a product that it's incredible. I believe it's a product that it's proven to be successful in other markets.

And I think it's just a matter of taking this to the next level. And I believe the team is fully committed to get there. And the second question you have is around the situation in the Middle East. So we don't see inflationary headwinds. Just to give you and put things in perspective, the Middle East accounts for less than 1% of our revenue base. And in the first quarter, closed flattish.

And that's obviously a very strong performance in the first two months of the quarter and obviously, a negative trend during the month of March as a result of the conflict that took place in the region.

I think we obviously give priority to our people, give priority to sustain our clients, and that's obviously what we're currently doing. We'll keep monitoring the situation. And obviously, we will be able to provide you more update as we progress throughout the quarter.

The next question comes from Veronica Dubajova, Citi.

I'm going to keep it to two as well, please. My first one is just if you can give us a little bit of a flavor for where you are in terms of your manufacturing not necessary for AI-glasses, I know you don't want to comment on capacity, but just maybe if you can characterize the constraints that you're seeing in the business.

Obviously, there's been a lot of discussion in the press about-- some of the models aren't available in certain regions. And so if you can give us some color on how much progress you've made in terms of expanding that capacity and where you stand even quantitative or qualitatively apologies that would be super helpful.

And then my second question is just following back up on Hassan's query about sort of longer-term inflationary impacts obviously we have now had elevated oil prices for a couple of months, that tends to be into other things like packaging and freight over time. And Stefano we were super successful mitigating that back in 2022, 2023 through price increases.

I'm just curious if you have any high-level thoughts on sort of how much there is in the world of consumer where you might be able to pass some of these input prices on to the extent that we are in a more persistent inflationary environment.

Let me take your two questions here. So the first one regarding manufacturing overall supply chain. We have the machine up and running. We have a service level that has been guaranteed. We don't see disruption in our supply chain.

Actually, the companies marching well. The service levels that we obviously continue to monitor that -- it's there. It's there for lenses, it's there for frames and it's satisfactory, I would say. Clearly, logistics had to be adapted and adjusted based on the turmoil that we've seen in the Middle East, but we had no consequence with respect to our manufacturing and distribution capacity.

One of the big plus of EssilorLuxottica and Veronika, you follow us for a long time, you know that we are very-- that very well is the fact that we have a very widespread network of laboratory, quite network of manufacturing capacity on frames, logistic centers.

So we are capable to eventually overcome challenges that we might see or face in certain parts. So that's obviously is very important. The second question you have is regarding the headwinds from inflationary situation that we -- that might raise potentially. We don't see it. I mean we have something on commodities, but it's a marginal part of our cost base.

And I don't think it's -- we can call out anything here that is material for us. You might remember the situation on 2022-2023 well. But you know that, that situation was structurally different. It was a widespread inflationary trend that hit the labor market primarily.

And our reaction in terms of price adjustment was very much the consequence of what happened on the -- especially on the labor market. That's very different from what we see today. So I would tend to make a distinction really from what happened 3 years ago and what is the situation today.

The next question comes from Domenico Ghilotti Equita.

Two questions on my side. First, I'm trying to get your thoughts on how we should look at the comparison for the second half because you will have a tough Q3 and even tougher Q4. I'm trying to understand if you have launches and new products, in new countries to cope with this kind of additional challenges or if we have to assume some kind of natural slowdown going into the second half.

And the second question, if you can share any thoughts at this point also on the margin side. I know it's a call on the sales, but any indication would be very helpful.

So two questions, probably one answer here. you're right, second half of 2026 comparison is tougher because last year, we grew around 14% in H2. And the first half was a 7% growth at constant currency.

So no doubt there is tougher. But the answer to your question with respect to top line and also profitability. It's really our guidance. It is the solid growth of our revenue at constant currency year-over-year and is the anchoring of that growth to the profitability, our adjusted operating profit that we expect broadly in line with that.

So that's really where we are, and that's where we are progressing to.

The next question comes from Thierry Cota, Bank of America.

Actually, they've been mostly asked, but one is left. On the growth of the wearables in Q1, can you give us an indication of price versus volume? The price of the new products in September has been much higher than a few months earlier. So what has been the scale of benefit from the higher prices of the products?

So the Price, it's helping also on wearable progressively. You're right, Thierry. That's a good point because we have seen progressively products being priced higher because of new features because directed and segmented for customers that needed specific features. And so we do see a higher contribution within the wearable category from price/mix.

Clearly, volume continues to be predominant. But just to give you an idea, you remember Ray-Ban story is priced at $2.99. Now we have a wide range of family that starts at $3.99 with Oakley Houston gets up to $3.79. I'm always talking about dollars here. For Ray-Ban Meta second generation. Then we have the new ones, the Blayzer and the Scriber priced at $4.99, and we go up to the $7.99 of Meta Ray-Ban display.

So the purpose and the goal that we have, it's very clear -- very clear. We want to enlarge the product range -- and we want to make sure that we properly segment our customers based on usage of the product, based on affordability, so purchasing power and based on features that they will require for one glasses versus another.

And that's obviously extremely important for us. Just to give you another data point, I think last year, we ended up with about 40 SKUs. Today, our product range is made of 11 models and 60, 6-0 SKUs, and we'll further increase that number in the upcoming months. So it's obviously very, very exciting news here.

With respect to the scale, I think we're still building up a category. That's very important for us, and we see continuous growth. I think you can clearly witness that from our growth profile. The mid-single-digit contribution from AI-glasses is there. And again, the higher is that contribution in the growth, the bigger is going to be the scale effect in terms of also margin.

The next question comes from Luca Solca Bernstein.

I would like to ask you a question -- two very different questions. One is on retail. We looked at the acquisition of this new retail sale in Thailand. Can you maybe give us a bit of more detail on how you frame the opportunity there. We saw that the penetration in Europe at GrandVision continue to increase.

And maybe you could update us on where you stand on both frames and lenses in this chain. But I wonder what the magnitude of this opportunity in Thailand could be and where you start in terms of EssilorLuxottica product penetration in that business?

A question instead on the new smart glasses category that you've been pioneering. There's a lot of imitators following you. There's technology companies following on your footsteps. We often get the questions on how exclusive the agreement you have with Meta is.

We are assuming that EssilorLuxottica could distribute third-party products -- third-party smart glasses, but may not engage at least for a certain amount of time with product and branding collaborations. But please correct me if I'm wrong in this assumption.

So let me take both your questions. So Top Charoen, it's a very important strategic acquisition for EssilorLuxottica. It's a B2B customers for us, an important -- in an important and strategic market that is Thailand with a very promising prescription market.

So we are taking that step into the Thailand market because we believe we could get the proper scale. We could use Top Charoen as an opportunity to showcase our products. Clearly, there are different variety of stores that are addressing different customers in the countries. And we believe that is a great opportunity for us in that respect.

The answer to your question on Top Charoen is the question on progression on integration. We don't talk any longer about the integration of GrandVision because now GrandVision is truly part of EssilorLuxottica. But let me say, the penetration of frames and lenses in GrandVision coming from EssilorLuxottica is now ranging anywhere between 85% to 90%.

So we are pretty much done. It's the end of a journey that has been done successfully. And now obviously, we continue to see good traction. We continue to see good performance, and we also have a good profitability that we achieved in GrandVision. So I would say a very successful story so far, which is not completed in a way because we continue to grow, to develop products, to launch products in GrandVision, and that's obviously very important and instrumental to elevate the consumer journey in our optical retail banner.

The second question, I think, pertains more to the relationship between EssilorLuxottica and Meta. And as we probably said a few times already, that relation encompass certain parts that are exclusivity from one side and the other side. I can't get into the detail of that exclusivity, but it's a very successful collaboration between two companies. The other thing that you have to bear in mind with respect to our own retail is that typically, the space that is made available in our own stores for third-party brands, it's anywhere between 5% to 10%.

So remember, if there is something entering into that space, there is something else that is going to go out, and that's really what you have to bear in mind. Then when we'll see new products coming into the market, we'll obviously make the proper assortment according to the desirability and the demand that we may see from the market itself.

So there are no more questions. I want to thank you, everyone, for the participation today and wish you a pleasant evening or a pleasant rest of the day. Thank you very much.

Good morning, and good afternoon, everybody. This is Giorgio Iannella from the IR team. Thank you for joining EssilorLuxottica Interim Results Management Call. The Group Chairman and CEO, Francesco Milleri; the Deputy CEO, Paul du Saillant; and the CFO, Stefano Grassi, will walk you through the business and financial highlights of the first half of the year. After their presentations, there will be a 30-minute Q&A session [Operator Instructions]. With that, I hand it over to Francesco.

Welcome back, everyone, and thank you for joining us today. I'm pleased to reconnect with you and to share where we stand with the execution of our new strategy, which is clearly driving the group business momentum. This is in line with our plans, and I believe it will become more and more visible in the near future as the new projects, products and medical services will translate directly into numbers. 2025 marked a year of sharp acceleration for EssilorLuxottica as we manage our deep transformation from a traditional optical company into a leading med-tech and data-driven group. This broader scope now better defines and makes clear our core business, strategic focus and investment priorities. The new ambition of our group is to shape the future of health and human performance.

This evolution represents the key engine behind our faster revenue growth and the driver of the positive progression of our profits. The strong increase of revenue in the fourth quarter reflects the solid performance of our overall business, further reinforced by our clear leadership in wearable and med-tech. We are confident that this trajectory will continue, confirming the strength of our vision and the excellence of our execution. Stefano will walk you through our financial performance later on. I would just like to highlight that we recorded revenue growth at constant currency above 18% in the fourth quarter and 11% in the full year. For the first time, we see a double digit in our history. With EUR 28.5 billion revenue in the full year, the adjusted operating profit reached EUR 4.5 billion after EUR 300 million headwind from U.S. tariffs and materially adverse exchange rates.

Solid operations are clearly shown by a strong free cash flow of EUR 2.8 billion, EUR 400 million higher than last year. At this stage, the new category we have created in AI glasses is at the heart of this journey. In 2025, we sold more than 7 million units of AI glasses, posting exponential growth, driven by the strength of our iconic brands, Ray-Ban and Oakley across all geographies and channels. This success of our wearable brands has been made possible by our unique logistics and distribution footprint. with 18,000 stores in retail and 300,000 partners in wholesale, forming the most powerful go-to-market platform for a product that is first and foremost, a vision care device. This view is further reinforced by rapidly growing attachment rates of prescription lenses and the already high penetration of photochromic lenses, which together are delivering a strong increase in daily usage and confirming the relevance of this category for all consumers.

Wearables are now becoming part of our normal life. As a testament to our capacity to roll out this new category and expand its scope, the recently launched Oakley Vanguard unlocks new use case across both sport and lifestyle. More is coming in terms of brands and futures with increasing levels of personalization, not only in daily and social life, but also in professional activities. Several projects are already underway with banks, consulting firms and health care institutions, opening up larger and sometimes unexpected market opportunities. AI glasses are not only the evolution of traditional eyewear. They are above all, a new digital platform that brings together vision correction, by sensors, audio, cameras and artificial intelligence into a single system. We are increasingly convinced that this category has the potential over time to replace the mobile phone as the primary personal computing interface in both personal and professional context.

In 2025, our plan has been focused on growth and scale. We are convinced that leadership and consistent market share in this strategic area are essential for the future of our Med-Tech vision. This acceleration require significant upfront investments in both OpEx and CapEx across R&D, operations, marketing and communications. As expected, these initial investments are reflected in our P&L, but still the group reached record earnings results. As our Med-Tech and wearables segments reach scale, we expect profit to accelerate and the operating margin to regain momentum for both EssilorLuxottica and the whole optical and Med-Tech industry. The future direction of the company is now set around a clear and well-executed strategy based on emerging field of Oculomics. This enables us to expand our scope from vision correction into medical support and the early detection of metabolic, neurological and cardiovascular conditions.

In line with this vision, our journey will continue to extend into advanced health technologies, predictive medicine, diagnostic instruments and clinical practices, including surgical applications. One of our most important achievements has been our ability to integrate in a truly holistic way, AI glasses as a consumer-facing evolution with a data-driven med-tech, health care and clinical business. You will see our M&A approach evolve with an increasing focus on start-ups in vertical medical AI, advanced diagnostics and support for clinical studies. At the same time, we will continue to improve and extend our logistics and distribution footprint through both internal and external growth across physical retail and e-commerce.

The convergency of these 2 dimensions, digital and physical, together with our strong medical reputation is what we believe makes our strategy truly unique and almost impossible to replicate. Finally, in hearing aid glasses, we continue to invest in a vertical application of our technology in the audio space, bringing in new customer segments and incremental revenues. We have high expectation for the launch of new products in the second half of this year, combined with our strategy to expand audio feature across our wearable through a subscription-based approach. In conclusion, we have closed a remarkable year and are starting the new one with strong confidence and clear plans to be at the forefront of the convergence of multiple sector and different industries into glasses. That is why EssilorLuxottica is taking leadership in the whole med-tech space.

Last word on our financial road map, why we confirm we are fully on track with our long-term outlook dating back to March 2022. Today, we are updating it, planning to deliver over the next 5 years, a solid and broadly aligned growth of revenues and operating profits. With that, I will now hand over to Paul. Thank you.

Thank you, Francesco, and hello, everyone. Happy to reconnect with you. As you have heard, in 2025, EssilorLuxottica took further decisive steps in its strategic journey and delivered solid financial results, driven by an ambitious vision, strong execution and a relentless focus on innovation. This performance is underpinned by our best-in-class manufacturing and logistics platform, our global and resilient supply chain and a unique omnichannel distribution model that enables us to scale innovation efficiently and consistently across markets. Today, I would like to take a step back and focus on what sits at the very core of our vision and strategy in the traditional business, which is the scientific ecosystem we are building around eye health.

Let me start from lens innovation and myopia management in particular, a field that we have been investing in for almost half a century and where we further strengthened our leadership in 2025. Stellest has become a global reference in myopia management, supported by robust long-term clinical evidence and is now worn by millions of children worldwide. Importantly, Stellest remains the first and only spectacle lens to have received FDA market authorization in the United States. This is a decisive recognition of myopia management as a medical treatment. In 2025, we took a major step forward with the launch in China of Stellest 2.0, our most advanced myopia management lens to date. We have maximized the lens power and aspiricity of the micro lenses based on our fundamental research at a neurobiological level, leading to almost 2x lower actual length growth after 12 months in Stellas 2.0 versus the previous generation.

This new generation is being rolled out in EMEA and will apply for authorization with the FDA. At the same time, we are moving earlier in the patient journey. With Stellest Plano solution, we are addressing children at risk of developing myopia based on clinical evidence showing that delaying onset can deliver long-term benefits comparable to years of slow progression. This marks a shift from management toward evidence-based prevention, a meaningful evolution. Our approach to myopia is deliberately multi-technology and multi-brand. Alongside Stellest, SightGlass Vision Dot technology commercialized under Nikon and Kodak in China continues to gain great traction, reinforcing our portfolio and offering eye care professionals a broader set of clinical validated solution across different price points.

As a result, in 2025, total revenue generated by our myopia management portfolio grew by 22%. Beyond myopia, innovation across our lens portfolio remains strong. In presbyopia, brands such as Varilux, Nikon and Shamir continue to introduce designs that combine optical precision, personalization and comfort, leveraging AI-driven modeling. Transition, extending light management benefit across prescription, plano and smart eyewear is increasingly becoming a standard feature in connected glasses. In frames, 2025 was a year of strong brand momentum and creative activation across our portfolio. On the licensing side, we renewed our long-term partnership with Burberry through 2035, reaffirming a collaboration rooted in craftsmanship and innovation, and we launched the first-ever collaboration between MIU MIU and Puyi Optical, demonstrating our ability to blend exclusivity, design excellence and retail leadership, particularly in Asia.

Across our proprietary brands, we further strengthened Ray-Ban's creative leadership by naming A$AP Rocky as its first ever creative director. We celebrated Oakley's 50th anniversary, and we are now seeing the brand gain exceptional global visibility through its presence at the Winter Olympic in Italy. At the core of all our initiatives is science. Last year, we formalized this commitment with the creation of our Scientific Advisory Committee, bringing together 5 world-class experts across physics, mathematics, ophthalmology, bioethics and neuroscience, including Nobel Price and Fields medal [indiscernible]. Their role is to challenge us, guide us and help us explore new frontiers from oculomics to AI and neuroscience, always with patient in mind in areas of human health where ethic matters as much as innovation.

We are reinforcing our ecosystem through open collaboration. Our partnership with the Politecnico di Milano continues to advance research at the intersection of optics, bioengineering and artificial intelligence, while the joint smart eyewear lab is shaping the future of connected vision devices. Our membership in the collaborative community on ophthalmic innovation allows us to contribute to global standards and consensus building across myopia, AI and data-driven ophthalmology. Through our collaboration with Chips-IT, we are also investing in application-specific semiconductor designed to enable the next generation of smart and medical eyewear. Finally, at our [indiscernible] R&D lab in Paris, teams are working at the frontier between vision science and neuroscience, exploring how visual signals are processed and transmitted by the brain.

This research is essential to deepen our understanding of perception and cognition and to unlock the next wave of optical and neuro adaptive solutions. Sustainability remains a fundamental pillar of our strategy, guided by a clear road map across climate, circularity, responsible operation and social impact. This year, our efforts were recognized by leading external benchmarks. We achieved an A rating for climate from CDP, placing EssilorLuxottica among [indiscernible] organizations. In parallel, our Standard & Poor's Global Corporate Sustainability Assessment score reached 66, securing the third position in our industry worldwide out of more than 250 assessed companies. To sum up, 2025 confirm that EssilorLuxottica growth is built on a unique combination of clinical science, technological depth and industrial scale.

From med-tech to neuroscience, from eyewear to eye health, we are not only innovating with our industry, we are redefining its boundaries. At the same time, with our new long-term outlook, we are looking at the next 5 years with solid ambitions on our financial delivery. With that, I will now hand over to Stefano. Thank you.

Thank you, Paul, and welcome to our full year 2025 earnings results. We closed another record year for EssilorLuxottica with revenue that grew 11% at constant currency, almost 2x faster than the 6% that we delivered in 2024. North America, EMEA and Asia Pacific, they were all up double digit, while Latin America delivered a high single-digit year. In an outstanding quarter like 2025, Q4 was actually the strongest one for all the year. Our top line was up 18.4% at constant currency, 12.1% at current exchange results. These numbers are even more remarkable in consideration of the fact that in Q4, Supreme and Heidelberg became full comparable as they were both included in 2024 and 2025. So fully comp for our reporting. In Q4, our North American business was up 24%. EMEA delivered 16% sales growth, while Asia Pacific was up 12%.

And the last, Latin America delivered 8% sales lift in the quarter. Last note on foreign exchange. For the third consecutive quarter, we had some headwinds, unfortunately, in our results with about 6 percentage points of difference between constant and current exchange results. As usual, the main driver for that is the U.S. dollar. They had a devaluation of approximately 8 percentage points year-over-year versus euro. At those currency level, you might still expect some currency headwinds during the course of 2026. But now as usual, let's take a closer look across the 4 different regions. In North America, we recorded a top line growth up 23.8% at constant currency. This result doubled the speed of growth that we had in North America during the course of the third quarter, where our revenue grew 12%.

But what I think is probably even more evident is the different speed between the first half in North America, there was a 5% growth at constant currency and the second half, where we recorded an 18% growth at constant currency. In our Professional Solutions, our B2B business, our independent channels, our key accounts, our department stores were all positive. While when we look at our sales on our e-commerce partners, over there, we have a negative territory for the revenue in Q4. When we look at our product category, frames were up triple digit, thanks to an outstanding performance of our AI glasses category, but also optical frame delivered solid growth in the quarter, while our lens business in Q4 was flattish.

When we look at our frame brands, Ray-Ban and Oakley were up triple digit. On the lens side of our business, we start seeing some good traction of Stellest, the first and only lens myopia solution FDA approval that is now available in the United States that is now getting orders in excess of 4,000 doors in North America. Last comment on price/mix, which I would say was strong in both lenses and frames. But now let's move to the direct-to-consumer. On the direct-to-consumer side in North America, our e-commerce business was just attached below double digit in the quarter, and our retail business delivered high single-digit comp sales for Q4. Sunglass Hut was up 9% and LensCrafters was up 7% in Q4. So I would say a very compelling story proposition for a direct-to-consumer business.

A quick highlight on LensCrafters. We're reporting another great quarter. We posted in Q4 the 2 single days with the highest revenue in LensCrafters history, and that happened during the insurance days at the end of December. Our lens mix continues to improve during the quarter. We have a higher penetration of transition. We have a successful adaptive progressive lens powered by Shamir across the all different LensCrafters stores in North America. All the fundamental KPIs like price mix, eye examination, traffic and conversion that were all trending in the right direction. Moving to the Sun banner, Sunglass Hut now. Q4 was simply the best quarter in 2025 despite a tough comparison base as last year, Q4 comp sales were actually the best in 2024. So best result on top of best result last year.

Our international and co- location performed, I would say, at a fairly even pace. AI glasses continue to represent a key driver of our growth with both Ray-Ban Meta and Oakley Meta that deliver an outstanding results. But before moving to EMEA, let me say that as we enter in 2026, our direct-to-consumer trend in North America is further accelerating. So we're just 1 month into the year, but obviously, we are up for a very promising start. Moving on to EMEA. EMEA delivered a 15.7% growth in Q4, the 19th consecutive quarter of growth in the EMEA region, the best quarter in 2025 for Professional Solutions, the best quarter in 2025 for direct-to-consumer with both segments that delivered a double-digit pace. In the region, Italy, Spain, U.K., Turkey, Eastern Europe and Middle East posted double-digit quarter at constant currency, while Scandinavia was up high single digit and France delivered a fourth quarter in a low single-digit territory.

When we look at our 2 distribution channels in Professional Solutions, our frame business delivered an outstanding quarter, thanks to the AI glasses and the optical business with a growth that was very much driven by volume and also price mix. We're happy with our luxury portfolio in the EMEA region. We had a mid-single-digit pace. I would put on the spotlight, CHANEL, Prada, MIU MIU. Now when we look at the lens side of the business, the other product category, we had a good performance of transition and Varilux and a double-digit growth on Stellest with a growth that was very much driven by volume on the lens side of the business. Now let's switch channel and let's look at our direct-to-consumer.

Comps were in the high single-digit territory for optical EMEA and double digit in the Sun part of our business in EMEA. Optical business, I would say that we are very much at the ending stage of the integration between the former GrandVision banners into the operating machine of EssilorLuxottica. And just to give you a flavor for that, approximately 85% penetration of the EssilorLuxottica product in our frame assortment and approximately 90% penetration of a lens assortment across the banners in the EMEA region. The subscription model is now available in about 19 countries and represents 22% of the optical revenue in the region, a couple of percentage points more than what we have in the fourth quarter of last year. Last but not least, there is another important asset, and that is represented by teleoptometry.

And just to give you an idea how important is this asset and how successful was this exit in 2025, let me share with you that we hit over 200,000 eye examinations performed through the teleoptometry in 2025. That number is up 40% versus 2024 eye examinations. Now if we move to Sun, fourth quarter was actually the best quarter for Sun in 2025, with U.K., Turkey, Italy all at double-digit pace. The top door in the EMEA region for Sun, you remember, those are the 50 largest ones that we have deliver a double-digit quarter. So whether you are in Dubai or you are in Paris, in Madrid rather than in Istanbul, Sunglass Hut more and more is the destination location for Sun in the EMEA region. And that clearly makes everyone in the Sun team in EssilorLuxottica extremely proud for that.

Now let's switch gears. Let's move to East in the Asia Pacific region. Top line up 11.6%. Another strong quarter in this region with India, Australia, Southeast Asia, all up on the double-digit pace. China and Japan were high single digit, while Korea delivered a mid-single-digit growth during the course of Q4. An important asset here is myopia. And the myopia category in China delivered another great quarter of double-digit growth with revenues that today in Greater China are about 27% of the total business. The demand continues to be strong. And I would say it's the demand that continues to be strong for all the different myopia solutions that range from Stellest up to the Kodak and Nikon that leverage the other technology, the DLT1.

When we look at our other category, frame business delivered a strong quarter, I would say, across pretty much all the regions with sales that were driven by volume, but also with price mix. Ray-Ban, Oakley, luxury portfolio, they were all up double digit during Q4. Now when we look at our direct-to-consumer channel, the other channel, I would say that we are very pleased with our key banners in Mainland China. Those banners delivered a double-digit growth pretty consistently throughout 2025 in every single quarter. The other leading optical banner in the region, OPSM, posted a low single-digit quarter in comp sales with the key metrics on premium lenses on transition, on myopia solution that were all improving versus the fourth quarter last year.

Now let's touch on the last region in the pipe, and that is obviously Latin America. In Latin America, we had a fourth quarter up 7.6%. That trend is an acceleration compared to the third quarter, where you remember, we delivered 5.2% top line growth. Both Professional Solutions and direct-to-consumer delivered high single-digit quarter. I would say we had pretty much a great quarter across the different country in the region. Brazil and Argentina were up double digit. Mexico, Colombia and the other Latin American country delivered a mid-single-digit quarter. In the Brazil, the largest country, we had a double-digit growth for our frame business and double digit in Oakley and in our luxury portfolio with price mix being very much the primary driver of our growth in the country.

When we look at our lens business in Brazil, we had a low single-digit quarter, but all the key assets, Transition, Varilux, Eisen, they all delivered positive growth in Q4. Last touch on Oticas Carol as usual. The 1,400 stores delivered a double-digit quarter. And I would say that in Oticas Carol, AI glasses are start becoming more and more important and very much instrumental to our growth and success story for those banners. Let's touch now to the direct-to-consumer region. In the direct-to-consumer region, the Sun banner was just a touch below double digit. Ray-Ban stores, Sunglass Hut stores and Oakley stores were very much the primary driver of our comp sales growth in Q4. While when we look at our optical side of the business, the largest GrandVision footprint, the one that we had in Mexico posted a high single-digit comp sales.

Now we are now concluding our journey across our 4 different regions. And now let's take a closer look to our profit and loss as usual. We will be looking at the full year profit and loss. And as usual, I will walk you through the key line items at constant currency, and I won't spend time on sales as we largely covered that before. So the first line item is the gross margin. Our gross margin is down 260 basis points in '25 versus 2024. And this is really the combination of 2 effects. On one side, you have the impact of tariffs. And here is the gap is largely in the second half versus the first half of the year as those tariffs impacted for 2 quarters in 2025, second half, while in the first half of the year, the impact was very much in the second quarter.

The second part, important part, is the percentage dilution coming from the AI glasses that in the second half of the year due to the higher contribution of AI glasses to our growth rate had a much stronger impact on our margin. I would say that on a full year basis, just to give you a broader picture, approximately 1/3 of the impact is due to -- on the gross margin is due to tariffs, while 2/3 of the impact is attributable to AI glasses. Now let's take a look a little bit of our OpEx. Our OpEx as a percentage of revenues are 170 basis points down versus 2024 levels. Here, you have on one side, the investment that we continue to do to support our new strategic initiatives. We talk about during the different regions, the performance on AI glasses.

Francesco and Paul explained our long-term strategy on med tech the development of the audiology business and those investments, the deployment of those initiatives across the different channels, across the different geography, clearly have an impact on our selling, marketing and also G&A. But at the same time, we are undertaking a deep exercise to relook at our organization, understand whether we have deployed all the people in the right spot, and we are working to realign our organization to our strategic priorities. So overall, you look at our operating profit as a percentage of revenue, that is down 70 basis points at constant FX and about 100 basis points at current exchange rate. Below the operating profit, our cost of debt as a result of a higher interest rate environment, it's higher versus last year.

Clearly, that is the primary driver for that. While on the tax rate, we have a slightly more favorable pretty much as a result of a different country mix. That leads to a total net profit for EssilorLuxottica full year '25, down 50 basis points at constant FX and 70 basis points at current exchange rate. Now the last chapter of this journey before the Q&A session is clearly an important one, and that is represented by our cash flow. I will start saying one number that I believe tells you all, EUR 2.796 billion of free cash flow generation during the course of 2025. This represents a record high free cash flow generation. Those figures were achieved despite the material headwinds from tariffs and the material headwind from currencies.

A last comment on our net debt-to-EBITDA ratio that is now at 1.7 at the end of 2025, clearly confirming our ability on one side to maintain a strong balance sheet and at the same time, to invest in all the strategic priorities for the group. But now as usual, let's leave the floor to the operator for the usual Q&A session.

[Operator Instructions] Our first question comes from Oriana Cardani, Intesa Sanpaolo.

The first one is on the evolution of wearables sales by channel. Considering the full year results, can you provide us with the channel mix for wearable net revenues and tell us if you expect different future trends between the 2 channels? And my second question is on the margin outlook for wearables. How do you expect operating -- OpEx, operating cost to evolve in this year, next year for the wearables? And at what level of production volume do you expect economies of scale to help improve margins?

I take the first question is channel. Is professional solution wholesale, it will be the one that really will give us the best chance to grow everywhere. Also, if we believe that the direct-to-consumer, special the physical network that we have, the 18,000 stores that we directly manage it will be really the crucial factor that it can really activate in the wholesale, the growth of our sales of the AI glasses. AI glasses now is something more common. It is still something different from the normal glasses. So has to be tested, tried, explained sometimes. So it's a outdated fact that we have this very high professional network has helped a lot in the speed of really how we enter in the market. And then the Professional Solution follow also imitating the strategy that we have in our retail stores.

So I believe that the mix will be much bigger on the wholesale because wholesale the number of doors are much bigger than our retail. But the sales -- the number of units for single door, it will be -- it will remain in the future, in the near future higher in our own retail where we can take care and we can better define the communication strategy that will help also the independent optician and also the consumer electronic to better understand how to sell eye glasses and wearable.

I'll take the second question you have for tonight. So margin outlook for the AI glasses. I think there's a couple of things that you need to take into consideration. On one side, we do expect consistently with what we have seen in the last couple of years, a price/mix going up as a result of product innovation. If you think about it, where we priced the original Ray-Ban stories at $2.99 and the evolution of pricing for Ray-Ban Metal now, it's obviously going exactly in that direction. And we believe that, that will happen again, driven by innovation as much as we have done with other parts of the business. Then there is a second part of the equation that is a cost. And I believe that the scale will have to get cost progressively lower throughout the time.

Our next question comes from Chiara Battistini, JPMorgan.

The first question is on the wearables and the rollout of further capacity and production. So I was wondering and also, we've seen some comments from Meta in the last few weeks, if you could give us an update on how to think about the expansion of capacity and also CapEx for 2026 on the back of potentially expanding capacity? And the second question, you've mentioned myopia management up 22%. I was wondering if you could give us an update on the size of myopia management in 2025? And how to think about the priorities for myopia management in 2026, especially given the new push in the U.S.

Chiara, I'll take the answer to the first question with respect to capacity evolution. Let me put it in a broader perspective here. I think we will have the capacity that is needed internally or externally to manage the demand that we will face in the coming years. And I think we are planning according to that in close partnership with Meta. Then the second question is on myopia, Paul.

Yes, I will take the second one. Thank you, Chiara. To give you a little bit of a reference, so the global myopia activity for the group, as it was said, has grown 22% globally. As you know, mainly today, this activity is in China and Europe. For China, just to have in mind, I think Stefano gave a data point, we have close to 30% of the full China activity that is myopia management based. So it's quite significant. The priority for '26 is quite simple, and I did refer to it in my little talking point. First is to continue to deploy the full solution that we have at work with hospitals and the government in China, namely Stellest, Stellest 1, Stellest 2 and the DOT technology, which gives us a full platform to address the different price points and needs. Second is to continue to roll out in Europe and introduce Stellest 2.0, which is the latest technology platform in Europe.

And of course, a huge focus of our American colleagues is following the FDA approval back in September that we obtained, we are now really in the full launching process of Stellest 1.0, the first platform as we prepare to file with FDA the Stellest 2.0 also. But right now, the focus is to establish with the doctors, with the optometrists, with the parents, this totally new solution in U.S., which is first ever available for the children. And we have already close to 4,000 doors that have been trained and equipped. And we, of course, are expanding the distribution to many more doors as we talk. So this is really the plan for us this year. It's a big priority for the teams. And it's a fantastic where also to connect to the med-tech strategy that was explained because this is taking us in the doctor and in the clinic in the high hospital space.

Our next question comes from Anne-Laure Bismuth, HSBC.

Congratulations on the very strong top line earnings. Just 2 questions. So first of all, I would like to come back on the production capacity because there were some headlines mentioning that you can -- there were some discussion to double the production capacity, so let's say, to reach EUR 20 million to EUR 30 million of production capacity in wearables this year. Is this -- is this assumption a number that we should take in consideration? Can you give us a bit more color on that? And the second question is still on the wearables. So the Meta Ray-Ban display. So the display is a big...

Okay. So I will -- I think we don't hear Anne, anymore. So I will take the first question on the capacity. I think you have to look at this question in a different angle. The company is well equipped with building and plans to follow the needs ramp-up as it comes. And you have to have in mind that we have a very modern plant in China, where we have actually a full new building that was realized in the last 18 months. We have also a very large campus. As you all know, we built in Thailand, where we have there, what I call advanced surface ready to be equipped. And as we need to follow the demand, we add production line, which we now have standardized. We know very well how to equip them. And also, we are connected when we need with a Vietnamese partner company to support. So we have an in-place capacity setup that can follow the demand. And I think this is the way to look at it more than anything.

The next question comes from Hassan Al-Wakeel, Barclays.

I have a couple, please. Firstly, if I can follow up on wearables. Your P&L and business is changing in a meaningful way as wearables become a larger share of your top line. Can you talk about the longer-term benefits from scale and better unit economics on the EBIT margin, but also gross margin from product bundling. Do you see a wearables margin over the medium term in line with the group? I ask given your long-term targets broadly imply flat margins? And then secondly, can you please quantify the tariff and meta dilution headwind in the second half as you helpfully provided in H1 and the work that you've been doing to offset tariff, how do you see this in 2026? And what was the FX impact at the margin last year?

I'll take on your question. So beginning with the AI glasses. So the longer-term benefit in operating leverage and I would say, price/mix improvement is fully reflected in our long-term guidance, the new one that we just shared. Clearly, in that guidance, you have -- we are anchoring revenue growth with operating profit. And that's obviously creating that pace of earnings throughout the time. I would say that, again, when you look at the price mix, it's evident. You look at the collections that we have displayed today between Ray-Ban Meta, between Vanguard, Meta Ray-Ban Display, they all have price points that are higher -- significantly higher than the original product that we marketed a few years back because there is a higher technological content and because all those features, which, by the way, have been extremely appreciated by consumer are clearly creating a positive effect on our products.

So remember, when you look at the ecosystem of our wearable AI glasses, you have to bear in mind there's always a couple of other add-ons, which obviously help top line, but also profitability. The first important part is the lenses. 20% of the AI glasses that we sell are equipped with prescription lenses. And that's obviously a margin lift that is quite material. The other important thing is represented by coatings with transition that typically 40% to 50% penetration in our AI glasses. So that's obviously something that helps. And that's pretty much the story for AI glasses. Again, you will see price/mix going up. You will have on a cost side scale that will help also on a cost management. And all of that is pretty much baked into our long-term guidance.

Our next question comes from Hugo Solvet, BNP Paribas.

Congratulations on the print. I'd like to give you a break on smart glasses and focus on the base business. Could you maybe discuss the performance of the non-smart glasses portfolio and whether you continue to see that halo effect that you highlighted in Q3? And would you expect that to continue? And going back to smart glasses, but keen to get your thoughts on how do you see competition unfolding given the recent nervousness in anticipation of upcoming competitive launches?

Hugo, no eyeglasses sun halo effect. I believe that we have to start really thinking to glasses, sunglasses or eyeglasses, not as a really different category. It's really an expansion of category for different functionality. So we now start to consider AI glasses or wearable really part of our normal portfolio. Then, of course, the -- as any big innovation, especially the Ray-Ban display, they will drive traffic into the store. And honestly, the conversion is very high when the product is available and when it's not available is really we convert in a different kind of sunglasses of eyeglasses. So of course, the halo effect is quite important. But I believe that is really a part of the game. We don't consider something special. It's something that will continue in the future.

This is the strategy of how we manage our portfolio. The same for competition, welcome competition on this new category because we are 2 years ahead of all others. We have the unique distribution platform, really almost impossible to be replicated in the short term, maybe also in the long term is not easy. And competition means more investment in the category. And since we lead the category, that means that for us is we expect an increasing share of the market. So both are good things, halo effect and competition are really welcome in our future. Thank you.

The next question comes from Veronika Dubajova, Citi.

Congratulations on a very impressive finish to the year and frankly, on a very impressive 2025. I will keep it to 2. I'm actually going to change it up a little bit and ask about Stellest and your ambitions in the U.S., Paul, I think based on the disclosure that you've given us, China is about a EUR 300 million or so revenue line for Stellest. How long do you think until we get to a similar number in the U.S.? And ultimately, how do you assess the potential in the U.S. market versus China? If you could talk about that, that would be super helpful. And then my second question is going back to wearables. And I was hoping maybe you can give us a little bit of a preview around what's in the pipeline for 2026. Obviously, I noted your comments around it sounds like Nuance Generation 2.0. But to the extent that you can maybe talk upon what what's planned on the sort of AI glasses front in terms of iterations in 2026, that would be helpful.

Yes. Thank you. So I will take your -- I'm sure I understand fully, and we also are trying to be reasonable in the ambition we can fix ourselves for the U.S. Let me give you just a few data points. In the U.S., you have 15 million children from the age of 5 to 17 that are corrected for their myopic vision. in China, this number, of course, is very much more than that. And in China, we have been able to see that myopia solution have been progressively deployed to 20% of those children that need -- that are corrected for myopia. So if you take that metric, which, of course, will take time, we have been in market really with those solutions for now 5, 6 years in China. But in the U.S., if you say that it could represent progressively 20% of the children that will embrace that technology, although Francesco will tell me every children have to be wearing Stellest.

And he's right because it's actually the duty to make it available to any children. But this is the kind of order of magnitude that we see in the U.S. And the most important, it's that it's our duty and the duty of the parents of the -- all the stakeholders to make it available to equip the children in the U.S. with this solution because it's a good solution. It's super efficient. But that is what we are talking about. And be sure that there is a huge focus on that to reach millions of children with this solution in the U.S.

About the wearable pipeline once -- and just one thing on Stellest U.S. ambition. We start to understand that longevity is start when you are young. So that is why we are pushing so hard on Stellest. Stellest can change the progression of your myopia that it will prevent early stage of many others ocular pathology. So we believe that there is also a netic approach that we have -- we need to have because a kid with Stellest really have a chance to have a better life in the future. And this is the first time that is that problem we have to deal with. It's like in the pharma industry, when you need to make available some drugs to everybody because this will affect the future of your life, not just correct something, is slow down the pathology.

That is really something that we are looking at, and we are reflecting how to really very well penetrated the market to give the information to doctors and to parents. For wearable pipeline and ones, of course, we believe that the portfolio has to grow very, very fast, as to touch different segments of our customers from luxury to more affordable eyeglasses and as to really have cover in a much better segmentation approach of female, male, kids, everyone that is -- can have interest in this new category. So it's not so easy like in analogic glasses to have a new product, but now the platform is very solid. We have more than one platform with different capability and features. And we are really focused on expanding our portfolio. The same for Nuance. We had a wonderful return on the first launch of Nuance.

People have to really understand that is totally different approach, having Nuance towards in canal traditional hearing aids. At the first try, you don't see immediately the big benefit that amplification in canal gave to the patient. But in the long term, really, we had a strong return. People is telling us that their life change, the capability to have a clear understanding and conversation in-house with the TV or outside in the noisy place improve a lot. So the new launch that we expected for the second part of the year, it will really expand the portfolio with something that we will see big improvement in amplification and in the power supply, the battery and many other features, including the capability to take phone call from our hearing aids out of Canal.

The next question comes from Thierry Cota, Bank of America.

First, on the guidance, so you get for an aligned growth of sales and EBIT over the coming 5 years. I was wondering whether you think this is going to be aligned more or less every year or whether we should still have a margin drop at EBIT level in 2026. And secondly, in Q3 or on Q3, you gave the contribution of AI glasses to the growth of the quarter on an organic basis. Could you give us the same amount, the same number for Q4, please?

Thierry, let me answer your 2 questions here. First question on the guidance. I mean, we gave and shared a long-term guidance. And when we do that, we clearly don't guide on a single year. Clearly, there are certain things that are evident in 2026 as far as we see today. We have the annualization of tariffs. As you know, in 2025, we had from the second quarter until the end of '25, the impact of tariffs. We will annualize that effect in 2026. FX, apparently, it doesn't look like it's going to be our friend for 2026 with the U.S. dollar-euro exchange rate at this level. And obviously, the other thing that we know is that AI glasses will represent an important constituents of our growth profile this year.

And we also know that the new initiative, the new assets that we recently deployed, Paul talked about the Stellest launch and deployment in the United States as the one and only solution to manage myopia as a lens. We know that the hearing aid will evolve throughout 2026. We know that the AR glasses family will expand in 2026. So all of those are constituents of this year. We have a checkpoint in the middle of the year where we'll see where we are in terms of trajectory. What I can tell you tonight is that already January started well. We are delivering a double-digit month in January. Clearly, is the lowest month in terms of contribution to the overall revenue. We have 11 months more to go, but it's a promising start for 2026.

The second question you had, Thierry, was around the contribution of AR glasses. I can tell you, I mean, I think it's pretty evident that the contribution of AR glasses to our revenue profile, it was bigger during the second half of the year, particularly in the fourth quarter, even more than in the third quarter. I -- again, I think it's a natural evolution of our expansion of distribution network, as mentioned before. There's also probably a little bit of a seasonality linked to the holiday season. But again, it's nothing that shouldn't surprise as we keep rolling out a product that is highly desirable in the market and is very successful on both direct-to-consumer as well as Professional solution.

The next question comes from Richard Felton, Goldman Sachs.

My first one is a follow-up on Veronika's question on Stellest in the U.S. I appreciate the comparison with China, but my understanding is that reimbursement is a little bit better in the U.S. So could you comment on current reimbursement coverage for Stellest and your expectations during 2026? And if that is reasonable to potentially drive higher penetration rates than you commented on in China? And my second question is on AI glasses. Are you able to provide any color on the acceleration in AI glasses in Q4 by product? So which products within the AI glasses portfolio were driving that acceleration in growth?

Reimbursement. So clearly, you're right, in the U.S., you have managed vision care programs and a very important, very positive news is that Stellest has already been put in the so-called formulary of VSP, which means that it is already very visible by all the eye care provider, the eye care professional as being a reimbursed product solution. So it's part of the installing this category, this product, this solution in the U.S. You are right, we are looking at every aspect that is going to make this, as Francesco and I said, a standard solution for children, for myopic children.

And I'll take the second question, Richard, with respect to eyeglasses. I have a hard time to honestly put on the spotlight a specific model for the fourth quarter because I think we had a successful rollout of the second generation of Ray-Ban Meta. We had an incredible, incredible curiosity and excitement around the launch of Vanguard and also the other product that we are selling during the end of the third quarter that is Houston. So -- and Meta Ray-Ban display, it's another product that attracted a lot of curiosity, a lot of interest. We have pretty much all the appointments booked in our stores to try on Meta Ray-Ban display booked throughout the end of the year. So all of them have been contributing to our successful story in the fourth quarter.

So thanks for following us also today. Really appreciate the patience that you show to our company and has been a really interesting question. I hope that next time, we will talk a little bit more about health care, predictive medicine and our investment in eye clinic and clinical study that is a part that will be really relevant for our future as eyeglasses are now. Thank you, and see you soon.

Good morning, and good afternoon, everybody. This is Giorgio Iannella from the IR team. Thank you for joining EssilorLuxottica Third Quarter Revenue Management Call. The Group CFO, Stefano Grassi, will walk you through the revenue performance of the last quarter. After his presentation, there will be a 30-minute Q&A session. [Operator Instructions]

With that, I hand it over to Stefano.

Good morning, and welcome to our third quarter revenue results. We couldn't imagine today a better start of the second half of this year for EssilorLuxottica, where our revenue posted a record high growth of 11.7% at constant currency, the best result ever for EssilorLuxottica. The 3 largest geographies delivered all double-digit growth with North America up 12.1%, with EMEA up 12.7%, with Asia Pacific up 10.5%. Latin America delivered mid-single-digit quarter with a top line up 5.2%.

Both our segment Professional Solution and Direct-to-Consumer deliver a double-digit quarter. As an additional info for today's call, the 2 acquisitions, Heidelberg and Supreme, accounts for about 2 percentage points in our sales growth.

The wearables products play a major role in our third quarter growth profile. We really now are building a brand-new category with unprecedented opportunities to develop products and services that are associated with our glasses that now, I would say, more than ever, should be imagined as a platform device. Just to give you an idea, our wearable category accounts for more than 4 percentage points in our growth profile at constant currency. And the exciting product pipeline that have been recently presented at the MetaConnect and that are about to hit the market, like the Oakley Vanguard, the Ray-Ban Meta second generation, the Meta Ray-Ban with an integrated display, I'm sure they will all further strengthen our leadership position in this key product category.

But now let me switch gear and talk about e-commerce. Our e-commerce business posted an outstanding quarter at a double-digit pace with all the main platform like Ray-Ban.com, Oakley.com, SunglassHut.com. they all deliver a double-digit sales growth. Our revenue growth profile, our current FX is affected by the devaluation of few currencies like the U.S. dollar, the Chinese renminbi, the Turkish lira and the Brazilian reais, which diluted our constant currency growth by about 5 percentage points, leading to a total growth at current change at 6.7% for Q3.

But now, as usual, let's begin our journey across the 4 different regions. And as per our tradition, let's begin with the largest one, North America. In North America, we had the third quarter at double-digit pace, 12.1%. We more than doubled the pace of growth that we deliver compared to what we had in the second quarter, where I remind you, we posted a top line up 5.5% at constant currency.

In the Professional Solution, our B2B division, our top line was up double digit. And Ray-Ban Meta clearly played a major growth driver in the B2B segment. Both our independents and key account posted a solid growth. And in those 2 distribution channel in North America, we were overall positive in Lenses and positive in frame. So I would say, a great momentum for our 2 optical channels in North America.

Now if we look at our 2 product categories, lenses and frames, on the lens side, our revenue were up low single digit, and the volume was really the main driver. I would say we were positive in a single vision business. We were positive on the progressive business. But now more than the performance on the lens, we are all very excited to really be the pioneers in myopia management in the United States. With our revolutionary lens Stellest that will be finally sold in the U.S. after we got the FDA approval. And EssilorLuxottica will be the first to offer this lens that will materially help kids to slow down myopia progression.

Let's touch on our frame business. Frame business was up on a double-digit pace with volume and price mix, both positive with Ray-Ban, that was double digit. And even when you exclude the impact of wearables, you would be looking at Ray-Ban that was up high single digits on Sun and was double digit up on the prescription business. So I would say that probably in Ray-Ban, we do have a sort of a halo effect coming from the excitement around the wearable products, that is also creating some benefits on the other part of the Ray-Ban business.

If we now move to the direct-to-consumer, I would say that we are extremely pleased with the third quarter outcome. As our comp sales were up 7% at -- on a comp basis, with LensCrafter that had the best quarter of the year with the comp sales in excess of 8%, and Sunglass Hut, the likewise posted the best quarter of 2025 with comp sales up around 8.5%.

I would say that for both of them, we had a strong fundamentals in terms of traffic, conversion, volume and price mix. And just to add a further perspective to this performance, I can say that the first few weeks of October show a further acceleration trend in both LensCrafter and Sunglass Hut. So very excited about the third quarter result, even more excited by the trajectory as we enter in the fourth quarter.

And now let's move to Europe. Europe was up 12.7%, material acceleration compared to the second quarter delivery of 9.1%. This represents the 18th consecutive quarter of revenue growth in the EMEA region and the best results since the first quarter of 2022.

Let me share with you a few highlights here. From a country standpoint, Italy, Germany, U.K., Turkey, Eastern Europe and Middle East, they all posted double-digit growth. When we look at our 2 distribution channels, both Professional Solutions B2B, direct-to-consumer, they were all up double digit. Our professional solution, key channels the independents, the large key accounts, our e-commerce partners were all positive. And when we look at our 2 product category, lenses and frames both positive.

On the lens side, I would say the price mix was the main driver. While when we look at our frame business, both volume and price/mix they were strong. When we look at our branded lens portfolio on the B2B side, we are very happy with the key brands, Varilux, Eyezen and Transition, they all deliver high single-digit growth and our myopia management lens, Stellest delivered a double-digit quarter.

Now let's move to the other distribution channel, the direct-to-consumer one for a minute, and let's talk about our 6,000 EMEA stores that in the third quarter, delivered the best quarter for 2025 with comp sales up 9.4% and both optical and sun banners delivered an even pace of growth during Q3. In Optical EMEA, we had double-digit comps in Italy, double-digit comps in Germany, in U.K., in Portugal, in Turkey, in Ukraine and a high single-digit comp sales in the Nordics. The subscription model, it's continuing to deliver outstanding growth is now representing 22% of our revenue in the optical business for EMEA, and it's about 3 percentage points higher than what it was in the third quarter of last year.

Let's now shift to Sun. We had a very tough comparison base on the Sun business in EMEA but we are pleased with a strong delivery in the third quarter. We had a strong demand for Sunglasses during the summer season with 2 out of the 3 months of Q3 deliver a double-digit pace. And so far, the fourth quarter is a double-digit quarter. So can't really wish anything better for our Sun business in the EMEA region.

Now let's move east, and let's touch Asia Pacific. A double-digit quarter, material acceleration compared to the 7.8% that we had in the second quarter for the Asia Pacific region. It's the best quarter so far in Asia Pacific. We had, from a country standpoint, China up on the high single digit. Southeast Asia, that was double digit. Korea that was double digit and Japan to deliver a double-digit quarter.

Just to share with you a bit of a highlight of what happened in the Asia Pacific region. In China, Stellest 2.0, the new generation of our myopia lens, progressively rolled out during the course of the third quarter. You remember, we launched at the beginning of July, and we're now prioritizing clinics, hospital and selected key accounts. And so far, I must say that the early readings are very reassuring because we are gaining a clear indication of strong productivity in the doors where Stellest 2.0 is actually sold.

The overall myopia solution category continues to gain traction in China and now represents 1/3 of our revenue in the country with the overall portfolio that is growing approximately 20% at constant currency during the course of the third quarter. The frame business, the frame product category were actually strong in the quarter for China. We delivered double-digit quarter, I would say the main driver for that was the luxury portfolio and the Oakley brand.

And now let me just give you a quick touch on the direct-to-consumer side. The optical stores in the region deliver a low single-digit comp sales. And I would say we had a soft Hong Kong business, while on the other side, Mainland China was up double digit and OPSM delivered a low single-digit quarter.

But now let me move to the last region in our journey, and that is Latin America. Latin America, as I mentioned at the beginning, was a mid-single-digit quarter with both channels deliver a mid-single-digit growth.

In Brazil, we had low single-digit Q3. Óticas Carol was a bit soft in Q3, I would say, primarily due to a timing difference that we have between last year and this year. In the presentation of the frame collection. I believe we should get most of it back in the fourth quarter. But outside Óticas Carol, the frame and the lens business were solid positive. The EssilorLuxottica days that were held in Brazil at the beginning of Q3. So a large engagement, I would say, probably an unprecedented engagement of our key clients and independents. And the payback was very evident in my view, when we look at our order intake on the key accounts.

If we look at now our other 2 countries, Argentina was up double digit. Volume was the main driver on the frame business and price/mix was really the main driver on the lens part of the business. Mexico, another key country in the region, delivered a mid-single-digit growth and kudos here to our direct-to-consumer part and in particular, to Sunglass Hut and GrandVision Mexico that were very much instrumental to our growth in Mexico.

But now let me hand it over to the operator for the Q&A session.

Our first question comes from Oriana Cardani, Intesa Sanpaolo.

The first one is on the significant acceleration seen in North America in Q3 compared to Q2. What greater contribution from the price/mix effect in Q3 compared to Q2, considering the repricing implemented in response to tariffs? And can you give us an idea of how much of the growth seen in North America is due to the growth of Meta glasses?

And my second question is on M&A policy. Is it possible to quantify the contribution to revenue growth expected for next year resulting from the consolidation of the acquisition already announced?

Let me answer your 2 questions here. North America, the impact of the price increase is not the primary driver of the overall growth in North America. Clearly, we do have a lift coming from that. But I think it's really a combination of different factors coming to play altogether. Clearly, there is a lift coming from Ray-Ban Meta wearables as a product category, I would say. There is an improvement on some fundamentals on the optical channels, meaning key accounts and independents. And that improvement is not only price, it's mix and it's also volume. That, I think, is important to be said, especially on the lens part of the business, especially on the key accounts.

So it is really a combination of different things. The contribution for -- from Ray-Ban Meta and wearable, as I mentioned before, is in excess of the 4 percentage point overall for the group. But again, the pleasing thing is that when we look at the underlying part of our business, even our core business show material improvement on the B2B and show a material improvement also on the direct-to-consumer side. I think you heard me saying before that both Sunglass Hut and LensCrafters, the 2 leading banners in North America delivered the best quarter of the year during the course of the third quarter.

And obviously, it's not part of your question, but I want to reemphasize that. We are entering into the fourth quarter with a further acceleration trajectory on our direct-to-consumer banner, which is obviously very encouraging.

The other question you had, Oriana, is regarding the acquisition of RetinAI. It's a bolt-on acquisition. So in that respect, you should see that acquisition that's been announced just yesterday.

The next question comes from Chiara Battistini, JPMorgan.

The first question I have is on wholesale and a very strong acceleration that was in Q3. I was wondering to what extent there is any timing of shipment sell-in that is impacting that acceleration? And to what extent is actually just a step-up in the growth profile as all of the innovation starts gaining weight also within that channel.

And the second question I have is on Stellest, in the U.S. after your approval, and you mentioned that you're going to be making it available in Q4, I was wondering if you can share some more color on how we should be thinking about the rollout and the ramp-up and maybe the opportunity in the U.S. as well, please.

So first question regarding Professional Solutions acceleration. I don't think there is any particular sell-in push here. It's a natural performance that we've seen, I would say, pretty consistently throughout the third quarter on the B2B side. And what I'd like to see is, obviously, that performance, especially in key accounts, on the large accounts that we have in North America being quite strong and being quite strong on frames, being quite strong on lenses. I also seen and observed a sequential improvement on our independents, our ECP. So that's obviously, I would say, extremely encouraging.

Meta, the innovation, Ray-Ban Meta play obviously an important role during the course of the third quarter. And you know that when we look at wearables, we should also think about the add-on that we have from a lens perspective. Just to give you an idea, when we sell Ray-Ban Meta in the direct-to-consumer channel, typically, we have a pretty high attachment rate of prescription. So prescription glasses are obviously a big percentage, 20% in penetration of our Ray-Ban Meta. When we sell wearables, we have typically 1/3 of anti-reflective lenses that are associated with that. So all of this help our trajectory in top line, help our mix, our price/mix overall.

The question on Stellest, we are clearly very happy -- [Technical Difficulty] appreciate we received just a matter a few days ago, the clearance from the FDA to commercialize Stellest in the United States. We are ready for that. So it's going to be really a matter of days as you're going to see, and we are ready for that on the B2B side. We are ready for that also in our stores where you will see visibility, where you will see people trained, where you will see very much an enthusiast because it's been a long journey for us, and we're now all very excited to properly roll out these lenses. And again, I want to reemphasize the fact that we are the first and so far the only one that can commercialize in the United States, a myopia management solution like Stellest.

The next question comes from Grace Smalley, Morgan Stanley.

My first question would just be on wearables. Given the very strong growth you are seeing in that category. Could you just give us an update on the scaling of your production capacity? And how you're thinking about wearable units evolving as we move into 2026?

And then just to come back on some of your comments there, given the very strong performance in Q3 and clearly, the positive comments on the exit rate and the current trading and given wearables typically lend themselves very strongly to gifting in Q4. But I guess, at the same time, you're also starting to annualize some of the contribution from Supreme and face a tougher underlying comparison base in Q4. So putting the pieces together, how are you thinking about the level of growth we should expect going forward relative to kind of the very strong double-digit growth you've just achieved in Q3?

Thank you, Grace. Let me answer both of your questions here. First one is capacity. I mean it's a question that in a way I was expecting, right, considering the performance that we've seen. We are ready for that. I think we have, in a way, the flexibility from 2 different angles, the geographical flexibility to fulfill the demand that is going to come in the coming months. And we also have the capability to do it in-house or outsource. And obviously, that is very important because we want to keep and retain that flexibility as we see this curve that will progressively ramp up. When we look at the exit from the third quarter, enter into the fourth quarter, I mentioned before.

You've seen that in many different parts of the organization, in many different business units, we do experience an acceleration in our trend. So obviously, the first month actually is not even finished the first month. We're actually a couple of weeks into the first month of the quarter. But obviously, if I have to judge, but what I see so far, I would say we look at this fourth quarter with a good degree of optimism, confident with the assets that we have in our pocket, confident with the fact that innovation will also play a major role into our fourth quarter trajectory.

And what I mean by that, it's obviously the progressive rollout of Stellest 2.0 in the fourth quarter in China. In 2026 in other countries. What I mean by that is the rollout of all the new products that have been recently presented at the MetaConnect: Vanguard, Meta, Ray-Ban Meta 2.0 and Meta Ray-Ban that I believe will play a role also in our fourth quarter profile. I also mean the impact and the contribution that we have as October 1 of Optegra. So we are adding a set of new clinics, 70 clinics across Europe that obviously represent a major important strategic pillar for our revenue growth profile and are developing in the med-tech space.

Our next question comes from Hassan Al-Wakeel, Barclays.

Firstly, maybe a follow-up on capacity. Are you able to talk roughly where you are in terms of volumes versus the 10 million? And how you're thinking about the need to ramp beyond the 10 million given some of the recent launches? And how should we think about the cadence of some of your future launches?

And then secondly, if I can ask on margins and how you view current consensus for the second half given, a, the stronger growth that is coming through, but also the mix of this growth and dilution for Meta as well as tariffs. Do you think that you could plausibly increase margins in 2026 if Meta grows in line with your expectations?

So let me answer both of your questions. The first one is the capacity on wearables. You rightly pointed out the 10 million capacity that we originally were planning to build by the end of 2026, seeing this further acceleration and with the flexibility that I described you before, we are in a position to anticipate that build up capacity before what we shared at the beginning. So it will come earlier at the end of 2026.

And again, we will couple that additional capacity also with our ability to deliver product innovation, not just at the end of this year but also in the following years. So you can further expect newness associated with our products in terms of wearable. And as you might heard and read on the news, obviously, there are speculation that other brands might come into the pipeline of wearables for EssilorLuxottica.

Your second question is regarding margins as much as you might appreciate that this is not a margin call, but it's a revenue call. But we shared, right, the fact that the wearable division, in absolute terms, it is a profitable business. And clearly, we benefited on that. It is a business where we do have, as I mentioned before, lenses, prescription lenses on 20% penetration, which I believe it's a very strong penetration in our own retail network, considering the certain part of our network only sales on glasses like Sunglass Hut. It's a business where we do have a high penetration of transition, where we do have a high penetration of polarized lenses.

So the overall ecosystem, overall ecosystem of wearable it's going to progressively bring not only revenue associated with the hardware, but also the revenue associated with lenses. And I believe over the longer run, the services, the most obvious and evident one, it's the premium AI will help to contribute and lift the margin furthermore for this product category.

The next question comes from Veronika Dubajova, Citi.

Congratulations on a really impressive quarter. Two questions for me, please. One, I appreciate you want to steer away from commenting on the size of the Smart Glass revenues. But if I just do some quick back of the envelope math, I guess, we're looking at sort of a third quarter revenue number that on my math would be north of EUR 300 million. Just curious if you can confirm whether I'm at least in the right ballpark? And whether there is any sort of stocking in this number given the high number of launches in the quarter? Or you think this is a good run rate as baseline, obviously, before we get to some of the more exciting contributions into the fourth quarter and into next year. So that's my first question, please.

And then the second question, just on the improved momentum in North America B2B business. Stefano, obviously, I know you've taken a number of actions there to improve your competitiveness, to improve the service. It's really good to start seeing those coming through. Do you think there is scope for that B2B business to accelerate also in the fourth quarter? Or is that acceleration you're seeing in Q4 really just a function or just present in the retail business?

Veronika, so first question on the Meta. I think I mentioned at the beginning that the contribution to our revenue growth profile is in excess of 4 percentage points. So the math over there, it's pretty easy. I mean, whether it is or it's not a good run rate for the fourth quarter, we'll see it. But clearly, we are seeing a quite material step change in our growth trajectory. And entering to the fourth quarter with the confidence that I described you before should give you a good idea where we're heading to.

Professional Solutions North America I think we -- again, we've seen some good indications in Professional Solutions in North America. And the positive thing is that it's coming across channels, 2 critical ones, in particular, the key accounts and independents. It's coming across lenses and frames. It's coming because we are also seeing a good traction on volume, in particular, on lenses. And we see a good balance between volume and price/mix. So all those things are still there from what we can observe in the first few weeks of the month of October. So again, you probably don't see us here, but you look at smiling phase around the table here, which, again, it gives you a good pulse, a good sense on how we are entering in the last quarter of this year.

The next question comes from Hugo Solvet, BNP Paribas Exane.

Congratulations on the print. I have 2. First on Smart Glasses. I understand the 20% share of prescription, 30% of transition. But overall, the penetration of proprietary lenses, if you could give us a number and how it has evolved since you first launched the Ray-Ban Meta that would be super helpful.

And second, could you give us a sense whether you've believe that a meaningful step-up in marketing investment will be required to fill further the growth of the Smart Glasses business?

So I want to make sure that I understand your questions. When we sell Meta, Ray-Ban Meta or Oakley Meta products, the lens is obviously our manufacturer for sunglasses within EssilorLuxottica when we produce our lenses are part of our manufacturing capacity on Rx. So that's part of our business, pretty much like any other pair of frames where we associate our lenses into that.

So -- and just to expand a bit on the commentary that you made at the beginning, the 30%, 1/3 is polarized, actually, the penetration of transition it's about 50%, 40% to 50% depending on the quarter. So that's really to give you a ballpark idea. So 20% prescription penetration on our own retail network, 1/3 penetration of polarized and 40% to 50% penetration of transition. Those are the key data that I would probably stick in my mind with respect to the lens dynamic.

I think the marketing expenses. I think it's a continuous interaction between EssilorLuxottica and Meta to make sure that we get the best ROI. I think this year, if you just step back and look at the amount of work that has been done on the brand and on this product category, I think we should all feel very, very pleased, very proud for the work that has been done.

I can tell you that looking at the marketing communication plan for 2026 that we're definitely going to have a lot of excitement for next year with a lot of visibility on wearables. And again, we are in the process of crystallizing the plan for next year, but there are some quite interesting, I would say, news on our marketing testimonials and visibility that we're going to give for our wearable products. And obviously, this will not only be Ray-Ban, but will be also Oakley that it's just joined the family of wearable products that are offered to our consumer.

The next question comes from Adrien Duverger, Goldman Sachs.

Congratulations on a great set of results. I have 2 questions, please. The first one is, could you please comment on your expectations for the timing of the next generation in terms of launches? And could you also comment on the trends with regard to average selling prices?

And the second question would be on the consumer feedback from Nuance. And also I remember last quarter, you commented that they had over 80% penetration of prescription lenses. Could you please update us on that figure, as I suppose Nuance continue to be available across more doors?

The question on next generation of Meta, EssilorLuxottica Meta wearable products. I think you've seen already that from a pricing standpoint, some of our products have a higher pricing because they encompass different additional features that we didn't see before. You've seen it very clearly whether you're looking at second generation of Ray-Ban Meta, whether you're looking at Vanguard, the latest Oakley Meta, that has been launched or you look at Meta Ray-Ban, which is obviously a much higher price point with revolutionary features, which I believe you haven't seen before.

So pricing will be very much driven by innovation and features that will be added. And obviously, on top of the hardware, there would be the services component that will progressively be added to the hardware platform.

Nuance. Just to give you a couple of data points here. We have over 12,000 doors open and available for selling Nuance worldwide. It's doing well. We are pleased with the buildup work that the team is doing to create this new category in a way of hearing aids device that look and feel like a normal frame. We are very pleased by the fact that the prescription penetration is pretty high. We are already commercializing Nuance in 6 countries. And I believe between now and the end of this year, we're probably going to be opening up other 5 to 6 countries. And that's obviously very encouraging because we keep hearing and people asking when can I get it, when it's going to be available in my country.

So a few other countries will come on board in the near future. And there is another interesting thing. We -- in the country where we have this information available, we do see typically that between 1/3 to 2/3 of the Nuance customers are new customers to hearing aids. So our people that never worn hearing aids before. And that's obviously very encouraging because it means that we are expanding the scope of hearing aids and we are reaching our people that would normally wouldn't wear hearing aids device because probably of the stigma.

And with that, obviously, Nuance doesn't carry a stigma. It's a highly effective product. And it's obviously very encouraging to see that statistics in some of the country where we have this information. Clearly, Nuance, similar to the other wearables, the one that we developed in partnership with Meta will see a product evolution, which I believe will come in 2026.

The next question comes from Domenico Ghilotti. Equita.

Two questions. The first is a quick follow-up on the wearable. Just to have the contribution in the first half, so we can appreciate the ramp-up coming from wearables in the third quarter.

And second is on myopia management. So it's a more, let's say, broad indication, if you can share your view on when do you expect this category in the U.S. to be, let's say, the size of China or whatever you want, but in terms of potential contribution over the medium term.

So first question on Meta. The contribution on wearable still in the first half of the year. In the third quarter, that contribution is higher than what we had in the first half. So we've seen an acceleration in terms of Ray-Ban Meta contribution.

The second question is around myopia. I don't know -- I mean I'm not good in sizing market here, right? But what I can tell you is that we are the pioneers for this product category in the United States. So I think this is probably the most important thing. We are the only one that today in the most important optical market in the world, are commercializing myopia solution that help kids to materially slow down myopia progression. And that is something unique, something that no one else has it today in the market.

And you know our power fire in visibility, you know our capability to invest in the strategic initiatives that EssilorLuxottica believe are critical. And I think we've been very deliberate in the past to say that myopia, Stellest, in particular, in North America was one important strategic initiative. So I believe this could be quite big. And now we'll see, I mean, as the revenue will come through and we can see already contribution as we close 2025. But again, stay tuned and obviously, we'll give you more update as soon as we close the year.

The last question comes from Julien Dormois, Jefferies.

The first one is actually a follow-up and sorry for coming back again on AI glasses. But you kindly indicated that you generated 4 percentage point contribution in the third quarter, so that makes roughly EUR 250 million. So just wondering whether you could confirm that it would probably represent approximately 700,000 to 800,000 pairs? So just to give a sense of what the unit base that we're talking about for AI glasses?

And the second question relates to the opportunities on the services side of things, and you commented on that a few times already tonight. But just wondering what exactly the levers are behind those services. And what is the revenue split between you and Meta on services? I think you fully consolidate the hardware part of things. But on the services side, how are the things are going to work going forward? That would super helpful.

So let me answer the first question. So the contribution is in excess of 4 percentage points. The math is not directly the one I think you did because you need to take into account that there is a mix between the 2 different channels, B2B and direct-to-consumer. And therefore, the pricing is obviously different depending on whether you're selling a B2B or you're selling on the direct-to-consumer side.

The services that will be associated with the wearable platform, I think some of the most obvious ones are related to the leverage of AI. But again, you're looking at over the longer run. And I think our CEO and Chairman has been very explicit more than once in saying that glasses will become a platform that will enable different functionalities on a day-to-day basis, will enable not only the support of artificial intelligence, but also medical checks progressively.

So we are just, first few steps into a journey that can materialize in a quite fascinating way. And we believe that glasses will be the future. Glasses will materially replace most of the functionalities that today we have embedded into our phones. And I think the Meta Ray-Ban really represents a further proof of concept of what we are able to do when you couple 2 companies that have a high degree of expertise in their respective area. But again, that is just the first step.

But over the longer run, you should think about services. You should think about the hardware associated with the frame and you should think about the lenses because that's the other thing. And the pleasing thing to me is that even Meta Ray-Ban is a product that also encompass prescription. So it's a proof of concept that we can showcase information on the lens, it's a proof of concept that we can do that associating prescription to that. So a lot of exciting things coming all together in our platform device.

All right. This was the last question for tonight. Thank you very much for joining us today and look forward to connecting with you for the full year 2025 results. Thanks a lot.