Luxury eyewear manufacturer and distributor Luxottica Group (NYSE: LUX) certainly has turned its eye towards profits. Despite the continuing erosion of the U.S. dollar against the Euro, Luxottica's July 26 2Q earnings report looks good. The only blind spot is Luxottica's inability to capitalize on its retail sector, particularly in the U.S. market. That is not to say Luxottica is not trying. The company has recently acquired 870 additional retail locations globally, and is aggressively establishing a retail presence in China and South Africa. In order to strengthen its brands in the U.S., Luxottica is unveiling a new line of eyewear products under a licensing agreement with Polo Ralph Lauren. Within the next several quarters, Luxottica intends to launch an ultra-luxury (obscenely overpriced?) eyewear brand named ILORI as part of a full luxury line. Perhaps the problem in its retail sector stems from Luxottica's inability to define precisely what type of eyewear distributor it is. While going after the vanity eyewear market of the uber-wealthy, Luxottica also owns LensCrafters and Sunglass Hut, the epitome of value-driven suburban mall retail demographics.

Despite problems in its retail sector, and being repreatedly hammered by exchange rate fluctuations, Luxottica continues to post good numbers. The company posted its ninth consecutive quarter of double-digit growth in its wholesale sector. In the most recent quarter, wholesale sales were up 17.5%. This gain follows 1Q 2007 wholesale gains of 20.4%. For the first half of 2007, wholesale sector operating income has increased 24.5%, which certainly helps to offset a 12% decline in retail operating income for the same period. Wholesale sales in emerging markets have increased by 50% during the previous quarter with so sign of a slowdown. On the basis of recent wholesale figures, Luxottica CEO Andrea Guerra raised FY guidance for growth in consolidated EPS to the 26-29% range, excluding the impact of exchange rate fluctuations, always a major concern to potential and current shareholders. For the first half of 2007, consolidated EPS stands at $0.83.

Luxottica stock is up over 15% from the beginning of the year, closing on 9 August at $35.50. Investors with a tolerance for currency volatility may wish to look into Luxottica.