Luxottica

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Luxottica Group S.p.A.
Type Società per azioni
Traded as BITLUX, NYSELUX
Industry Eyewear, fashion, luxury, manufacturing, retail, wholesale distribution
Founded Agordo, Italy, in 1961
Headquarters Milan, Italy
Area served Worldwide
Key people Leonardo Del Vecchio (Founder and Chairman), Enrico Cavatorta (co-CEO)
Products Sunglasses, spectacle frames, prescription frames
Services Opticians, optical retail, sun retail
Revenue €7,313 million (2013)[1]
Operating income €1,056 million (2013)[1]
Total assets €8,421 million (2012)[1]
Total equity €3,993 million (2012)[1]
Employees 70,307 (2012)[1]
Website luxottica.com

Luxottica Group S.p.A. is an Italian eyewear company. It is the world's largest eyewear company, controlling over 80% of the world's major eyewear brands.[2][3]

Its best known brands are Ray-Ban, Persol and Oakley. It also makes sunglasses and prescription frames for a multitude of designer brands such as Chanel and Prada, whose designs and trademarks are used under license. Luxottica also makes sunglasses branded Giorgio Armani, Burberry, Stella McCartney, Versace, Vogue, Miu Miu, Tory Burch, and Donna Karan.[4]

Its prime competitor is the Safilo Group S.p.A.

History[edit]

Luxottica headquarters in Milan

Leonardo Del Vecchio started the company in 1961,[5] in Agordo north of Belluno, Italy; today the company is headquartered in Milan.

Del Vecchio began his career as the apprentice to a tool and die maker in Milan, but decided to turn his metalworking skills to making spectacle parts. So in 1961, he moved to Agordo in the province of Belluno, which is home to most of the Italian eyewear industry.[6] The new company was Luxottica s.a.s., a limited partnership with Del Vecchio as one of the founding partners.[6] In 1967, he started selling complete eyeglass frames under the Luxottica brand, which proved successful enough that by 1971 he ended the contract manufacturing business.[7]

Convinced of the need for vertical integration, in 1974, he acquired Scarrone, a distribution company.[6] In 1981 the company set up its first international subsidiary, in Germany, the first in a rapid period of international expansion.[6] The first of many licensing deals with a designer was struck with Armani, in 1988.[8]

The company listed in New York in 1990,[9] and in Milan in December 2000,[10] joining the MIB-30 (now S&P/MIB) index in September 2003.[11] The listing raised money for the company and allowed it to use its shares to acquire other brands, starting with Italian brand Vogue in 1990, Persol and US Shoe Corporation (LensCrafters) in 1995, Ray-Ban in 1999 and Sunglass Hut, Inc. in 2001.[6] Luxottica later increased its presence in the retail sector by acquiring Sydney-based OPSM in 2003, Pearle Vision and Cole National in 2004.[12]

The company also acquired Oakley in a US$2.1 billion deal in November 2007,[13] and in August 2011 Erroca for €20 million.[14]

In March of 2014, it was announced that Luxottica would partner with Google on the development of Google Glass and its integration into Luxottica's eyewear.[15]

On the 1st September 2014, a new organizational structure was announced, composed of two co-CEOs, one focusing on market development and the other overseeing corporate functions. After the exit of former CEO Andrea Guerra, Enrico Cavatorta was appointed CEO of Corporate Function and Interim CEO of Market (until new and permanent appointment to this role).[16][17][18]

Brands[edit]

Persol sunglasses
Ray-Ban sunglasses

Luxottica's two main product offerings are sunglasses and prescription frames. The company operates in two sectors: manufacturing & wholesale distribution, and retail distribution.[19]

The house brands include:[20][21]

The company also makes eyewear under license for designer labels such as:[20][22]

The most recent deal was with Tory Burch. These brands are sold in the company's own shops, as well as to independent distributors such as department stores, duty-free shops, and opticians.

Retail[edit]

Luxottica Retail has more than 7,000 retail locations in the United States, South America, Canada, China, Australia, New Zealand, South Africa, Israel, the United Kingdom, and United Arab Emirates.[12] The headquarters of the retail division is in Mason, Ohio.[12] Their retail banners include:

Medical managed care[edit]

Luxottica also owns EyeMed Vision Care, a managed vision care organization in the United States.[25] As of 2012, it is the second largest vision benefits company in the United States.[26][27]

Criticism[edit]

Recent criticism has come upon the high prices of Luxottica's luxury brand named glasses, such as Ray-Ban, Oakley, and several others. A 2012 60 Minutes segment focused on whether the company's extensive holdings in the industry were used to keep prices high. Luxottica owns not only a large portfolio of brands such as Ray-Ban and Oakley, but retailers like Sunglass Hut and Oliver Peoples, as well as the optical departments at Target and Sears. In addition, by owning the vision insurance company EyeMed, it controlled a portion of the buyers' side of the market as well.[27] CEO Guerra said that Luxottica did have competitors at the retail level in the American market, such as Walmart, and Costco.[27]

Financial performance[edit]

Year Net sales (K€) Operative income (K€) Net income (K€) - Net Income attributable to Luxottica Group Stockholders
2013 7,313,000 1,056,000 545,000
2012 7,086,142 982,049 541,700
2011 6,222,483 807,140 452,343
2010 5,798,035 712,158 402,187
2009 5,094,318 571,085 299,122
2008 5,201,611 731,639 390,167
2007 4,966,054 833,264 489,850

data retrieved from Luxottica website

Transfer pricing issues[edit]

In December 2013, Luxottica Group paid €33 million to the Italian Agency of Revenue to settle transfer pricing issues that arose in 2007.[28]

Major shareholders[edit]

The list of Luxottica shareholders with more than 2% of holdings, represented by voting shares at April 28, 2013.[29][30]

Delfin S.a.r.l. 61.35%
Giorgio Armani 4.77%
• Treasury Shares 0,87%
• Other shareholders < 2% 33%

In September 2012, Delfin S.a.r.l. reduced its share of Luxottica from 66% to 62.1%.[31]

References[edit]

  1. ^ a b c d e "Annual Report 2012". Luxottica. Retrieved 20 July 2012. 
  2. ^ "Luxottica to Buy a U.S. Sunglasses Maker". in The New York Times June 21, 2007. 2007-06-21. 
  3. ^ Crutchfield, Dean. Forbes http://www.forbes.com/sites/deancrutchfield/2012/11/27/luxottica-sees-itself-as-king-raising-questions-about-brand-authenticity/ |url= missing title (help). 
  4. ^ Brett Arends, "Are Designer Sunglasses Worth the Price?", Wall Street Journal, July 22, 2010.
  5. ^ "World's Billionaires Leonardo Del Vecchio". Forbes March, 2011. 
  6. ^ a b c d e "Luxottica Past and Present". Luxottica Group S.p.A. Retrieved 2009-11-02. 
  7. ^ "Santander research". Borsa Italiana 2003. 
  8. ^ "The Armani Group and the Luxottica Group announce expiration of licence agreement". in Pambianco News November 21, 2002. 
  9. ^ "Luxottica Group S.p.A.". NYSE, New York Stock Exchange. 
  10. ^ "Luxottica". Borsa Italiana. 
  11. ^ "Luxottica Group Added to MIB 30 Index". Syndication Teleborsa 22, 2003. 
  12. ^ a b c "Luxottica Facts and Figures". Luxottica Group S.p.A. Retrieved 2011-08-10. 
  13. ^ "Luxottica Group and Oakley complete merger". Syndication Teleborsa, 2007. 
  14. ^ "Luxottica buys Erroca sunglasses chain for €20m". in Globes September 13, 2011. 
  15. ^ Google to De-Dorkify Glass in Partnership With Ray-Ban Maker Luxottica, Businessweek, March 25, 2014
  16. ^ "Luxottica sets new co-CEO model, Guerra to leave, Cavatorta named CEO Corporate, interim CEO Markets". Vision Monday. 
  17. ^ "A management shake-up at Luxottica, Ray-Ban maker". The New York Times. 
  18. ^ "Luxottica announces the implementation of a new governance structure based on a co-CEO model". Luxottica. 
  19. ^ "Luxottica S.p.A". Bloomberg Businessweek. Retrieved 2011-08-10. 
  20. ^ a b "Luxottica Group S.p.A". in Reuters. Retrieved 2011-08-10. 
  21. ^ "Luxottica House Brand". Luxottica Group S.p.A. Retrieved 2011-08-10. 
  22. ^ "Luxottica License Brands". Luxottica Group S.p.A. Retrieved 2012-04-12. 
  23. ^ "Armani Group and Luxottica sign exclusive license agreement" (Press release). Luxottica. June 8, 2012. Retrieved February 16, 2013. 
  24. ^ "Versus". License Brands. Luxottica. Retrieved February 16, 2013. 
  25. ^ "Our Position in the Industry". EyeMed Vision Care. Retrieved 2011-08-10. 
  26. ^ "Activities: Managed Vision Care", Luxottica website
  27. ^ a b c "Sticker shock: Why are glasses so expensive?". 60 Minutes (CBS News). October 7, 2012. Retrieved October 19, 2012. 
  28. ^ Turra, Alessandra (10 December 2013). "Luxottica Group to Settle Up With Italian Revenue Agency". WWD. Retrieved 10 December 2013. 
  29. ^ "Major Shareholders", Luxottica website
  30. ^ "Luxottica". Borsa Italiana. 
  31. ^ Mesco, Manuela, "Delfin cuts Luxottica stake to 62.1% from 66%", MarketWatch, Sept. 6, 2012

External links[edit]