When it comes to eyewear, Luxottica Group has it made in the shades. The world's largest eyewear firm, Luxottica designs, makes, and sells eyeglass frames and sunglasses, offering more than 20 licensed designer brands ( Burberry, Chanel, Tiffany) and a dozen house brands (Ray-Ban and REVO). The group's 6,200-store (about 520 stores are franchises) retail arm, Luxottica Retail, operates LensCrafters and Pearle Vision optical shops, Sunglass Hut, Watch Station, and Watch World, and the EyeMed Vision Care group. Luxottica makes its frames in company-owned plants in Italy and China and sells them in about 130 countries. It acquired US sport sunglasses maker Oakley in 2007, as well as China's Modern Sight Optics.
The recession in the US and resulting decline in mall traffic resulted in decreased same-store sales at LensCrafters and Pearle Vision stores in 2008. Outside the US, sales at Luxottica's retail chains grew about 5% for 2008 overall, but the firm posted a 60% plunge in its fourth-quarter earnings. The group's retail operations account for about 60% of Luxottica's sales. Its wholesale distribution network covers more than 130 countries on five continents. Luxottica makes about 130,000 frames a day of its house brands, plus the licensed frames, and sells them worldwide through about 30 wholly- and majority-owned distributors and about 100 independent distributors.
Luxottica has looked to its international holdings for growth in recent years and is actively extending its global reach through acquisitions. Most recently, Luxottica bought Brazilian eyewear maker Tecnol for around €110 million ($145 million) in early 2012. The purchase of Tecnol increased the company's foothold in Brazil's burgeoning luxury market. Previously, the optics maker in 2011 purchased the Stanza and High Tech sunglass specialty retail chains in Mexico, giving it some 70 stores, for €17 million ($23 million). The deal, which called for the stores to be rebranded as Sunglass Huts, represented the firm's first retail presence in Mexico. Boosting its retail presence in Latin America, Luxottica took full control of Multiopticas Internacional, which operates more than 390 eyewear stores under the GMO, Econoptics, and SunPlanet banners in Chile, Peru, Ecuador, and Colombia, in mid-2011. (Luxottica entered the South American retail business in 2009 by purchasing 40% of Multiopticas.) The company's Sunglass Hut chain is expanding in South Africa and debuted in The Philippines in 2010.
Through a string of purchases in China, including Modern Sight Optics, Xueliang Optical, and Ming Long, in recent years the Italian eyewear giant has cobbled together a network of about 300 stores, all of which have been renamed LensCrafters.
The company gained a foothold in another populous country -- India -- in 1999 and in 2007 boosted its investment there with the acquisition of an additional 20% of RayBan Sun Optics India Ltd. The deal increased Luxottica's stake in RayBan Sun Optics India Ltd. to about 65%. Luxottica, through its purchase of Ray-Ban eyewear from Bausch & Lomb in 1999, has held an interest in the Indian operation. In addition, in late 2008 the company opened the first of more than 100 planned Sunglass Hut stores in India via a franchising agreement with DLF Group, a real estate development firm in New Delhi.
In a deal that eclipses previous licensing agreements, Luxottica inked a 10-year deal with Polo Ralph Lauren estimated at more than $1.7 billion. As part of the deal, which became effective in 2007, Luxottica designs, manufactures, and distributes Polo Ralph Lauren-branded prescription frames and sunglasses. In a similar 10-year exclusive agreement inked with luxury icon Tiffany in 2006, Luxottica makes and markets Tiffany-branded ophthalmic and sun eyewear. The Tiffany-branded eyewear is distributed worldwide to Tiffany's stores and other retails in North America, Japan, Hong Kong, South Korea, the Middle East, and Mexico.
Luxottica was founded in 1961 by Leonardo Del Vecchio, Italy's "King of Spectacles," who flies to work in his helicopter to avoid the tortuous mountain road that leads to the company's manufacturing headquarters. Del Vecchio owns about 70% of the firm. – less