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Luxottica

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Luxottica Group S.p.A.
Company typeSocietà per azioni
BIT: LUX, NYSE: LUX
IndustryEyewear, fashion, luxury, manufacturing, retail, wholesale distribution
FoundedAgordo, Italy, in 1961
Headquarters
Milan
,
Italy
Area served
Worldwide
Key people
Leonardo Del Vecchio (Founder and Chairman), Andrea Guerra (CEO)
ProductsSunglasses, spectacle frames, prescription frames
ServicesOpticians, optical retail, sun retail
Revenue€6,222 million (2011)[1]
€807.0 million (2011)[1]
€452.0 million (2011)[1]
Total assets€8,644 million (2011)[1]
Total equity€3,625 million (2011)[1]
Number of employees
65,611 (2011)[1]
Websiteluxottica.com

Luxottica Group S.p.A. is the world's largest eyewear company.[2] Its best known brands include Ray-Ban, Persol and Oakley, Inc.. 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 Burberry, Polo Ralph Lauren, Stella McCartney, Tiffany, Versace, Vogue, Miu Miu, Tory Burch and Donna Karan.[3] Its prime competitor is the Safilo Group S.p.A.[according to whom?]

In addition to making sunglasses and eyeglasses, Luxottica also sells them at several different retail chains that are also owned by them, such as: Sunglass Hut, Oliver Peoples and Pearle Vision Center. In the United States, it also owns EyeMed Vision Care, putting it on the buyers' side of the market as well. Due to its extensive holdings, Luxottica has been previously been accused of being a monopoly as well as using its power as a price maker to raise the cost of eyewear and keep it high.

History

File:Luxottica Headquarters Milan.jpg
Luxottica headquarters in Milan

Leonardo Del Vecchio started the company in 1961,[4] 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.[5] The new company was Luxottica s.a.s., a limited partnership with Del Vecchio as one of the founding partners.[5] 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.[6]

Convinced of the need for vertical integration, in 1974 he acquired Scarrone, a distribution company.[5] In 1981 the company set up its first international subsidiary, in Germany, the first in a rapid period of international expansion.[5] The first of many licensing deals with a designer was struck with Armani, in 1988.[7]

The company listed in New York in 1990,[8] and in Milan in December 2000,[9] joining the MIB-30 (now S&P/MIB) index in September 2003.[10] 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.[5] Luxottica later increased its presence in the retail sector by acquiring Sydney-based OPSM in 2003, Pearle Vision and Cole National in 2004.[11]

The company also acquired Oakley in a US$2.1bn deal in November 2007,[12] and in August 2011 Erroca for €20 million.[13]

Brands

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.[14]

The house brands include:[15][16]

Arnette
Oliver Peoples

The company also creates eyewear under license for designer labels such as:[15][17]

Anne Klein
Dolce and Gabbana
Ralph Lauren Purple Label

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

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.[11] The headquarters of the retail division is in Mason, Ohio.[11] Their retail banners include: Template:Multicol

Template:Multicol-break

Template:Multicol-break

  • Optical Shop of Aspen
  • Surfeyes
  • Laubman & Pank
  • ICON
  • Grand Optics LLC

Template:Multicol-end

Medical managed care

Luxottica also owns EyeMed Vision Care, a managed vision care organization in the United States.[18] As of 2012, it is the second largest vision benefits company in the United States.[19][20]

Criticism

A 2012 60 Minutes segment focused on the whether the company's extensive holdings in the industry was 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.[20] CEO Guerra claimed Luxottica did indeed have competitors at the retail level in the American market, such as Walmart, Costco and Warby Parker.[20]

Financial performance*

Year Net sales (K€) Operative income (K€) Net income (K€) - Net Income attributable to Luxottica Group Stockholders
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

Major shareholders

The list of Luxottica shareholders with more than 2% of holdings, represented by voting shares at April 28, 2011.[21][22]

• Delfin S.a.r.l. 66.16%
• Giorgio Armani 4.85%
• Treasury Shares 1%
• Other shareholders < 2% 28%

In September 2012, Delfin S.a.r.l. reduced its share of Luxottica from 66% to 62.1%.[23]

References

  1. ^ a b c d e f "Annual Report 2011" (PDF). 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. ^ Brett Arends, "Are Designer Sunglasses Worth the Price?", Wall Street Journal, July 22, 2010.
  4. ^ "World's Billionaires Leonardo Del Vecchio". Forbes March, 2011.
  5. ^ a b c d e "Luxottica Past and Present". Luxottica Group S.p.A. Retrieved 2009-11-02.
  6. ^ "Santander research" (PDF). Borsa Italiana 2003.
  7. ^ "The Armani Group and the Luxottica Group announce expiration of licence agreement". in Pambianco News November 21, 2002.
  8. ^ "Luxottica Group S.p.A." NYSE, New York Stock Exchange.
  9. ^ "Luxottica". Borsa Italiana.
  10. ^ "Luxottica Group Added to MIB 30 Index". Syndication Teleborsa 22, 2003.
  11. ^ a b c "Luxottica Facts and Figures". Luxottica Group S.p.A. Retrieved 2011-08-10.
  12. ^ "Luxottica Group and Oakley complete merger". Syndication Teleborsa, 2007.
  13. ^ "Luxottica buys Erroca sunglasses chain for €20m". in Globes September 13, 2011.
  14. ^ "Luxottica S.p.A". Bloomberg Businessweek. Retrieved 2011-08-10.
  15. ^ a b "Luxottica Group S.p.A". in Reuters. Retrieved 2011-08-10.
  16. ^ "Luxottica House Brand". Luxottica Group S.p.A. Retrieved 2011-08-10.
  17. ^ "Luxottica License Brands". Luxottica Group S.p.A. Retrieved 2012-04-12.
  18. ^ "Our Position in the Industry". EyeMed Vision Care. Retrieved 2011-08-10.
  19. ^ "Activities: Managed Vision Care", Luxottica website
  20. ^ a b c "Sticker shock: Why are glasses so expensive?". 60 Minutes. CBS News. October 7, 2012. Retrieved October 19, 2012.
  21. ^ "Major Shareholders", Luxottica website
  22. ^ "Luxottica". Borsa Italiana.
  23. ^ Mesco, Manuela, "Delfin cuts Luxottica stake to 62.1% from 66%", MarketWatch, Sept. 6, 2012
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