Luxottica

History

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

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

The company listed in New York in 1990, and in Milan in December 2000, joining the MIB-30 (now FTSE MIB) index in September 2003. The listing raised money for the company and allowed it to use its shares to acquire other brands, starting with Italian brand Vogue Eyewear in 1990, Persol and US Shoe Corporation (LensCrafters) in 1995, Ray-Ban in 1999 and Sunglass Hut, Inc. in 2001. Luxottica later increased its presence in the retail sector by acquiring Sydney-based OPSM in 2003, Pearle Vision and Cole National in 2004. Luxottica acquired Oakley in November 2007 for US$2.1 billion. Oakley had tried to dispute their prices because of Luxottica's large marketshare, and Luxoticca responded by dropping Oakley from their stores, causing their stock price to drop, followed by Luxottica's hostile take over of the company. In August 2011 Luxoticca acquired Erroca for €20 million.

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

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).

Enrico Cavatorta left the company 40 days after being appointed CEO. In 2016, it was reported that Luxottica had lost its third chief executive in a year and a half as Adil Mehboob-Khan stepped down a year after he replaced Cavatorta.

In January 2017, the company agreed on a €46 billion merger with Essilor. The deal will also help to offer a succession plan for Leonardo Del Vecchio, the company's founder.

Brands

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

The house brands include the following:

The company also makes eyewear under license for the following designer labels:

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 7,200 retail locations in the United States, Latin America, Canada, China, Australia, New Zealand, South Africa, the United Kingdom, and United Arab Emirates. The headquarters of the retail division is in Mason, Ohio, United States (North America). Their retail banners include the following:

Charity

Luxottica had three charitable programs named Give the Gift Of Sight, Pearle Vision OneSight Foundation in North America, and the I-Care Community in Australia. These three programs were founded in 1988. Luxottica came to a decision to unite all three charitable programs into one global foundation and called it One Sight.

Medical managed care

Luxottica also owns EyeMed Vision Care, a managed vision care organization in the United States. As of 2014, it is the second largest vision benefits company in the United States.

Criticism

The company has been criticised for the high price of its brand-name 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 also retailers such as Sunglass Hut and Oliver Peoples, the optical departments at Target and Sears, as well as key eye insurance groups including the second largest glasses insurance firm in the US. It has been accused of operating a complete monopoly on the optical industry and overcharging for its products — for example, increasing the prices of Rayban sunglasses after buying the company as well as temporarily dropping Oakley from its frame design list, then when the company stock crashed, purchasing the company. In addition, it has been argued that, by owning the vision insurance company EyeMed, it also controls part of the buyers' market as well.

Financial performance

(Amounts in thousands of Euros)

data retrieved from Luxottica website

Transfer pricing issues

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

Major shareholders

The list of Luxottica shareholders with more than 2% of holdings, represented by voting shares at 23 December 2014.

In September 2012, Delfin S.a.r.l. reduced its share of Luxottica from 66% to 62.1%, but later increased its share to 66% again.