Luxottica

Luxottica Group S.p.A. is an Italian eyewear conglomerate and the world's largest company in the eyewear industry.[3][4] It is based in Milan, Italy.[5]

Luxottica Group S.p.A.
TypeListed società per azioni
IndustryEyewear manufacturing, luxury, eyewear manufacturing and wholesale distribution, eyewear retailing
Founded1961 (1961)
(Agordo, Italy)
Headquarters
Milan
,
Italy
Area served
Worldwide
Key people
ProductsSunglasses, spectacle frames, prescription frames
ServicesOpticians, optical retail, sun retail
Revenue€ 9.493 billion (2019)[2]
Number of employees
80,000 (2019)[2]
DivisionsRay-Ban, Essilor, Persol, Oakley, LensCrafters, OPSM, Sunglass Hut, Apex by Sunglasshut, Eyemed, Pearle Vision, Sears Optical, Glasses.com, Onesight, Target Optical
Websiteluxottica.com/en

As a vertically integrated company, Luxottica designs, manufactures, distributes and retails its eyewear brands, including LensCrafters, Sunglass Hut, Apex by Sunglass Hut, Pearle Vision, Target Optical, Eyemed vision care plan, and Glasses.com. Its best known brands are Ray-Ban, Persol, and Oakley.

Luxottica also makes sunglasses and prescription frames for designer brands such as Chanel, Prada, Giorgio Armani, Burberry, Versace, Dolce and Gabbana, Miu Miu and Tory Burch.[6][7][8][5]

In January 2017, Luxottica announced a merger with Essilor.[9] The combined entity would command more than one quarter of global value sales of eyewear.[10][5] In March 2018, the European Commission unconditionally approved the merger of Essilor and Luxottica.[11] On 1 October 2018, the new holding company EssilorLuxottica was born, resulting in combined market capitalization of approximately €57 billion.

History

Leonardo Del Vecchio started the company in 1961,[12] in Agordo north of Belluno, Veneto; today the company is headquartered in Milan, Italy.[5]

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.[13] The new company was Luxottica s.a.s., a limited partnership with Del Vecchio as one of the founding partners.[13] 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.[14]

Convinced of the need for vertical integration, in 1974, he acquired Scarrone, a distribution company.[13] In 1981, the company set up its first international subsidiary, in Germany, the first in a rapid period of international expansion.[13] The first of many licensing deals with a designer was struck with Armani, in 1988.[15]

The company listed in New York in 1990,[16] and in Milan in December 2000,[17] joining the MIB-30 (now FTSE MIB) index in September 2003.[18] 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 the United States Shoe Corporation (LensCrafters) in 1995, Ray-Ban in 1999 and Sunglass Hut, Inc. in 2001.[13] Luxottica later increased its presence in the retail sector by acquiring Sydney-based OPSM in 2003, Pearle Vision and Cole National in 2004.[19] 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 Luxottica responded by dropping Oakley from their stores, causing their stock price to drop, followed by Luxottica's hostile take over of the company.[20] In August 2011, Luxottica acquired Erroca for €20 million.[21] 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.[22]

On 1 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).[23][24][25] 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.[26]

In January 2017, the company agreed on a merger with Essilor.[27] The deal also offered a succession plan for Leonardo Del Vecchio, the company's founder.[28] Shortly before the merger completed, reporter Sam Knight wrote in The Guardian, "in seven centuries of spectacles, there has never been anything like it. The new entity will be worth around $50bn (£37bn), sell close to a billion pairs of lenses and frames every year, and have a workforce of more than 140,000 people."[29] On 1 October 2018 the new holding company EssilorLuxottica was founded, resulting in combined market capitalization of approximately €57 billion.

In August 2018, Luxottica restored Accademia Bridge in Venice.[30]

Eyewear 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.[31]

The house brands include the following:[32][2]

The company also makes eyewear under license for the following designer labels:[32][2]

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.[5]

Retail

Luxottica Retail has about 9,100 retail locations[2][34] in the United States, Latin America, Canada, India, China, Australia, New Zealand, South Africa, the United Kingdom, and United Arab Emirates.[19] The headquarters of the retail division is in Mason, Ohio, United States (North America).[19] Their retail banners include the following:[35]

John Lewis Opticians (in Partnership with John Lewis and Parthers department stores)

  • Salmoiraghi e Viganò[36]

Luxottica is the largest optical retailer in the United States, with 7.3% of US retail sales in 2015.[37] With its merger with Essilor in 2018 the company owns Coastal/Clearly, an online contacts and glasses retail giant bought in 2014 that ships to over 200 countries beside its original North American market.

Medical managed care

Luxottica also owns EyeMed Vision Care, a managed vision care organization in the United States.[38] As of 2014, it is the second largest vision benefits company in the United States.[39][40][41]

Criticism

Monopolistic pricing practices

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 (over a dozen[42]) 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, temporarily dropping then-competitor Oakley from its frame design list, then, when the company stock crashed, purchasing the company, then increasing the prices of its Ray-Ban sunglasses. In addition, it has been argued that, by owning the vision insurance company EyeMed, it also controls part of the buyers' market as well.[40]

The company has said that the market is highly competitive, and that their frames account for ~10% of sales worldwide and ~20% in the United States.[43][42] Euromonitor International estimated that Luxottica's market share was 14% worldwide, with the second-largest company in the industry, Essilor, holding a 13% market share. The third-largest player was Johnson & Johnson, with a 3.9% market share. In October 2018, Luxottica and Essilor merged into a single company, EssilorLuxottica, which now occupies nearly 30% of the global market share and represents almost a billion pairs of lenses and frames sold annually.[44]

The HBO series Last Week Tonight with John Oliver has criticized the company as a prominent instance of corporate consolidation,[45] as has the TruTV series Adam Ruins Everything.

In 2019, LensCrafters founder E. Dean Butler spoke to the Los Angeles Times, admitting that Luxottica's dominance of the eyewear industry had resulted in price markups of nearly 1,000%. In the interview, Butler noted "You can get amazingly good frames, with a Warby Parker level of quality, for $4 to $8. For $15, you can get designer-quality frames, like what you’d get from Prada." When told that some eyeglasses cost as much as $800 in the United States, Butler remarked, "I know. It’s ridiculous. It’s a complete rip-off."[46][47]

Major shareholders

The list of Luxottica shareholders with more than 2% of holdings, represented by voting shares at 23 December 2014.[48]

In September 2012, Delfin S.a.r.l. reduced its share of Luxottica from 66% to 62.1%,[49] but later increased its share to 66% again.

See also

References
  1. "Francesco Milleri replaces Massimo Vian as the new CEO of Luxottica". Retrieved 23 January 2018.
  2. "EssilorLuxottica - Annual Report 2019" (PDF). Retrieved 10 June 2020.
  3. "Luxottica to Buy a U.S. Sunglasses Maker". The New York Times/Reuters. 21 June 2007.
  4. Editorial, Reuters. "${Instrument_CompanyName} ${Instrument_Ric} Company Profile | Reuters.com". Reuters. Retrieved 25 May 2017.
  5. Knight, Sam (10 May 2018). "The spectacular power of Big Lens". The Guardian. Retrieved 3 June 2018.
  6. Arends, Brett (22 July 2010). "Are Designer Sunglasses Worth the Price?". Wall Street Journal.
  7. "Eyewear brands". luxottica.com. 1 May 2015.
  8. Touryalai, Halah. "Ray-Ban, Oakley, Chanel Or Prada Sunglasses? They're All Made By This Obscure $9B Company". Forbes. Retrieved 25 May 2017.
  9. Chad Bray and Elizabeth Paton, Luxottica, Owner of Ray-Ban, in $49 Billion Merger With Essilor The New York Times 2017/01/16
  10. "Eyewear 2018 Edition: Key Research Highlights". 17 July 2017.
  11. Editorial, Reuters. "EU clears merger of Essilor, Luxottica without conditions".
  12. "World's Billionaires Leonardo Del Vecchio". Forbes March 2011.
  13. "Luxottica Past and Present". Luxottica Group S.p.A. Retrieved 2 November 2009.
  14. "Santander research" (PDF). Borsa Italiana 2003.
  15. "The Armani Group and the Luxottica Group announce expiration of licence agreement". in Pambianco News November 21, 2002.
  16. "Luxottica Group S.p.A." NYSE, New York Stock Exchange. Archived from the original on 26 December 2013.
  17. "Luxottica". Borsa Italiana.
  18. "Luxottica Group Added to MIB 30 Index". Syndication Teleborsa 22, 2003.
  19. "Luxottica Facts and Figures". Luxottica Group S.p.A. Retrieved 10 August 2011.
  20. "Luxottica Group and Oakley complete merger". Syndication Teleborsa, 2007.
  21. "Luxottica buys Erroca sunglasses chain for €20m". in Globes September 13, 2011.
  22. Google to De-Dorkify Glass in Partnership With Ray-Ban Maker Luxottica, Businessweek, 25 March 2014
  23. "Luxottica sets new co-CEO model, Guerra to leave, Cavatorta named CEO Corporate, interim CEO Markets". Vision Monday.
  24. "A management shake-up at Luxottica, Ray-Ban maker". The New York Times.
  25. "Luxottica announces the implementation of a new governance structure based on a co-CEO model". Luxottica.
  26. "Loss of another Luxottica chief is a concern for Italy Inc". The Financial Times.
  27. Ray-Ban Maker Luxottica to Merge With Lens Company Essilor, Creating $49 Billion Eyewear Giant, Wall Street Journal, 16 January 2017, retrieved 17 January 2017
  28. "Ray-Ban maker Luxottica agrees €46bn merger with Essilor". BBC News. 16 January 2017.
  29. Knight, Sam (10 May 2018). "The spectacular power of Big Lens | The long read". The Guardian. ISSN 0261-3077. Retrieved 18 June 2019.
  30. FashionNetwork.com. "Luxottica completa il restauro del Ponte dell'Accademia a Venezia". FashionNetwork.com (in Italian). Retrieved 11 September 2018.
  31. "Luxottica S.p.A". Bloomberg Businessweek. Retrieved 10 August 2011.
  32. "Luxottica Group S.p.A". in Reuters. Retrieved 10 August 2011.
  33. "WWD: Valentino and Luxottica Sign Licensing Agreement". Retrieved 28 April 2017.
  34. "Annual Report 2017" (PDF). Retrieved 19 April 2018.
  35. "Annual Review 2014". Retrieved 12 June 2015.
  36. "Reuters: Luxottica buys remaining 63.2 pct of Salmoiraghi & Vigano". Retrieved 28 April 2017.
  37. "Top 50 list" (PDF). mobile.visionmonday.com. 2017. Retrieved 30 March 2020.
  38. "Our Position in the Industry". EyeMed Vision Care. Retrieved 10 August 2011.
  39. "Activities: Managed Vision Care", Luxottica website
  40. "Sticker shock: Why are glasses so expensive?". 60 Minutes. CBS News. 7 October 2012. Retrieved 19 October 2012.
  41. "Forbes: There's More To Ray-Ban And Oakley Than Meets The Eye". Retrieved 31 March 2015.
  42. Swanson, Ana. "Meet the Four-Eyed, Eight-Tentacled Monopoly That is Making Your Glasses So Expensive".
  43. "FACT CHECK: Does Luxottica Own 80% of the Eyeglass Industry?".
  44. Knight, Sam (10 May 2018). "The spectacular power of Big Lens | The long read" – via www.theguardian.com.
  45. "Corporate Consolidation: Last Week Tonight with John Oliver (HBO)". 24 September 2017.
  46. Lazarus, David. "How badly are we being ripped off on eyewear? Former industry execs tell all". latimes.com. Retrieved 18 June 2019.
  47. Lieber, Chavie (6 March 2019). "Glasses can have a markup of 1,000%. Two former LensCrafters executives revealed why". Vox. Retrieved 18 June 2019.
  48. "Azionisti rilevanti di LUXOTTICA GROUP SPA". Commissione Nazionale per le Società e la Borsa. Archived from the original on 27 December 2014. Retrieved 27 December 2014.
  49. Mesco, Manuela, "Delfin cuts Luxottica stake to 62.1% from 66%", MarketWatch, 6 September 2012
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