De Rigo Vision announced on June 14 an agreement for the takeover of REM Eyewear and all its operations. The terms were not disclosed. With this acquisition, the Italian company expands its brand portfolio and boosts its presence in the important U.S. market. Its total annual sales will grow to more than $500 million.
In this respect, the takeover resembles in some ways the acquisition of Tura by Eschenbach and Viva International by Marcolin. The other two major European companies in the sector, Luxottica and Safilo, already have for many years a much stronger presence in the U.S. through their retail and wholesale operations.
De Rigo had sales of €403 million in the past year. In the U.S. which represented only about 5 percent of its sales, its best-seller is the Chopard license. It is counting on REM's wider sales network especially to boost market penetration for its strongest house brand, Police. It should also benefit licensed brands in De Rigo's portfolio like Carolina Herrera, Escada, Lanvin and Nina Ricci.
We could not determine the size of REM's annual turnover, but we estimate that it is higher than €50 million, with €40 million in the U.S. alone. De Rigo already has a U.S. sales subsidiary, which it set up in Florida in 2013. It will be consolidated with REM's sales operations to form a single organization under a new name, De Rigo REM. It will be based at REM's headquarters in Sun Valley, California.
Iraj Kamili, who was recently appointed to head up De Rigo's U.S. sales subsidiary, will continue to be involved along with Hundert family, Steve Horowith, president of REM, and other key managers like Keith Kamùalich, a former manager of Tura who joined the company last year as vice president of sales.
REM has licensing agreements with prestigious American brands like Converse, John Varvatos, Lucky Brand, Jones New York and Jonathan Adler. Run by Mike Hundert and his sister Donna Gindy, REM is a family-owned company like De Rigo. It was founded by Efraim Remba in 1953 and bought by Gerry Hundert, who is now 90 years old, and Shirley Hundert in 1971.
De Rigo says it has not yet started discussing the future distribution of REM's collections in Europe, where the Italian company has a strong presence at wholesale and retail, including the General Optica chain in Spain and its joint venture with Boots Opticians in the U.K.
Since 2011, REM has had a joint venture with Mondottica U.K., called Remdottica, for the sale of its Converse line on the European market. Their collaboration was extended two years later to encompass other brands and a larger territory.
De Rigo's total revenues increased last year by 7.3 percent to €403.0 million, with growth of 6.7 percent in constant currencies. The operating margin fell to 4.2 percent from 4.9 percent in the previous year, but net earnings went up by 13.6 percent to €14.7 million.
Sales fell by 4.3 percent to €26.5 million in the Americas, due in part to the devaluation of the Brazilian real. They rose by only 1.5 percent to €277.3 million in Europe under the impact of the difficult market situation in Russia. They jumped by 32.0 percent to €90.0 million in the rest of the world, thanks in particular to strong progress in Turkey, South Korea and China, offsetting a certain weakness in the United Arab Emirates.
The group's wholesale revenues rose by 4.2 percent to €231.0 million. Excluding its joint venture with Boots, in which the group has a 42 percent stake, retail revenues increased by 9.6 percent to €184.9 million, driven by the expansion of its Opmar Optik chain in Turkey.. Operating profits increased by 146.3 percent to €13.3 million at retail but fell by 54.1 percent to €8.4 million at wholesale.