The Western world's leading manufacturer of eyeglass cases, Italy's Fedon, is diversifying its product range, adding office stationery and related equipment. After decades of experience in satisfying the increasing demands of big-name clients in the eyewear sector, including most of the major fashion brands on the market, the Fedon family has decided to apply the same manufacturing technologies to products such as pocket and desk diaries, business card holders and attaché-cases. Using a combination of aluminium and leather, the result is likely to be as elegant and reliable as the firm's renowned production for the eyewear industry.
Around one billion lire (e0.5m-$0.5m) have been invested in the new program, which will include on-line sales. To manage the latter, Fedon has set up a new subsidiary, e-Fedon, 49 percent of which is jointly owned by an e-commerce expert, Antonio Gudri, and by On Air, which belongs to the Omnitel mobile telephony group. From next month on, e-Fedon will propose Fedon's office stationery to individual companies and wholesalers on the first authorized interactive e-commerce site in Italy, which allows the client to study the product from all angles, and to choose the color. Leathergoods and stationery shops will have to continue buying through agents and wholesales for the moment.
Two years ago, Fedon was already selling its sophisticated eyeglass cases through its representatives in 70 countries when it was admitted to the over-the-counter market of the Paris Bourse on the strength of a business plan that called for the consolidation and expansion of this sales structure. Last year, Fedon acquired a German firm, Kapunkt, and France's Genetier, which were the leaders in this sector in their respective countries. These acquisitions raised Fedon's world market share in eyeglass cases from an estimated 15 percent to almost 22 percent. Fedon also established a US sales subsidiary last year in partnership with Richard Hammel, who holds 49 percent. Another sales subsidiary will start operations in Hong Kong in a few months' time, serving the US and Asian markets.
The group's chairman, Callisto Fedon, is budgeting a turnover of 100 billion lire (e52m-$48m) for this year, after an initial 15 percent increase in the first quarter, based on comparable structures, that was partly influenced by the weakness of the euro. The group ended 1999 with a turnover of 87.946 billion lire (e45.4m-$42.1m), 29.1 percent up from 1998, but with a growth of only 5 percent for its continuing operations. As Italian eyewear frame suppliers lead the world, it was normal for the Italian market to represent 48 percent of the turnover. The rest of Europe took up another 41 percent, doubling from the previous year's level, and the rest of the world 11 percent.
The huge investments made in 1999 cut operating profits from 9,930 million to 4,888 million lire (e2.5m-$2.3m), and halved consolidated net earnings to 4,612 million lire (e2.4m-$2.2m). Another reason for the drop in profits was the imposition of extraordinary import duties by the US government in March of last year on these and other European products as a reprisal in the banana war. Despite the temporary profit decline, dividends have been raised by 20 percent for this year.
The 80-year-old company has already spent about 40 billion lire (e20m-$20m) on the automation of its production processes in Italy. Recent new investments included 4.2 billion lire (e2.2m-$2m) on a new 26,000-square-meter factory in Alpago, where raw materials are cut and stored. Another factory has been built at Capodistria in Slovenia, which will produce 10,000 units a day with cost savings of 30 percent. Fedon recently added another 110 people to its workforce as it has been working overtime for some months to honor new orders, which had risen by 42 percent at the end of last January as compared to January of 1999.