Safilo announced that it has grabbed the Givenchy license from De Rigo, adding that the deal will more than compensate for the loss this year of the licenses on three brands whose eyewear is being taken in-house by their owner, the French Kering group, after the end of June.
In a conference call with financial analysts to comment on Safilo's latest results, Luisa Delgado, chief executive of the group, said that Givenchy's sales are “roughly the same, slightly above” the combined revenues of those three Kering brands - Alexander McQueen, Bottega Veneta and Saint Laurent.
An investment broker, Websim, estimates that the Givenchy license represented annual sales of around €20 million for De Rigo. Delgado said she estimates that Safilo could “very easily” double Givenchy's sales in a few years' time because of “significant whitespaces” globally and the potential for upgrading and modernizing the brand's collection. The licence agreement signed by Safilo, which covers sunglasses and optical frames, will run from Jan. 1, 2016 until Dec. 31, 2021, and is renewable with mutual consent.
As previously reported, Kering announced last September its plans to regain control over its 11 eyewear licenses and develop them in-house. As part the move, the French group immediately terminated the licenses of Alexander McQueen, Bottega Veneta and Saint Laurent with Safilo. For the larger Gucci license, which is estimated to generate about €250 million in annual sales and represents more than a fifth of Safilo's revenues, the parties agreed on a softer exit.
The termination date for the Gucci license was brought forward two years to Dec 31, 2016 from the end of 2018, but it will be followed by a four-year supply agreement ending in December 2020. Safilo will also obtain a €90 million compensation from Kering, divided into two equal instalments in 2017 and 2018.
Safilo has added more details about the supply contract for Gucci eyewear, whose sales of Gucci are expected to remain “flattish” this year, as they were in 2014 as compared to 2013. Safilo said that Kering is offering “significant” guaranteed production volumes. In the first two years, starting in 2017, the minimum volumes are going to be close to the brand's current production levels. They will be halved in 2019 and 2020, but they will continue to provide Safilo with revenues and help it cover fixed costs.