Luxottica is taking over full ownership of Salmoiraghi & Viganò, one of the two major Italian optical retailing group by exercising an option to buy 63.2 percent of the company at an undisclosed price. The deal is scheduled to be completed in the first quarter of 2017. Luxottica already acquired a 36 percent stake in Salmoiraghi for €45 million through a capital increase at the end of 2012.
The move signals a major change in strategy for the world's largest eyewear producer. Back in the 1990s, Leonardo del Vecchio, Luxottica's major shareholder, who is still running the group, had told us that he had no intention to take over any retail operations in Europe, in contrast with the company's strategy in the U.S. The reason given at the time was that Luxottica didn't want to go into competition with its retail clients in Europe, where it had a dominant share of the market. In the third quarter of this year, Europe still contributed 48 percent of the group's wholesale revenues.
Things have changed in the meantime. The other major retail group in Italy, represented by Ottica Avanzi and other banners owned by GrandVision, is controlled by Hal, which has also become Safilo's largest shareholder. As a result, Safilo's products have gained a stronger presence in GrandVision's Italian stores.
Interestingly, Salmoiraghi was previously a big client of Safilo. It was for many years the property of Dino Tabacchi, one of Safilo's former shareholders, and his family. He bought Salmoiraghi in 2002 for €68.5 million, after selling his shares in Safilo to his brother Vittorio. Dino Tabacchi's son, Edoardo, is still running the chain, which had been previously owned by De Rigo. Luxottica's initial investment in Salmoiraghi, which helped the chain to get out of a serious financial squeeze, was seen as a means of preventing its takeover by Hal.
An industry insider said that he is unaware of Salmoiraghi discriminating against brands that don't belong to Luxottica brands. However, it noted that it is Luxottica's business model to vertically integrate its manufacturing and retail businesses in the U.S., thus leaving little space for competitors in the stores it controls. In this spirit, he said he could expect Salmoiraghi‘s commercial policy to be aligned with that of Sunglass Hut, which offers a majority of sunglasses produced by Luxottica and is also present in Italy.
Luxottica is taking full ownership of Salmoiraghi after a period of strong growth and a return to profitability. The Italian eyewear retailer posted a 12.5 percent increase in sales to €210 million for the full financial year to Sept. 30, 2016, thanks to a 10 percent rise in same-store sales and the opening of 30 stores over the 12-month period. Its Ebitda rose by 80 percent to about €39 million and its net earnings jumped by 300 percent to €23 million.
The group had 430 stores at the end of September. The company said it carried out 370,000 eye tests and sold 340,000 prescription frames, 430,000 sunglasses and 1.7 million contact lenses during the fiscal year. During a similar period, the Italian market for reading glasses, sunglasses and contact lenses rose by an estimated 3 percent, said Salmoiraghi, indicating a clear progress in market shares.
The group aims to open another 30 locations and to increase same-store sales by a further 10 percent in the current financial year ending in September 2017. At mid-November, the group had a total retail network to 438 units trading in Italy under several banners.
In one of its most recent promotions, Salmoiraghi launched special unisex spectacles to wear when driving, offering the glasses until Christmas at a promotional price of €59 for a pair with single-vision lenses and €99 for progressive lenses. The launch price will remain in place during the whole of 2017 for members of the Italian Automobile Club, ACI. The regular price for glasses with single-vision lenses will be €99, while the cost of spectacles with progressive lenses will depend on the lenses' gradient.