Luxottica Group will spend the next three months conducting a thorough audit of Cole National's operations, which it formally acquired on Oct. 4 for $497.4 million, but it has already decided to shut down its headquarters in Twinsburg, Ohio, which currently employs some 800 persons. As it already did with Sunglass Hut International soon after its takeover in March 2001, it will transfer all of Cole National's operations to its modern integrated Luxottica Retail Service Center in Cincinnati, leaving only Cole's chain of gift shops, Things Remembered, managed separately.
Kerry Bradley, Luxottica Retail's chief operating officer, and other company officials went to visit Cole National's headquarters and talked to key staff members immediately after the closing of the transaction. Larry Pollock has resigned as Cole's president and CEO, with a 3-year non-competition clause.
Luxottica wants to take the profitability of Cole Vision's stores up to the standards of LensCrafters within the next two years. It also wants to raise well above 5 percent the level of their merchandise made up of Luxottica's own products, as it has done at LensCrafters and Sunglass Hut, where they represent more than 35 percent of sales and many stores. Together, the three entities form a network of 5,435 stores in North America, including the 728 Things Remembered units.
The retail format and the commercial model of Cole National, which is positioned for the most part in a lower segment of the market, is regarded by Luxottica's executives as highly complementary to its existing retail operations in North America, creating a broader platform that will create new opportunities for the company's brands and making room for new synergies. Combined with Cole Managed Vision, Luxottica's managed vision care operation, EyeMed, will offer a more compelling range of insurance products.
Luxottica says the acquisition of Cole National will have a neutral effect on its earnings this year and a dilutive effect of one cent of a euro per share at the most in 2005. Luxottica is financing the early redemption of high-yield bonds contracted by Cole National for a total of $275 million, optimizing the company's debt structure.