Luxottica continues its shopping spree. Oakley may be the next item on the list, provided the price looks right. Anyhow, one of Leonardo Del Vecchio's priorities is to acquire other optical retail chains, particularly in North America, Australia and the UK. In the USA, the group will be looking exclusively for prescription eyewear chains, as Sunglass Hut's acquisition has pushed Luxottica's share of the US sunglass retail market to the limits of local anti-trust regulations. Sunglasses represent about one-third of the products offered at some of LensCrafters' newer stores, which are displaying Ray-Ban models more prominently, and the portion taken up by Luxottica's product line in Sunglass Hut stores is set to rise to 40 percent by 2003.
Luxottica's chairman defends Luxttica's decision to invest in retail ing, maintaining that the acquisition of LensCrafters didn't reduce the group's US wholesale business. The independent opticians in North America will be serviced through a new distribution center, similar to those being planned in Italy for Europe and in Japan for Asia. Luxottica is also afraid of being cut off in certain markets where at least one other producer, De Rigo, has been taking over other independent chains.
On the manufacturing side, the group wants to make in-house half its the plastic sun lenses for its own requirements, and it's acquiring the related equipment, following certain recent supply problems. Luxottica already covers internally nearly all its own needs for mineral sun lenses. Rumors that the group was preparing to take over a ?small? lens producer have been denied. Luxottica will continue to buy plastic lenses from other producers so as to benefit from the innovations the latter can achieve in terms of colors and materials.
Luxottica is reportedly increasing production of its own Persol brand of sunglasses in Turin. It's also boosting production of semi-finished frames in China, but the assembly will continue to be carried out at its own factories in Italy.
The eyewear czar is bugeting a total turnover of 6 trillion lire (e3.1bn-$2.7bn) for 2001, up 28 percent from the level generated in 2000. Profitability should be more or less in line with last year's net margin of 10.56. For the next 3 years, deliveries of frames are expectedc to grow at an annual rate of 4-5 percent in volume.
Del Vecchio again emphasizes that LensCrafters and Sunglass Hut will remain two distinct entities, but indicates that no opportunities will be lost to develop logistical synergies which will greatly benefit Sunglass Hut's profitability. For a starter, Sunglass Hut's headquarters at Coral Gables, Florida are due to be shut down by the end of August and moved to Cincinnati, the home of LensCrafters. Only some of Sunglass Hut's 250 employees in Florida have been given an opportunity to move to Cincinnati, where LensCrafters plans to spend $30 million on a new 225,000-square-foot headquarters.
On the other hand, LensCrafters is changing slightly the emphasis of its central marketing message from medical perfection to fashion and fun. To mark the change, the personnel in the chain's 858 stores is no longer required to wear a uniform.
Meanwhile, some shareholders of Sunglass Hut have filed a judicial suit against Luxottica, claiming that its former chairman and major individual shareholder, James Hauslein, had supported Luxottica's bid last February in partial exchange for a $15 million 5-year consultancy contract. Yet, all the other directors of Sunglass Hut voted in favor of the bid, which valued Hauslein's 4.3 percent shareholding at $19.1 million, and Luxottica points out that the US Securities & Exchange Commission, which was informed about the existence of a consultancy agreement, didn't request the company to submit a public notice with additional information on the deal.