Luxottica's management indicated last week that Oakley's eyewear business in Europe would be integrated with Luxottica's by May 1, but the final company structure was not yet clear as of yesterday. Sources at Oakley Europe, whose offices in France, Germany and Italy are being closed down, said it will take a few more weeks before the new sales apparatus is fully in place.
According to sources from outside the group, the new Luxottica subsidiary in Zurich that will handle Oakley's sales in sporting goods stores is going to be run by Josée Perrault, the Canadian executive who led Oakley Europe for a few years before returning to her native country to run Oakley's Canadian operations. It is not clear yet whether she will also take care of Arnette, another sports eyewear brand of Luxottica. As previously reported, the general plan calls for Luxottica's existing network to handle sales of the Oakley brand in the optical retail circuit in Europe.
Scott Olivet, Oakley's chief executive, describes the integration in Europe as ?our biggest initiative and probably our biggest opportunity,? as Europe has been historically ?one of Luxottica's greatest strengths and one of Oakley's biggest challenges.?
In a number of key emerging markets, the integration with Luxottica has been faster, with Oakley switching from distributors to Luxottica's network. The companies have also started work in other markets such as Australia and the U.K. to share cost synergies and develop revenue opportunities.
Oakley closed the first quarter of this year with a 15 percent increase in its global wholesale revenues in terms of dollars, with its optics and apparel, footwear and accessory divisions each enjoying double-digit growth. The company did not provide dollar figures.
Among its product lines, sport performance rose by 39 percent, polarized lenses increased by 15 percent, the women's collection was up by 31 percent, prescription frames rose by 13 percent and the company's customized eyewear service increased by 38 percent.
The brand enjoyed balanced growth in the USA and abroad, with sales outside the USA underpinned by Australia, Brazil, Japan and Germany. However, overall European sales were down because of the transition to a different sales structure in the continent. In the USA, Oakley experienced balanced sales growth in both retail and wholesale, despite a tough environment, with the O stores booking a 19.5 percent rise in comparable store sales.
Oakley's Square O collection and its lifestyle products underperformed the rest of the product range, but sales of these new collections are expected to ?catch up a little bit? in the future. Oakley is also launching a new technical sunglass model specifically designed for women, called Enduring, which joins the Stockholm Goggle. The management feels that the women's active lifestyle segment has been neglected and aims to address it to eventually dominate the market.
Among other initiatives, Oakley is exploiting cross-selling initiatives with Luxottica's retail chains LensCrafters and Sunglass Hut, and has even built up an order backlog for its prescription frames because of the higher production volumes needed to supply LensCrafters. The company expects that in the second quarter it will be able to catch up and supply its wholesale and retail customers. It expects to be a strong contributor to LensCrafters and Sunglass Hut's results from the middle of this year.
Oakley is also working on a new retail brand for North America that will be located in malls and address active and performance-seeking clients. A first test store is scheduled to be opened in May. Oakley and Luxottica are also cooperating in the design of a new collection for Luxottica's Revo brand that will be launched in December.