The acquisition of a sunwear company would be a welcome diversification for this large French eyewear firm, a bit like Marcolin's recent takeover of France's Cébé. At the same time, Logo Paris is looking at investments outside France that would help it to take a stronger foothold in certain foreign markets.
These investments may be financed through cash or shares or a combination of both. A share deal would allow Essilor, which already sold many of its other eyeglass frame operations, to reduce its own 44 percent stake in Logo. On the other hand, Logo is in a much better financial position following a major reorganization. It has virtually no debt, and it now expects a nice profit this year after a loss in 1999 that was largely due to extraordinary charges of more than 50 million French francs (e8m-$7m) from the closure of its SML titanium frame manufacturing plant, which employed 105 people.
The SML factory's production has been transferred to Logo's 6-year-old plant in Indonesia, which has been handling mainly its volume business. Logo still operates its plastic frame manufacturing unit at Oyonnax plus a metal frame factory in Morez, Lux de Morez, which has been financially integrated into Logo a few weeks ago, generating some savings in administrative costs.
As part of its reorganization, Logo sold last November its safety eyewear business, Lunettes de Protection Essilor, which accounted for annual sales of about 40 million FF (e6-$6m), to a Canadian firm, Leader Industries. Leader is now budgeting an overall sales increase of 40 percent this year following this and other acquisitions. It's also planning to launch a complete line of sports goggles with corrective lenses in the course of this year. In 1999, Leader's sales rose by 8.1 percent to Can$23.9 million (e17.5m-$16m), but its net profit declined by 24.4 percent to $1.1 million (e0.7m-$0.6m).
Not including the safety eyewear business, Logo's sales increased by 4 percent last year to about 400 million FF (e60m), with 65 percent of the turnover generated outside France. The USA is the largest foreign market for Logo, ahead of Germany. The company's sales growth accelerated to 15 percent in the first 3 months of 2000, thanks in part to a strong momentum in the USA and to the recovery of the Asian market.
Logo is giving a further boost to its foreign sales network. It's setting up a sales office in Dubai, a promising market. It established sales subsidiaries in the USA and Germany in 1995, with Essilor's help. Last year, it set up a wholly-owned sales subsidiary in the UK and formed a joint venture with its Italian distributor, Formelli. Spain could be next in line.