Safilo has bought two upmarket eyewear retail chains in Mexico and Australia for a combined €28 million in an effort to expand its network by about 100 stores a year through acquisitions and organic growth. The expansion will be financed by the group’s cash flow.
The company already owns the 114-store Solstice network in the USA and Loop Vision in Spain, which manages 66 locations. With the two acquisitions, Safilo’s distribution network now consists of 269 stores.
The Italian eyewear company bought 60 percent of the Mexican retail chain Sunglass Island for $22 million, or €15 million. The 15-year-old company manages 38 Sunglass Island stores and seven Island Optica shops in the country’s main tourist cities. Sunglass Island generated revenues of $26 million in 2007, selling to consumers who forked out on average $200 each.
Safilo also bought a 100 percent stake in Just Spectacles, an Australian company based in Perth, for 21 million Australian dollars, or €13 million,. It has been in the Australian optical market for more than 20 years and runs 44 stores, 12 in franchising, mainly in the country’s western and southern territories. The company has annual sales of about A$24 million and an average ticket of US$150 per client.
Safilo did not release any further details on the profit and loss accounts of the companies it has acquired, but indicated that it paid nine times EBITDA. It justified the hefty price by the fact that the retailers are located in high-growth markets.
Safilo aims to use its Mexican and Australian acquisitions to build up its presence in Latin America, the Caribbean and the South Pacific. They are expected to boost the group’s revenues by about 2 percentage points this year. A brokerage firm, Cazenove, estimates that Safilo’s retail business will reach €115 million in 2008, or about 9 percent of total sales.
Future sunglass stores directly opened by Safilo, in or outside the USA, will be branded under the Solstice name. It will however continue using existing retail brands in markets where they are well established, though it does not rule out unifying all sunglass stores under the Solstice name at some point.