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Luxottica

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Luxottica Group S.p.A.
Company typePublic (1990–2017)
Subsidiary (2018–present)
NYSE: LUX (1990–2017)[1][2]
IndustryEyewear manufacturing, luxury, eyewear manufacturing and wholesale distribution, eyewear retailing
Founded1961; 63 years ago (1961)
(Agordo, Italy)
FounderLeonardo Del Vecchio
Headquarters
Milan
,
Italy
Area served
Worldwide
Key people
Francesco Milleri
(Deputy Chairman and Chief Executive Officer)[3]
ProductsSunglasses, spectacle frames, prescription frames
ServicesOpticians, optical retail, sun retail
Number of employees
89,000 (2019)
ParentEssilorLuxottica (2018–present)[4]
DivisionsRay-Ban, Persol, Oakley, LensCrafters, OPSM, Sunglass Hut, Apex by Sunglasshut, Eyemed, Pearle Vision, Sears Optical, Onesight, Target Optical
Websiteluxottica.com/en

Luxottica Group S.p.A. is an Italian eyewear multinational corporation headquartered in Milan. As a vertically integrated company, Luxottica designs, manufactures, distributes, and retails its eyewear brands through its own subsidiaries. It is the largest eyewear company in the world.[5][6] It is, since October 2018, a subsidiary of EssilorLuxottica, which arose out of a merger between the Italian company and the French ophthalmic optics corporation Essilor.[7]

Luxottica was founded in Agordo by Leonardo Del Vecchio in 1961 as a sunglasses manufacturer selling and branding under its own name. Del Vecchio quickly acquired numerous businesses in the pursuit of vertical integration, buying distribution companies rapidly and signing its first designer licensing agreement with Giorgio Armani. In 1990, the company listed American depositary receipts on the New York Stock Exchange where it traded until 2017.

Luxottica retails its products through stores that it owns, predominantly LensCrafters, Sunglass Hut, Pearle Vision, Target Optical, and Glasses.com. It also owns EyeMed, one of the largest vision health insurance providers. In addition to licensing prescription and non-prescription sunglasses frames for many luxury and designer brands including Chanel, Prada, Giorgio Armani, Burberry, Versace, Dolce and Gabbana, Michael Kors, Coach, Miu Miu and Tory Burch,[8] the Italian corporation further outright owns and manufactures Ray-Ban, Persol, Oliver Peoples, and Oakley. Luxottica's market power has allowed it to charge price markups of up to 1000%.[9]

In January 2017, Luxottica announced its merger with Essilor, in which Essilor would buy Luxottica while Del Vecchio would become executive chairman of the combined company, as well as co-lead the company with then-Essilor CEO Hubert Sagnières.[10][11] The combined entity would command more than one quarter of global value sales of eyewear.[12][13] In March 2018, the European Commission unconditionally approved the merger of Essilor and Luxottica.[14] On 1 October 2018, the new holding company EssilorLuxottica was born, resulting in combined market capitalization of approximately $70 billion.[15]

History

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For post-2018 history, see EssilorLuxottica § History.

Foundings of Luxottica

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Luxottica Carlos sunglasses, produced by Luxottica prior to its licensing deals with fashion houses

Leonardo Del Vecchio started the company in 1961,[16] in Agordo north of Belluno, Veneto; today the company is headquartered in Milan, Italy.[13]

Del Vecchio began his career as the apprentice to a tool and diemaker in Milan, but he decided to turn his metalworking skills to making spectacle parts. In 1961, he moved to Agordo in the province of Belluno, home to most of the Italian eyewear industry.[17] The new company was Luxottica s.a.s., a limited partnership with Del Vecchio as one of the founding partners.[17] In 1967, he started selling complete eyeglass frames under the Luxottica brand, which proved successful enough that by 1971 he ended the contract manufacturing business.[18]

Vertical integration and acquisitions

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Convinced of the need for vertical integration, he acquired Scarrone in 1974, a distribution company.[17] In 1981, the company set up its first international subsidiary, in Germany, the first in a rapid period of international expansion.[17] The first of many licensing deals with a designer was struck with Giorgio Armani in 1988.[19]

The company listed in New York in 1990,[20] and in Milan in December 2000,[21] joining the MIB-30 (now FTSE MIB) index in September 2003.[22] The listing raised money for the company and allowed it to use its shares to acquire other brands, starting with Italian brand Vogue Eyewear in 1990, Persol and LensCrafters in 1995, Ray-Ban from Bausch & Lomb in 1999 and Sunglass Hut in 2001.[17] Luxottica later increased its presence in the retail sector by acquiring Sydney-based OPSM in 2003, Pearle Vision and Cole National in 2004.[23]

Luxottica acquired Oakley in November 2007 for US$2.1 billion. Oakley had tried to dispute their prices because of Luxottica's large marketshare, and Luxottica responded by dropping Oakley from their stores, causing their stock price to drop, followed by Luxottica's hostile take over of the company.[24]

In August 2011, Luxottica acquired Erroca for €20 million.[25] In March 2014, it was announced that Luxottica would partner with Google on the development of Google Glass and its integration into Luxottica's eyewear.[26]

Reorganization and merger with Essilor

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On 1 September 2014, a new organizational structure was announced, composed of two co-CEOs, one focusing on market development and the other overseeing corporate functions. After the exit of former CEO Andrea Guerra, Enrico Cavatorta was appointed CEO of Corporate Function and Interim CEO of Market (until new and permanent appointment to this role).[27][28][29] Cavatorta left the company 40 days after being appointed CEO. In 2016, it was reported that Luxottica had lost its third chief executive in a year and a half, as Cavatora's replacement, Adil Mehboob-Khan stepped down one year after he gained the position.[30] Upon the departure of Mehboob-Khan, Del Vecchio reclaimed executive powers and became much more active in the company.[31]

In January 2017, the company agreed to a merger with Essilor.[32] The deal also offered a succession plan for Leonardo Del Vecchio, the company's founder.[33] Shortly before the merger completed, reporter Sam Knight wrote in The Guardian, "in seven centuries of spectacles, there has never been anything like it. The new entity will be worth around $50bn (£37bn), sell close to a billion pairs of lenses and frames every year, and have a workforce of more than 140,000 people."[34] On 1 October 2018 the new holding company EssilorLuxottica was founded, resulting in combined market capitalization of approximately €46.3 billion as of the date of the merger announcement.[35]

Eyewear brands

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Persol sunglasses
Ray-Ban's Aviators

Luxottica's two main product offerings are sunglasses and prescription frames. The company operates in two sectors: manufacturing & wholesale distribution, and retail distribution.[36]

The house brands include the following:[37][4]

The company also makes eyewear under license for the following designer labels:[37][4]

These brands are sold in the company's own shops, as well as to independent distributors such as department stores, duty-free shops, and opticians.[13]

Retail

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Luxottica Retail has about 9,100 retail locations[4][42] in the United States, Latin America, Canada, India, China, Australia, New Zealand, South Africa, the United Kingdom, and United Arab Emirates.[23] The headquarters of the retail division is in Mason, Ohio, United States (North America).[23] Their retail banners include the following:[43]

Luxottica is the largest optical retailer in the United States, with 7.3% of US retail sales in 2015.[45] With its merger with Essilor in 2018 the company owns Coastal/Clearly, an online contacts and glasses retail giant bought in 2014 that ships to over 200 countries beside its original North American market.[citation needed]

Medical managed care

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Luxottica also owns EyeMed Vision Care, a managed vision care organization in the United States.[46] As of 2014, it is the second-largest vision benefits company in the United States.[47][48][49]

Philanthropy

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Luxottica is affiliated with the charitable organization OneSight, formed in 1988.[50] In August 2018, Luxottica restored Accademia Bridge in Venice.[51] In March 2022, EssilorLuxottica announced the launch of the OneSight EssilorLuxottica Foundation to unify the group's philanthropic efforts, primarily providing vision services to underserved communities.[52]

Criticism

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Monopolistic pricing practices

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The company has been criticized for the high price of its brand-name glasses, such as Ray-Ban, Oakley, and several others. A 2012 60 Minutes segment focused on whether the company's extensive holdings in the industry were used to keep prices high. Luxottica owns not only a large portfolio of brands (over a dozen[53]) such as Ray-Ban and Oakley but also retailers such as Sunglass Hut, Lenscrafters and Oliver Peoples, the optical departments at Target, and (formerly) Sears, as well as key eye insurance groups including the second largest glasses insurance firm in the US, EyeMed. It has been accused of operating a complete monopoly on the optical industry and overcharging for its products; for example, temporarily dropping then-competitor Oakley from its frame design list, then, when the company stock crashed, purchasing the company, then increasing the prices of its Ray-Ban sunglasses. In addition, it has been argued that, by owning the vision insurance company EyeMed, it also controls part of the buyers' market as well.[48]

The company has said that the market is highly competitive, and that their frames account for ≈10% of sales worldwide and ≈20% in the United States.[54][53] In 2017, their share of the prescription lens market was 41%.[55] Euromonitor International estimated that Luxottica's market share was 14% worldwide, with the second-largest company in the industry, Essilor, holding a 13% market share. The third-largest player was Johnson & Johnson, with a 3.9% market share. In October 2018, Luxottica and Essilor merged into a single company, EssilorLuxottica, which now occupies nearly 30% of the global market share and represents almost a billion pairs of lenses and frames sold annually.[56]

Despite not owning most of the market, the company has considerable price-setting power. It uses "spiff money", financial incentives to reward other industry players who co-operate with it, and has repeatedly driven companies that competed with it on price out of business, crashing their market share and stock price, then buying them out. It has used a variety of techniques, including compelling retailers to drop suppliers and making imitations of competitor's products. It also funds university chairs of opthamology and is influential in professional associations.[57]

The HBO series Last Week Tonight with John Oliver has criticized the company as a prominent instance of corporate consolidation,[58] as has the TruTV series Adam Ruins Everything.[59]

In 2019, LensCrafters founder E. Dean Butler spoke to the Los Angeles Times, admitting that Luxottica's dominance of the eyewear industry had resulted in price markups of nearly 1,000%. In the interview, Butler noted "You can get amazingly good frames, with a Warby Parker level of quality, for $4 to $8. For $15, you can get designer-quality frames, like what you'd get from Prada." When told that some eyeglasses cost as much as $800 in the United States, Butler remarked, "I know. It's ridiculous. It's a complete rip-off."[60][61][62]

Major shareholders

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The list of Luxottica shareholders with more than 2% of holdings, December 2014.[63]

See also

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References

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  1. ^ "NYSE DELISTING FAQ". Luxottica. 16 June 2017. Retrieved 6 July 2023.
  2. ^ "Experience real-time quotes, in-depth charts, and analyst ratings". Webull. Retrieved 6 July 2023.
  3. ^ "Francesco Milleri replaces Massimo Vian as the new CEO of Luxottica". 19 December 2017. Retrieved 23 January 2018.
  4. ^ a b c d "EssilorLuxottica - Annual Report 2023". Retrieved 5 August 2024.
  5. ^ "Luxottica to Buy a U.S. Sunglasses Maker". The New York Times/Reuters. 21 June 2007.
  6. ^ "Company Profile, Reuters.com". Reuters. Retrieved 25 May 2017.
  7. ^ "5 Biggest Eyewear Companies in the World". Insider Monkey. Retrieved 14 November 2023.
  8. ^ Arends, Brett (22 July 2010). "Are Designer Sunglasses Worth the Price?". Wall Street Journal.
    "Eyewear brands". luxottica.com. 1 May 2015.
    Touryalai, Halah. "Ray-Ban, Oakley, Chanel Or Prada Sunglasses? They're All Made By This Obscure $9B Company". Forbes. Retrieved 25 May 2017.
    Knight, Sam (10 May 2018). "The spectacular power of Big Lens". The Guardian. Retrieved 3 June 2018.
  9. ^ Lazarus, David (5 March 2019). "Column: How badly are we being ripped off on eyewear? Former industry execs tell all". Los Angeles Times. Retrieved 5 July 2023.
  10. ^ Muiler, Thomas; Leafgreen, Dan (15 January 2017). "Essilor to Buy Ray-Ban Maker Luxottica for About $24 Billion". www.bloomberg.com. Retrieved 14 July 2023.
  11. ^ Chad Bray and Elizabeth Paton, Luxottica, Owner of Ray-Ban, in $49 Billion Merger With Essilor. The New York Times, 2017/01/16.
  12. ^ "Eyewear 2018 Edition: Key Research Highlights". 17 July 2017.
  13. ^ a b c Knight, Sam (10 May 2018). "The spectacular power of Big Lens". The Guardian. Retrieved 3 June 2018.
  14. ^ "EU clears merger of Essilor, Luxottica without conditions". Reuters. March 2018.
  15. ^ "EssilorLuxottica". Forbes. Retrieved 12 June 2021.
  16. ^ "World's Billionaires Leonardo Del Vecchio". Forbes March 2011.
  17. ^ a b c d e "Luxottica Past and Present". Luxottica Group S.p.A. Retrieved 2 November 2009.
  18. ^ "Santander research" (PDF). Borsa Italiana 2003.
  19. ^ "The Armani Group and the Luxottica Group announce expiration of licence agreement". in Pambianco News November 21, 2002. 21 November 2002.
  20. ^ "Luxottica Group S.p.A." NYSE, New York Stock Exchange. Archived from the original on 26 December 2013.
  21. ^ "Luxottica". Borsa Italiana. Archived from the original on 14 August 2012. Retrieved 13 September 2011.
  22. ^ "Luxottica Group Added to MIB 30 Index". Syndication Teleborsa 22, 2003.
  23. ^ a b c "Luxottica Facts and Figures". Luxottica Group S.p.A. Retrieved 10 August 2011.
  24. ^ "Luxottica Group and Oakley complete merger". Syndication Teleborsa, 2007.
  25. ^ "Luxottica buys Erroca sunglasses chain for €20m". in Globes September 13, 2011. 7 August 2011.
  26. ^ Google to De-Dorkify Glass in Partnership With Ray-Ban Maker Luxottica, Businessweek, 25 March 2014
  27. ^ "Luxottica sets new co-CEO model, Guerra to leave, Cavatorta named CEO Corporate, interim CEO Markets". Vision Monday.
  28. ^ "A management shake-up at Luxottica, Ray-Ban maker". The New York Times. 2 September 2014.
  29. ^ "Luxottica announces the implementation of a new governance structure based on a co-CEO model". Luxottica.
  30. ^ Gordon, Sarah (10 February 2016). "Loss of another Luxottica chief is a concern for Italy Inc". The Financial Times. Archived from the original on 10 December 2022.
  31. ^ "FB Roundup: Casino Group, Luxottica, and LVMH | Campden FB". www.campdenfb.com. Retrieved 11 October 2023.
  32. ^ Ray-Ban Maker Luxottica to Merge With Lens Company Essilor, Creating $49 Billion Eyewear Giant, Wall Street Journal, 16 January 2017, retrieved 17 January 2017
  33. ^ "Ray-Ban maker Luxottica agrees €46bn merger with Essilor". BBC News. 16 January 2017.
  34. ^ Knight, Sam (10 May 2018). "The spectacular power of Big Lens | The long read". The Guardian. ISSN 0261-3077. Retrieved 18 June 2019.
  35. ^ Bray, Chad; Paton, Elizabeth (16 January 2017). "Luxottica, Owner of Ray-Ban, in $49 Billion Merger With Essilor". The New York Times. Retrieved 10 November 2022.
  36. ^ "Luxottica S.p.A". Bloomberg Businessweek. Archived from the original on 15 October 2012. Retrieved 10 August 2011.
  37. ^ a b "Luxottica Group S.p.A". in Reuters. Archived from the original on 30 July 2010. Retrieved 10 August 2011.
  38. ^ "Limited Warranty". Native Eyewear. Retrieved 14 October 2021.
  39. ^ "Swarovski and EssilorLuxottica announce a ten-year licensing agreement". 6 December 2022. Retrieved 25 September 2023.
  40. ^ "EssilorLuxottica: Swarovski and EssilorLuxottica announce a ten-year licensing agreement". Yahoo! Finance. 6 December 2022. Retrieved 25 September 2023.
  41. ^ "WWD: Valentino and Luxottica Sign Licensing Agreement". 23 February 2016. Retrieved 28 April 2017.
  42. ^ "Annual Report 2017" (PDF). Retrieved 19 April 2018.
  43. ^ "Annual Review 2014". Archived from the original on 19 May 2015. Retrieved 12 June 2015.
  44. ^ "Reuters: Luxottica buys remaining 63.2 pct of Salmoiraghi & Vigano". Reuters. 25 November 2016. Retrieved 28 April 2017.
  45. ^ "Top 50 list" (PDF). mobile.visionmonday.com. 2017. Retrieved 30 March 2020.
  46. ^ "Our Position in the Industry". EyeMed Vision Care. Retrieved 10 August 2011.
  47. ^ "Activities: Managed Vision Care", Luxottica website
  48. ^ a b "Sticker shock: Why are glasses so expensive?". 60 Minutes. CBS News. 7 October 2012. Archived from the original on 8 October 2012. Retrieved 19 October 2012.
  49. ^ "Forbes: There's More To Ray-Ban And Oakley Than Meets The Eye". Forbes. Retrieved 31 March 2015.
  50. ^ "Charity Navigator - Rating for OneSight". www.charitynavigator.org. Retrieved 24 December 2022.
  51. ^ FashionNetwork.com. "Luxottica completa il restauro del Ponte dell'Accademia a Venezia". FashionNetwork.com (in Italian). Retrieved 11 September 2018.
  52. ^ www.eyecarebusiness.com https://www.eyecarebusiness.com/news/2022/launch-of-the-onesight-essilorluxottica-foundation. Retrieved 24 December 2022. {{cite web}}: Missing or empty |title= (help)
  53. ^ a b Swanson, Ana. "Meet the Four-Eyed, Eight-Tentacled Monopoly That is Making Your Glasses So Expensive". Forbes.
  54. ^ "FACT CHECK: Does Luxottica Own 80% of the Eyeglass Industry?". 20 September 2016.
  55. ^ Pollock, Ian (16 February 2017). "Why the merger of Essilor and Luxottica matters". BBC News. Retrieved 23 October 2024.
  56. ^ Knight, Sam (10 May 2018). "The spectacular power of Big Lens | The long read". The Guardian – via www.theguardian.com.
  57. ^ Knight, Sam (10 May 2018). "The spectacular power of Big Lens". The Guardian. Retrieved 23 October 2024.
  58. ^ "Corporate Consolidation: Last Week Tonight with John Oliver (HBO)". YouTube. 24 September 2017.
  59. ^ Cave, James (14 September 2016). "Turns Out A Single Company Controls Several Of The Outlets Where You Buy Eyeglasses". Huffington Post. Retrieved 30 August 2022.
  60. ^ Lazarus, David (5 March 2019). "How badly are we being ripped off on eyewear? Former industry execs tell all". Los Angeles Times. Retrieved 18 June 2019.
  61. ^ Lieber, Chavie (6 March 2019). "Glasses can have a markup of 1,000%. Two former LensCrafters executives revealed why". Vox. Retrieved 18 June 2019.
  62. ^ Engineering a Monopoly: How to not get ripped off on your next pair of eyeglasses https://interestingengineering.com/how-not-to-get-ripped-off-on-your-next-pair-of-eyeglasses
  63. ^ "Azionisti rilevanti di LUXOTTICA GROUP SPA". Commissione Nazionale per le Società e la Borsa. Archived from the original on 27 December 2014. Retrieved 27 December 2014.
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