Share this
Digg
Del.icio.us
StumbleUpon
Netscape
Yahoo
Technorati
Googlize this
Facebook
Export PDF
Print
E-mail
MORE THAN TWO decades ago, actor Tom Cruise in the 1980s epic action movie Top Gun popularised Aviator sunglasses. Strategic product placement was a key marketing tool for the sunglasses brand Ray- Ban at the time. Indeed, Cruise had worn Ray- Ban’s Wayfarer sunglasses years earlier in another movie, Risky Business. The two movies apparently helped spark a renaissance of sorts for sunglasses. Outsized sunglasses became a fashion statement of the era. Millions of Ray- Bans were sold years later because everyone wanted to have a Cruise look.
Ray-Ban was one of the many eyewear brands owned by US lens maker Bausch & Lomb, which sold the label in the late 1990s to focus on its core contact-lens business. The buyer, Italian upstart Luxottica Group, is now the world’s largest eyewear company. Twelve years after Luxottica bought Ray-Ban for US$640 million, the boom in luxury retailing in China and other emerging markets is boosting the fortunes of the fashion-eyewear firm. Luxottica’s New York- and Milan-listed shares are up more than 50% this year way, overperforming the broader market indices, which are barely in positive territory. Suddenly, luxury and fashion eyewear is hot, and investors know it.
Luxottica’s is a rags-to-riches story. It was founded by Leonardo Del Vecchio, who was sent to an orphanage at the age of seven. Del Vecchio started out as an apprentice to a tooland- die maker in Milan as a teenage school dropout and eventually learnt to make metal spectacles. By the 1960s, he had a fledgling spectacle-frame business, making metal frames under contract for eyewear firms. He eventually launched his own Luxottica brand and expanded by growing the Italian and, later, European, American and Asian eyewear distribution and retailing businesses.
Luxottica turned a net profit of €382 million ($673.8 million) last year on revenues of €5.8 billion. (Ray-Bans make up just over a third of Luxottica’s total annual revenues.) Analysts expect Luxottica’s earnings to grow 21% this year and nearly 20% next year even as it splurges to roll out an aggressive expansion strategy across emerging markets, including China, over the next three years.
Over the years, Luxottica, which listed on the New York Stock Exchange in 1991, has grown through acquisitions, buying eyewear brands, distributors and retailing franchises. It bought out the Italian brand, Vogue, in 1991, as well as Persol and the LensCrafters chain in 1995. In 1999, it acquired Ray-Ban and, in 2001, Sunglass Hut, Inc. Eight years ago, it bought Australian eyewear retailer OPSM and, in 2004, American eyewear retailers Pearle Vision and Cole National. Four years ago, it got Oakley, an American firm famous for its sporty eyewear, for US$2.1 billion.
Del Vecchio is now Italy’s second-richest man and Forbes earlier this year estimated his net worth at more than US$11 billion ($13.7 billion).
