Thursday, June 21, 2007

Luxottica to expand eyewear empire Italy-based Luxottica Group, the world's #1 eyeglass manufacturer and retailer, announced it would buy US-based sunglass maker Oakley in a $2.1 billion deal. Luxottica already owns such US companies as Lenscrafters, Pearle Vision, Sunglass Hut, and EyeMed Vision Care. It also runs in-store optician departments at Sears, Target, and other companies. It has over 5,800 retail locations worldwide, including China, Brazil, Australia, and New Zealand. It is very big in Europe. Luxottica produces such branded sunglass brands as Ray-Ban, Ralph Lauren, Burberry, Prada, and Chanel. It has extensive holdings in China where much of its manufacturing has been transferred, It also recently bought Chinese retailers Xueliang Optical (149 stores) and Modern Sight Optics, with 290 stores. Oakley is best known for sports-oriented sunglasses (its most well-known brand is Factory Pilots), as well as motorcycle and ski goggles. It owns the Bright Eyes, Oakley Vault, and Sunglass Icon retail chains (over 300 locations). Typically, Oakley itself has been a major acquirer, having bought Eyewear Safety Systems, a maker of protective eyewear, for $110 million. It also recently bought Oliver Peoples, a luxury eyewear brand, and retail chain, Optical Shop of Aspen. Sunglass Icon is the #2 sunglass specialty shop in the US; Sunglass Hut is #1. This is another story of a garage-based business hitting it rich. Oakley was started in 1976 making a few motorcycle goggles with a piffling investment from one guy. It has been growing every since. A Bloomberg story quotes on analysts as saying "This is maybe one of the best brand acquisitions Luxottica has made. One of the areas Luxottica was lacking was sunglasses for sports." In fact, this is a very smart move, getting rid of a key competitor and allowing expansion into related but new product areas that already have a real cachet, products that can be helped by Luxottica's global reach. Luxottica's only real competition in the eyewear industry is the HAL Trust, a Dutch holding company that is a major owner of eyewear companies including Pearle Europe (a chain with over 2,084 stores, under such names as Pearle, Apollo, Avanzi, Synoptik, and others); Grandvision (over 500 retail stores in the UK. France, and other countries); and Redstar (a Chinese chain with over 100 stores); HAL has no apparent presence in the US. 5:27:00 PM

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