Luxottica global expansion moves up a gear

By Kathryn Higgins

07 March 2016 at 09:02 BST

The Ray-Ban sunglasses maker stumbled on the Borsa Italiana on Tuesday after unveiling a $1.6bn investment in its global expansion strategy.

Stefano Tinti

The cash boost will help to lift Luxottica's currency-neutral revenue by five to six percent this year and then at a 'mid-to-high single-digit' rate in 2017 and 2018 by upping spending on digital, product development and expansion into emerging markets. According to estimates by Exane BNP Paribas, demand for eye-wear is rapidly expanding in emerging markets and putting pressure on the luxury sunglasses maker to move towards making prescription specs. With approximately 2.3 billion people in Asia, Africa and Latin America now needing optical frames, Exane's Luca Solca suggests that a tie-up with French lens maker Essilor International could be a next step for Luxottica.

Early stumble

News of the investment tripped up Luxottica on the Borsa Italiana as the company scaled down its earnings outlook. Shares slumped around six per cent on Tuesday after the company indicated that net income will increase at least at 1.5 times the pace of sales through to 2018 – just half the company's target growth rate for the last six years. Luxottica's management has suffered ongoing turmoil, with three chief executives departing the company in quick succession. On Tuesday, longtime Del Vecchio family advisor Franceso Milleri was appointed to the company's board to advise founder and majority owner Leonardo Del Vecchio.

Eye-wear boom

As demand for luxury frames grows in emerging markets, so too do infringements upon the intellectual property of makers like Luxottica. On Thursday, police in Bangkok announced that they had seized a stockpile of almost 900,000 counterfeit brand-name sunglasses in the city. The sunglasses were reportedly being imported from China before being 'customised' with stickers and tags in Thailand to help pass them off to consumers. The Italian Embassy in Thailand reportedly took part in a press conference announcing the raid. Sources: Business of Fashion; Bloomberg Business; The Fashion Law


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