Every corporation would like to dominate its industry. It can be what pushes mergers, the hiring newest executives, the reshuffling of management and even substantial changes to a company’s business design. Most of these things are carried out the furtherance of perfection, of seeking complete domination atop the precipice of industry: dominance so rare because many governments have legislated against such ambition with anti-monopoly and antitrust statutes. But what happens if there seemed to be an organization that achieved almost complete power over an industry which had been not highly regulated and had minimal barriers to entry? Would you need to own a piece, even when your main products were primarily comprised of small elements of glass, metal and plastic? From Ray-Ban and oakleys australia and prescription frames that retail from the large sums of money, on the stores that sell the glasses, Luxottica Group (LUX) dominates the eyewear world.
The Italian company had revenues of €7.313 billion last year and produced over 77 million pairs of sunglasses and optical frames. Over half a billion people wear Luxottica glasses and the company has single handedly turned a once boring eyewear market into high fashion. Their proprietary brands (68% of the total sales of frames) include a couple of the top sunglass brands in the world Ray-Ban and Oakley, along with Vogue Eyewear, Persol, Oliver Peoples, Alain Mikli and Arnette.
Beyond their wholly owned brands, Luxottica holds contracts with nearly every designer brand and label imaginable, including: Chanel , Prada , Miu Miu, Dolce & Gabbana, Bulgari, Tiffany & Co TIF -.20%., Versace, Burberry, Polo Ralph Lauren RL 1.42%, Donna Karan, DKNY, Paul Smith, Brooks Brothers, Stella McCartney, Tory Burch, Coach COH -.02%, Armani and Starck Eyes. These deals run for 3-10 years with a lot of containing renewal options. The fashion houses send Luxottica sketches of their new collections, and Luxottica provides the exclusive rights to create and produce accompanying eyewear in house. Luxottica may then sell the glasses for a lot of times what they cost to produce.
Not simply are you currently almost certainly buying sunglasses australia, but most likely you buy them from your Luxottica-owned retailer too. The corporation carries a retail network comprised of over 7,000 stores worldwide including the top eyewear chain, Lenscrafters, other big chains such as Pearle Vision and Oliver Peoples, and lots of boutique chains. Additionally they operate Sears Optical and Target TGT .69% Optical. And when you believed wasn’t enough, they also own Sunglass Hut, the biggest sunglass chain worldwide and EyeMed, another largest managed vision care company (covering eye exams and glasses for 36 million members).
Competition for Luxottica is usually knocking in the door as companies such as online retailer Warby Parker go from virtual unknowns to $100 million companies in just a few years.
However, Luxottica supports the cards in brick-and-mortar retail: when competitors get too big, Luxottica can just cut them from their popular distribution channels. That’s exactly how they treated then-independent competitor Oakley during the early 2000’s. Luxottica caused Oakley’s stock to plummet just by carrying fewer of their sunglasses through Sunglass Hut, eventually leaving Oakley without having choice but to merge with Luxottica in 2007.
In other instances Luxottica has brought iconic brands names like Ray-Ban and transformed them. When Luxottica purchased Ray-Ban in 1999, the company was on life support so you could purchase a set of Ray-Ban sunglasses in any major chain store for $30. Luxottica took the manufacturer off the market for a year and then relaunched them as being a luxury brand with glasses selling for more than 5 times the maximum amount of.
This coming year alone Luxottica purchased Glasses.com, a firm which offers a unique virtual 3D try-on technology and it is collaborating with Google GOOGL -1.16% to develop, develop and distribute Ray-Ban and Oakley Google Glasses which should be in shops early next year. Luxottica recently brought Michael Kors in the fold by signing a brand new 10 year exclusive licensing deal that is set to launch in 2015.
Because such a large percentage of ray ban aviators hails from North America (56%) the lowering of the United states dollar versus the euro has negatively impacted earnings. The stock is currently trading at the pricey 35 times trailing twelve month earnings. For 2013, the corporation reported an operating profit of €1.056 billion and dexopky62 cash flow of €610 million. Also, shareholders could see earnings volatility on account of contact with the sunglass and luxury market (54% of revenues) that are not quite as predictable as being the prescription frames and lenses (46% of revenues).
Luxottica made positive moves on the dividend front by improving the payment each and every year since 2009. Management has not been inclined to perform large share repurchases and activist investors who are looking to change which may be disappointed to learn that Leonardo Del Vecchio, the company’s founder throughout the firm Delfin S.à r.l., has voting rights over 61% from the issued shares.