Luxottica pays the designers a royalty of 5% to 14% of net sales and a marketing fee of 5% to 10% depending on the agreement.
The agreements with these brands are exclusive meaning no other manufacturer can make their glasses. It licenses the other designer brands including Bulgari, Burberry, Chanel, Coach, Dolce & Gabbana, Donna Karan, Paul Smith, Polo Ralph Lauren, Prada, Stella McCartney, Tiffany, Tory Burch, Versace and Armani. These proprietary brands accounted for 70% of frame sales with Ray-Ban and Oakley making up nearly 45% of the sales. In addition to its 7,000 retail stores and its roughly 10 production facilities the company owns some of the brands it sells including Ray-Ban which it bought in 1999, Oakley which it bought in 2007, Vogue, Oliver Peoples, Persol, Alain Mikli, Arnette and REVO.
He estimated some 500 million people were wearing his sunglasses around the world. It's risky but it can work out very well and be extremely cost efficient.Ħ0 Minutes on CBS last year interviewed Luxottica CEO Andrea Guerra about his company's dominance in the eyewear space. That kind of model is known as vertical integration. Not only is it making the glasses it but it's also selling them directly through Sunglasses Hut, Lenscrafters, Pearle Vision-all are owned by Luxottica. Today, Luxottica has cut out the middle man.
It then began wholesaling its first collection of eyewear. So, what's the deal with Luxottica? The Milan-based company started off pretty small back in 1961 with now chairman Leonardo Del Vecchio selling small parts to the optical industry.īy 1971, the company was able to produce a pair of glasses from start to finish. Luxottica shares are up an impressive 114% over the last five years compared with 26% for the S&P. If you owned Luxottica shares at the start of the year you'd be up 24% compared with 13% for the S&P 500.
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