Luxottica takes Lenscrafters to China

Luxottica, the one-thousand pound gorilla of the eyewear industry, and the owner of Lenscrafters, announced that they will be bringing around 1,000 eyewear outlets to China. Basically, there will be Lenscrafter stores all over the affluent parts of China (sorry, Western China). At over $100 a pop for a simple pair of glasses, Luxottica will have to work hard to differentiate their product from that available from online retailers for about 1/3 of the price. In the United States, mid-range Lenscrafter glasses are indistinguishable from those purchased online at a fraction of the price. Beyond that, Lenscrafters have an army of dissatisfied customers. I will be the bigger man, however, and I say to Luxottica, good luck in China!

Luxottica aims for 1,000 China outlets in 5 years

SHANGHAI, Nov 9 (Reuters) – Luxottica, the world’s biggest eyewear maker, plans to nearly quadruple its retail outlets in mainland China and Hong Kong to about 1,000 in five years, banking on robust demand in the fast-growing economy, its global chief executive said.

The maker of RayBan sunglasses is increasingly focusing on China, where it now operates two of its eight manufacturing plants worldwide.

It rolled out the LensCrafters brand to its Chinese stores in 2006 and operates 266 outlets in China and Hong Kong, out of about 5,900 globally, selling its house brands of eyewear as well as licensed brands such as Bulgari, Versace and Polo Ralph Lauren, Andrea Guerra told reporters in Shanghai on Thursday.

“Obviously it would take time,” Guerra said. “But I am sure that in the next five years we will be in the region of 1,000 stores.”

Sales in the mainland and Hong Kong could come to 100 million euros ($147 million) next year, up from its 2007 target of 75 million euros, said the 42-year-old chief executive.

To maintain the momentum, the Italian eyewear maker will invest 10 million to 15 million euros annually in the country in the next three years, he added.

Globally, Luxottica’s 2007 sales target is around 5 billion euros, rising to 5.7 billion euros next year on a pro forma basis.

MINOR ACQUISITIONS
Luxottica, founded nearly half a century ago in northeastern Italy, has grown through a series of acquisitions, including its 1995 takeover of optical chain LensCrafters which gave it a foothold in North America.

It is in the process of acquiring U.S. sunglass maker Oakley and expects to close the $2.1 billion all-cash deal in the middle of the month.

The Italian eyewear maker is also acquisitive in China, where it has snapped up three eyewear retailers in major cities.

Guerra, whose career had included a stint in the Marriott Corp, said his firm would focus mostly on organic growth in the next five years but did not rule out minor acquisitions.

Luxottica’s eyewear, priced at 1,300 to 3,000 yuan ($175-$404), targets the medium- to high-end segment, particularly professionals aged 25 to 40.

Guerra saw great potential for China’s eyewear market, especially for sunglasses, which as elsewhere in Asia are an increasingly important fashion statement.

He noted the rapid rise in popularity of sunglasses in Japan.

“In the beginning of the ’90s there were basically no sunglasses,” he said, although in 2007 one-fifth of the population wears sunglasses.

Roughly 1 percent of China’s 1.3 billion population wears sunglasses, compared with 25 percent in North America and 50 percent in western Europe, he added. ($1=.6803 Euro) ($1=7.420 Yuan) (Reporting by Fang Yan)

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