Luxottica-Armani, Changes in Design and Distribution

TheLuxottica Group has made public the reasons that led to the termination of the license agreement between the company and Giorgio Armani. Emerging during contract renewal negotiations were significant changes regarding design, minimum guaranteed billings and distribution.

Giorgio Armani would in fact have decided to make radical changes to the design of the eyewear. Luxottica was unable to agree to this change in strategy because the passage from a 'classical' product to a trend or niche product would have led to a considerable reduction in billings for at least three or four years. Under the terms of the contract, which provides for the payment of royalties on minimum guaranteed billings irrespective of guaranteed sales, the Del Vecchio company would have had to bear the brunt entirely.

Billings would also have suffered because of the other request put forward by Giorgio Armani, to reduce the number of authorized opticians. This proposal would also have been detrimental to Luxottica's image, with negative consequences for the Group's twenty two lines (according to Luxottica, opticians deprived of a brand they've been selling years react by eliminating the supplier).

(Source: MF)