Luxottica joins Oakley to create new group

At Oakley's California headquarters yesterday, Luxottica Group S.p.A., the world leader for the design, production, distribution and sale of top range and luxury eyewear, presented to the financial community the development plan structured around the new business prospects deriving from the US$2.1 billion acquisition of the Californian company last November 14. The new Luxottica Group is the outcome of the merger between these two companies.

The final objective of the long-term development plan is clear: to create an innovative business model with numerous advantages for consumers, employees and Luxottica Group shareholders. The plan is based on Luxottica's vertical integration model, its balanced brand portfolio and ability to achieve all regions, which have now been joined by Oakley's technological leadership and considerable clout in the sports world.

The plan envisages that Luxottica will exceed the Euro 6.1 billion billings target (at an exchange rate of €1 = US$1.45) in 2009, with growth up 27% on 2007 at constant exchange rates. Expected billings in 2008 are in the range of Euro 5.6 to Euro 5.75 billion. The plan also has a profitability target: by 2009 the Group forecasts a per share profit in excess of Euro 1.31, an increase of 35% compared to 2007 that will be unaffected by exchange rates and brand amortization. Per share profit in 2008 is expected to be between Euro 1.11 and Euro 1.14. For 2007, the Group estimates a per share profit of Euro 1.08, a 24% upturn against the net result for 2006 at constant exchange rates.

Luxottica reiterated that by 2010 operational synergies created just by merging the two companies should be Euro 100 million, gradually rising from Euro 20 million in 2008 and Euro 60 million in 2009.

During his presentation of the plan, Luxottica Group chief executive Andrea Guerra commented: 'The combination of the Luxottica and Oakley businesses changes the future of our industry. Today is the start of a new Luxottica Group and ahead lie 3-5 years of development, new projects and the exploration of new segments. Two complementary models, two unique stories with a lot in common: Oakley' extraordinary sun lenses technology and its supremacy in sports together with our dimensions, proximity to luxury and fashion, excellent design and production. The combination of these qualities will create a global competitive advantage at all levels of an organization whose potential for growth appears to be unlimited.

'Our shared work started last summer, when the first 80 Oakley and Luxottica managers began to lay the plans for the future and these are already at the implementation stage. From the outset, this process has been based on the real integration of people, integration that is cultural first and business second, the only real guarantee of the extraordinary possibility we have to change the development of our industry.

'Today, we are witnessing the creation of new segments and new lifestyles due to the removal of the boundaries between technology, luxury and sport. These are three sectors that we now have in-house and through which we can influence change and keep a strong grip on our leadership.

'Our growth forecasts are a demonstration of the new Luxottica Group's potential over the entire period covered by the plan'.

Actions in European countries and emerging markets are priorities in the plan. With this integration, Luxottica's entire commercial and operational infrastructure will be available to Oakley, one of the most sought-after brands in these countries, and aims at more than doubling sales over the next three years.
In addition to the obvious operational synergies deriving from the total number of Luxottica and Oakley stores, the retail market is an opportunity to display, present and talk about the Oakley brand in a great many more stores, especially in the vision eyewear segment.

Another of the plan's priorities is to have significant new additions in the industrial and operational world. Immediate leverage will be applied to all expertise deriving from the mutual exploitation of strong points. Strong impetus also for the sun lens research and development area by making Oakley's considerable skills and Luxottica Group's long tradition a common factor. Lastly, an optimum logistics set up will be quickly identified for the Group.

In view of business development and not simply integration and rationalization, the plan includes other projects that will additionally expand the Group's potential.

These are the other projects: the strengthening of the luxury retail presence in North America; the exact positioning that will foster development of the new portfolio for REVO and Arnette, sports brands with a long tradition; a stronger global operational infrastructure for Oliver Peoples, the Californian luxury brand that is sought-after worldwide.

Andrea Guerra concluded: 'We have combined the strengths of two successful organizations. The development plan and the relevant operational plans have been completed and many are already at the execution stage. With our usual speed, entrepreneurship, simplicity and passion, we must now continue to meet the current and future requirements of our customers throughout the world.'