Cavatorta Says Luxottica’s Strategy On Track, Company to Re-examine ROI


Luxottica's new CEO
Enrico Cavatorta.

MILAN—In a conference call with financial analysts here following Luxottica’s announcement of a new co-CEO structure for corporate and markets functions and the departure of Andrea Guerra, as previously reported by VMail today, new CEO Enrico Cavatorta reiterated that the company’s strategic direction remains constant, adding that any disagreements between former CEO Guerra and Luxottica founder and chairman, Leonardo Del Vecchio and the company’s board “had more to do with differences of opinion over the approach of the shared CEO structure and the new organizational model rather than any other issue.” He also dismissed certain media reports speculating on strategy differences between the chairman and Guerra.
Cavatorta said, “Andrea has made a valuable contribution to the company. I would like to thank him personally and on behalf of the company for his contributions over 10 years. We have worked together side by side. He has done a tremendous job and is leaving the company in excellent shape.”

He added, “The most important asset of Luxottica is its highly competent management team, who are more than capable of seizing new opportunities and facing what lies ahead. Today, we have put in place a new foundation for growth and development, consistent with the company’s strategic direction. The challenges and complexities of the company and the environment are no longer suited to a single leadership role. As CEO of corporate functions, I’ll lead this approach where we will also look closely at profit margins, cost allocations, grow our revenues becoming even more efficient than we are today.”

Cavatorta, a long-time Luxottica executive, most recently current general manager and CFO of the Group, was appointed CEO of Corporate Functions. He was also named as Interim CEO of Markets until a person is named to that new post and the two will function as co-CEOs. He said that the search for a Markets CEO has begun and that this will be an external hire, noting that the search firm, the Luxottica HR committee, the chairman and himself will be involved in the search.

In response to analyst questions, Cavatorta repeated that the disagreements about the future leadership of the company were about the organizational model. “Given the complexities of Luxottica, the board, not just Mr. Del Vecchio, felt we needed a different approach, and on this there was clearly disagreement with [Mr. Guerra].”

“Luxottica is not changing its strategy,” he noted, again countering prior speculation about the management shift. “We will continue to increase our distribution in wholesale and retail. In wholesale ,we’ve identified certain markets where there are more opportunities, such as Southeast Asia. In terms of retail, we confirm our interest in expanding sunwear retail across all parts of the world and our interest in expanding our optical retail presence in emerging markets.” He emphasized, “We are not interested to expand our optical presence in Europe or pursuing assets in Europe related to optical.”

Cavatorta dismissed prior media speculation that there had been disagreement between Guerra and Del Vecchio or the board over the company’s recent agreement to work with Google on Google Glass. “Google Glass was not one of the reasons of disagreement. It will not be dismissed. On the contrary, we are eager to continue our journey with Google and we will continue as planned.”

In response to another question over possible strategic internal disagreements, Cavatorta acknowledged that there were “discussions,” over one and a half years ago, explored on both sides,” between Luxottica and Essilor International (ESSI.PA). “In the end, a common thinking between Mr. Del Vecchio, Andrea, myself and the board, was that there were not the right condition to go ahead with a deal.” Cavatorta declined to provide more detail.

Cavatorta continued, “The results of the business today are encouraging. The third quarter trend to date is consistent with first half of year and we can confirm expectations for the year-end results we set at the start of this year. In the coming months, we will set our plan for 2015. We are making this change in organization structure at a time when the company is performing very well. But we are moving into a new phase; standing still is not in our DNA.”