Luxottica New Co-CEO Could be Selected Within Weeks

By

Enrico Cavatorta, Luxottica co-CEO.
NEW YORK—Following Luxottica Group S.p.A.’s (NYSE: LUX; MTA: LUX) introduction of a new co-CEO management structure earlier this week, in which one of the co-CEOs will be Enrico Cavatorta, the company’s long-term GM and CFO and now CEO of Corporate Functions, VMail has learned that the other co-CEO in charge of Markets could be selected within a few weeks, likely before the end of the year.

In an exclusive interview with VMail, Cavatorta said, “We are down to a short list of candidates, and it is now down to a question of weeks, not months. They could join the company before year end.” He reiterated that the changes in the top management of the company do not reflect any changes in Luxottica’s Group strategy. The new co-CEO Markets will be responsible primarily for sales, marketing and brands across Luxottica Group’s wholesale, sun retail, optical retail and the emerging e-commerce area.

According to Cavatorta, “The co-CEO will not necessarily sit in Milan; maybe he will sit in the United States. We are not only open to this, but we are in favor of this person being in the United States, at least in the initial phase of his career. The U.S. is too big and too important.” The United States is the company’s biggest market, accounting for approximately 55 percent of its sales and profits.

Among the initiatives on which the new co-CEO will focus, “the person should dedicate a lot of energy to fix optical retail opportunities in the U.S.,” said Cavatorta. While this would not include the goal of increasing the number of LensCrafters stores, it would involve increasing the number of Target Optical stores and adding more Pearle Vision franchises. Global retail growth is planned for Sunglass Hut, with a goal of increasing from just under 3,000 stores now to 4,000 locations.

The company’s view toward the new CEO Markets fits a corporate strategy toward a more globally diverse management structure, featuring a broader management team with more autonomy in other regions of the world, such as Asia and Latin America, he noted. “Decisions need to be taken on a global level,” Cavatorta said.

E-commerce is another area in which the company sees a lot of potential and will focus moving forward, which Cavatorta told VMail could constitute the company’s fourth area of distribution, after wholesale, sun retail and optical retail, including what happens in each channel. “One of the attributes of the new co-CEO will be experience and an emphasis on e-commerce, which will clearly need to be developed,” Cavatorta said. This comes with the blessing and encouragement of Luxottica’s founder, Leonardo Del Vecchio, who Cavatorta said feels that “e-commerce is key and we need the right people on board.” The new co-CEO is expected to bring their own expertise in the area of e-commerce or perhaps establish a vice president of e-commerce. Online sales for the Luxottica Group today, he noted, are currently approximately $200 million globally, mostly in the U.S., representing about two percentage points of the company’s overall revenue.

Cavatorta described Luxottica’s evolution in the e-tail market, which started with its proprietary brands Oakley.com and Ray-Ban.com and was followed by the retail brands SunglassHut.com, LensCrafters.com, PearleVision.com, and its Australian brand, OPSM.com. “With the addition of Glasses.com [which Luxottica acquired in February 2014] and its virtual try-on technology, this is clearly a wonderful technological tool to boost sales through this network,” Cavatorta said.

Cavatorta reiterated that it was a disagreement over the company’s new co-CEO management structure that led to the departure of the company’s former CEO, Andrea Guerra, and that it was not due to a personal rift with Del Vecchio, a disagreement over strategy, or even the company’s partnership with Google Glass, as has been conjectured. “I am excited and Del Vecchio is excited,” he said about Luxottica’s partnership with Google Glass, stating that the first collection is scheduled to be available in 2015. “We are already working on prototypes,” he said.

Cavatorta also stressed in the interview a desire to reassure the investment community that the company’s long-term strategy of growth, both organically and through acquisition, will not change. Del Vecchio is expected to take a more hands-on approach as executive chairman over the next six to 12 months as the new co-CEO management structure becomes functional, he said.