EssilorLuxottica Reveals Plans for Growth and Integration

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LONDON—The management of EssilorLuxottica presented its strategic vision, integration progress and long-term financial guidelines at the company’s 2019 Capital Markets Day held here today. “This is a milestone moment for EssilorLuxottica because we have successfully mapped out our go-forward strategy and initiated the first concrete moves of the integration. The teams are working well together, and we are fully energized about what the future holds, not just for us, but for the entire industry,” commented Francesco Milleri, deputy chairman, CEO of Luxottica Group.

"We are very pleased to have shared the first steps toward the unification of EssilorLuxottica today including our strategic vision for the eyecare and eyewear industry, our latest innovation and an update on our integration progress. I am increasingly confident in our future each time I see the dedication, talent and expertise of our strong teams around the world. Together, we will take great strides to bring better vision to the billions of people in need around the world,” added Laurent Vacherot, CEO of Essilor International.

In a presentation to investors, EssilorLuxottica shared its strategic vision for the future, where combining the strengths of Essilor and Luxottica will open up new avenues for growth and enable the Company to achieve its purpose, “see more, be more, and live life to its fullest.”

EssilorLuxottica said in a statement that its plans to grow its business and the broader industry are rooted in the following pillars:
  • An open business model where eyecare and eyewear products are accessible to everyone, everywhere. This will be made possible as the Company shifts to a global network model made up of stores, prescription laboratories, logistics hubs, R&D centers and digital properties, all connected in real time and benefiting from advanced analytics and data.
  • Accelerated innovation that leverages both companies’ research and development; supply chain advancement by combining frames and lenses for the complete pair; revolutionizing the eye exam; developing smart eyewear and new categories.

  • Reshaping the consumer journey from refraction exam, awareness and storytelling to access and convenience to digitally enabled stores.
  • Embedding sustainability at EssilorLuxottica’s core: from responsible environmental practices to philanthropic initiatives to employee shareholding.

During the first nine months of the year, the company put in place a structured process to drive integration and deliver synergies. The net impact on adjusted operating profit of those synergies is expected to be in the range of:

• Euro 300 to Euro 350 million in the period 2019/2021
• Euro 420 to Euro 600 million by 2022/2023

With the ultimate objective of building a unified company, EssilorLuxottica has launched more than 20 priority work streams and 160 business initiatives that are being implemented globally. This activity is under the leadership of more than 40 key executives with the full commitment of dedicated teams involving more than 800 employees across the two organizations. First steps include:

• The creation of one single supply chain and prescription laboratories network.
• The integration of Costa in Luxottica’s brand portfolio and frame network.
• The introduction of a co-location model to systematically review headquarters locations for EssilorLuxottica.
• A pilot project in Italy to define one single IT platform to be quickly rolled out across the company’s organization.

The company said it is building the foundations of a new culture by combining the best of both worlds. This includes Essilor’s employee shareholding culture and Luxottica’s welfare traditions, to name a few examples. On Sept. 26, the company will start campaigning its new global employee shareholding plan. For the first time, the plan will include Luxottica’s employees in Italy, paving the way for a full roll-out of the initiative within EssilorLuxottica globally in the future. As of today, more than 46,000 Essilor employees are EssilorLuxottica shareholders.

EssilorLuxottica said it will continue to rely on a strong foundation for future growth, including state-of-the-art research and development, strong brands, sustainable growth levers, and powerful human capital.

In the long-term—up to 2023—the company’s ambition on financial targets, all of which exclude the impact of strategic acquisitions and currency effect, is as follows:

Sales: mid-single digit growth with a growing contribution from direct-to-consumer activities and fast-growing markets, including China, India, ASEAN, South Korea, Hong Kong, Taiwan, Africa, the Middle East, Russia, Eastern Europe and Latin America.

• Adjusted2 operating profit: 1.0–1.4x sales.
• Adjusted2 net profit: 1.0–1.5x sales.

On the matter of the Costa integration, a Luxottica spokesperson told VMAIL, "Following the combination of Essilor and Luxottica last fall, we have been looking at opportunities to grow our brands and businesses by leveraging the newly-expanded organization and its strengths. One of the most promising opportunities lives with the Costa brand. We see Costa’s incredible potential here and globally as a high performance brand with a purpose.

"Luxottica’s investments in innovation, operations and distribution will play an important role in achieving that potential. For this reason, we will move Costa into Luxottica’s portfolio on Jan. 1, adding a complementary brand with its own unique story and loyal following. For Costa’s customers, this means the renowned quality and performance of products and services will be further improved thanks to the long lasting expertise of Luxottica’s teams in building iconic sunwear brands."

In response to a question from VMAIL on the matter, the spokesperson said, "Because the role of CEO is no longer required, Holly Rush will be leaving the company. Commercial leadership for Costa will be under Fabrizio Uguzzoni, president of Luxottica Wholesale N.A."