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Seeing Past Dollar Woes

As the euro continues to overpower the dollar, American and European luxury eyewear makers have found ways to cope.

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NEW YORK — As the euro continues to overpower the dollar, luxury eyewear brands have found ways to cope.

Some are raising prices and others are eating costs, but no one is shifting production out of Europe. Eyewear represents an enormous amount of business in Italy, where industry powerhouses Marcolin, Safilo, Luxottica and Marchon produce their goods.

In 2004, Italy exported $513 million in eyewear to the U.S., an 11 percent increase over 2003, according to Roberto Luongo, executive director of the U.S. for the Italian Trade Commission. Luongo said the Italian eyewear makers in the luxury sector are working to reduce the negative impact of the euro’s strength against the dollar.

In order to increase brand awareness of Italian-made eyewear, the ITC held its second annual eyewear fashion show here during the Vision Expo East show last month. Forty-eight companies, including Safilo, Marcolin, Luxottica, Allison and Riviera, took part in the show at Gotham Hall, which exhibited 110 frames divided by the season’s top trends.

For Japanese company Charmant, which produces brands such as Christian Roth and Hugo Boss in Italy, it’s about keeping the prices stable for the consumer.

“Basically, we are absorbing costs,” said Dee Berghuys, director of product development. “There’s not much you can do.”

But Berghuys believes the luxury eyewear business will continue to do well, as consumer interest remains high.

“When you look back on certain figures, like Jackie O or movies like ‘The Matrix’ or Tom Cruise in ‘Risky Business,’ there’s a certain image to [sunglasses], which people are still interested in [achieving],” Berghuys said.

Cliff Robinson, vice president of American firm Legacie, which makes licensed lines of Judith Leiber, Kata and Cynthia Rowley eyewear, said production has remained in Italy and the company has made sacrifices when it comes to margins.

“The last year has been a problem,” said Robinson. “When the euro gets to $1.05, you are concerned; when it gets to $1.10, you get worried, and when it gets to $1.15, you become obsessed.”

On Friday, one euro was worth $1.29.

Although Legacie has continued to manufacture its goods in Italy, Robinson said the group is open to other options.

“We’re exploring opportunities, but there is still a need for Italian-made luxury goods,” he said. “We have raised prices 10 to 15 percent over the past year. A Judith Leiber frame, which would normally sell on the retail floor for $450, is now $475.”

For Safilo, which makes licensed lines for Gucci, Giorgio Armani, Marc Jacobs and Dior, the predicament seems to be a wash.

“The high euro goes both ways for us,” said Claudio Gottardi, president and chief executive officer of Safilo USA. “Forty percent of our business is in North America and 40 percent is in Europe [with the rest dispersed throughout the world]. When one is struggling, it benefits the other. Our margins in the U.S. have decreased, while margins in Europe have increased dramatically.”

Switching factories to China is not in the cards for Safilo’s luxury products division, which is produced in the company’s own Italian factories.

“The moment you produce outside [of your own factories], your competitors are going to see what you are producing before the market,” Gottardi said.

Maurizio Marcolin, president of Marcolin U.S. and ceo in charge of licensing, said that, despite fluctuating currency rates, he will not seek out Asian factories for production. Marcolin produces eyewear for Roberto Cavalli, Miss Sixty, Kenneth Cole and the new Tom Ford brand.

“We decided not to discount or trade off in the quality,” he said. “We are assuring the quality and styling of the product. There will be no compromising for the luxury brands.”

Marcolin did not raise prices on existing styles to counter the ratio between the euro and the dollar, but when needed, applied higher prices on new styles, Marcolin said.

“We are always seeking for better efficiency in production to keep costs competitive and margins relevant,” he said.

Paul Diaz, president and ceo of Allison USA, which manufactures glasses for Missoni, Vivienne Westwood, Ferré and Anna Sui, noted that buyers aren’t so concerned with price.

Although the firm has decided to absorb costs to keep prices consistent, Diaz said one major department store asked him to raise prices for the Anna Sui collection to the $100-plus bracket so as not to compete with lesser-priced department stores.

Across the board, companies agreed it is vital to maintain the quality of their luxury brands.

“Once you sacrifice quality, it’s not a luxury brand,” said Robinson of Legacie.

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