MILAN — The house of Versace could prove to be the apple of Luxottica Group SpA’s eye.

This story first appeared in the January 15, 2003 issue of WWD.  Subscribe Today.

Luxottica will pick up the rights to manufacture and distribute Versace and Versus eyewear by buying a majority stake in IC Optics, the joint venture that produces the two lines, sources close to the negotiations told WWD on Tuesday.

Reports indicated that, as early as this week, Luxottica will acquire a controlling interest in IC Optics. Versace and the Cremona family, owners of a toy manufacturing company in the northern town of Varese, established the 50-50 joint venture in 1999 to produce Versace and Versus eyewear. IC Optics, which also makes frames for Gai Mattiolo through a licensing agreement, posted sales of $42.2 million in 2001. A deal could be announced as early as this week.

Both Versace and Luxottica declined to comment.

“It’s a deal favorable to all involved,” said one source familiar with the operation. “Luxottica increases the stable of brands it controls. Versace acquires the industrial know-how of the industry leader.”

Late last year, Giorgio Armani terminated its licensing past with Luxottica, ending a 14-year partnership between the designer and the eyewear giant and forcing Luxottica to issue a profit warning for 2003. Armani’s signature and Emporio lines accounted for about 7.2 percent of Luxottica’s revenue, or about $232.7 million, based on Luxottica’s 2001 sales of $3.23 billion. Dollar figures have been converted from the euro at current exchange rates.

The Luxottica-Armani breakup spurred speculation that Italy’s largest eyewear maker was about to strike a licensing deal with LVMH Moët Hennessy Louis Vuitton’s Louis Vuitton unit or snap up smaller competitor De Rigo to compensate. Luxottica then denied it was talking to LVMH or De Rigo.

While his plans for eyewear aren’t set, some in the market speculate Armani will sign a licensing pact with one of Luxottica’s competitors such as Safilo, De Rigo or Marcolin. Armani declined to comment on the state of its eyewear business.

Versace has been looking to expand its presence in accessories, which made up about 10 percent of its 2001 sales of $515.5 million. Last year, Versace opened its first freestanding accessories store in Berlin. The store is considered a prototype and others could be on the way.

Working with a larger player could be just what Versace needs to grow its eyewear business, said Paola Durante, a Milan-based analyst at Merrill Lynch. Luxottica boasts an extensive retail network, including the Sunglass Hut and LensCrafters chains, as well as extensive design and production facilities.

“I think it is a brand that has room to develop itself in eyewear,” Durante said. “Versace hasn’t really done that much in glasses.”