MILAN — Luxottica and Giorgio Armani Group said Wednesday they have reached a preliminary agreement on a 10-year license for the production and distribution of eyewear for the Giorgio Armani, Emporio Armani and A|X brands, beginning in January 2013.
This marks a return to Luxottica for the designer, who first licensed his eyewear to the Italian firm in 1988. Luxottica then lost the license to Safilo SpA, whose first Armani collections came out in 2003.
Safilo said earlier Wednesday that the Armani deal, due to expire on Dec. 31, 2012, was not being renewed, confirming weeks of speculation about the future of the lucrative license, which last year generated sales of 165 million euros, or $218.9 million at average exchange.
“Giorgio Armani and Luxottica started a very successful journey together: Together we changed the world of eyeglasses, which, previously perceived as mere functional instruments, evolved into ‘eyewear’ and into indispensable fashion accessories,” stated Luxottica chief executive officer Andrea Guerra.
Luxottica owns the Oakley and Ray-Ban labels and holds eyewear licenses with brands such as Bulgari, Burberry, Chanel, Dolce & Gabbana, Donna Karan, Polo Ralph Lauren, Prada, Salvatore Ferragamo, Tiffany and Versace. Last year, the company inked an agreement with Coach that will start in January.
Without the Armani license, Safilo said its medium-term financial targets would be lower by about 150 to 200 million euros, or $203.6 million to $271.5 million at current exchange, at the net sale level in 2015, while the earnings before interest, taxes, depreciation and amortization margin would reach 13.5 percent instead of 15 percent.
A Citi study said Wednesday’s “news is consistent with our long-time view that Armani was always a risk for Safilo” and estimated Armani “might have some 6 percent positive impact on Luxottica’s bottom line from 2013 onwards.”
However, Safilo said it was “confident that it can achieve its medium-term business and economic targets through further developing its current portfolio of brands, new Safilo-owned brands and future additional licensing agreements.” On Monday, the company and Celine unveiled a new five-year licensing agreement that will launch in January in Celine boutiques and selected points of sale globally, and sources in Milan say Safilo is to reveal another new license soon.
In addition to its own brands, which include Carrera, the company produces premium eyewear collections for brands such as Alexander McQueen, Balenciaga, Bottega Veneta, Dior, Gucci, Marc Jacobs, Valentino, Yves Saint Laurent and Max Mara.