By  on February 1, 2017

MILAN — All eyes are on the eyewear sector, which is going through a series of seismic changes as the big players in this arena adapt to ever-evolving business demands.The announcement of a new joint venture between LVMH Moët Hennessy Louis Vuitton and Marcolin is expected to further shake up the category, in the wake of the Luxottica Group and Essilor merger revealed last month that will create a $16 billion giant. Kering was the first to initiate the string of changes, when it decided to set up a new dedicated entity in 2014 and bring eyewear production in-house.On Tuesday, competitor Safilo Group was once again hit by the latest news, as shares closed down 7.5 percent to 6.35 euros, or $6.81 at current exchange rates, on the Milan Stock Exchange.Marcolin SpA lifted the veil on the rumored agreement with LVMH Wednesday. Starting in 2018, Marcolin will design and manufacture eyewear for the Céline and Louis Vuitton brands, with the goal of “becoming, in the future, the preferred partner” of the LVMH group in the eyewear business. LVMH will control 51 percent of the joint venture and Marcolin the remaining 49 percent.Preparatory to the joint venture, Marcolin is launching a capital increase of 21.9 million euros, or $23.5 million at current exchange, and issuing a bond of 250 million euros, or $268.2 million, expected to mature in 2023.LVMH will take a 10 percent stake in Marcolin, which produces and distributes eyewear collections for brands including Tom Ford, Tod’s, Balenciaga, Moncler and Dsquared2, among others. This confirms a report published last month.Marcolin listed a new revolving credit facility of up to 40 million euros, or $43 million. The company will use the funds to redeem 200 million euros, or $214.6 million, of senior secured notes due in 2019 and other short- and medium-term financing.Marcolin estimated that equity contributions to the start-up costs, capital expenditures and working capital will total between 20 million and 25 million euros, or $21.4 million and $26.8 million, over the course of the next four to five years, of which it expects to fund approximately 7 million euros, or $7.5 million, in 2017.In the 11 months ended Nov. 30, revenues and adjusted earnings before interest, taxes, depreciation and amortization “will be largely in line” with the same period in the previous year, said Marcolin. The company pointed to increased sales in Italy, the Rest of Europe and the Rest of the World, which offset decreased sales in the Americas and Asia.Competitor Safilo on Tuesday reported a 2 percent contraction in full-year sales to 1.25 billion euros, or $1.35 billion, following the loss of licenses including Gucci, which ended in December, two years earlier than planned and which represented some 15 percent of the group’s revenues from the start of the year through the third quarter.In addition to its own house brands Carrera, Polaroid and Safilo, the company produces and distributes eyewear collections for several brands in the LVMH stable, including Dior, Céline, Fendi, Givenchy and Marc Jacobs.Safilo has been focusing on its 2020 Strategic Plan and a balanced brand portfolio that can guarantee business stability in the long-term. The storied group readjusted its strategies for the Gucci license when Kering said it was assuming control of its eyewear business.In December, Safilo said it had renewed its license with Christian Dior Couture, part of the LVMH stable. The Italian eyewear company and the French firm extended the agreement for the design, production and worldwide distribution of the Dior and Dior Homme eyewear collections through Dec. 31, 2020.At the same time, Safilo said its licensing agreement with Céline, which will officially expire at the end of 2017, was not being renewed.Luxottica produces eyewear under license for names including the Giorgio Armani Group, Bulgari, Burberry, Chanel, Coach, Prada and Versace and also has a number of owned brands, such as Ray-Ban, Oakley and Persol. It and Essilor, the leading maker of lenses worldwide, have agreed to a 46 billion euro, or $48.7 billion, merger to form an eyewear powerhouse with annual sales of more than 15 billion euros, or $15.9 billion.Marcolin was founded by Giovanni Marcolin Coffen in 1961 in Longarone, Italy, in the Cadore eyewear district. PAI Partners took control of the company in 2012. Brothers Diego and Andrea Della Valle, who invested in Marcolin in 2004, remained shareholders of the firm, which is led by chief executive officer Giovanni Zoppas, who joined in December 2011.Marcolin went public on the Milan Stock Exchange in 1999 and was delisted in 2013, following PAI’s investment.According to Euromonitor International, the global eyewear market is worth $121 billion and Luxottica is the leading eyewear company with a 14 percent share in 2015, up from 12 percent in 2010. Essilor follows with a 13 percent share, up from 11.05 percent in 2010. Safilo takes up 4.3 percent of the global spectacles market.

To continue reading this article...

To Read the Full Article
SUBSCRIBE NOW

Tap into our Global Network

Of Industry Leaders and Designers

load comments
blog comments powered by Disqus