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Thread: Latest follow up on Essilor-Luxottica merger ..................................

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    Redhot Jumper Latest follow up on Essilor-Luxottica merger ..................................

    Why the merger of Essilor and Luxottica matters

    By Ian PollockBusiness reporter, BBC News
    February 16, 2017
    4 hours ago

    Since their impending merger was announced in January, there has been remarkably little comment about the huge proposed deal to combine Essilor and Luxottica.

    But there certainly should be.
    These are two of the biggest firms in the lucrative international business of making spectacles. France's Essilor is the world's number one manufacturer of lenses and contact lenses, while Italy's Luxottica is the leading frame manufacturer.
    It is not obvious that the merger is in the public interest, though the two firms certainly think it is.


    "The parties' activities are highly complementary and the deal would generate significant synergies and innovation and would be beneficial to customers," says Essilor.
    But there seems to be growing disquiet in the industry.
    Gordon Ilett, of the Association of Optometrists, says: "This now allows the [enlarged] group to control all aspects of supply of product - from manufacture to the end user.
    "Those businesses who remain as their customers will be indirectly controlled by the terms and conditions imposed by them.
    "Whether their UK market share, following this merger, is sufficient for examination by the competition authorities is open to debate, but the effect of it will be reduced choice for the consumer, and will most likely result in reduced quality products longer term," Mr Ilett adds.


    Potential stranglehold

    If the deal goes through later this year the new company, to be called EssilorLuxottica, will become a behemoth of the industry.
    It will sell not only lenses and frames around the world but will also be stocking its own optician's shops as well, such as Sunglass Hut, and LensCrafters in the US and Australia, both currently owned by Luxottica.
    One long-standing independent UK wholesaler, who asked to remain anonymous, says the merged firm would be so powerful it would probably squeeze out some competitors.

    "If those two companies merged there would be a branded frame supplier offering you high-end branded frames, and also offering UK opticians a lens and glazing deal, to suit, so they will control almost everything [they offer] to both independent retailers in the High Street and even the chains," he argues.

    In his view this would amount, almost, to a stranglehold on the supply of high-end glasses, with some rivals giving up.
    "I imagine it would knock out quite a few glazing houses in the UK, and it would probably knock out other fashion frame houses," he adds.


    Big beasts

    Unless you know about the eyewear business, or take an interest in investing in big European companies (they both have stock market listings) the names of the two big firms will probably have passed you by.
    But if you have been inside an optician's shop you will certainly have heard of the brands they own and make. For instance, the leading varifocal lens brand, Varilux, is made by Essilor.
    Just a year ago, in presenting its 2015 financial results to investors, Essilor boasted that it was "an undisputed leader with only 25% market share" of the combined world market for prescription lenses, sunglasses lenses and lenses for reading glasses.
    When it comes to just the prescription lenses, it has a 41% share of the world market.

    For its part, Luxottica owns several of its own brand names such as Ray-Ban and Oakley, and it also makes, under licence, spectacle frames which carry high-fashion names such as Armani, Burberry, Bulgari, Chanel, Prada, Ralph Lauren and Versace.

    In 2015 the Italian firm made almost 10% of the 954 million frames that were sold worldwide that year, and claims that about half a billion of its frames are currently perched on people's noses.

    The overall industry internationally is in fact quite fragmented with hundreds of other smaller manufacturers and related businesses such as glazing laboratories.
    Market research firm GFK describes the optical industry as "a complex and extremely competitive market-space".


    EU review?

    Even so, with the two firms having a combined turnover of more than 15bn euros (£12.8bn), of which 3.5bn euros were in Europe, on the grounds of size alone the proposed merger easily meets the requirements of the European Commission for a formal review.
    These are:

    • a combined worldwide turnover of all the merging firms of over 5bn euros


    • an EU-wide turnover for each of at least two of the firms of over 250m euros

    An inquiry would see if the merged firm threatened to be too dominant, thus reducing competition and leading to higher prices for the customers.

    A Luxottica spokesman told the BBC that the firm was confident that any scrutiny would not hinder the deal.
    "The transaction is subject to mandatory submission to a number of anti-monopoly authorities including the European one, as is customary in transactions of this size and nature," he said.
    "We are confident that the transaction does not raise anti-monopoly issues and will fully co-operate with the anti-monopoly authorities to obtain the required clearance," he added.
    The EU itself says it currently has no comment to make and it has not yet been formally notified of the merger deal under the requirements of its own rules.

    But the leading chain of opticians, Specsavers, views the impending deal with caution.
    "Mergers are a continuing trend in optics, but this is a significant development which will result in huge supply chain and retail implications for the industry and consumers worldwide," the firm says.
    "It is unlikely that the impact of the merger will be felt by consumers straight away but we will watch with great interest how the new organisation will arrange itself."

    Very profitable

    If you have ever bought a pair of spectacles with anything other than the most basic frame and lenses, you may have gulped at the price, possibly coming to several hundred pounds.


    Of course, not all spectacles are expensive and not all of the sale price goes to the manufacturers.
    Opticians and the wholesalers that supply them are businesses that seek to make a profit.
    They also need to cover the costs of staff, equipment, shop and office space, stock and all that advertising.
    But for the manufacturers such as Essilor and Luxottica, it is a stonkingly profitable business.
    On worldwide sales of 6.7bn euros in 2015, Essilor made operating profits of 1.2bn euros.
    For the same year, Luxottica sold goods worth 8.8bn euros and made operating profits of 1.4bn euros.

    With cost-cutting at a merged business projected to save between 400m and 600m euros per year, profits could be boosted even further.

    Will customers benefit as well?


    Source: ==============>
    http://www.bbc.com/news/business-38899892

    Last edited by Chris Ryser; 02-16-2017 at 06:19 AM.
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    Redhot Jumper When it comes to just the prescription lenses, it has a 41% share of the world market

    Quote Originally Posted by BBC article

    When it comes to just the prescription lenses, it has a 41% share of the world market.

    That is a huge amount, they can claim as their present business, and the combination of the 2 corporations will try very hard to get that increased.
    Chris Ryser
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    http://optochemicals.com............................. http://arcoatings.com

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    Redhot Jumper News Release: Essilor - 2016 Results .....................

    News Release: Essilor - 2016 Results

    GlobeNewswire • February 17, 2017


    · Profit attributable to equity holders up 7.4% vs. 5.9% revenue growth·

    Dynamism of fast-growing countries
    ·
    An active year for acquisitions and partnerships

    · Strong free cash flow generation


    Charenton-le-Pont
    , France (February 17, 2017 - 6:30 am)


    - The Board of Directors of Essilor International met on February 16, 2017 to approve the financial statements for the year ended December 31, 2016. The financial statements have been audited and the auditors are currently in the process of issuing their report.


    See all of it: ==========>

    http://finance.yahoo.com/news/news-r...053100263.html
    Chris Ryser
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    http://optochemicals.com............................. http://arcoatings.com

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    and now with safilos demise.....

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    Safilo group s.p.a. Reports ...................................

    Quote Originally Posted by COMEINPEACE View Post

    and now with safilos demise.....


    SAFILO GROUP S.P.A. REPORTS PRELIMINARY Q4 AND FY2016 SALES

    Padua, January 31, 2017 – The preliminary figures for 2016 indicate that Safilo’s full year total net sales reached Euro 1,252.8 million, slightly contracting compared to the Euro 1,279.0 million recorded in full year 2015 (-2.0% at current exchange rates and -1.2% at constant exchange rates) as a result of the negative impact of the brands that the Group stopped servicing. In the year, sales of the Going Forward Brands Portfolio increased 3.6% at constant exchange rates (+5.2% excl. Retail).

    In the fourth quarter of 2016, Safilo’s total net sales equaled Euro 313.7 million, slightly declining compared to the same period of last year (-1.7% at current exchange rates and -1.7% at constant exchange rates), while the sales of the Going Forward Brands Portfolio recorded a positive performance (+0.5% at constant currency and +2.3% excl. Retail).


    See all of it: ============>
    http://investors-en.safilogroup.com/...cle&ID=2240938
    Chris Ryser
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    http://optochemicals.com............................. http://arcoatings.com

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    Quote Originally Posted by Chris Ryser View Post
    News Release: Essilor - 2016 Results

    GlobeNewswire • February 17, 2017


    · Profit attributable to equity holders up 7.4% vs. 5.9% revenue growth·

    Dynamism of fast-growing countries
    ·
    An active year for acquisitions and partnerships

    · Strong free cash flow generation


    Charenton-le-Pont
    , France (February 17, 2017 - 6:30 am)


    - The Board of Directors of Essilor International met on February 16, 2017 to approve the financial statements for the year ended December 31, 2016. The financial statements have been audited and the auditors are currently in the process of issuing their report.


    See all of it: ==========>

    http://finance.yahoo.com/news/news-r...053100263.html
    Note Hoya's revenue declined globally for the same period.

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    Quote Originally Posted by COMEINPEACE View Post
    and now with safilos demise.....
    Safilo would be doing better if their back orders weren't so bad! A lot of companies are no longer selling Safilo because of all the issues they are having. Not so sure if the Luxottica merger has anything to do with this.

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    Quote Originally Posted by mervinek View Post
    Safilo would be doing better if their back orders weren't so bad! A lot of companies are no longer selling Safilo because of all the issues they are having. Not so sure if the Luxottica merger has anything to do with this.
    Were letting Safilo circle the drain here... Its was bad before, and now even worse. what pushed us over the edge was the returns. reps do not even handle that anymore. were done. PITA with them not putting names on frames that we order randomly, every few months we have to go to war with them on shipping, we fight to set up reg mail to our lab which is free, then they will on their own switch it back to usp blue or something overnight, mark the box 2 pounds for 1 frame and we get a bill for $14 dollars. this happens ALL THE TIME with them.

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    Quote Originally Posted by Slim View Post
    Were letting Safilo circle the drain here... Its was bad before, and now even worse. what pushed us over the edge was the returns. reps do not even handle that anymore. were done. PITA with them not putting names on frames that we order randomly, every few months we have to go to war with them on shipping, we fight to set up reg mail to our lab which is free, then they will on their own switch it back to usp blue or something overnight, mark the box 2 pounds for 1 frame and we get a bill for $14 dollars. this happens ALL THE TIME with them.
    Wow! We never had those kind of problems. I will say that my Safilo reps are the best! seriously love them. My problems are the backorders. I had one guy that wanted a different color frame. Ordered it in June and it said it had a 1 month backorder. Pt said he would wait. Back order dated kept changing so we ended up getting it in December. Right now I have a liz claiborne frame with a broken hinge that is under warranty. I ordered it in December and I am still waiting. Rep has searched. There are no parts avail. They keep changing the date. Patients are getting angry. So frustrated. What is their deal? I've never experienced backorders like this.

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    My only real concern here is what's going to happen to costs. I know I'm one of the rare few here on Optiboard but I've never had an issue with Lux's products or the big E's lenses (or reps, even). My biggest obstacle as an optician (other than never being paid enough by ODs, which is a different issue) has always been justifying cost to patients. Even believing wholeheartedly in the idea of my services being worth something, and the cost for those services being bundled into the price of a complete set of frames, it's very difficult for me to justify what any place I've ever worked at has charged the patient. If the merger is going to result in an increased price for product going to the patient... That's my big concern. With Zenni and Warby still independent of either outfit, I can really foresee this being the thing that transitions brick and mortar optical into an almost exclusively boutique realm and makes online the primary source of eyewear for North Americans.

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    Redhot Jumper

    Quote Originally Posted by Browman View Post

    If the merger is going to result in an increased price for product going to the patient... That's my big concern. With Zenni and Warby still independent of either outfit, I can really foresee this being the thing that transitions brick and mortar optical into an almost exclusively boutique realm and makes online the primary source of eyewear for North Americans.

    This would still leave the independent the choice to sell the product at similar pricing than the on line products and start charging for the service separately.

    Thi way you could even service the online purchased products that will also need servicing.
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    Quote Originally Posted by mervinek View Post
    Wow! We never had those kind of problems. I will say that my Safilo reps are the best! seriously love them. My problems are the backorders. I had one guy that wanted a different color frame. Ordered it in June and it said it had a 1 month backorder. Pt said he would wait. Back order dated kept changing so we ended up getting it in December. Right now I have a liz claiborne frame with a broken hinge that is under warranty. I ordered it in December and I am still waiting. Rep has searched. There are no parts avail. They keep changing the date. Patients are getting angry. So frustrated. What is their deal? I've never experienced backorders like this.
    My Safilo reps are also consistently excellent. The backorders are bothersome, but removing all Saf products from my board would seem to be a ludicrous overreaction.
    I'm Andrew Hamm and I approve this message.

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    Quote Originally Posted by AngeHamm View Post
    removing all Saf products from my board would seem to be a ludicrous overreaction.
    I agree. They sell well and we don't have problems with quality. It's only a random warranty issue (in which someone sat on their glasses). If a patient wants a different color that is on back order, I am not recommending ordering it. They just keep changing dates and they are not reliable. Other than that, no problems. Our Kate Spade and Liz Claiborne sell wonderfully!

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    Quote Originally Posted by Chris Ryser View Post
    This would still leave the independent the choice to sell the product at similar pricing than the on line products and start charging for the service separately.

    Thi way you could even service the online purchased products that will also need servicing.
    This would require an EXTREME shift in the independent paradigm, at least in the State of Texas. I don't have any out of state experience in the optical realm, but, around Houston, for example, many independents are selling even poly SV with basic AR in bargain frames at a price that would allow most patients to buy two pairs on WP and upwards of 10 on Zenni. Getting into BF and standard-PAL territory only worsens the situation. I've a feeling it's going to be an "adapt or die" sort of situation in terms of independents continuing business as usual, or becoming boutique/luxury operations.
    Last edited by Browman; 02-24-2017 at 01:26 PM.

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    Quote Originally Posted by mervinek View Post
    I agree. They sell well and we don't have problems with quality. It's only a random warranty issue (in which someone sat on their glasses). If a patient wants a different color that is on back order, I am not recommending ordering it. They just keep changing dates and they are not reliable. Other than that, no problems. Our Kate Spade and Liz Claiborne sell wonderfully!
    Kate Spade is the best ladies' line I've seen in my entire career.

    Also, to be fair, it's just as often that the frame arrives a month before the original backorder date as it is that the date gets pushed back.
    I'm Andrew Hamm and I approve this message.

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    Quote Originally Posted by AngeHamm View Post
    Also, to be fair, it's just as often that the frame arrives a month before the original backorder date as it is that the date gets pushed back.
    I used to run into that, but it's been a long time since that's happened.

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    Master OptiBoarder AngeHamm's Avatar
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    Quote Originally Posted by mervinek View Post
    I used to run into that, but it's been a long time since that's happened.
    It happened twice last week in my office.
    I'm Andrew Hamm and I approve this message.

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    Quote Originally Posted by AngeHamm View Post
    It happened twice last week in my office.
    Lucky Ducky!!!

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    LVMH buying a 10% stake in Marcolin is a bigger issue for Safilo right now. A number of LVMH brands are licensed with Safilo that will eventually transfer over to Marcolin. Safilo has to find someway to offset those losses or look to be bought out.
    Nothing in all the world is more dangerous than sincere ignorance and conscientious stupidity

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    Blue Jumper They can always find names

    Quote Originally Posted by newguyaroundhere View Post

    LVMH buying a 10% stake in Marcolin is a bigger issue for Safilo right now. A number of LVMH brands are licensed with Safilo .............................

    They can always find names and other brands for their products.






    [/QUOTE]
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