science

Luxottica

Luxottica is a science topic covered in the lgStudy science library. This page brings together a partial reference excerpt, illustrations, worked examples, real-world applications and a short study plan, so you can understand Luxottica rather than just read about it. In short: Luxottica Group S.p.A. was an Italian eyewear multinational corporation headquartered in Milan. A merger with Essilor happened in January 2017 which made Luxottica a subsidiary of the French company Essilor.

Key takeaways

Luxottica belongs to science; place it in that map before memorising details.
Learn the definition first, then one example that makes the definition concrete.
Connect Luxottica to a quantity you can measure, compute or draw — that is where exam questions come from.
Reproduce the core statement of Luxottica from memory before moving on to harder problems.

Reference excerpt

Luxottica Group S.p.A. was an Italian eyewear multinational corporation headquartered in Milan. A merger with Essilor happened in January 2017 which made Luxottica a subsidiary of the French company Essilor. As a vertically integrated company, Luxottica designs, manufactures, distributes, and retails its eyewear brands through its own subsidiaries. It is the largest eyewear company in the world. It is, since October 2018, a subsidiary of EssilorLuxottica, which arose out of a merger between the Italian company and the French ophthalmic optics corporation Essilor. Luxottica was founded in Agordo by Leonardo Del Vecchio in 1961 as a sunglasses manufacturer selling and branding under its own name. Del Vecchio quickly acquired numerous businesses in the pursuit of vertical integration, buying distribution companies rapidly and signing its first designer licensing agreement with Giorgio Armani. In 1990, the company listed American depositary receipts on the New York Stock Exchange where it traded until 2017. Luxottica retails its products through stores that it owns, predominantly LensCrafters, Sunglass Hut, Pearle Vision, Target Optical, and Glasses.com. It also owns EyeMed, one of the largest vision health insurance providers. In addition to licensing prescription and non-prescription sunglasses frames for many luxury and designer brands including Chanel, Prada, Giorgio Armani, Burberry, Versace, Dolce and Gabbana, Michael Kors, Coach, Miu Miu and Tory Burch, the Italian corporation further outright owns and manufactures Ray-Ban, Persol, Oliver Peoples, and Oakley. Luxottica's market power has allowed it to charge price markups of up to 1000%. In January 2017, Luxottica announced its merger with Essilor, in which Essilor would buy Luxottica while Del Vecchio would become executive chairman of the combined company, as well as co-lead the company with then-Essilor CEO Hubert Sagnières. The combined entity would command more than one quarter of global value sales of eyewear. In March 2018, the European Commission unconditionally approved the merger of Essilor and Luxottica. On 1 October 2018, the new holding company EssilorLuxottica was born, resulting in combined market capitalization of approximately $70 billion.

History

Founding of Luxottica

Leonardo Del Vecchio started the company in 1961, in Agordo north of Belluno, Veneto; today the company is headquartered in Milan, Italy. Del Vecchio began his career as the apprentice to a tool and diemaker in Milan, but he decided to turn his metalworking skills to making spectacle parts. In 1961, he moved to Agordo in the province of Belluno, home to most of the Italian eyewear industry. The new company was Luxottica s.a.s., a limited partnership with Del Vecchio as one of the founding partners. In 1967, he started selling complete eyeglass frames under the Luxottica brand, which proved successful enough that by 1971 he ended the contract manufacturing business.

Vertical integration and acquisitions Convinced of the need for vertical integration, he acquired Scarrone in 1974, a distribution company. In 1981, the company set up its first international subsidiary, in Germany, the first in a rapid period of international expansion. The first of many licensing deals with a designer was struck with Giorgio Armani in 1988. The company listed in New York in 1990, and in Milan in December 2000, joining the MIB-30 (now FTSE MIB) index in September 2003. The listing raised money for the company and allowed it to use its shares to acquire other brands, starting with Italian brand Vogue Eyewear in 1990, Persol and LensCrafters in 1995, Ray-Ban from Bausch & Lomb in 1999 and Sunglass Hut in 2001. Luxottica later increased its presence in the retail sector by acquiring Sydney-based OPSM in 2003, Pearle Vision and Cole National in 2004. Luxottica acquired Oakley in November 2007 for US$2.1 billion. Oakley had tried to dispute their prices because of Luxottica's large marketshare, and Luxottica responded by dropping Oakley from their stores, causing their stock price to drop, followed by Luxottica's hostile take over of the company. In August 2011, Luxottica acquired Erroca for €20 million. In March 2014, it was announced that Luxottica would partner with Google on the development of Google Glass and its integration into Luxottica's eyewear.

Reorganization and merger with Essilor On 1 September 2014, a new organizational structure was announced, composed of two co-CEOs, one focusing on market development and the other overseeing corporate functions. After the exit of former CEO Andrea Guerra, Enrico Cavatorta was appointed CEO of Corporate Function and Interim CEO of Market (until new and permanent appointment to this role). Cavatorta left the company 40 days after being appointed CEO. In 2016, it was reported that Luxottica had lost its third chief executive in a year and a half, as Cavatora's replacement, Adil Mehboob-Khan stepped down one year after he gained the position. Upon the departure of Mehboob-Khan, Del Vecchio reclaimed executive powers and became much more active in the company. In January 2017, the company agreed to a merger with Essilor. The deal also offered a succession plan for Leonardo Del Vecchio, the company's founder. Shortly before the merger completed, reporter Sam Knight wrote in The Guardian, "in seven centuries of spectacles, there has never been anything like it. The new entity will be worth around $50bn (£37bn), sell close to a billion pairs of lenses and frames every year, and have a workforce of more than 140,000 people." On 1 October 2018 the new holding company EssilorLuxottica was founded, resulting in combined market capitalization of approximately €46.3 billion as of the date of the merger announcement.

Eyewear brands

Luxottica's two main product offerings are sunglasses and prescription frames. The company operates in two sectors: manufacturing & wholesale distribution, and retail distribution. The house brands include the following:

The company also makes eyewear under license for the following designer labels:

These brands are sold in the company's own shops, as well as to independent distributors such as department stores, duty-free shops, and opticians.

… excerpt ends here. Continue reading the full article.

Illustrations

Worked examples

Example 1 — a first encounter with Luxottica

Start with the simplest possible case. Write down what Luxottica claims or describes in one sentence, then invent the smallest concrete situation in which that sentence is true. In science, the smallest case is usually a single object, a single equation or a single measurement. Check that every symbol or term in your sentence has a meaning in that case.

Example 2 — changing one variable

Take the situation from Example 1 and change exactly one quantity: double it, halve it, or set it to zero. Predict what should happen to Luxottica before you calculate. Comparing your prediction with the result is the fastest way to find out whether you understand the idea or only the words.

Example 3 — an exam-style question

Typical questions about Luxottica ask you to (a) state it precisely, (b) apply it to given data, and (c) explain a limitation. Practise writing all three answers in under five minutes; the third part is what separates a full-mark answer from an average one.

Applications of Luxottica

In research: Luxottica appears in science research whenever the underlying quantities have to be modelled precisely. Papers usually cite it as a starting assumption and then explore where it breaks down.
In technology and industry: Engineering practice reuses Luxottica in design rules, simulations and safety margins. Knowing the idea lets you read a specification sheet and understand why the numbers look the way they do.
In the classroom: Luxottica is common in secondary-school and first-year university syllabi. It links to neighbouring topics 1990 initial public offerings, 2018 mergers and acquisitions, Companies based in Milan, so understanding it makes those chapters shorter.
In everyday life: Look for Luxottica outside the textbook — in sport, cooking, traffic, electronics or the sky above you. An example you found yourself is remembered far longer than one you were given.

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How to study Luxottica in 20 minutes

Read the reference excerpt below once, without taking notes.
Close the page and write down what Luxottica means in your own words.
Compare your version with the excerpt and mark what you missed.
Work through the three examples above with pen and paper.
Explain Luxottica out loud to somebody else — or to Teacher Smith in the lgStudy chat.

Frequently asked questions

What is Luxottica in simple terms?

Why does Luxottica matter?

Because it connects several science ideas at once: it gives you a definition you can apply, a quantity you can calculate, and a way to check whether a result is plausible.

How should I study Luxottica?

Read the excerpt, restate it from memory, then work through the examples and applications listed on this page. The five-step study plan above takes about twenty minutes.

What does this page cover?

It gives you a compact reference excerpt plus original lgStudy explanations, examples, applications and study material on Luxottica.