French luxury goods group Kering has created an in-house eyewear division to tighten control over its Luxury and Sport & Lifestyle brands, gradually managing …
French luxury goods group Kering has created an in-house eyewear division to tighten control over its Luxury and Sport & Lifestyle brands, gradually managing all of the high profile licenses. As part of the initiative, Kering said it is to “evolve” its 20-year partnership with eyewear maker Safilo, terminating its current Gucci license agreement at the end of 2016 instead of end-2018. From January 2017, Safilo instead will handle production development, manufacturing and supply of Gucci eyewear on a new four-year contract, renewable by mutual agreement. Kering, meanwhile, will make a €90m compensation payment to Safilo in three installments between 2014-2018.
The French group said that former Safilo chief executive Roberto Vedovotto and his team would be co-shareholders of a new entity called Kering Eyewear. A spokeswoman for the group declined to reveal how much Kering is investing in the project.
The move comes as Kering now wants to be involved in every step of the business from design and marketing to sales, but will continue to outsource manufacturing.
The global eyewear market for frames and sunglasses is significant, with double-digit growth in the premium segment, Kering said Tuesday, noting eyewear business derived from its brands generates €350m ($459m) in annual sales.
However, The 11 Kering brands that are active in the eyewear category, of which nine are managed through license agreements with five different partners, generate consolidated royalties of around €50m.
Vedovotto, CEO of Kering Eyewear, said: ‘Eyewear is a strategic category for Kering brands. Through this innovative project, Kering aims at helping them fulfil their full growth potential in this business segment while leveraging the unique appeal of each of them.”
Safilo Group CEO Luisa Delgado said: “We are satisfied with furthering our partnership [with Kering] in a way that leverages the heart of Safilo’s strengths in eyewear product excellence. We have a unique tradition in the market as strategic partner for those brands that consider eyewear as strategic category. Through this agreement we confirm our capabilities as trusted partner”.