LensCrafters 2003 Annual Report Download - page 8

15
MANUFACTURING AND WHOLESALE DISTRIBUTION DIVISION
OVERVIEW OF 2003
2003 was a challenging year for Luxottica Group’s manufacturing and wholesale distribution division. In addition to
the difficult economic conditions in many important markets and the unfavorable Euro/U.S. Dollar exchange rate, the
Group decided not renew what had been one of the most important licenses in its portfolio - the license with Armani,
which was first launched in 1988. The discontinuation of the manufacturing and wholesale distribution of Giorgio
Armani and Emporio Armani sunglasses and prescription frames resulted in a year-over-year decline of nearly 80
percent in sales of Armani-licensed eyewear, thus significantly affecting the performance for the year of the
manufacturing and wholesale distribution division.
Despite these events, during the course of the year Luxottica Group actually strengthened its brand portfolio. First,
it acquired licenses for Versace and Versus in January and Prada and Miu Miu in July, for which the first collections
were launched in March and September, respectively. Similarly, in March of 2003 it launched two additional new lines,
Ray-Ban Ophthalmic and Ray-Ban Junior, further enhancing a brand that has been the leader in the sun segment
since its launch 66 years-ago. In fact, in 2003 Ray-Ban introduced its first ever ophthalmic collection with 43 models.
The new collection included styles from classic to more modern, frames in ultra-light resins, special metals and alloys,
all in the genuine Ray-Ban style and manufactured with maximum research and refined technology.
While the acquisition of the Prada and Versace licenses added two important brands from leading international
fashion houses to Luxottica Group’s portfolio, the extension of the Ray-Ban brand, Luxottica Group’s strongest house
brand and its best selling, represented a key development in the Group’s portfolio strategy. As a result, after the first
full twelve months of sales the introduction of the new designer collections and Ray-Ban lines will have more than
replaced the loss of the Armani licenses both in terms of revenues and level of profitability.
Today, as a result of a portfolio optimization strategy carried out over the years by the Group, as well as its ability
to quickly anticipate and address developments that could have potentially negatively affected it in the long term,
Luxottica Group’s brand portfolio is stronger and better balanced than ever before, resulting in a further consolidation
of its market leadership. At the same time, the launch of the new collections and the more than positive response
received from opticians, optical retailers and customers alike, make Luxottica Group more competitive and attractive
as a partner for the more prestigious designer brands that want to benefit from Luxottica Group’s recognized
leadership in design, production quality and global wholesale distribution.
14
FINANCIAL PERFORMANCE THE YEAR IN REVIEW
193
3,500
3,000
2,500
2,000
1,500
1,000
500
0
Millions of Euro
239 270 340 420
955 1,226 1,431 1,538
1,874
2,417
3,065 3,132 2,82
5
700
600
500
400
300
200
100
0
Millions of Euro
57
37 67 93 119 153 180 224 227
239
413
509
602
432
26
400
350
300
250
200
150
100
50
0
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003
Listing on
NYSE
Acquistion of
LensCrafters
Acquistion of
Ray-Ban
Acquistion of
Sunglass Hut
International
Millions of Euro
133
31 35 48 65 84 106 130
152
255
316
267
372
NET SALES EVOLUTION
OPERATING INCOME EVOLUTION
NET INCOME EVOLUTION