LensCrafters 2005 Annual Report Download - page 21

> 20 | ANNUAL REPORT 2005
The agreement with Burberry was an important addition to the list of long-term partnerships the Group
has entered into or renewed in recent years, from the agreements with Versace and Prada to the
renewals with Bvlgari and Chanel in 2004, and the new partnerships with Dolce & Gabbana and Donna
Karan in the same year. The duration of these agreements, at least ten years on average, allows the
Group more time to develop collections and to position them more effectively in the market, thus
maximizing their potential, each in line with its particular brand values.
The increasingly strong and well balanced brand portfolio encompasses the most diverse of consumer
tastes and trends whilst continuing to attract prestigious luxury and fashion brands such as Polo Ralph
Lauren early in 2006, the latest of the long series of ten-year agreements signed by the Group.
DISTRIBUTION
The success enjoyed by the wholesale division in 2005 was reflected in the positive performance and
consistently strong demand for the new collections. Total wholesale sales were Euro 1,310.3 million, up
19.7% from 2004. Operating income for the wholesale business rose 30.5% from the previous year to
Euro 304.3 million (representing 23.2% of wholesale sales). For yet another year, the wholesale division
continued to grow at rates above the average of most of the markets in which the Group operates. In
Europe, which continues to be one of the most important markets for the wholesale business, Luxottica
Group continued to gain market share, even in markets that did not grow in absolute terms. The
wholesale division did similarly well in the United States, where the Group’s reorganization of its
distribution structure began to yield its first and very positive results.
In 2005, the wholesale division extended its coverage of markets in Eastern Europe and in particular
opened a representative office in Moscow to oversee the Russian market. This structure will work to
prepare the ground for commercial operations by, for example: supporting Russian distributors of
Luxottica Group products, gathering market information and monitoring marketing activities and
communication. Similarly, a representative office was opened in China to ensure more direct monitoring
of that market and the distribution activities in it. The Group also set up direct distribution in the important
South Korea market.
Over the course of the year, the Group continued to invest in optimizing services and logistics in order
to remain the preferred partner for clients looking to benefit from a range of products and services of the
highest possible quality. Even the acquisition of retail brands has benefited the level of service the Group
is able to offer its clients. In fact, Luxottica Group’s direct experience in retail in key markets has
translated into unique expertise and understanding of challenges facing its retail clients, from third-party
retail brands, large and small, to independent optical stores. Luxottica Group not only offers the best
eyewear brands, with an array of models tailored to the needs of each market, but also delivers them in
a timeframe and manner designed to maximize their value. It also provides all the necessary pre- and
post-sales services. This approach helps wholesale clients operate under ideal circumstances, thus
maximizing the market potential for premium optical products and services.
MANUFACTURING
In 2005, Luxottica Group took additional steps to further improve its manufacturing efficiency - a
cornerstone of its long-term strategy - by focusing on the forecasting of materials requirements and
planning, and on monitoring production progress to reduce production times as well as stock of semi-
finished product. Additionally, the Group launched a project to further integrate planning and control
procedures between the Italian manufacturing facilities and the plant in China, to ensure increasingly
more effective coordination and flexibility.