LensCrafters 2005 Annual Report Download - page 31

> 30 | ANNUAL REPORT 2005
Having sold the optical stores it previously owned in Malaysia and Singapore, Luxottica Group remains
the market leader in Hong Kong, which is a key market for consolidating its presence in China. In Hong
Kong, the Group operates through two retail brands - The Optical Center and The Optical Shop - which
are being merged into a single premium brand with an identity and image leaning more towards
premium and fashion.
In 2005, Luxottica Group completed the acquisition of Chinese retail brands Xueliang Optical in Beijing
(77 stores) and Ming Long Optical in Guangzhou (133 stores), both leaders in their markets. This
represents an important foothold in what the Group considers a key area of future development. The
stores of these two retail brands are managed as part of the Asia-Pacific retail structure, which controls
969 optical and sun retail locations in all, of which 615 in Australia, 74 in New Zealand, 4 in Singapore,
66 in Hong Kong and 210 in China.
WHOLESALE
BRAND PORTFOLIO
The Group’s leadership does not depend on the reach and depth of distribution alone. Luxottica
Group’s brand portfolio, with 18 license brands and eight house brands, is one of the strongest and
most balanced in the industry and it allows the Group to offer a broad range of models capable of
satisfying the most diverse taste and responding to the changing demands and characteristics of each
market. Luxottica Group successfully reconciles necessities of style with complex and highly structured
manufacturing systems, and without compromising product quality. With its outstanding distribution
capacity, a direct presence in many markets, marketing support and a keen understanding of the
international marketplace, the Group is the ideal partner for brands seeking to translate their style and
values into successful, high quality eyewear collections. The Group’s 18 license brands, including some
of the best known fashion houses and international designers, are under exclusive licensing
agreements with an average duration, in most cases, of nearly ten years. One objective for the future is
to extend average duration of any agreement as much as possible, to more thoroughly help realize the
value of each eyewear brand through improved investment planning. The agreements entered in 2003
with Versace and Prada, the renewals in 2004 with Chanel and Bvlgari, the agreements signed in 2004
with Donna Karan and Dolce & Gabbana and in 2005 with Burberry, are all steps in this direction.
Great attention is continuously dedicated to improving product assortment in order to guarantee
coverage and segmentation of the mid- to premium-price market while at the same time always working
to minimize potential for cannibalization among brands. Unique in the industry, Luxottica Group has a
portfolio of eight house brands balancing the license brands, including Vogue, Persol and Ray-Ban, the
world’s best selling sun and prescription brand. Thanks to excellent development of this brand, sales of
house brands have been extremely good and provide an important balancing element in what is a very
diversified portfolio. With its own distribution and retail sales structures and major investments in
advertising, Luxottica Group is able to develop and support collections for each brand very effectively.
As for license brand communication, the Group also benefits from eyewear campaigns that are run
directly by its license partners.