LensCrafters 2007 Annual Report Download - page 33

> 32 | ANNUAL REPORT 2007
The Group’s wholesale distribution network covers more than 130 countries, with directly
controlled operations in its key 44 markets, where clients are mostly retailers of mid- to premium-
price eyewear, such as independent opticians, optical retail brands, specialty sun retailers and
duty-free shops. In North America and other areas, key clients also include independent
optometrists and ophthalmologists and premium department stores. Direct distribution in the key
markets gives Luxottica Group a considerable competitive edge, making it possible to maintain
close contact with clients, maximize the image and visibility of the Group’s brands and optimize
distribution.
In addition to making some of the best brands, with a broad array of models tailored to the needs
of each market, Luxottica also provides its wholesale clients with the assistance and services
needed to enable their business to be successful.
One of Luxottica Group’s main strengths is its ability to offer pre- and post-sale services which
have been developed and continuously improved over decades. These high-quality services are
designed to provide customers with the best product and in a timeframe and manner that most
enhance their value. The distribution system is connected at the international level to a central
production planning function through a network linking logistics and sales functions and outlets to
the manufacturing plants in Italy and China. Through this network, global sales and inventory are
monitored daily and, based on the information from the market, production resources and
inventory levels are adjusted. This integrated logistics system is one of the most efficient and
fastest in the industry. In Asia, Europe and the United States, centralized distribution centers have
over the years significantly improved distribution speed and efficiency. Luxottica Group is thus able
to provide its clients with a highly automated system for order management that reduces delivery
times and minimizes inventory, while providing high-quality products.
RETAIL
Luxottica Group’s retail division includes:
• Ilori, LensCrafters, Pearle Vision (owned and franchise stores), Sears Optical, Target Optical,
Sunglass Icon, Oakley Stores and Vaults, The Optical Shop of Aspen and Oliver Peoples shops
in North America, where the Group is a leading retailer in optical products;
• OPSM, Laubman & Pank, Bright Eyes and Budget Eyewear stores in Australia and New Zealand,
guaranteeing the Group’s leadership in this region with 910 stores;
• Sunglass Hut, the world’s leading and widest reaching specialty premium sun retail chain, has
2,000 stores mostly in North America, Asia-Pacific, the Middle East and the UK; and
• a network of approximately 250 stores in China and Hong Kong.
In 2007, the retail division, excluding Oakley, saw a slight (1.8%) contraction in its revenues to Euro 3.2
million, mainly due to the unfavorable trend in the Euro/Dollar exchange rate. On a comparable
exchange rate basis, revenues would have grown 5.6%. Further, on a comparable number of stores,
exchange rate and consolidation area basis, and including Oakley, sales increased by 1.2% despite
the ups and downs in the North American market. In Australia and China, two major markets for the
Group, sales were stable. Sunglass Hut continued to develop in all the countries in which it operates:
over the last three years it has recorded 40% growth on comparable stores, exchange rates and
consolidation area basis.
Operating income in the retail business (excluding Oakley) amounted to Euro 362 million, down
16.2% from the previous year, while its ratio to sales (operating margin) was 11.2%.
In 2007, the Group’s retail business benefited from its major investment plan, mainly focused on