September 2, 2014 4:45 pm

Luxottica’s Leonardo Del Vecchio eyes acquisitions on his return

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Leonardo Del Vecchio, 79-year-old founder and executive chairman of the global eyewear group behind Ray-Ban and Oakley, has acquisitions in his sights and plans to double the group’s revenues to more than €14bn in the next decade.

After a decade spent out of the limelight, Mr Del Vecchio, who became a multi-billionaire by creating the world’s largest eyewear group by sales, stepped back into the frame on Monday. He took over as executive chairman of Luxottica, the group he founded half a century ago, after parting with his highly regarded chief executive Andrea Guerra following a disagreement over strategy.

In an interview with the Financial Times, Mr Del Vecchio says Mr Guerra had not shared his “ambitious plans” for the group, including further rapid expansion.

“I want to grow in the next 10 years even more than in the past 10 years. My aim is that in the next 10 years we will celebrate having double the revenues than we have now,” said a lean and animated Mr Del Vecchio at Luxottica’s newly opened headquarters – a bright white tower in central Milan.

Mr Del Vecchio, who will turn 80 in May, was raised in an orphanage. He rose to become one of Italy’s world-class cadre of postwar entrepreneurs that includes designer Giorgio Armani and chocolatier Michele Ferrero.

He sees much of the desired revenue jump coming from organic growth.

CV: Leonardo Del Vecchio

Leonardo Del Vecchio, president and CEO of Luxottica during an interview with Financial Times in the new headquarter in Milan, September 01,2014. Photo Paolo BonaLeonardo Del Vecchio, president of Luxottica during an interview with Financial Times in the new headquarter in Milan, September 01,2014. Photo Paolo Bona

For a look at the Luxottica chairman’s journey from Milan orphan to Italy’s second-richest man

See below

Eyewear sales are growing fast in new markets in South America and in established markets like the US where they have become a fashion accessory. Mr Del Vecchio sees his generation as another target.

“People who are young like me,” he smiles, “almost all of them carry sunglasses as I do. That will increase as people who are young like me increase.”

However, he also sees acquisitions ahead.

“We have done acquisitions, and we will continue to do acquisitions but for companies that do not cannibalise the shops that we already have and the interests that we already have. We would buy a chain that does something different for us,” he says.

“We want to grow very fast because we don’t want anyone to be faster than us. We must run, we need to push the accelerator because we don’t want anyone else to eat our lunch,” he adds in Italian faintly accented from the northeast mountain region where Luxottica’s manufacturing base is still located, surrounded by snow-capped peaks.

Luxottica looked at a tie-up with French group Essilor two years ago. Mr Del Vecchio, who owns 66 per cent of Luxottica’s shares, says that in the end “we decided it wasn’t a good deal for us” because to make the deal work he would have had to dilute his shareholding. “Of course I could not accept this.”

Considering deals that would be of interest to him, Mr Del Vecchio speculates that he “would like” a joint venture with a group like LVMH, owner of Louis Vuitton and Dior and the world’s largest luxury goods group. Luxottica is already working on a joint venture with Google to design, develop and distribute Google Glass, the interactive headset costing $1,500.

Mr Del Vecchio’s comments about driving growth come as Gucci-owner Kering said it would be making its own eyewear in house.

The Luxottica founder’s handover of front-line management to Mr Guerra a decade ago was a rare example in Italy of a family patriarch ceding to a trained manager in the first generation.

His return as head of an executive committee overseeing a new management structure which splits Mr Guerra’s job in three, among two co-CEOs and a head of operations, has been read by some insiders as a push to put his family in charge of management in the next generation.

Mr Del Vecchio reiterates his long-held view that he would not be succeeded in management of the group by a family member, including any of his six children.

“No one from my family can become a manager of this company. It is too big . . . If I had wanted to replace my children today instead of Mr Guerra, I would not have been able to do it,” he adds.

Mr Guerra left Luxottica on Monday after handing his notice to the board. He received a €11.5m golden goodbye. He also accepted an offer from Mr Del Vecchio to buy back his shares in the group for €34m. In an interview with the FT in April, Mr Guerra said he was “so happy leading this company” and had no plans to leave. Luxottica’s revenues doubled during his 10 years as chief executive.

“I must thank Mr Guerra for the work he has done. Luxottica has done much for him. But he has done more for Luxottica. It was an excellent investment,” Mr Del Vecchio says.

And how long does Mr Del Vecchio, who has become an icon in Italy having created one its few global groups, intend to remain executive chairman?

“I will remain president for as long as the company wants me. The day the board put a vote of no-confidence, I will leave. But I believe the board loves me, I believe everyone in this company loves me,” he says.

CV: Leonardo Del Vecchio

Born in Milan in 1935. Enters orphanage as his widowed mother is unable to support him. He later starts his career as apprentice tool and dye maker in Milan. Switches to making spectacle parts.

Leonardo Del Vecchio, president and CEO of Luxottica during an interview with Financial Times in the new headquarter in Milan, September 01,2014. 
Photo Paolo BonaLeonardo Del Vecchio, president of Luxottica during an interview with Financial Times in the new headquarter in Milan, September 01,2014. 
Photo Paolo Bona

1961: Founds Luxottica as contract manufacturer.

1967: Company starts selling Luxottica-branded spectacle frames.

1988: Strikes first licensing deal with Giorgio Armani.

1990: Luxottica lists in New York, followed by a Milan IPO in 2000. Listings generate firepower to buy other brands, including Ray-Ban and Sunglass Hut.

2004: Andrea Guerra appointed Luxottica chief executive as Mr Del Vecchio steps back from front-line management.

2007: Oakley bought for $2.1bn.

March 2014: Luxottica partners with Google to work on the development and distribution of Google Glass wearables.

September 2014: Mr Del Vecchio returns as executive chairman.

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Letter in response to this report:

A paralysed society / From Mr Angelo Richiello

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