Kering is Bolstering its In-House Eyewear Division By Acquiring Danish Brand LINDBERG
Kering
is bolstering its eyewear division by way of a new name. The Paris-based
conglomerate announced on Thursday that it has signed an agreement for Kering
Eyewear to acquire 100 percent of the share capital of LINDBERG, the Danish
eyewear brand launched in 1969 by optician Poul-Jørn Lindberg and his wife as
an optical store and subsequently turned into a multinational company by their
son Henrik. The acquisition is “an important milestone in the successful
expansion of Kering Eyewear and perfectly fits with its development strategy,”
according to Kering, which launched its eyewear division in 2014, a venture
that it says consists of “an innovative business model that has enabled [it] to
reach a critical size in the market with close to €600 million wholesale
external revenues” as of FY2019.
“This acquisition
will further reinforce Kering Eyewear as the most relevant player in the luxury
eyewear market segment, adding to its portfolio a complementary and proprietary
brand with strong legitimacy, undisputed know-how and best-in-class customer
service in optical frames,” the group – which also owns Gucci, Balenciaga,
Bottega Veneta, and Saint Laurent, among other luxury brands – said in a
statement. Kering, which has not disclosed the terms of the deal, further
asserted that due to the “business complementarities, both companies will be
able to leverage on their respective strengths across the value chain, with
synergies in distribution and geographical reach notably.” In turn, “This will
contribute to accelerate the growth and enhance the profitability of Kering
Eyewear.”
LVMH followed
suit, announcing in February 2017 that it would team up with Italy-based
eyewear company Marcolin to form a “design and manufacturing
joint venture,” in which it holds a 51 percent stake. More
recently, LVMH-owned Fendi announced a new deal with Thelios, LVMH’s venture
with Marcolin, to create, produce and distribute the Italian fashion house’s
eyewear collection. On July 1, the parties said in a statement that the
“collaboration is an important step for both (companies), which are joining
forces to increase the appeal of Fendi eyewear and making it a leading brand in
the luxury segment.” Thelios currently manufactures eyewear for LVMH’s Dior,
Stella McCartney and Kenzo labels.
The emphasis on
supply-side acquisitions has intensified in recent years, as luxury groups have brought an array of suppliers and services under
their own roofs – or at least amass sizable stakes in the companies – in an
effort to exert increased control over the manufacturing of their
offerings. Over the past decade, in particular, fashion’s most esteemed
luxury names have been busy buying up different aspects of their supply chains
in part to ensure closer ties to a supply of raw materials. Most recently, Prada announced in June that it has partnered with
fellow Italian fashion company Ermenegildo Zegna Group to acquire a controlling
stake in Italian cashmere producer Filati Biagioli Modesto in furtherance
of a quest to “secure a domestic supply chain and luxury-goods manufacturing
expertise.”
President and CEO
of Kering Eyewear Roberto Vedovotto said on Thursday that “LINDBERG is the
absolute luxury eyewear and it will come as a perfect complement to the brand
portfolio that Kering Eyewear has been assembling since 2014, making it even
more relevant to our specialized distribution network.” The deal is expected to
close in the second half of this year.
Bernstein analyst
Luca Solca asserted in a note that expansion into eyewear “confirms Kering’s
ambition to step out of soft luxury and build beachheads around it, in an
effort to test new areas and eventually diversity its business.” Mr. Solca
states that the industry is a challenging one, however, in much the same way as
watches, due to the existence of “major incumbents.” In terms of eyewear, Solca
points to the recent combination of EssilorLuxottica and GrandVision
as an example of why it will “likely remain a tough area for Kering to expand
into, while producing an attractive ROIC.”
* This article was originally published here
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