Letter to shareholders
“My dream, as an entrepreneur, has always been to make the best eyewear in the world and see everyone wearing them. True determination, commitment to excellence and the ability to reinvent ourselves and innovate characterize our history and mark our way of working. The pillars of our strategy have never changed: product quality, strong brands, efficient factories, widespread distribution and growing our direct relationship with the end consumer.”
Leonardo Del Vecchio
Just over a year has passed since we announced, together with Essilor, a historic agreement to combine our two companies and create a major integrated player in the eyewear industry.
Our vision is to push beyond the boundaries of the sector to unlock greater value for our customers and consumers. By integrating the beauty and craftsmanship of our design and the prestige of our brands with high-quality lenses manufactured with advanced digital technologies, we will offer innovative products and services that satisfy the needs and desires of people everywhere.
The agreement with Essilor, which we expect to close in the first half of 2018, will allow us to accelerate the completion of our integrated model by adding the final component to our value chain. Lenses and frames will be created as a single product right from conception through design and production.
Waiting to write a new chapter of our history together with our French partners at Essilor, in 2017 we continued to invest in our strategic priorities, mindful of the opportunities ahead for the Group.
Over the last three years, we have completed initiatives and a strategic refocusing that have improved the quality and competitiveness of the Group. This allowed us to close a record year in terms of revenues and of both earnings and cash generation, over one billion Euro. Our net margin was above the 10% threshold again after fifteen years.
Much has been done to enhance the brand portfolio, always at the center of our strategies, and its positioning in the market by introducing stricter trade policies in North America, streamlining our distribution in China and strongly investing in digital communication and new online platforms to engage even the younger generation.
2017 was also a year of major investments in our industrial infrastructure. We completed the expansion of three new large hubs in Italy, the United States and China, which are now equipped to produce and distribute frames and lenses together under one roof, and we streamlined our global logistics network to further improve the speed and quality of our customer service.
We continue to have a great focus on innovation. Again this year, we introduced approximately 2,000 new models, along with new materials and processes, giving life to collections that were well received in every market. We also made major investments to strengthen both the digital infrastructure along the entire supply chain and the IT platforms that today connect Luxottica directly with the market, from customers to consumers, and bring in store our true omnichannel experience. We have presented to the market the store of the future, easily sustainable, where digital integrates and completes the physical experience, breaking down barriers such as the limitation of physical spaces and the availability of products in store. The transformation is in progress.
Today we have over 4,000 windows equipped with digital screens in the Group’s retail chains and in select independent optical stores, as well as large-scale installations, such as the Times Square mega screen in New York. They already allow a visual communication in real time with millions of people in the most prestigious streets and neighborhoods all over the world. 2018 saw the start of a new project dedicated to our wholesale customers, where we expect to install over 20,000 digital windows.
Retail has grown both in size and quality. In the last twelve months we have reached the milestone of about 9,000 stores worldwide, thanks to the acquisition of Óticas Carol, one of the most important franchise chains in Brazil. Digital and omnichannel are the focus of our future development.
Looking ahead, 2018 is expected to be another year of growth and important investments for the Group. The growth pillars remain unchanged: product quality, strong brands, efficient factories, widespread distribution and an increasingly direct relationship with the end consumer through retail and e-commerce.
As always, we will seize new opportunities ahead with a clear strategy, fierce determination and speed of execution.
Leonardo Del Vecchio