Paris—Kering SA, the luxurygoods conglomerate that owns Gucci, Yves Saint Laurent and other designer brands, has expanded into eyewear as well. The company plans to take control of its eyewear business.
Kering signed an agreement with Italy’s Safilo Group SpA to set up a four-year strategic product partnership from 2017, Kering said today. As part of the accord, Kering will pay Safilo 90 million euros (about $118 million) in three installments through 2018 to terminate the eyewear maker’s Gucci license deal two years early.
“Eyewear is a strategic category,” Roberto Vedovotto, a former Safio chief executive who joined Kering last year. “By bringing the business in-house, Kering aims to help its 11 brands that are active in eyewear fulfill their growth potential.”
Eyewear generates about 50 million euros of royalties for Kering via license agreements with five different partners, the French company said. Yet, the business is worth about 350 million euros in sales and the market for premium high-end frames is growing at a double-digit rate, Kering added.
Not all analysts are so optimistic about Kering’s move.
“We have doubts the solution opted by Kering will result in the group producing an overall higher amount of profit in absolute terms with its eyewear business,” said Luca Solca, an analyst at Exane BNP Paribas. “The challenge for Kering will be to service a customer base that has no overlap with its own.”
Vedovotto will head Kering’s new eyewear unit and be a co-shareholder of the division, Kering reported.