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When looking into Luxottica Group (NYSE: LUX) from an investor standpoint, a couple big moves which have recently taken place signal to me that Luxottica is taking a position for the long haul. Luxottica Group may be more well known to you by some of their eye-wear brand-names -- Brooks Brothers, Donna Karan, Prada and Ray-Ban. Luxottica is the world's single largest eye-wear / eye-care firm, marketing thousands of eyeglass designs under at least 25 brand names.
Some of the most significant company movements that grabbed my attention are not to be taken lightly. This is a very well focused company with an aggressive vision for the future. (Puns are included at no extra charge).The single most powerful event I have seen initiated by Luxottica was the November announced acquisition of D.O.C. Optics to include some 100 retail establishments operated by D.O.C. nation wide. The acquisition is expected to be completed in the first quarter of 2007 for an amount of approximately $90 million. As of this writing the deal is passing cleanly through financial processing and regulatory approval.
While this move by Luxottica is very good for the company and its investors, when you consider that Luxottica Group already holds LensCrafters and Pearle Vision, I'm hoping that this ownership change in D.O.C. won't translate as lessened competition and therefore higher prices for the consumer.
Added to the D.O.C. acquisition is the recent announcement that Luxottica has entered into a ten year license agreement with Tiffany & Co.(NYSE: TIF). Luxottica and Tiffany's shall cooperate in the design, manufacturing and worldwide distribution of exclusive ophthalmic and sun collections under the Tiffany & Co. name. I find this marketing agreement to be an absolutely first class business move for both companies.
These moves by Luxottica are shrewd and brilliant. D.O.C. Optics is a company that Luxottica has long admired for its attention to quality and value. Tiffany's is a company known for extreme high-end fashion and desirability. These are attributes in which Luxottica is already deeply entrenched. A quick review of its brand name offerings will bear that out.
Taking control of D.O.C. should provide immediate and noticeable income growth for Luxottica. Its shareholders should be greatly cheered by this move. Entering into an agreement with Tiffany's assures presentation to a highly sought after market segment. It would seem to me that now is an opportune time to consider buying a piece of this strong company. From where I'm looking, Luxottica appears to be positioning for a strong push in a very upward direction.
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