The Wall Street Journal-20080206-Designer Eyewear Group to Open Boutiques

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Designer Eyewear Group to Open Boutiques

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In a bid to get more shelf space for its glasses, Italian eyewear manufacturer Safilo Group SpA is planning to roll out its own retail stores.

Safilo, which makes eyewear for fashion brands such as Giorgio Armani and Dior, announced the acquisition of two eyewear chains, Just Spectacles in Australia and Sunglass Island in Mexico, for a total of 28 million euros ($41.5 million). In addition, the company will create a new chain of prescription eyewear boutiques, opening in countries such as China this year, Chief Executive Claudio Gottardi said in an interview. Alongside the new prescription chain, Safilo will roll out its Solstice sunglasses chain, which counts 110 stores in the U.S., internationally.

"We need to bring retail up to the level of our brands," Mr. Gottardi says.

In recent years, eyewear has become a central component of the luxury-goods industry. Labels such as Gucci and Prada were eager to draw in consumers who couldn't afford a $1,000 bag but could buy a $200 pair of sunglasses.

Now, eyewear chains are also becoming more chic. Two years ago, Safilo's bigger rival Luxottica Group SpA began refurbishing its LensCrafters stores with upscale touches such as hardwood floors. Last year, Luxottica launched a new chain in the U.S., Ilori, dedicated to designer sunglasses.

Yet Luxottica has shut Safilo out of its major LensCrafters and Sunglass Hut chains in recent years. Mr. Gottardi said the loss of any one retailer wouldn't hurt sales by more than "a couple percentage points." Analysts estimate Luxottica has about a 20% retail market share in the U.S.; Safilo's share is estimated to be minimal.

With its new retail strategy, Mr. Gottardi wants sales from Safilo's own stores to make up 20% to 25% of group sales by 2011, up from 6% last year. To do that, the company will open or buy 100 to 200 stores a year for the next five years. By comparison, Luxottica's retail sales made up 65% of group revenue last year.

"The majority of our future expansion will come from building our own stores under our own name," Mr. Gottardi says. The company will unveil the name of its new prescription eyewear chain in a month.

The acquisitions in Australia and Mexico will serve as platforms to develop the Asia-Pacific and Latin America regions, Mr. Gottardi says. From its new base in Mexico, Safilo can now reach into booming consumer markets such as Brazil.