EssilorLuxottica hosted its 2019 Capital Markets Day in London this week, presenting its strategic vision, integration progress, and long-term financial guidelines. In short, it laid out its plans for growth as well as how it will further unite its entities into one company unit.
In the long-term (up to 2023), the company’s ambition on financial targets, all of which exclude the impact of strategic acquisitions and currency effect, is as follow:
Sales: mid-single digit growth with a growing contribution from Direct-to-Consumer activities and Fast-Growing Markets
Adjusted operating profit: 1.0–1.4x sales
Adjusted net profit: 1.0–1.5x sales
In a presentation to investors, EssilorLuxottica shared its strategic vision for the future, where combining the strengths of Essilor and Luxottica will open up new avenues for growth and enable the Company to achieve its purpose, “see more, be more, and live life to its fullest.”
EssilorLuxottica said its plans to grow its business and the broader industry are rooted in the following pillars:
- An open business model where eyecare and eyewear products are accessible to everyone, everywhere. This will be made possible as the company shifts to a global network model made up of stores, prescription laboratories, logistics hubs, R&D centers, and digital properties, all connected in real time and benefiting from advanced analytics and data
- Accelerated Innovation that leverages both companies’ research and development; supply chain advancement by combining frames and lenses for the complete pair; revolutionizing the eye exam; developing smart eyewear and new categories
- Reshaping the consumer journey from refraction exam, awareness, and storytelling to access and convenience to digitally enabled stores
- Embedding sustainability at EssilorLuxottica’s core: from responsible environmental practices to philanthropic initiatives to employee shareholding.
Progress on the Integration
During the first nine months of the year, the company put in place a structured process to drive integration and deliver synergies. The net impact on adjusted operating profit of those synergies is expected to be in the range of:
- Euro 300 million to Euro 350 million in the period 2019/2021
- Euro 420 million to Euro 600 million by 2022/2023
With the ultimate objective of building a unified company, EssilorLuxottica has launched more than 20 priority work streams and 160 business initiatives that are being implemented globally. This activity is under the leadership of more than 40 key executives with the full commitment of dedicated teams involving more than 800 employees across the two organizations.
First steps include:
- The creation of one single supply chain and prescription laboratories network
- The integration of Costa in the Luxottica’s brand portfolio and frame network
- The introduction of a co-location model to systematically review headquarters locations for EssilorLuxottica
- A pilot project in Italy to define one single IT platform to be quickly rolled out across the Company’s organization.
Building the foundations of a new common culture
The company is building the foundations of a new culture by combining the best of both worlds. This includes Essilor’s employee shareholding culture and Luxottica’s welfare traditions, to name a few examples. Yesterday (Sept. 26), the company started campaigning its new global employee shareholding plan. For the first time, the plan will include Luxottica’s employees in Italy, paving the way for a full roll-out of the initiative within EssilorLuxottica globally in the future. As of today, more than 46,000 Essilor employees are EssilorLuxottica shareholders.