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Luxottica Group SWOT & PESTLE Analysis

ID : 52353353| Feb 2018| 15 pages

COMPANY PROFILE -Luxottica Group

Business Sector :Fashion & Lifestyle

Operating Geography :Global

About Luxottica Group :

Luxottica Group is an Italian eyewear corporation serving the customer in premium, luxury and sports eyewear based out of Milan, Italy. It is a market leader in its segment with revenue generated of over €9 billion and a market capitalization of €46 billion. It has over 82,000 employees working all over the globe as of March 2016. The group makes sunglasses as well as prescription frames and boasts off designer brands such as Prada, Chanel, Versace and DKNY. The group also includes brands such as Ray-Ban, Persol and Oakley.

Luxottica Group Revenue :

€9,086 million – FY ending March 2016

Competitive Analysis of Luxottica Group

SWOT
PESTLE
The SWOT analysis for Luxottica Group is presented below:
Strengths
Weaknesses
1. Strong Financial Performance
2. Diverse brand portfolio
3. Market Leader
4. Strong supply and big network
5. Brand image which gives it the freedom for pricing power.
1. Frequent changes in leadership
2. Low investment in R&D
3. Lack of scale
4. Overpricing on majority of the products.
Opportunities
Threats
1. Expansion in Emerging Markets
2. Merger, Acquisitions and Licensing
3. Launch of new products and services
4. Attracting venture capital
1. Counterfeit Goods
2. Rise of E-commerce
3. Government regulations
4. Emerging competition and price war.
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Detailed SWOT Analysis of Luxottica Group

 

Strength

1. Strong Financial Performance: The revenue stands at €9,086 million with a growth of over 25% over the last five years. One trend which can be observed is the continuous growth of the bottom line i.e. the Net Income over the past couple of years. The net income is €851 million with the growth of nearly 6% year on year basis. This increasing trend shows the immense popularity of the brands under the Luxottica group.Income from operating activities increased to €867.9 million an approximate increase of 10.1% from 788.1 million in the first six months of 2016. This substantial improvement in the first 6 months shows group's growth despite the more challenging macroeconomic environment.

2. Diverse brand portfolio: The brand portfolio which has proprietary brands such as Ray-Ban, Oakley, Vogue etc and also licensed brands such as Giorgio Armani, Burberry, Chanel etc is a right mix of elegance and style. The portfolio appeals to many tastes of people and is well balanced between licensed brands and proprietary brands.

3. Market Leader: In January 2017, the company announced a merger with Essilor forming an entity whose market capitalization stands at €46 billion, making it the largest eyewear company in the world. Before the merger, the global market share of Luxottica was 14% and Essilor 13%. The synergy thus formed of two naturally complementary products, frames and lens will come under one roof and look to serve vision needs of 2.5 billion people all over the world. Also, the market share of the combined entity is expected to reach 30% after the merger is completed.

4. Strong supply and big network: An efficient distribution network helps the company to maintain close contact with its consumer as it maximizes visibility of the brand. The distribution mainly comprises of Wholesale chain and Retail chain network. As of December 2016, there were 7158 stores and 819 franchise stores.

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Weakness

1. Frequent Changes in Leadership: In the past three years, there has been incessant changes at the top level and just before the Essilor merger, the company named Francesco Milleri as their new CEO when the incumbent CEO Massimo Vian parted ways with the company. This is the fourth such instance in less than three years. While the Francesco Milleri is an able leader and longtime employee of the company, such frequent changes at the top management could be detrimental to long-term strategy and growth of the company. In order to have better futuristic growth with clear goals and targets, stability at the top management is needed.

2. Low investment in R&D: The company spends only a tenth on R&D, of what it spends on marketing. This statistic is alarming because the Company in order to thrive needs to continuously invent and innovate and thiscan be achieved through R&D initiatives. Luxottica needs to focus on such initiatives in order to stay ahead of the curve.

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Opportunity

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Threat

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References

1. Luxottica Group Annual Report 2016: http://www.luxottica.com/sites/luxottica.com/files/annual_review_eng_interattivo.pdf

2. Luxottica Group-Half Yearly Report 2017: http://www.luxottica.com/sites/luxottica.com/files/relazione_finanziaria_semestrale_2017_eng.pdf

3. Luxottica Group Annual Review 2016: http://www.luxottica.com/sites/luxottica.com/files/luxottica_group_relazione_finanziaria_annuale_2016_eng_0.pdf

4. Livemint: http://www.livemint.com/Companies/KixA8iLeApfvzDJvyb7GKP/Essilor-Luxottica-combines-share-in-Indias-eyewear-market.html

5. Reuters: https://www.reuters.com/article/us-luxottica-ceo/luxottica-ceo-exits-eyewear-giant-ahead-of-essilor-merger-idUSKBN1E92IB

6. CNN: http://money.cnn.com/2017/01/16/news/companies/glasses-merger-luxottica-essilor/index.html

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Luxottica Group SWOT and PESTLE analysis has been conducted by Pulkit Mittal and reviewed by senior analysts from Barakaat Consulting.

Copyright of Luxottica Group SWOT and PESTLE Analysis is the property of Barakaat Consulting. Please refer to the Terms and Conditions and Disclaimer for usage guidelines.

Luxottica Group SWOT & PESTLE Analysis
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