Italian luxury eyewear firm Luxottica Group SpA said Friday that it will acquire Israel-based Erroca, a 60-door sunglass specialty retail chain. The move will likely be the beginning of larger expansion in the Middle East, the company told WWD.
“The opportunities in that region are strong,” said Fabio d’Angelantonio, chief executive officer of Luxottica’s specialty chain, Sunglass Hut. “We’re targeting Turkey, Saudi Arabia, Kuwait, Bahrain, Qatar, United Arab Emirates. The consumer there is becoming increasingly assertive in their approach to fashion especially when it comes to luxury accessories, and especially with sunglasses.”
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The entry into the Israeli market is part of Luxottica’s global strategy of expanding its Sunglass Hut stores in what it calls the “sun belt,” or regions with high-growth potential and a relevant number of sunny days per year. In 2011, Sunglass Hut entered the Mexican, Brazilian and Chinese retail markets.
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The Erroca deal, which is expected to close by the end of October, is estimated at about 20 million euros, or $28.5 million at current exchange, according to the Italian eyewear manufacturer, which said that over time, it would eventually rebrand Erroca stores into Sunglass Hut stores.
Once the rebranding is complete, Luxottica said it would consider flagship opportunities and further expansion within Israel.
“Israel represents a very important market for Luxottica…by this action, Luxottica shows how strategic this country is for the group,” said Luxottica executive vice president of wholesale Paolo Alberti, who noted that the company already has a presence in Israel through its wholesale division.
Currently in shopping malls in Israeli cities like Jerusalem, Tel Aviv and Eilat, Erroca, is expected to amass net sales of 25 million euros, or $35.6 million in 2011, according to Luxottica.
Known for its Ray-Ban brand, as well as licensed brands such as Bulgari, Chanel, Prada and Versace, the eyewear company reported in March that its sales in 2010 rose 13.8 percent to 5.8 billion euros, or $7.6 billion, a record for the firm.