April 24, 2018 / 12:22 PM / 3 months ago

LVMH's eyewear venture looks to triple production

LONGARONE, Italy (Reuters) - A joint venture between Dior-owner LVMH (LVMH.PA) and Italy’s Marcolin could triple its production of glasses over time as its portfolio of brands expands.

LVMH last year followed in the steps of rival Kering (PRTP.PA), which decided in 2014 to bring its eyewear business in house to increase control and pocket profit margins previously left to licensees.

The shift in strategy has dealt a blow to Italy’s Safilo (SFLG.MI) - the world’s second-largest eyewear manufacturer behind domestic rival Luxottica (LUX.MI) - which was already suffering from the loss of Kering’s Gucci license.

Safilo in December lost LVMH’s Celine brand to the new joint venture and is seen at risk of losing Christian Dior and other prestigious brands owned by the French luxury goods group after 2020.

The Thelios joint venture, 51 percent owned by LVMH, could potentially boost production to 4.5 million pieces a year from 1.5 million currently, CEO Giovanni Zoppas said.

LVMH Managing Director Toni Belloni said the group’s brands had freedom in their licensing choices but added Thelios would become what he termed a privileged partner.

“Some of the most important licenses are due to expire in 2020 and in the following two years, which is a timeframe consistent with Thelios’ learning curve,” Belloni said.

Safilo’s Dior license expires in December 2020, Givenchy in 2021, Fendi in 2022 and Marc Jacobs in 2024.

The joint venture inaugurated on Tuesday an 8,000 square meter plant in Longarone, northeast Italy, an area famous for eyewear manufacturing. Thelios could more than double the plant’s size if needed, Zoppas said.

The venture employs around 250 people, of which 100 work at Longarone.

In addition to Celine, Thelios’ portfolio includes at present Loewe and Fred.

“If we remained with three brands we would very disappointed ... we’re determined to add more,” Belloni said.

The executive said LVMH had no plans to raise its 10 percent stake in Marcolin.

Reporting by Riccardo Bastianello; Writing by Valentina Za; Editing by Keith Weir and Mmark Potter

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