Safilo SpA

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Safilo SpA

Zona Industriale
VII Strada, 15
35129 Padua
Italy
Telephone: +39 049-6985111
Fax: ( + 39) 049-6985354
Website: http://www.safilo.com

Private Company
Incorporated: 1934
Employees: 5,755
Sales: EUR 845 million ($748 million) (2001 est.)
NAIC: 339115 Ophthalmic Goods Manufacturing; 423460 Ophthalmic Goods Merchant Wholesalers; 333314 Optical Instrument and Lens Manufacturing

Safilo SpA is one of the world’s leading manufacturers of eyeglasses and sunglasses, as well as other goods for the optical market, including frames and contact lenses. Based in Italy, Safilo is that country’s number two maker of eyewear, behind Luxottica. Safilo distributes its products primarily through third-party opticians, but runs a small network of showrooms in such select locations as Paris’s Champs Elysées and New York’s Fifth Avenue in order to showcase its strong selection of its own brands, which include Safilo, Carrero, Smith, and Blue Bay, and designer frames. Safilo has long been a leader in the designer eyewear market—the company pioneered this market in the late 1960s—and features collections for such well-known brands as Gucci, Polo Ralph Lauren, Yves Saint Laurent, Dior, Max Mara, Valentino, Diesel, Pierre Cardin, and Burberry, as well as a number of brands specific to the North American market, including Nine West, Fossil, Kate Spade, and Saks Fifth Avenue. The United States has long represented a primary market for the company, generating as much as 46 percent of its annual sales, which topped EUR 845 million (approximately $750 million) in 2001. The company, through its subsidiaries Smith Sports Optics and Carrera Optyl, is also the leading manufacturer of sports-specific eyewear; the company holds a 50 percent share of the U.S. market in that eyewear category. Formerly listed on the Italian stock exchange, Safilo was delisted after founder’s son Vittorio Tabacchi gained control of the company from his brothers. Tabacchi, who holds the position of chairman, named Roberto Vedovotto as the company’s managing director in 2001. The company expects to return to the stock market early in the 2000s.

Italian Eyeglass Maker in the 1930s

The late 19th century saw the birth of the Italian eyeglass manufacturing industry, centered around the Cadore area in northern Italy. The earliest eyeglasses business was set up by Angelo Leone Frescura and Giovanni Lozza in 1878; the partners later moved their business to a new site in Calalzo di Cadore in 1883, where they established Italy’s first modern-era manufacturer of lenses and eyeglass frames. The Cadore region was to become nearly synonymous with Italian eyeglasses manufacture, continuing to account for more than half of the country’s total production by the end of the 20th century.

In 1934, Gugliemo Tabacchi bought the original eyeglass factory, founding a new company, Safilo. Over the following years, the company adopted new technologies and materials, including cellulose acetate, which had first been put into use for making eyeglass frames in the 1920s. The use of cellulose acetate enabled manufacturers to create more varied eyeglass styles, adding colors and new shapes. Yet the wearing of eyeglasses remained a necessity, and not yet the fashion accessory of the later decades of the century.

Tabacchi’s business grew strongly, focused on the Italian market. In the 1960s the company growth led it to extend its production facilities, adding a new plant in Santa Maria di Sala, near Venice, in 1964. That plant then took over the company’s production of cellulose acetate-based frames. Apart from producing eyewear, Safilo also developed its own engineering department, which designed proprietary machinery, or adapted third-party machinery, to meet the company’s production needs—and give it an edge on the competition.

In 1968, Safilo became an industry pioneer when it debuted what are considered the first designer eyeglasses, in conjunction with noted designer Count Emilio Pucci. For those models, Safilo developed a new process that enabled the company to incorporate Pucci’s well-known vividly colored and patterned fabrics into the plastic of the frames.

International Expansion in the 1970s

The success of the Pucci and other eyeglass models enabled the company to grow further in the 1970s. The company expanded its original Calalzo facility at the beginning of the decade, then bought a new building, in Padua, in 1973, which was converted to serve as Safilo’s distribution center in 1975. Two years later, Safilo extended the Padua site, which then became the company’s headquarters.

Safilo had focused primarily on the Italian market until the 1970s. The growing popularity of Italian-made eyewear elsewhere in the world soon led the company to begin its own international expansion, starting with the launch of a subsidiary in Belgium in 1977. The success of its venture into Belgium led Safilo to expand throughout Europe, opening distribution subsidiaries in Denmark, Spain, Germany, and France. Back in Italy, Safilo added a new factory operation, in Martingnacco-Udine, in 1980, dedicated to the production of metal components for eyeglass frames.

Designer eyewear took off in the 1980s as eyeglasses started to become fashion accessories—a trend helped in part by such spectacles-sporting celebrities as Elton John. In 1984, Safilo added a new company devoted to designer eyeglasses styles, Optifashion, and began building up a stable of designer names. Safilo’s designer business also brought it to the United States, where it acquired 50 percent in New Jersey-based eyeglasses company Starline Optical, which was building up its own selection of designer eyewear, such as a line of Calvin Klein-designed styles launched in 1985. By 1986, Safilo had acquired full control of Starline, giving it one of the largest eyewear distributors in the U.S. market.

Consonant with the rising success of designer ophthalmic eyewear was the growing popularity of designer sunglasses styles. Safilo moved to gain a place in this market as well, acquiring the Friuli, Italy-based Oxsol, a specialist in sunglasses manufacturing, in 1987. The following year, Safilo’s designer business was boosted by the worldwide contract for Gucci, which itself was eager to extend its brand into the eyewear and sunglasses sectors. The company scored its next designer success in 1989 when it acquired Optique du Monde, based in the United States, which held the license to produce eyewear under the Polo Ralph Lauren brand.

By the beginning of the 1990s, Safilo had become one of Italy’s top eyeglass manufacturing groups, competing head-to head with rival Luxottica as the two groups built up their stable of designer brands. Safilo added such names as Pierre Cardin in 1991, Burberry in 1994, Diesel in 1995, and Max Mara in 1997. In 1998 the company wooed away Valentino, as well as its sub-brand, Oliver by Valentino, from Luxottica, then added Nine West in 1999 and Kate Spade and Fossil in 2000. The company scored a new designer coup when it signed on the coveted Yves Saint Laurent label in 2002.

Leading Eyeglasses Maker in the 21st Century

Safilo supported the growth of its stable of brands with the steady expansion of its industrial and distribution capacity. In 1988, the company began construction of a new headquarters facility on a 25-acre site in Padua, which opened in 1990. The following year, Safilo inaugurated a new production plant in Longarone dedicated to the production of metal frames. The new site also enabled Safilo to enter the fast-growing market for lightweight titanium-based frames.

During the first half of the 1990s, Safilo strengthened its commercial component, taking over its distributors in Canada and Sweden in 1990, then boosting its presence in the Far East with the creation of a dedicated division for that region in 1994. The company expanded throughout Europe as well, opening subsidiaries in the United Kingdom in 1995; Greece, The Netherlands, and Austria in 1996; Australia and South Africa in 1997; then Japan, Brazil, and Portugal through the end of the decade.

By 1995, Safilo operated five manufacturing facilities producing some ten million frames per year. Sales topped L 415 billion ($265 million) in that year. Yet the company found itself unable to meet the rising demand for its frames; at the same time, the company saw increasing growth from its sunglasses division and sought to expand further into that sector. In 1996, Safilo made two important acquisitions. The first was the purchase of Smith Sport Optics, the U.S.-based leader in sports-specific eyewear, particularly ski masks. Next, Safilo won in its bid to buy bankrupt Carrero-Optyl Group of Austria. These purchases not only added new production capacity—including Carrera-Optyl’s three plants in Austria and Slovenia—but also added to Safilo’s stable of brands with Carrera-Optyl’s Carrera, Sunjet, Viennaline, and Terri Brogan, and licenses to produce eyewear for Christian Dior, Hugo Boss, Dunhill, and Porsche. The two acquisitions also added significantly to Safilo’s sales, with some $180 million in annual revenues coming from Carrera-Optyl and another $30 million from Smith Sport Optics.

Listed on the Italian stock exchange, Safilo nonetheless remained controlled by the Tabacchi family, represented by brothers Vittorio, Diño, and Giuliano, who together owned some 70 percent of the company’s shares. At the end of the 1990s, however, the brothers disagreed over the future direction of the company, with Dino and Giuiliano interested in selling their stakes—possibly to Safilo’s fast-growing rival Luxottica. In the end, Vittorio prevailed, buying up Giuiliano’s stake in the company, before gaining complete control of Safilo in 2001. The company was then de-listed from the stock market.

Company Perspectives:

We intend to further consolidate our leadership in luxury eyewear and, at the same time, boost the steady growth that we have enjoyed in recent years, focusing, as always, on three key elements: quality of product, selective distribution and customer service.

Despite the uncertainty surrounding its ownership, Safilo forged ahead with its expansion at the turn of the century. The company continued to seek to expand its production capacity, and in 2000 acquired Maxima, a specialist in eyeglass coating and coloring, located in Longarone. The company also opened a new distribution facility in Padua that year.

In 2001, Safilo’s designer brand business was boosted by the renewal of its license with Christian Dior. The company also was vying for another prestigious brand name, Yves Saint Laurent (YSL), part of the Gucci group; Safilo was awarded the license for the YSL brand in May 2002. By then, the company had entered into a new optical category, after acquiring a 17.5 percent stake in Safilens in 2001. Safilo then announced its plans to launch its own Carrera-branded contact lenses in 2002, testing the product in the Italian market first, before going ahead with a worldwide launch. As Safilo turned to the new century, its sales had neared EUR 850 million and were expected to near the EUR 1 billion mark by the end of 2002. In October of that year, Vittorio Tabacchi acknowledged his intention to return the company to the stock market, forecasting a new listing by as early as 2005.

Principal Subsidiaries

Carrera Optyl D.o.o. (Slovenia); Carrera Optyl GmbH (Austria); Carrera Trading Gmbh (Austria); Lenti Sri; Safilo America Inc; Safilo Australia; Safilo Espana S.A. (Spain); Safilo Benelux S.A.; Safilo Do Brasil; Safilo GmbH (Germany); Safilo Far-East Ltd (Hong Kong); Safilo France S.a.r.l.; Safilo Hellas S.a. (Greece); Safilo International BV; Safilo Japan; Safilo Ne-derland BV (The Netherlands); Safilo Scandinavia AB (Sweden); Safilo South-Africa; Safilo UK Ltd; Safilo Portugal; Safint Australia Pty; Safint B.V.; Safint Optical U.K.; Smith Sport Optics Inc. (U.S.A.).

Principal Competitors

Luxottica SpA; B Braun Melsungen AG; Essilor International S.A.; Bausch and Lomb Inc.; Allergan Inc.; Cristalería Española SA; Cole National Corporation; Instrumentarium Corporation; Lantis Eyewear Corporation; NCH Corporation; Fielmann AG; Oakley Inc.; Halma p.l.c; Optische Werke G Rodenstock; Krys Vision Originale Vision Plus; OPSM Protector Ltd.; Bacou USA Inc.; EganaGoldpfeil Holdings Ltd.; Marchon Eyewear Inc.

Key Dates:

1934:: The company is founded by Gugliemo Tabacchi, who buys Italy’s first eyewear manufacturing facility established in 1883.
1964:: Safilo opens a second factory in Santa Maria di Sala, near Venice.
1968:: Safilo becomes the first eyewear company to produce designer eyeglasses, with Italian designer Pucci.
1977:: Safilo establishes its first international subsidiary in Belgium.
1984:: The company adds a dedicated division for designer eyewear, Optifashion.
1986:: The company acquires U.S.-based Starline Optical.
1987:: The company acquires Italy’s Oxsol and begins sunglasses production.
1990:: The company opens a new headquarters building in Padua.
1991:: The company opens a new production facility in Longarone dedicated to producing metal frames, including titanium frames.
1996:: The company acquires Smith Sports Optics of the United States and Carrera-Optyl of Austria.
2000:: The company acquires Maxima, a specialist in eyeglass coating and coloring, based in Longarone.
2001:: Vittorio Tabacchi takes control of Safilo and removes the company from the Italian stock market.
2002:: The company signs a worldwide license agreement with Yves Saint Laurent.