License a Go-Go: Kering to Bring all Eyewear In-House

image: Gucci

image: Gucci

Kering, the French luxury group behind the Gucci and Yves Saint Laurent brands, is creating a in-house eyewear division to tighten control over the business and gradually take back all of it licenses. The group said it wants to be involved in every step of the business from design and marketing to sales, but would continue to outsource manufacturing.

The global eyewear market for frames and sunglasses is significant, with double-digit growth in the premium segment, Kering said in a statement on Tuesday.

The company said the eyewear business derived from its brands generates 350 million euros ($459 million) in annual sales, making it one of the top five players in the industry, and currently receives about 50 million euros in licensing royalties.

The move is part of a wider trend of luxury groups buying back licenses to better control the image of their brands, diversify business and boost sales and profit.

One of the most high-profile examples has been Burberry's decision to take its perfume business in-house, with the aim of building a global beauty brand, complete with cosmetics and make-up lines.

As part of its initiative, Kering said it had decided to terminate its Gucci license agreement with eyewear maker Safilo at the end of 2016 instead of end-2018. Kering will make a 90 million euro compensation payment to its Italian partner. Starting in Jan. 2017, Safilo would handle production development, manufacturing and supply of Gucci eyewear based on a new four-year contract, renewable on mutual agreement.

The French group said that former Safilo Chief Executive Roberto Vedovotto and his team would be co-shareholders of a new entity called Kering Eyewear. A spokeswoman for the group declined to reveal how much Kering is investing in the project. (1 US dollar = 0.7619 euro)