A luxury fashion expert says Luxottica’s founder most likely had his business’s future at heart when ousting the sunglass empire’s non-family chief executive last week, despite media speculation that the exit was personal.
The Italian eyewear firm, which has annual revenues of €7.3 billion and includes brands such as Oakley and Ray-Ban, was brought to prominence during Andrew Guerra’s decade-long tenure.
Leonardo Del Vecchio, who owns 66% of Luxottica shares, retired from the limelight upon Guerra's appointment in 2004 – one of the most prominent examples of an Italian family patriarch ceding control to a non-family member.
Guerra went on to transform the company into the largest eyewear firm in the world.
But at a board meeting on Monday, the company agreed to remove Guerra from the top post, replacing him with a trio of co-chief executives.
Luca Solca, luxury analyst at Exane BNP Paribas, believes Del Vecchio is too capable an entrepreneur to let personal idiosyncrasies damage his business interests.
“The 80-year-old must believe a new management organisation will provide new energy and new focus that should do even better for Luxottica,” Solca said, adding that Del Vecchio’s stake in the business allowed him to more easily enact this vision. “I tend to believe a majority shareholder chairman can be in a position to precipitate change more so than a non-shareholder chairman.”
Solca says Del Vecchio could have been unhappy with performance in a number of areas, including cost and return on investment, and that by returning to the firm he will be able to ensure these issues are addressed and appropriately managed.
However, in an interview with Italian newspaper, Del Vecchio said Guerra had opposed a radical overhaul of the management structure, which some believe would allow the eyewear patriarch to hand off the business to his offspring.
"When approaching 80, one must think about one's children. You can put in writing that succession plans had a determining role in the decision," Del Vecchio said, according to a Reuters translation.
Previous reports suggested that Del Vecchio and Guerra had fallen out over Guerra’s political ambitions and a deal that would see Luxottica design wearable technology for Google Glass, which Del Vecchio has described as an “embarrassing” fashion accessory.
The new management structure sees 53-year-old Enrico Cavatorta, the current chief financial officer, appointed to co-chief executive. The Milan-based company is recruiting externally for a third co-CEO.
Guerra was given a €11.5 million redundancy package, along with an additional €34 million for the shares he held in the eyewear group.
Solca concluded: “Enzo Ferrari used to say that as an entrepreneur you need to be able to race men, before you race cars. In this perspective, Mr Del Vecchio's decision is in the best interest of the company, in his opinion.”