Letter to shareholders

Leonardo Del Vecchio

“My dream, as an entrepreneur, has always been to make the best eyewear in the world and see everyone wearing them. True determination, commitment to excellence and the ability to reinvent ourselves and innovate characterize our history and mark our way of working. The pillars of our strategy have never changed: product quality, strong brands, efficient factories, widespread distribution and growing our direct relationship with the end consumer.”

Leonardo Del Vecchio

Dear Shareholders, On January 16, 2017 we announced, together with Essilor, an historic agreement to combine our two companies and create a major integrated player in eyewear; a European champion with strong national roots between Italy and France and a shared culture of excellence and innovation. We looked ahead, beyond the boundaries, leading the evolution of the industry for the benefit of our customers and consumers. By integrating unparalleled design and the prestige of our brands with the best ophthalmic lenses and the most advanced digital technologies, we will offer innovative products and services of the highest quality.

The agreement with Essilor will allow us to accelerate the completion of our integrated model by adding the last component to our value chain. Lenses and frames will be born as a single product right from conception through design and production.

This marks a new phase of planning and opportunity for the Group's future, but it would not have been possible without the important results we achieved in 2016, with the support of all of you.

This past year, we implemented initiatives and a strategic refocusing that improved the quality and competitiveness of the Group, and set the stage for continued revenue and profit growth.

The period of profound change which started with my collaborators two years ago has enabled the Group to broadly strengthen its position in any market and to be simpler, more efficient and employ a faster decision-making process.

Much has been done to enhance the brand portfolio, always at the center of our strategies, and its positioning in the market by introducing stricter trade policies in North America, streamlining our distribution in China and harmonizing prices in different markets. These projects have impacted short-term results, but they will give us a boost in the medium and long term, preserving the integrity of our businesses.

2016 was also a year of major investments in our industrial infrastructure which is absolutely excellent, our retail network and our digital transformation. In just over six months we created three new large logistics-production hubs in Italy, the United States and China, which incorporate the production of lenses and frames together, and streamlined our international logistics network to promote the efficiency, speed and quality of service to our clients. Our factories are centers of technological excellence, where craftsmanship coexists with the latest-generation automation and research and development excellence.

The pursuit of innovation guides all our choices. Every year we introduce approximately 2,000 new models and, thanks to our innovation lab in the heart of Silicon Valley, we’re exploring new ideas and opportunities to seize the potential of each market. Recent achievements include further developments in Chromance and Prizm technologies which appear in Ray-Ban and Oakley sun lenses, the commercial launch of Radar Pace, Oakley’s first smart glasses and, for the first time in eyewear, the introduction of Ray-Ban frames made with graphene.

The retail segment has grown not only in terms of size in North America and around the world, but also in terms of quality. In the last twelve months we have added approximately 1,000 new stores to our global network thanks to the acquisition of Salmoiraghi & Viganò and collaborations with brands such as Macy's and Galeries Lafayette. In 2017 we expect to add approximately 950 Óticas Carol stores in Brazil upon the closing of the announced acquisition. We have also invested significant resources to promote the omnichannel evolution of our retail network – innovating our e-commerce platforms and integrating them into our physical stores – and introduced more sophisticated tools for eye exams and digital marketing.

Today, Luxottica looks forward to the challenges and opportunities ahead with enthusiasm and the confidence that comes from being in the right position to address evolving competitive landscape. Geographic diversification, productive integration and organizational flexibility allow us to respond to change and every opportunity while realizing our vision: to provide the best products and service to our customers.

2017 will be another important year in our history and that of our industry. As always, we will face new challenges with determination, speed of execution and clear strategies.

April 2017

Leonardo Del Vecchio

Last updated: Apr 28 2017