Oh, well! One of LUX Headquaters ordered the Rayban glasses, that look like Oakley, to be pulled off the shelves at all SHI stores. They did this before black Friday, ASAP. Seems like little or no revenue was made on the dupes. Too bad! (I say sarcastically).
Oakley may take a hard line with business deals, but they don't go copying their competitors. Lux is desperate, because they know they've lost the Oakley customer. That's a big percent of the Sunglass Hut business.
Also, no marketing mailers from Sunglass Hut this Holiday. Lens Crafters doesn't have a clue what to do with this new business.
Regarding Lux's new purchase, hopefully they won't drive the men's apparel retailer any further into the hole. Do you guys remember Casual Corner? They lost big after LUX took over. LUX has proven that they cannot manage anything but an OPTICAL retailer.
These Italians love to throw away they're money, and exercise their unethical business ethics. Not to mention ruin the lives of hard working American workers.
Again you say LUX proceeded to copy OO product.
Many of the styles in Question were successful sellers before LUX bought HUT. We are only talking about a blue mirror coating and a green mirror coating. The same colors can be found in many low priced Sunglasses in Drug and Department Stoes. Here is what Lux had to say about it.
Luxottica Issues Statement Regarding Case Brought by Oakley in California Court
MILAN, Italy--(BUSINESS WIRE)--Nov. 21, 2001--Luxottica Group, S.p.A. (NYSE: LUX; MTA: LUX) announced that the U.S. District Court for the Central District of California has issued on Tuesday, November 20, 2001, a limited, temporary restraining order valid in the U.S. only and effective through November 30, 2001, in a case brought by Oakley, Inc. alleging that a patent it holds covering reflective coating for sunglass lenses has been infringed by certain sunglass models made by Luxottica and sold in its LensCrafters and Sunglass Hut stores.
Luxottica noted that the order by its terms applies only to three models for a total of four SKU's. Over the past four months the Group sold 2,129 units of these four SKU in the U.S. out of a total of over four million units sold over the same period, thus representing an insignificant percentage of its sales in that market.
Leonardo Del Vecchio, chairman and founder of Luxottica Group, commented: ``We believe that the patent purportedly held by Oakley is invalid and thus intend to vigorously defend against the claims made in the case. More than anything else, this is an issue of upholding the image of the Group, which we believe was unjustly tarnished by these claims.''
Luxottica further stated that, while it will fully comply with the order during its 10-day term, the order was issued by the court without any hearing.
Admittedly it will hurt OO, but do not be surprised if there are other methods of distributing sunglasses than the hut. Trying to cutoff your competitors by buying their distributors generally forces more outlets. Is that a positive move? The results should be very interesting...nevertheless, I feel pretty good about the cheap OO stock I bought at $11.80 as a result of the fallout with LUX and the hut! Of course, maybe I'll regret it later on, but do not see how you can go wrong with a top of line the name like Oakley. Best of luck to you!
You're looking at it through rose-colored sunglasses, my friend (by the way...that's a Maui Jim color, not Oakley!).
While LUX brands will gain somewhat in popularity due to exposure, customers are not going to trade down from an Oakley to an Arnette or Killer Loop. Different customer. Oakley's customer is a FASHION sport customer, just the same as kids who wanted Air Jordans didn't buy Cons when the stores ran out.
And while yes LUX's margin may improve, would you rather have the high margin of $800 million in sales or the slightly lower margin of, say, $1.1 billion. Not to mention the market share, and the opportuinity to groom the younger customer (who's already shown willingness to spend $150) into a Serengetti or Maui glass at the same or higher price.
They'll survive, but they won't flourish immediately.
just a ?????? are kids the only people buying sunglasses??
Profit is the name of the game! Lux can afford to give up some sales if it means more profit! OO sold well in the hut and not being there is going to hurt them bad! They are losing the most important thing in marketing and that is placement. Being in sneaker stores just won't cut it.
Over time Lux brands will gain popularity because of Hut placement!
My guess is OO will cave and give Lux more discount! and then they will be back in the Hut!
Lux might get hurt by a tough economy but OO will be the big loser either way!!!!!!
It makes sense to go after LUX and their attempts to copy OO rather than suing smaller players. After all LUX kicked OO out saying they did not need their product and then proceeded to copy the product...lenses or whatever the copying exists!
By the way, try asking the public about Oakleys and then LUX brands...hopefully you already know what the answer will be??? Even if hut made OO the public now wants Oakleys. The hut will turn out to be a bad deal for LUX.....
It will not be long until you will find the SGH in the Lenscrafters stores; when I visited the hut in my community the lady running the store had transfered from Lenscrafters to help out and she told me all the kids wanted Oakleys. About a month ago they were still carrying Oakleys, probably just getting rid of the inventory.
They did not copy any sunglas styles. The injunction is about certain lens colors and interestingly enough, there are a lot of similar lens colors on the boards of department stores in all kinds of cheap lines. Why is OO nut suing them.Sour grapes if you ask me!! Another thing a lot of people forget that part of SGH succes came from the fact that they were displayed front and centre in all the SGH stores which gave them unbelievable exposure.That exposure is now going to some of the mayor LUX brands. Besides i still see a good selection of MAUI JIM and SERENGETI at SGH. See what LUX had to say in their last Quarterly Report.
Commenting on the results of the retail division, Leonardo del Vecchio, chairman and founder of Luxottica Group, said: ``The strong quarterly performance of our retail division, particularly in terms of profitability, was directly the result of the integration of the Sunglass Hut stores into our Group. In fact, during the quarter we finalized the closing of the former Sunglass Hut headquarters in Miami and integrated the relative central functions into a single organization in Cincinnati, where LensCrafters was already headquartered. This produced savings and synergies for both organizations.''
``Regarding sales at Sunglass Hut, today I am no longer as concerned as I was immediately following the tragic events of September 11 in New York and Washington. In fact, even sales at the 84 stores that we operate in airports worldwide have already regained the greater part of the 34 percent drop experienced in the first full week immediately following September 11, and are currently showing a decline in the high single digits.''
``Finally, I am pleased with the improvement in profitability for the quarter of the Sunglass Hut stores. This was the result of renegotiations of terms with suppliers as well as the replacement of the low-margin Oakley products with a broader product offering that better reflects the assortment available to the public of our house brand and designer lines.''
Quepena 2001, es una pena, no?
I too see this as a short-term failure, but it could turn out OK in the long run for LUX. Comp sales numbers for the neext 10 months or so are going to be ugly, though? Have you heard any results from the last two weekends?
It's interesting that you say they're combo-ing the stores...that sounds like a recipe for disaster. We all know that this past spring/summer they were decombo-ing underperformers. Now...low margin, high shrink, notoriously poor selling training on watches combined with less ownership in sunglasses...that can't be good!
In hindsight, I'd have to say that this sounds like a purchase that was made without a strong plan on where to take the business, or just a really bad miscalculation on how they were going to run it.
PS: I still say the long term future of SGH stores is INSIDE Lenscrafter stores.
Last time I checked the Marketing team in LensCrafter does not have a creative license on any of the present brands carried by the HUT. Not to mention that this staff performs as they are ordered to. There is no individualism or creative flow. Orders are barked by LUX and only them. Scary Stuff!
I like the way you analyze the situation between Lux and OO.
I personally think LUX will fail with Sunglass Hut because they are trying to uniform the business to work like LensCrafter. What made Sunglass Hut successful was not only the brands they used to carry ( OO, Maui Jim, etc), but they would rank their stores according to the customer demand; thus, if a store had a strong fashion customer then they were given the top fashion styles. The same went for sport's oriented customers, and classics, etc.. Store ranking was analyzed based on sales by skus and department. Lens Crafters does not have the capability of doing this (their system is not capable). Sunglass Hut has been thrown at their laps, and they've been ORDERED to make it work, by LUX.
Their newest solution is to combo all stores, so they can carry watch and sun. This will not make them more profitable, it's been proven before.