Jim Jannard sold Oakley Inc. to Luxottica Group SPA in Italy for $2.1 billion eight years ago, but it appears the eyewear conglomerate is just now putting the Foothill Ranch-based subsidiary firmly into its fold.
Jannard has moved on to build a second fortune with Irvine-based Red Digital Cinema Camera Co. (see profile in special pullout section on OC’s Wealthiest).
Oakley, meanwhile, is amid a four-step process that began earlier this year, with word of layoffs and a reorganization coming last week. The reorganization is expected to be completed by Oct. 1, when plans for a retail expansion are expected take full shape.
It’s all part of a bid “to accelerate growth and to unlock the full potential of the brand,” according to the company.
“[It’s a] huge operation that I will say is 80% through,” said Massimo Vian, Luxottica’s chief executive of product and operations, during the company’s earnings call on July 27.
Luxottica said it had taken over executive duties from Oakley’s leadership, moving former Chief Executive Colin Baden into the new role of chief innovation and product officer. He now reports to Vian and is responsible for leading optics product innovation, design, line planning, research and development, and military products.
Also eliminated were a number of executive jobs in “global sales channels, global wholesale, global retail, and global product development for Oakley,” according to Vian.
Oakley also trimmed its rank and file—about 400 positions overall, through layoffs and attrition. The company’s Foothill Ranch headquarters and a smaller center in Lake Forest combined for 159 of the layoffs, according to filings with the state Employment Development Department.
The jobs cut here followed a reduction of Oakley’s international operations. The office in Switzerland, which had served as the European headquarters, was shuttered on July 1, with staffers dispersed to parent company Luxottica’s offices in London and Milan.
Oakley’s operation in Canada was shifted to the Belluno district in Northern Italy, where Luxottica produces eyeglasses under license for brands such as Prada and Bulgari, among others.
Currently in the works for Oakley is the integration of its back office functions—“information technology, administration, sales operations and order cycle management”—with Luxottica’s North American infrastructure. Oakley’s wholesale operations will be merged with the “wholesale activities of the group” in New York and its Atlanta distribution centers. Oakley also has a distribution center in the Inland Empire city of Ontario, about 40 miles from its headquarters.
$22M
The changes have cost the company about $22 million so far, and plans are in place to spend another $33 million for further initiatives. Luxottica said it looks to save about $110 million once the plan is fully deployed.
“Oakley savings will be reinvested in Oakley to make Oakley bigger and international, and a hit [during] the Olympics,” said Adil Mehboob-Khan, Luxottica’s chief executive for markets. “It’s important for us to underline that because Oakley is on our ‘we want to invest’ list, not on the ‘we want to extract savings’ list.”
Oakley brings in an estimated $1.5 billion in sales—on par with Luxottica’s RayBan brand—but counts on the U.S. for nearly all of the total. Its awareness among consumers in North America is at 80%, Mehboob-Khan said in March, but dips to 50% in Europe and around to 30% in emerging markets.
“Building the awareness, building that brand, is a major opportunity for us,” he said.
That means making Oakley available “to more people and more places” through a retail expansion outside the U.S., Mehboob-Khan said.
