Glasses equipped with artificial intelligence helped EssilorLuxottica achieve the final goal of its late founder Leonardo Del Vecchio last week — a €100bn valuation — capping its transformation from a workshop in the Dolomite mountains to the world’s biggest eyewear manufacturer.
His successor is betting that smart eyewear developed with social media giant Meta will one day replace the smartphone in customers’ pockets, and fuel future growth.
On an earnings call this month, the maker of Ray-Ban and Oakley sunglasses said glasses integrated with tiny cameras and Meta’s AI assistant were one of the strongest drivers of quarterly sales, helping to push up shares and taking it to a market capitalisation of €101.5bn last week.
“The merger between Luxottica and Essilor was the evolution of our initial vision which had optics at its core. Then technology positively disrupted our plans,” chief executive Francesco Milleri told the Financial Times.
“The next step with our Meta partners is to become leaders in the wearable computing space . . . [creating] glasses we think will one day replace most other technology devices,” he added.
His comments come as EssilorLuxottica last week hit a record valuation, but was also forced to respond after chief strategy officer Leonardo Maria Del Vecchio was placed under investigation by Milanese prosecutors as part of a sprawling probe into the alleged trafficking of illegally acquired private information, alongside dozens of others.
EssilorLuxottica expressed its “full support” to its late founder’s son over the weekend. A spokesperson for Del Vecchio declined to comment on Sunday. The company is not part of the probe.
EssilorLuxottica was created in 2018 through a complex €50bn merger of Italian billionaire Del Vecchio’s eyewear group Luxottica and French lens manufacturer Essilor. Luxottica started out in 1961, crafting parts for frames from Del Vecchio’s small workshop in the Italian village of Agordo.
The combined company has since grown into a global group with an annual revenue of over €25bn last year, making frames for designer houses such as Prada, Coach, Giorgio Armani and Chanel and pushing into wearable technology and healthcare.
Shares dipped slightly this week, leaving it hovering just below a €100bn market capitalisation, but are up by almost 25 per cent over the past 12 months.
EssilorLuxottica’s latest generation of Ray-Ban Meta glasses enable users to livestream what they see directly on to Facebook and Instagram and take pictures and videos that are automatically saved to their phones. In the US, the glasses are integrated with Meta’s AI assistant, giving owners the ability to ask the glasses for more information about what is in front of them.
“These new technologies will one day replace smartphones, like streaming services replaced music CDs and electric vehicles will substitute combustion engines,” Milleri added.
EssilorLuxottica said this month that its Ray-Ban Meta smart glasses and a brand of photochromic lenses that react to sunlight, had both been “key” drivers of growth in the third quarter. Its smart glasses, which sell for over €300, were popular on the group’s ecommerce channel, and the best sellers in most Ray-Ban stores across Europe, the Middle East and Africa.
The group does not share sales figures for single products, but revenues for its direct-to-consumer segment grew by 3.2 per cent to €3.4bn over the quarter, while total revenue rose by 2.3 per cent year on year to €6.4bn.
EssilorLuxottica and Meta are now planning to deepen their partnership, announcing a new long-term agreement in September to develop “multigenerational smart eyewear products”. Meta is also in discussions with the group over a multibillion-euro investment, with chief Mark Zuckerberg confirming last month that Meta plans to take a “symbolic” 5 per cent stake in EssilorLuxottica.
Together, Meta and the Franco-Italian group have the potential of “becoming the Samsung of Europe”, Zuckerberg said.
Over the past few years, Meta has spent billions of dollars on entering the wearable technology market, including creating virtual reality headsets.
Zuckerberg first approached Luxottica founder Del Vecchio in 2019 to explore a potential partnership, visiting the late billionaire in Agordo, where the company still has a factory. Milleri said that meeting sparked negotiations about how to develop a transformational product.
Smart glasses, says Milleri, are scalable unlike other wearable devices. “Momentarily cool but essentially extraneous devices previously launched by tech platforms [have] limited appeal,” he says.
“The strength of glasses is that billions of people already wear them and many more will in the future . . . they are part of our everyday lives, whether these are sunglasses or prescription ones.”
Under Del Vecchio, who died in 2022 aged 87, Luxottica made a first attempt to develop frames with an embedded technology, which ultimately failed to sell due to low demand. “The mistake we made 15 years ago, in the early stages of developing smart eyewear, was to think that people would simply buy the technology,” said Milleri.
Early versions of smart eyewear developed by Luxottica and others, including social media platform Snapchat, came in large and unattractive designs.
“The reality is that consumers always want great-looking accessories and that’s why the iconic brands at the core of our strategy are more important than ever,” Milleri said.
EssilorLuxottica now has eyewear licences for numerous global luxury fashion brands, giving its Meta partnership significant expansion potential, according to Milleri. He said “luxury branded smart eyewear” would eventually become “part of our daily lives” as the technology becomes invisibly embedded into frames.
The technology is promising, but EssilorLuxottica and Meta may come up against stumbling blocks in the form of privacy regulations around the world including in important markets such as China and the EU.
Meanwhile, under Milleri, the eyewear group is also pursuing deals in sectors including medical technology, this year taking an 80 per cent stake in Heidelberg Engineering, a German company specialising in diagnostic and surgical technology for ophthalmology.
It has also built a stake in Nikkon, which specialises in precision optics and photographic equipment, and in 2022 acquired Israeli hearing technology start-up Nuance Hearing to develop glasses fitted with its acoustic beamforming technology.
“We’re pursuing new objectives, investing in eye trackers and health monitoring systems which will help in the prevention of certain diseases,” said Milleri.
The company also acquired US streetwear label Supreme for €1.5bn in July, expanding its portfolio beyond frames and lenses in a bid to target younger consumers.
“We began as eyewear makers but we [ultimately] realised that glasses will be an AI, cloud computing vehicle,” Milleri said.
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