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News, Frames, Business

Kering ends Safilo's Gucci licence, agrees to another


French luxury conglomerate Kering, formerly PPR, is redefining its 20-year partnership with Italian eyewear company Safilo following its latest decision to take most of its eyewear business in-house.After assessing the growth prospects of the eyewear market and the business potential of its brands in this category, Kering has initiated a move aimed at building in-house eyewear expertise for its brands.

"The global eyewear market for frames and sunglasses is significant and growing double-digit in the premium high-end segment," Kering stated.

The current size of its brands' business is roughly €350 million and makes Kering one of the top five players in this industry, according to the company. Nine out of 11 Kering brands active in the eyewear category are managed through licence agreements with five different partners, generating consolidated royalties of approximately €50 million. Kering's partnership with Safilo includes eyewear licences for Gucci, Bottega Veneta, Saint Laurent and Alexander McQueen.

As part of the move, Kering and Safilo will terminate the current Gucci licence agreement two years in advance, i.e. by 31 December 2016.

Safilo will receive a compensation of €90 million, to be paid in three installments between 2014 and 2018.

The two companies have also agreed to put in place a product partnership agreement for four years, commencing in January 2017, renewable upon mutual agreement. The agreement covers product development, manufacturing and supply of Gucci eyewear products by Safilo, and is subject to the signing of long-form agreements by the end of the year.

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