Luxottica confirms talks for deal with Giorgio Armani

Luxottica Group SpA is in talks with Giorgio Armani SpA to produce glasses for the designer under license, in a push to add one of the fashion world's most highly coveted labels to its stable of brands, Chief Executive Andrea Guerra said

in an interview.

"Yes, we are in talks with Armani," Guerra confirmed as reported by Reuters. Landing an agreement with Armani, one of Italy's biggest fashion houses, would be a winning movement for Luxottica. A big boost for Luxottica could come from a license deal with top luxury group Giorgio Armani if the Italian fashion designer opts for its former partner when his contract with rival eyewear maker Safilo expires next year. Meanwhile, smaller Safilo SpA has said it is confident of renewing the license after making a "compelling" proposal and that a decision by Armani may come by the end of this year. Spokespeople for Armani and Safilo didn't respond to requests from the Wall Street Journal for comment.

Luxottica, which makes eyewear under license for several companies, said its premium and luxury brands posted good growth, citing the Chanel SA, Prada SpA, Burberry Group PLC, Tiffany & Co. and Ralph Lauren labels. Ray-Ban and Oakley also made a strong contribution, Mr. Guerra said.

The comments came as Luxottica, the world's largest eyewear maker, posted a shy increase in third-quarter net profit a week ago, and said it is continuing to target emerging markets such as Brazil and China for growth. Third-quarter net profit rose 9.1% to €111.2 million from €101.9 million a year earlier. On an adjusted basis that excludes a one-time gain and non-recurring costs, profit rose 4.1% to €106.1 million. Sales rose 4% to €1.52 billion from €1.46 billion, and were up 10% at constant exchange rates. In comparison, the average forecast of five analysts polled by Dow Jones Newswires put net profit at €105.3 million and sales at €1.50 billion.

"We will keep up with our pace of small and medium acquisitions," Guerra told Reuters, confirming Latin America as one of the group's main target markets. In the same vein, Luxottica’s CEO said 2012 could be a challenging year for those luxury players which, unlike Luxottica, have not invested in emerging countries and long-term projects. "It will not be a year of growth for everybody," he said.

Luxottica's wholesale division posted a 10.7% increase in sales after currency fluctuations, helped by key contributions from China, Brazil and the Middle East, along with Germany, Italy and the U.K. Revenue for the retail unit was €550 million. Third-quarter sales at the retail division were impacted by the weaker U.S. dollar, since approximately 80% of retail revenue comes from the U.S. At constant exchange rates, the retail division's sales grew 9.6% to €968.7 million; at current exchange rates, the increase was 2.4%.

Mr. Guerra said Luxottica was on track to meet its target of opening 90 new stores in Brazil, with around 15 opened by year-end. In China, the company aims to open 65 new stores by year-end, and 65 more next year, in order to meet its target of having 500 stores there in three years' time. It currently has about 230 stores in China.

Luxottica doesn't rule out acquisitions in the future, targeting China, India, Mexico, Turkey and Brazil. "We will continue to target Latin America in the next six to nine months," Mr. Guerra said.