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Aug 20, 2014
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Clash at Luxottica could lead to CEO departure -sources

Aug 20, 2014

MILAN, Aug 20 (Reuters) - Luxottica, maker of Ray-Ban and Persol sunglasses, could part ways with Chief Executive Andrea Guerra due to disagreements over strategy with founder and chairman Leonardo Del Vecchio, according to sources close to the matter.

Three sources said Guerra, 49, who had helped the company become world leader during his tenure, had fallen out with Del Vecchio, 30 years his senior and Italy's second-richest man.

"It seems inevitable that he will leave," said one of the sources.

Luxottica declined to address Guerra's future, but said in a statement: "We can confirm that for some time Chairman Leonardo Del Vecchio and CEO Andrea Guerra have been debating the best strategic direction for the group."

It said no board meeting had been called for now.

Shares in the company were down 3.2 percent in afternoon trade after falling as much as 7 percent on press reports that Guerra might step down.

According to a person who knows Guerra and recently spoke to Del Vecchio, relations between the two had soured in recent months, especially after Guerra was tipped in February to become a minister in the government of Prime Minister Matteo Renzi.

"There's been bad vibes between the two for a while now. Del Vecchio did not like the fact that Guerra was offered a ministerial position by Renzi and was considering taking it but did not come fully clean about what was going on," the person said.

"That really incensed Del Vecchio. I'm surprised it's taken so long to reach this point."

At the time, Guerra said in a statement he was "happy and serene" at Luxottica. "I am staying here to do my job in this beautiful company."

Corriere della Sera daily also cited disagreements between Guerra and Del Vecchio after Guerra's recent deal with Google to design and market its Internet-connected spectacles. It did not say what the disagreements were about.

Del Vecchio owns 66.5 percent of Luxottica, with fashion designer Giorgio Armani holding another 5 percent.

Andrea Guerra Image: Luxottica


Publicity-shy Del Vecchio, who rose to riches from humble beginnings in a Milanese orphanage, hired Guerra in 2004 from another family business, white goods maker Merloni Elettrodomestici. It was a rare example of an Italian patriarch picking an outsider to run a family company.

"He (Guerra) is a good manager, and the stock is reacting. But the company was created by Del Vecchio, not Guerra," said Roberto Lottici, a fund manager at Ifigest, who said he had bought Luxottica shares on Wednesday morning.

Under Guerra, Luxottica has become a world leader in its sector through innovation and international acquisitions, including the purchase of U.S. sports eyewear firm Oakley in 2007, and signed licences to produce and distribute luxury glasses for fashion brands ranging from Armani to Chanel.

Last year, the group had sales of 7.3 billion euros ($9.7 billion), up 43 percent from 2009 and more than double the level in 2004, when Guerra took over as CEO.

The group has built a strong international presence - 96 percent of its retail sales came from outside of Europe, mostly North America, in 2013 - and one of its main strengths is that it has full ownership of companies along the supply chain.

Since Guerra became CEO, shares in Luxottica have nearly tripled in value. A soft speaker who likes to keep a low profile, he has a reputation of being a demanding boss and his name has been mentioned as a possible successor to Sergio Marchionne at the helm of Fiat.

"He'll give managers space early on, but then will start imposing his own viewpoints. He has his own ideas on everything and finds it very hard to change his mind. He'll defend his ideas to the bitter end," said the person who knows him.

Citi analysts said in a note that if Guerra left, they did not expect it would have much impact on the group in the short term.

"Luxottica appears to be firing on all cylinders at the moment," the report said. "More importantly, Andrea Guerra has created a very strong management team, and we see him as a very capable director of the orchestra, rather than a one-man band."

(Writing by Silvia Aloisi; Editing by Erica Billingham and Will Waterman)

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