Luxottica made the surprise announcement on Sunday, that Enrico Cavatorta has resigned from his role as co-CEO of corporate functions. Mr. Cavatorta had been with Luxottica since 1999, serving as CFO until being named to the aforementioned co-CEO role just six weeks ago (on September 1). Mr. Cavatorta’s departure follows the resignation of former tenured CEO Andrea Guerra, which was also formally announced on September 1.
Founder and Chairman Leonardo Del Vecchio plans to recommend to Luxottica’s board the appointment of Massimo Vian to the role of co-CEO of operations and product, with interim oversight of corporate functions and markets. Mr. Vian has been with the company for the past seven years and is highly regarded, having served as director of Asia operations for several years before being named COO in 2010.
The company continues its search for a full-time co-CEO of markets, with the company suggesting that it is considering a list of high-profile candidates. We understand that the company is considering people with global consumer products experience, both luxury and non-luxury goods. While the company will now take some additional time to select the co-CEO of markets (versus its prior expectation to have an announcement by the third-quarter release in late October), we gather that an announcement could still come by the end of the year. Once both co-CEOs are fully in place and the transition is complete, these executives are expected to have full responsibility for running the company, with Mr. Del Vecchio stepping back into a role more similar to the one he has had over the past decade.
In response to ongoing media rumors/speculation, Mr. Del Vecchio stated that his son Leonardo Maria Del Vecchio has never been considered for a board appointment and that his other son, current director Claudio Del Vecchio, will not be reappointed following the expiration of his current term in 2015.
Separately, the company indicated that financial results remain on track with expectations through the third quarter (ended September). We estimate that, in particular, Sunglass Hut is showing continued solid growth and that LensCrafters is experiencing improving trends. We also do not believe that there have been any changes to the recently discussed long-term financial targets. There is no change to our operating earnings per American depositary share (EPADS) estimates of $1.90 in 2014 and $2.10 in 2015, which represent low-double-digit growth each year and translate to euro-based EPS of €1.41 and €1.66, respectively. Our estimates exclude charges related to management changes/departures.