Georgia Firm Has Frame-n-Lens in Its Sights

By DARYL STRICKLAND

June 11, 1998 12 AM PT

TIMES STAFF WRITER

Frame-n-Lens Optical Inc. of Fullerton, the state’s largest eye wear chain, said Wednesday it agreed to be acquired by National Vision Associates Ltd. of Georgia for $37 million in cash and assumed debt.

The acquisition of Fullerton-based Frame-n-Lens, which operates 209 stores, will boost National’s operations to 715 stores, making the company the third-largest eye wear retailer behind Cole Vision Corp., which operates Pearle Vision and NuVision stores, and LensCrafters.

National Vision currently is the nation’s fifth-largest optical retailer.

Frame-n-Lens will become a division of National, but will continue to operate under its own name, the companies said Wednesday.

Some layoffs may occur at Frame-n-Lens to eliminate overlapping jobs, according to President Michael Collins. He said that fewer than 5% of the company’s 1,200 employees would be affected.

Collins said he will assist in the merger, but that a long-term role has not been worked out.

Founded in Los Angeles in 1990, the privately held concern merged with the Eyeglass Co. in 1983, and grew into a regional retailer of prescription eyeglasses.

In 1986, the company built its own manufacturing factory in Santa Fe Springs. In a key acquisition four years ago, Frame-n-Lens purchased Family Vision Centers Inc., which had 123 units in Sam’s Clubs and seven in Wal-Mart stores.

The company’s sales totaled $78 million last year. National earned $5.5 million on sales of $186 million in 1997.

Analysts said the move makes sense because the companies are similar--offering low-priced products and operating stores within larger retailers. Frame-n-Lens has 123 units in Sam’s Club stores, for example, and National Vision has about 360 vision centers in Wal-Mart stores.

The deal, which is expected to close within 60 days, is part of an effort by National to wean itself from its heavy reliance on leases with Wal-Mart. Leases for some of those National units expire within the next five years, and there is no guarantee that the nation’s largest retailer will renew them, analysts said.

In October, National acquired Midwest Optical, a 50-unit chain of mostly independent sites in the upper Midwest.

“It has become critical to pursue a strategy of acquiring a chain of free-standing stores,” said Kyle Kavanaugh, an analyst with Schroder & Co. in New York. Analysts also say they expect consolidation to continue in the industry. The top 10 companies control less than 20% of the market, making many smaller firms ripe for takeovers by the industry’s giants.

The optical industry is expected to exceed $16 billion in sales this year. With aging baby boomers requiring more corrective lenses, the industry should continue to grow for more than five years, according to the Jobson Optical Group, which publishes the trade journal Vision Monday.

The managed care business also provides growth opportunities, said Collins, the Frame-n-Lens president. Companies must have optometrists on site to serve managed-care customers, and Frame-n-Lens plans to hire 200 more doctors and support staff by the end of the year, Collins said. National already provides optometrists at its sites, he said.

Shares of National Vision Associates rose 31 cents to $6.56 Wednesday in Nasdaq trading.

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Top Opticals

How Frame-n-Lens and National Vision Associates rank among the top optical retailers. 1997 U.S. sales, in millions:

1. Cole Vision: $997

2. LensCrafters: $955

3. Eye Care Centers of America: $240

4. Wal-Mart Corp.: $236

5. National Vision Associates: $182

6. Consolidated Vision Group: $180

7. Sterling Vision: $160

8. U.S. Vision: $125