Bausch May Lose Glasses Business
Bausch & Lomb Inc., the maker of Ray-Ban, Revo, Arnette, Liz Claiborne and Killer Loop sunglasses, may jettison the premium fashion eye wear business it has built up since the 1920s to focus on eye health care.
The Rochester, N.Y.-based company has hired investment firm Warburg Dillon Reed to advise it on options for the business, which hasn’t turned a profit recently. Those include a sale, a spinoff or forming a joint venture.
While it controls about 40% of the global business for premium-sunglasses--brands priced above $30--rivals like Foothill Ranch-based Oakley Inc. have been gaining with contemporary styles aimed at young customers.
The potential changes will have no effect on San Clemente-based Arnette Optics, which Bausch & Lomb purchased in January 1996, said founder Greg Arnett.
The company has 130 employees and makes 24 different models of sunglasses and goggles that are sold throughout the nation at specialty stores and Sunglass Hut International Inc., the nation’s largest sunglass retailer and Bausch & Lomb’s largest customer.
“It doesn’t bother us either way, who owns us,” Arnett said Wednesday. “I think us being left alone by Bausch & Lomb when they purchased us shows we’re doing all the right things.”
William Carpenter, chief executive of Bausch, said his company’s greatest potential for future growth lies with its health-care business for the eyes.
The company also plans to review sunglasses lines like Ray-Ban, which were first developed in the 1920s to help U.S. Army Air Corps pilots cope with glare.
The news sent the company’s shares surging on the New York Stock Exchange, by $2.50 a share, to $50.38. Oakley shares closed at $9.38, off 13 cents on the Big Board.
Eye wear sales have been hurt by an unexpected cutback in orders by Sunglass Hut.
In 1997, the division posted a $12-million operating loss as sales slumped 6%, to $467 million. Last month, Carpenter said the unit will turn a smaller-than-expected profit this year.
More than half of the sunglasses unit’s 2,800 employees work in the United States, most of them in Texas, California and New York.
Bausch & Lomb, which employs 15,000 people, leaped over Texas-based Alcon Laboratories as the world’s largest eye-care company by acquiring Storz Instrument Co. and Chiron Vision Care last year for $680 million. Among its products are contact lenses, eye surgery instruments, ophthalmic drugs and hearing aids.
The company is wrapping up a three-year restructuring to trim $100 million in costs by 1999 and eliminate 1,900 jobs to counter setbacks in the contact-lens and sunglasses markets.
