COLE NATIONAL CORP

COLE NATIONAL CORP

Previous company name
CNC HOLDING CORP
Name change date
7/3/1992
Company Overview
Cole National Corporation is an American company engaged in the operation of a specialize retail stores that provides optical products and services as well as personalized gifts through the subsidiaries of its wholly owned direct subsidiary Cole National Group’ Inc. The company sells its products and services through more than 2,900 company-owned retail locations and approximately 481 franchised locations in 50 states in the US, Canada and the Caribbean.
Founded by Joseph Cole in 1944, the company has grown into a massive specialty retailer with its leading interests in retail optical and personalized gift chains. It is one of the nation’s leading optical and personalization retailers, with its headquarters in Twinsburg, Ohio in the United States.
The company provides care products including prescription eyeglasses, contact lenses and accessories, and personalized gifts. It also provides various services including eye examinations and prescribing of eyeglasses and contact lenses. Its principal subsidiary, Cole National Group, Inc., operates through two segments: Cole vision and Things remembered. Cole vision provides prescription eyewear, accessories and services through its Cole Licensed Brands and Pearle Vision retail locations. Things remembered segment provides personalized services for any occasion including holiday, wedding, business recognition and other special occasion gift events.
Business Summary
Cole National Corporation is a provider of optical products and services and personalized gifts, primarily through the subsidiaries owned by its direct subsidiary Cole National Group, Inc. The Company sells its products and services through 2,444 Company-owned retail locations and 481 franchised locations in 50 states, Canada and the Caribbean. Cole has two business segments: Cole Vision and Things Remembered. A majority of Cole Vision’s revenue represents sales of prescription eyewear, accessories and services through its Cole Licensed Brands and Pearle Vision retail locations. Cole Vision revenue also includes discount program service fees from its Cole Managed Vision business. Things Remembered’s revenue represents sales of engraveable gift merchandise, personalization and other services primarily through retail inline stores and kiosks.
Description and history
Cole National Corporation, incorporated in 1984, is a provider of optical products and services and personalized gifts, primarily through the subsidiaries owned by its direct subsidiary Cole National Group, Inc. The Company sells its products and services through 2,444 Company-owned retail locations and 481 franchised locations in 50 states, Canada and the Caribbean. The Company has two business segments, Cole Vision and Things Remembered. A majority of Cole Vision’s revenue represents sales of prescription eyewear, accessories and services through its Cole Licensed Brands and Pearle Vision retail locations. Cole Vision’s revenue also includes sales of merchandise to franchisees, royalties based on franchise sales and initial franchise fees for Pearle Vision and capitation revenue, administrative service fee revenue and discount program service fees from its Cole Managed Vision business. Things Remembered’s revenue represents sales of engraveable gift merchandise, personalization and other services primarily through retail inline stores and kiosks. Things Remembered’s revenue also includes direct sales through its e-commerce site www.ThingsRemembered.com, sales through Things Remembered catalogs and through third-party partner programs.

On January 26, 2004, the Company announced that it entered into a definitive merger agreement with the Luxottica Group S.p.A. Under the agreement, Luxottica Group will acquire all of the outstanding shares of the Company. The merger is subject to the approval of the Company’s stockholders and the satisfaction of other customary conditions, including compliance with applicable antitrust clearance requirements.

Cole Vision

As of January 31, 2004, the Cole Vision segment contributed 77% of the Company’s net revenue during the fiscal year ended January 31, 2004 (fiscal 2003), through the operations of 2,197 Company-owned and franchised retail locations throughout the United States, Canada, and the Caribbean, and through Cole Managed Vision programs that provide vision care benefits to participants through access to networks of Company-owned, franchised and third-party optical locations.

Cole Licensed Brands operates principally under the Sears Optical, Target Optical and BJ’s Optical brand names. As of January 31, 2004, Cole Licensed Brands operated 1,337 retail locations in 47 states and Canada, including 831 departments on the premises of Sears department stores, 108 freestanding Sears Optical stores, 265 departments in Target stores and 133 departments in BJ’s Wholesale Club stores. Retail locations are generally operated under a lease or license arrangement through which the host store collects the sales receipts, retains an agreed upon percentage of sales and remits the remainder on a weekly or monthly basis. Locations are, in most cases, retail eyecare stores offering brand name and private label prescription eyeglasses, contact lenses and accessories, which make available services of a doctor of optometry who performs complete eye examinations and prescribes eyeglasses and contact lenses. In a majority of the stores, eye examination services are available from independent doctors of optometry, as is often required by state law, and from doctors of optometry employed by Cole Licensed Brands.

Pearle Vision operates 379 Company-owned and 481 franchised stores located in 45 states, Canada and the Caribbean. A majority of Pearle stores operate in either an Express or Mainline store format. Express stores contain a full surfacing lab that can produce glasses in approximately one hour. Mainline stores can produce over 40% of prescriptions on-site in approximately one hour. As of January 31, 2004, 235 of the Company-owned stores and 154 of the franchised stores were Express, with the remainder being Mainline stores. During fiscal 2003, approximately 18% of the prescription eyeglasses sold by Company-owned Pearle stores were produced in the stores and available the same day as ordered, of which less than half were available within one hour. The remaining 82% of prescriptions were not available for the customer the same day as ordered, and were either produced in the store, or at Pearle’s central laboratory in Dallas, Texas.

Pearle has maintained a franchise program since 1980. A majority of the franchised stores are single store franchise operations, with no franchisee operating more than 10 stores. In fiscal 2003, 14 new franchise locations were opened, 11 Company-operated locations were sold to franchisees, one franchise location was converted to a Company-operated location and seven franchise locations closed.

In 1988, Cole Vision Corporation created Cole Managed Vision (CMV) to bring its own capabilities to the vision benefit marketplace, and to provide an additional source of customers for the Company’s owned and franchised retail locations. Since then, CMV has been developing, marketing and administering group vision benefit programs for employers, health plans and associations nationwide. CMV manages funded benefits for approximately 13 million participants, and discount benefits for more than 80 million participants. Managed vision care participants comprise over a third of Cole Vision’s retail customers.

Things Remembered

Things Remembered contributed 23% of the Company’s net revenue in fiscal 2003. As of January 31, 2004, Things Remembered operated 728 inline stores and kiosks located in large, enclosed shopping malls located in 47 states. Each location carries an assortment of engraveable items and provides while you shop personalization services for any occasion, including holiday, wedding, business recognition and other special occasion gift events. Engraving is offered for items purchased at the store, as well as for items purchased elsewhere. Customers can also purchase Things Remembered’s gift assortment through its catalogs.

Merchandise sold at Things Remembered stores and through the catalog and Internet consists of a selection of moderately priced gift categories and items. The gift offerings include writing instruments; desk accessories, such as desk sets, recognition plaques and awards; women’s gifts, which include sterling jewelry, jewelry boxes and keepsake boxes; men’s gifts, which include barware, valet boxes and leather goods, and gifts for newborns and children, including baby cups, rattles and jewelry, as well as apparel and quilts. Gifts for the home include glassware, clocks, frames, albums and a special assortment of holiday gifts, such as ornaments and other collectible items. Gifts for pets include food bowls, treat jars and pet throws. Things Remembered features brand name merchandise, as well as higher margin private label merchandise. Engraving for all hardline merchandise is offered at all locations. Personalization of softline merchandise, such as throws, pillows, polo shirts, bathrobes, canvas totes and baby blankets are available from all locations with personalization provided from a central fulfillment facility.

As of January 31, 2004, Things Remembered locations consisted of 464 inline stores and 264 kiosks. The typical inline store consists of about 1,300 square feet, while kiosks, which are units generally located in the center of the common mall area, are typically 200 square feet. All locations are equipped with computerized engravers and some locations have key duplicating machines. A majority of stores also have equipment for etching glassware items. All locations are equipped with point-of-sale terminals.

Founded by Joseph Cole

Business Line
Engaged in the operation of a specialize retail stores that provides optical products and services as well as personalized gifts through the subsidiaries of its wholly owned direct subsidiary Cole National Group’ Inc
Subsidiary
COLE NATIONAL GROUP INC
Advisor
DELOITTE & TOUCHE LLP
IPO date
3/1994
US SIC Code
5995
Company Address
1925, Enterprise Parkway

City province or state postal code
44087, TWINSBURG, OH
Phone: +1 330 486 3100
Fax:
Country address: UNITED STATES OF AMERICA
Website url: www.colenational.com