By Cathy Ciccolella
Senior Editor

Moulin Global Eyecare CEO Cary Ma (r) is working with key executives Joe Barrett (l) and Anthony DiChiara to raise the company's profile in the U.S. market. PHOTO: Oscar Einzig Photographers

NEW YORK--On the eve of International Vision Expo East, three of newly renamed Moulin Global Eyecare's top executives arrived here prepared to shed light on a company that so far had shunned the spotlight.

With its recent acquisition of a controlling interest in 377-store Eye Care Centers of America (ECCA)--this country's third-largest retailer of optical goods and services, after Luxottica Retail and Wal-Mart--Hong Kong-based Moulin suddenly is taking a higher profile in the U.S. marketplace, where it has operated for years as a manufacturer/distributor of both branded and private-label eyewear.

When the $450 million ECCA acquisition closed on March 1, Moulin owned 56 percent of the chain, in partnership with equity investor Golden Gate Capital, which owns 43 percent (ECCA management retains 1 percent ownership). So far, it has been business as usual for ECCA since the transaction was completed...but Moulin's executive team, working with the chain's current management, has plans to build on ECCA's existing strong points, including the successful "value" strategy it launched four years ago.

Why did Moulin acquire ECCA, after being outbid by Luxottica Group in an earlier attempt to purchase Cole Vision parent Cole National? Actually, the acquisition was a logical step in Moulin's strategy to broaden its reach beyond its roots as a manufacturer of primarily private-label eyewear, according to Cary Ma, chief executive officer.

"Our intention was very clear," Ma said in an exclusive interview with VM, outlining the steps that led from Moulin's founding 45 years ago as an eyewear production factory through its acquisition of several European distribution firms to the present. "We didn't want to stay exclusively as an OEM manufacturer--we didn't see a great future with that. We knew we needed to control our own brand portfolio to control our future. Later, when our distribution business was generating steady cash flow, someone suggested we try to buy a U.S. optical chain, and the timing was right."

Ma added, "Moulin is an example of a successful manufacturer expanding internationally and quickly downstream into distribution, creating its own brand portfolio and finally controlling retailing, the last part of the supply chain."

In setting its sights initially on Cole, Moulin went up against industry giant Luxottica Group, which ultimately prevailed with a higher bid and a vote of support from Cole's board of directors. By the time Luxottica's purchase of Cole closed in early October 2004, however, Moulin's attention was turning in another direction--toward San Antonio-based ECCA.

ECCA's Appeal
"ECCA was not a second choice for us," stresses Joe Barrett, Moulin's executive director and chief operating officer. "We wanted a growth driver, and that's what ECCA is--it was not a second choice, but a different choice."

Moulin was first contacted by ECCA as a possible suitor about a year ago. "We were already involved in the Cole deal at that point, but we came away very impressed with ECCA's market focus and strategy," recalled Anthony DiChiara, Moulin's general counsel and executive vice president-strategic planning.

ECCA's "value" strategy, implemented in 2001, was particularly appealing to the Moulin team. "The chain had gone from an inventory of 60 to 70 percent name-brand frames down to 25 percent, and it was using a Ôvalue' approach to increase its number of transactions, which worked very well," DiChiara noted.

The chain's seasoned management was also a big plus. "The management team had successfully turned the company around, and I congratulate [ECCA chairman and president] Dave McComas on that," Ma told VM. Another positive element was "the scale and profitability of the company," he noted: "We looked at many other retailers, and we liked what we saw here."

(The Moulin team also saw several similarities between ECCA and their own retail chain in China, Shanghai-based America's Eyes. Launched 10 years ago in conjunction with veteran U.S. optical retailer Bob Hillman, the America's Eyes stores are also superopticals with in-store labs that follow a value strategy.)

What's Next for ECCA?
Moulin has stressed since the beginning that ECCA's management will remain intact post-acquisition. "We respect them and give them credit for what they have accomplished, and for identifying Moulin as a potential new owner," Ma said. "And we want them to continue doing what they're doing. We don't pretend we know how to run a large, successful U.S. retail operation--we will focus on operating the back-end synergies."

How those synergies will be accomplished is still being determined, but the customers of ECCA's various retail names should notice few immediate changes. "We're not planning to start shoving our brands into the stores," Barrett declared. "Debbie Thomas [ECCA's associate vice president, frames and visual merchandising] is still in charge of what goes on the shelf."

He said Moulin is initially focusing on ECCA's private-label and value product mix. The acquisition included a long-term supply agreement designed to reduce ECCA's cost of goods sold; plans call for transitioning the manufacture of most private-label frames stocked by the chain to Moulin over the next two years, expected to reduce costs by roughly $6 million annually by that time.

As for ECCA's branded inventory, "we'll approach that last," Barrett said. "We've discussed developing one or two Moulin brands to be a good fit for the ECCA stores, but their current brand strategy has worked well, and we're looking forward to the opportunity of working with some of ECCA's branded vendors."

On the lens side, he said he anticipates no changes in the chain's lab setup or lens inventory.

Retail Expansion
A possible expansion of ECCA into additional market areas is under consideration, however. Although the chain made a major move into Atlanta two years ago and has opened stores recently in Baltimore and Denver, "so far ECCA hasn't expanded into some heavily populated states such as California and the Northeast," Ma noted. "We're identifying new markets that might have potential for more stores. However, we're also going to be very prudent in the first two years about operating the company and paying down debt."

Most likely, ECCA's current five-year plan to open another 10 to 15 locations annually will remain in place, added DiChiara.

On the other hand, Moulin is gearing up for a major push of up to 500 more stores in China in the next few years, primarily through acquisitions there. America's Eyes--which finished 2004 with 34 locations and should have 58 stores by year-end 2005--currently holds 13 percent of the Shanghai eyewear market, according to Ma.

The Manufacturing Side
Although Moulin's current focus on retail will reduce the share of total revenues contributed by its manufacturing and distribution business to about 30 percent, a lot is happening in that arena as well.

Since allying with Germany's Metzler in August 2000 and acquiring former Rodenstock subsidiary NiGuRa in September 2003, Moulin has been streamlining its European operations. An office in Stuttgart, Germany, was closed recently to consolidate in DUsseldorf; two former Metzler and NiGuRa warehouses have been moved to the Czech Republic.

Overall, Moulin's distribution business was up about 25 percent last year, Ma told VM.

On the manufacturing side, Moulin continues to expand and enlarge its factory network in China. Ma is also proud that Moulin is the only Chinese company with a factory in Italy, a facility generating about 20 million Euros in revenues last year.

Worldwide, Moulin sold 15.5 million frames in 2004, 14.5 million of which it manufactured. By 2006, the company expects to increase its production capacity to 17.5 million frames, and to outsource an additional 1 million to 1.5 million units, Ma said.

In addition to now owning a major U.S. optical chain, Moulin continues to supply product to other eyewear retailers, both chains and independents. "Our chain business went up substantially in 2004, and we expect that trend to continue," Ma said. Sales to chains go through the company's own distribution network; sales to independent retailers are handled through partnerships with wholesalers.

What's In a Name?
Amid all the excitement of the ECCA acquisition, last month the former Moulin International Holdings officially changed its corporate name to Moulin Global Eyecare.

Why the change? "Our new corporate branding truly reflects our new corporate identity," said chairman Bo Kee Ma. "We are very much a global company in every aspect, combining international design and marketing experience with cost advantages from our manufacturing base in China."

Cary Ma said the company's increasing global presence also necessitated the move to a new identity: "Our new corporate name creates a true global identity umbrella that will eventually allow all of our company business units to be a part of one unified Moulin banner.

"Our new name symbolizes the renewed spirit, energy and optimism of our company, and a solid commitment to embracing global diversity."