Luxottica has signed a 10-year deal to design, produce and distribute the eyewear for Polo Ralph Lauren from the beginning of next year, ending months of speculation that Safilo had lost the licence.
The agreement is estimated to be worth more than $1.75bn over the decade. Terms include an advance payment of US$199m.
Leonardo Del Vecchio, Luxottica chairman, said: 'We are extremely pleased to start 2006 with the announcement of a landmark agreement with one of the world's leading brands.
'Polo Ralph Lauren is truly a global brand and a perfect fit for our integrated approach to wholesale/retail distribution.'
Ralph Lauren, chairman and chief executive of Polo Ralph Lauren, commented: 'Luxottica stands apart in the industry because of their expansive international presence and their commitment to extensive vertical retail stores.'
It is a significant loss to Safilo's brand portfolio. Not only did it acount for around 10 per cent of the group's global turnover, but it was also the company's first high-profile designer name. It began distributing Ralph Lauren in 1988 when it acquired Optique du Monde, the US company which held the licence.
Safilo will continue to distribute the Ralph Lauren, Polo by Ralph Lauren and Polo Jeans Co brands until December 31 2006.
Vittorio Tabacchi, chairman of Safilo Group, said: 'During the negotiations for the renewal of the licence agreement, significant differences became apparent which prevented us from reaching an agreement which was in line with our reciprocal interests.
'The consistency in terms of profitability of our licensed brands and the fundamental principle according to which royalties are not paid in advance remain the pillars on which the strategy of our company will continue to be based.'