King of the Sunglasses, Erroca, Sizes Up a Public Stock Flotation

The sunglasses manufacturer Erroca is considering a flotation on the Tel Aviv Stock Exchange, Haaretz has learned.

"Erroca has received proposals from various underwriters, and it is considering its next steps," a company spokesman confirmed.

With 43 stores nationwide, Erroca is the largest sunglasses chain in Israel. The company estimates the annual market for sunglasses in Israel at some NIS 300 million and claims that it controls 30 percent of this market.

Most other estimates put the market at anywhere from NIS 300 million to NIS 350 million and Erroca's share at anywhere from 20 to 30 percent. But according to a survey conducted by Optica - Erroca's largest competitor, with an estimated 14 percent of the market - about 1 million pairs of sunglasses are sold in Israel each year, at an average price of over NIS 500, with the average couple buying 1.6 pairs of sunglasses every year.

Erroca was founded in 1996 by brothers Yosef and Michael Wolf, who also own Einit, which imports eyeglasses and markets them both to Erroca and to other chains. Erroca is the exclusive Israeli distributor of prestigious international brands such as Gucci, Armani, Yves Saint-Laurent and Polo Ralph Lauren; it also markets its private Erroca brand. In addition to sunglasses, its stores sell various other fashion accessories.

According to Erroca, the company has sales of some NIS 100 million a year. It employs about 350 people, including at its stores, its Eilat headquarters and a Tel Aviv training center. Every year, it spends some $1.2 million on advertising, often featuring its in-house model, Sandy Bar.

Not all issues by retail chains on the TASE have been successes. But chains that did manage successful flotations, such as fashion houses Castro and Fox, have often posted dramatic improvements in sales and profits after the issue, due partly to the increased exposure that being traded on the TASE brings with it.