Cole National Corporation

Once an optical retailer with nearly 3,000 outlets in the United States, Canada, and the Caribbean, Cole National Corporation was acquired by Italy's Luxottica S.p.A. in 2004. Luxottica proceeded to fold Cole's operations into its North American Retail Group, and while Cole's holdings (such as Pearle Vision) continued to thrive, the Cole structure was dissolved. Over the course of its history, Cole National had dabbled in specialty retail ventures ranging from key cutting services to children's toys to cookie-baking to shoe repair and watchbands. Optical retail, however, began to play a large role in the company's strategy in 1996 when it acquired Pearle Inc. in a deal that made it the second-largest optical retailer in the United States. In 2004, at the time of the Luxottica acquisition, the company operated as a leading provider of vision care products and services—including managed vision care programs—and personalized gifts through its Things Remembered stores.

Early History
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Company namesake and guiding light Joseph E. Cole was born in Cleveland in 1915, the youngest of nine children. He started his retail career with Cleveland's National Key Company in 1935 at the age of 20. He left National Key nine years later to establish the key division of Curtis Industries, another Cleveland business.

Cole's first key shop was set up in the parking lot of a local Sears, Roebuck & Co. store that same year. By the end of the decade, Cole had built his little sideline into America's second-largest key retailer. The self-made entrepreneur was coronated "king of keys" in 1950, when he acquired National Key and Curtis' key division, the industry's two top players. The newly unified firm took the name of its larger constituent, National Key. (Although National Key was founded in 1932, Cole National claimed 1944 as its inaugural year.)

Joe Cole's key-selling concept was predicated on the idea that keymaking was a highly specialized, service-oriented business. While mass retailers wanted a share of this segment's high profit margins, they did not want to deal with the equally high level of training, service, and inventory control it demanded. Cole leased space from such leading department stores as Sears, Roebuck and Co., Montgomery Ward, and Kresge's. He then installed key-making machines, trained store employees to cut keys, and oversaw the operations' complex 3,000-unit inventory. While Cole neither manufactured keys nor owned stores, Cole found a profitable niche in providing its services to customers and retailers.

A company executive would later characterize Cole's counters as "an oasis of service in a sea of self-service." The tiny selling areas emerged as the most productive areas—in terms of profits per square foot—in some stores. During the 1950s, the company expanded into the manufacture and sale of key chains and jewelry, and launched a while-you-wait shoe repair division.

Public Offering Leads to Growth in the 1960s

The explosion of automotive and home sales in the postwar era made expansion of the replacement key industry virtually inevitable. Less than a decade after assuming the helm of National Key, Joe Cole increased sales fourfold, from $2.33 million in 1950 to $10.52 million in 1959. When the firm went public that year, it sold out its entire offering in one day. The Cole family retained a 25 percent stake in their company, which by that time was netting over $635,000 annually.

That same year, Cole tested a new concept in optical retailing, establishing an eyewear counter within space leased from a Detroit Montgomery Ward store. This venture was based on the same concept as the company's key business. Company strategists recognized that mass retailers had the traffic, but not the expertise, to run such an operation. Masco Optical became the foundation of a chain of optical counters that numbered over 150 locations by the end of the 1960s. Optical centers had become Cole National's largest division by 1964, contributing about half of annual sales.

Although CNC retained a focus on retailing, it also diversified into manufacturing during the 1960s. It acquired Sterling Industries, a Cleveland manufacturer of aluminum, steel and plastic products in 1961, thereby winning an exclusive contract with Welcome Wagon. In 1966 Cole National merged with Susan Crane, producers of giftwrap, and acquired the Gene Upton Co., manufacturers of self-adhesive metal letters and numbers. Two years later it acquired Manco, Inc., a manufacturer of Topps and Everbest brand watchbands. The Manco purchase included Canadian, British, and Japanese retail outlets. Griffon Cutlery Corporation, a marketer of manicure tools, was added to the roster in 1969. These acquisitions more than quadrupled Cole National's sales to over $40 million, but also invited speculation from analysts that the company had over-extended itself. In 1970, in fact, the retail conglomerate's profits declined by half.