After accumulating losses and debts year after year, Salmoiraghi & Viganò, Italy's largest optical retail chain, closed its fiscal year on Sept. 30, 2014 with profit of almost €200,000, a clear sign of a turnaround, even if the sum is still modest.
It came after the appointment of a new chief executive with retail experience, Giorgio Candido, following an investment in the chain by its biggest supplier, Luxottica, which acquired a minority stake, saving it from bankruptcy. He was given full powers to get the chain back on course.
Salmoiraghi's total sales increased by 11.3 percent last year to €168 million, up by 9 percent on a same-store basis. They generated a operating profit before amortization (Ebitda) of €10 million, equivalent to 6 percent of turnover. With the first-half results not far off, the chain is budgeting to reach turnover of €180 million for the full 12-month period though next September, with Ebitda set to rise to €18 million, or 10 percent of sales. The chain estimates that it has market shares of 8 percent in value and 9 percent in volume in Italy.
As of Sept. 30, the chain had a total of 444 sales outlets, with 349 direct stores that break down into 239 regular Salmoiraghi & Viganò stores, 36 lower-cost VistaSi stores and 74 hypermarket corners. The total included at the time 95 franchised outlets, which have been reduced to 85 since then. In the past few months, however, the chain has opened more stores than it has closed.
To help improve sales and profits without the risks entailed in direct ownership, the group's new strategy focuses on boosting again the number of stores through franchising. Franchising was already an important option for Salmoiraghi, but the strategy needed to be clearly implemented. In 2014, 30 franchises were closed out of a total of 115, and the 85 remaining outlets must now be ensured of being as visible on the market as the directly owned stores.
To support its strategy of expansion through franchising, Salmoiraghi returned last month to the Mido trade show in Milan after years of absence, with the aim of gaining new members from the thousands of independent opticians that visit the fair.
Salmoiraghi's franchised opticians are guaranteed assistance in selecting and purchasing their stock, which obviously includes the chain's private labels and they have access to all the chain's customer service tools. Customers can book an eye test through the Salmoiraghi call center.
There is no minimum sales target to qualify for a franchise contract. Salmoiraghi takes back unsold inventories. The franchisees are put in touch with an ophthalmologist in their area. They have access to training courses for sales assistance, and Salmoiraghi helps them to put together a business plan.
The chain's management structure has been revised. Previously the franchising sector was managed separately, whereas now the various area managers deal with all types of outlets in their territories.