GrandVision is starting to benefit from efforts to integrate the businesses it acquired at the end of 2017, led by the Tesco Opticians stores in the U.K., which it has rebranded under its Vision Express banner. The French-based optical retail group posted strong results for the first quarter of this year, with sales jumping by 6.7 percent from the year-ago quarter to €974 million, or by 7.5 percent in constant currencies.
The management said that this time it saw strong performance in fast-growing emerging markets as well as in more mature markets. Particular mentions went to the encouraging performance at Vision Express in the former Tesco locations, a strong performance in sunglasses and a continuing strong performance in France.
It also highlighted the completion of two important acquisitions during the quarter – Óptica2000 in Spain and Charlie Temple in the Netherlands – which it is currently in the process of integrating.
On an organic basis, sales went up by 5.7 percent in the quarter, while on a comparable store basis, they advanced by 5.0 percent. Acquisitions – primarily Óptica2000, which the company acquired from El Corte Inglés – contributed 1.8 percentage points to revenue growth.
GrandVision's store network increased to 7,216 stores, up from 7,095 at end of 2018, mainly due to the acquisition of Óptica2000 and its 108 stores.
The adjusted Ebitda for the quarter progressed by 1.7 percent to €138 million, as the strong operational performance in Latin America and Asia offset the expected weakness in the U.S. and higher costs linked to efforts to strengthen the digital and supply chain capabilities.
In the G4 segment, which comprises the stores operating in France, Luxembourg, Germany, Austria, the Netherlands, Belgium, the U.K. and Ireland, the group's sales increased by 5.4 percent in constant currencies, reaching €561 million, with organic growth and comparable store growth of 4.1 percent and 3.9 percent, respectively. Acquisitions contributed 1.3 percentage points to the overall sales increase in the region.
France, Germany and the U.K. delivered strong comparable growth, while the Benelux saw low single-digit growth. Apollo Optik in Germany and Pearle in Austria continued to benefit from increasing customer traffic generation, driven by omni-channel initiatives, efficient marketing campaigns and selective adjustments in the assortment. In the U.K., comparable growth benefited from an easy comparison base with the year-ago quarter, which had suffered from adverse weather conditions, as well as an acceleration at the former Tesco stores.
The adjusted Ebitda margin in the G4 segment continued to be negatively affected by the continued operational weakness in the Benelux region resulting from an ongoing management transition, although this was partly offset by operational improvements in the Tesco store network. The margin declined by 0.5 percentage points to 18.4 percent.
In the Other Europe segment, revenues grew by 10.2 percent at constant exchange rates to €292 million, with organic growth of 3.4 percent and comparable growth of 5.9 percent. The strong comparable growth performance was delivered throughout the segment, which also benefited from lower prior-year comparable sales related to poor weather. Sunglass sales were particularly strong in Southern Europe due to more normalized weather patterns this year. The adjusted Ebitda margin of the segment improved by 1.3 percentage points to 14.8 percent, as a result of operating leverage from higher sales and particularly strong growth in Switzerland and initial improvements in Italy.
In the Americas & Asia segment, revenues climbed by 10.9 percent to €121 million in constant currencies. On a comparable basis, segment sales rose by 7.9 percent, and the organic growth rate surged by 10.8 percent. Russia and Turkey saw an accelerated performance during the quarter, while the growth in the U.S. and across Latin America was somewhat weaker due to a difficult comparison base with the year-ago quarter. The adjusted Ebitda margin in the segment was halved, dropping by 3.0 percentage points to 3.0 percent, weighed down by high operating costs in the U.S in relation to the introduction of a new POS system.
GrandVision has set new medium-term objectives. It expects a medium-term average revenue growth of at least 5 percent at constant exchange rates, which includes on average at least three percentage points from comparable growth, plus contributions of at least one percentage point from store openings and at least one percentage point from small acquisitions.