Europe's largest integrated chain of optical stores is forecasting an increase of between 17 and 20 percent in its net earnings this year, accompanied by an increase of only 8-10 percent in its turnover. Among other factors, Fielmann's gross margin should start to go up after the completion in June of a major extension of the group's lens finishing operations in Rathenaw, and the new tax reform in Germany will lower the income tax rate to a maximum of 34 percent.

In the past year, Fielmann's net profit grew by 17.8 percent to 75,395,000 DM (e38,546,000-$33,126,000) on 9.6 percent higher consolidated revenues of 1,130.2 million DM (e577.8m-$496.6m), representing a net margin of 6.7 percent excluding in-house manufacturing, franchising and agency commissions, which boosted the total revenues to 1.4 billion DM (e0.7bn-$0.6bn. The Ebit (earnings before interest and tax) ratio reached a comfortable level of 14.8 percent in Germany, but it went down slightly to 11.8 percent in other countries, with a profit in Switzerland and a loss in Austria due to the start-up of 6 new stores.



The 4th quarter would have been better if Fielmann had not hired and trained new personnel in the summer in expectations of continued sales growth. The chain's sales in Germany rose by 9 percent on a comparable basis in the 1st half of last year, but then they were down 0.6 percent in the final quarter, probably because of the higher energy prices and because many consumers saved money for Christmas gifts.

The 1st quarter of this year started out relatively well, showing a 5 percent sales increase on a comparable basis for the group. Consolidated sales were up 11.8 percent to 300,464,000 DM (e153,611,000-$132,014,000), and they generated a 16.1 percent higher net income of 23,250,000 DM (e11,888,000-$10,217,000). Including inter-company and external sales, revenues rose by 11.5 percent to 369.5 million DM (e188.9m-$162.4m). The number of spectacles sold in Fielmann stores grew to 1.24 million. The company's 25 stores in Switzerland raised their sales by 31 percent, and the 11 branches in Austria by 83 percent for a total of 102 million DM (e52m-$45m).

The management is cautiously budgeting a minimum of 15 new regular store openings for this year, including 7 in Germany, 2 in Switzerland, 3 in Austria, between 2 and 4 in Holland and one in Poland, but the group is still looking for suitable new takeover opportunities. It's also looking for suitable sites for its superstores in major cities in Germany and the rest of Europe. Amsterdam may be next in line.

With its 440 domestic stores, Fielmann is aiming for market shares of 21 percent in value and 41 percent in volume in Germany this year. According to Optiker Gilde, the German buying group, Fielmann and the other top 9 integrated optical chains had together a total turnover of about 1,995 billion DM (e1,020bn-$877bn) in Germany last year, raising their combined share of the German optical market to 32.7 percent from 31.5 percent. Optiker Gilde says its 400 affiliated opticians managed to raise their own combined market share to about 9 percent thanks to their new advertising offensive.

In the medium term, the Fielmann group plans to add a maximum of 30 new stores in Germany, and to reach annual sales of 1.6 billion DM (e0.8bn-$0.7bn) at home and 400 million DM (e205m-$176m) abroad. Meanwhile, Fielmann is about to complete negotiations for the acquisition of a 370-year-old castle at Plön, near Hamburg, that would house a new Fielmann Academy. Managed as a non-profit-making foundation, it would train 2,000 opticians from inside and outside the group every year, starting in 2003. Fielmann would pay the state government about 7 million DM (e4m-$3m) to acquire the property. It would then invest about 30 million DM (e15m-$13m) more to renovate it and adapt it to its future functions.

At the same time, Günther Fielmann, the 61-year-old founder and CEO who owns about 72 percent of the group together with his family, is finalizing a private project to start up a chain of 10-20 biological food stores in Northern Germany, following a successful experiment at one of his 4 ecological farms, at Lütjensee. Biological food produced at the farm has been available also online through a website,