Because of the Covid-19 pandemic, GrandVision (GV) no longer expects this year to achieve its medium-term objectives of an annual growth of at least 5 percent in revenue and Ebita. It noted that the business environment remains uncertain but the company is confident that it will complete its takeover by EssilorLuxottica within 12 to 24 months of July 19, 2019, when the deal finally made on July 31, 2019 was announced.
On March 25, the European Commission indicated that it plans to reach a decision on the anti-trust implication of Essilux’ proposed €7.2 billion takeover of GV by July 24. A notice on its website said that the Commission resumed its in-depth investigation on March 16, after stopping it for two weeks to obtain additional data from the two companies.
GV said it was unable to predict the impact of Covid-19 on its full-year results and announced the postponement of its annual general meeting to June 30 from April 24 in order to safeguard the health of its shareholders, management, board members and employees.
Meanwhile, the company said that its comparable sales rose in January and February by 5.5 percent and the trend continued to be positive in the first two weeks of March, thanks to growth in most of the group’s core markets. But, due to lockdowns in countries like Belgium, France, Italy, Poland and Spain, as well as restrictions in other markets, sales are now down by up to a high-double digit rate as compared to a year ago. The group stressed that its online platforms are showing “robust growth,” while representing a small part of its revenues.
To save money, GV has started to reduce operating costs by adjusting marketing activities and non-critical discretionary spending, reviewing procurement, optimizing working capital and trimming capital expenditures. Also, the group aware of governmental help in the form of possible tax payment deferrals and other public relief measures such as short-term unemployment schemes. It is also starting to re-discuss lease payments with landlords in countries where stores have been closed.
At the end of February, GV had a net debt of €750 million with borrowings of €894 million and cash and cash equivalents of €154 million, giving it “significant financial headroom” under its financing arrangements. It has a revolving credit facility (RCF) of €1,200 million set up with 15 banks and running until 2024. It can be renewed twice for one year. GV had drawn down €385 million from the RCF. A further €509 million was obtained in short-term flexible finance.
Based on a simulation of a 30-60 percent drop in revenues over a period of up to six months, GV is confident that it will finish the year with a net debt below €1,000 million. Under the takeover accord with LuxotticaEssilor, GV’s net debt has to remain below €993 million. Hal, the holding company that owns 76.72 percent of GV, has the right to inject capital into GV if its net debt exceeds the threshold set for the takeover.
GV finished 2019 with sales of €4,037 million, up by 8.7 percent at constant exchange rates, with comparable growth of 4.1 percent. E-commerce surged by 66 percent, thanks to the acquisition of Charlie Temple as well as growth at Lenstore and GV’s various retail banners.
Adjusted Ebitda increased by 4.7 percent to €604 million and attributable net profit fell by 18.7 percent to €178 million due to €63 million in non-recurrent items including a €21 million impairment on software. GV’s board is proposing a full-year dividend of €0.35 per share to its shareholders.