The big international optical retailing group reported a stable adjusted operating margin before amortization (Ebitda) of 16 percent on sales €3,205 million for its fiscal year ended Dec. 31. Sales grew by 13.2 percent in constant currencies, driven by organic growth of 5.3 percent and growth from acquisitions of 7.9 percentage points.

Adjusted operating earnings, which exclude non-recurring items, rose by 12.8 percent in constant currencies, reaching €512 million. Net earnings jumped by 32.3 percent to €231 million.

GrandVision reported revenues of €786 million for the fourth quarter of the year, indicating an increase of 8.8 percent in constant currencies. Adjusted Ebitda rose by 4.5 percent to €111 million, resulting in a drop in the Ebitda margin of 0.5 percentage points, down to 14.2 percent, because of one-off costs related to the acquisition of For Eyes in the U.S. in December. Without acquisitions, the Ebitda margin would have risen to 16.6 percent, the company said.

GrandVision Consolidated Income Statement

Million Euros, Year ended Dec. 31

 

2015

2014

%
Change

Revenue

3,205

2,817

13.8

Cost of Sales

876

744

17.7

Selling and Marketing

1,617

1,446

11.8

General and Administrative

363

342

6.1

Share of Result of Associates

(5)

(3)

66.7

Financial Charges, net

19

34

-44.1

Pre-Tax

334

254

31.5

Tax

103

80

28.8

Minority Interest

18

13

38.5

NET PROFIT

231

175

32.0

As previously reported (Eyewear Intelligence Vol. 17 – N° 1+2 of Jan. 31), GrandVision had already announced a 4.1 percent sales increase on a comparable store basis for 2015. Comparable sales growth, which is based on constant currencies and comes before the addition of new stores, slowed down considerably in the fourth quarter to a rate of 2.2 percent, down from 6.1 percent in the last quarter of 2014.

In the so-called G4 area, which comprises the company's four largest business units: France / Spain / Luxembourg / Monaco, the Netherlands / Belgium, Germany / Austria and the U.K. / Ireland, revenues were up by 4.6 percent in constant currencies in the fourth quarter while the adjusted Ebitda margin was constant at 19.2 percent.

For the full financial year, revenues in the G4 segment showed a 6.1 percent increase in constant currencies. Comparable growth increased 0.4 percentage points to 4.1 percent on the back of high single-digit growth in Austria, Germany and Spain.

In the fourth quarter, revenues from other European countries grew by 15.1 percent in constant currencies, but on a comparable store basis, they were off by 0.7 percent during the three-month period due to declines in Italy and Northern Europe. The downturn led to the erosion of the adjusted Ebitda margin to 14.5 percent from 15.3 percent in the year-ago period. In the fourth quarter of 2014, the region had delivered strong comparable store growth of 5.2 percent.

Overall, for the full financial year, revenues and adjusted Ebitda in Other Europe showed strong double-digit increases of 20.8 percent and 19.4 percent in constant currencies, respectively. The total number of stores increased from 1,660 to 1,707 in the course of the year, mainly due to new store openings. Sales rose by 4.3 percent organically and by 3.2 percent on a comparable store basis in the region.

Revenues grew by 33.6 percent to €354 million last year in the Americas & Asia segment, which also includes the Russian market, in spite of a negative impact of 7.0 percentage points from currency exchange rates. They rose by 40.6 percent on a currency-neutral basis, with organic and comparable growth of 11.1 percent and 6.6 percent, respectively.

The segment included for the first time For Eyes, a chain of 116 stores in the U.S., as from Dec. 1. The total number of stores in this territory grew from 1,175 to 1,370 last year, including 60 new stores in Mexico alone. Comparable store sales continued to rise by a high single digit in most Latin American countries covered by the group, but they declined by a low single digit in Russia because of the local economy.

Adjusted Ebitda increased by 58.8 percent to €8 million in the region, with an 85.9 percent increase in constant currencies. Organically, Ebitda rose by 106.2 percent, but acquisitions had a negative impact of 20.4 percentage points.

The regional organic Ebitda jumped by 150 percent in the fourth quarter, but adjusted Ebitda fell to a negative level of €3 million due to one-off costs in the U.S. The growth in revenues slowed down to 9.7 percent in euros and 17.8 percent in constant currencies during the quarter because of a drop in organic growth to 10.8 percent due to previous acquisitions made in China, Colombia, Peru and Turkey.

Capital expenditures of €162 million in 2015 were mainly devoted to the ongoing optimization and expansion of the store network. As a result, the total number of physical and online stores increased by 296 to 6,110 in the year, trading under 34 retail banners and covering 44 countries. This includes 1,201 Solaris sunglass stores and points of sale, mostly corners in GrandVision stores.

The group had more than 31,000 employees at the end of last year, with 84 percent of them working at the stores. Out of them, 70 percent were female and 35 percent were certified opticians. GrandVision's stores around the world welcomed more than 500,000 visitors per day and sold some 14 million pairs of spectacles in 2015, including low-priced offerings under 23 different private labels. They had 1.5 million followers on social media.

The company launched last year a new global ERP system, starting in the Benelux countries, the U.K. and Ireland. Other countries will be connected in the next few years. It began to implement an omni-channel sales strategy in China, with the idea to roll it out globally at a later stage.

GrandVision Segment Review

( in million Euros )

   

2015

2014

%
Change

% change
constant
currencies

G4

Revenues

1,976

1,820

8.6

6.1

AdjustedEBITDA

401

364

10.2

8.4

Number of Stores

3,033

2,979

1.8

 

Other Europe

Revenues

875

732

19.5

20.8

AdjustedEBITDA

135

114

18.4

19.4

Number of Stores

1,707

1,660

2.8

 

Americas &Asia

Revenues

354

265

33.6

40.6

AdjustedEBITDA

8

5

60.0

85.9

Number of Stores

1,370

1,175

16.6

 

TOTAL

Revenues

3,205

2,817

13.8

13.2

AdjustedEBITDA

512

449

14.0

12.8

Number of Stores

6,110

5,814

5.1

 

In the medium term, GrandVision still hopes to achieve annual revenue growth of at least 5 percent, excluding large-scale acquisitions, and annual adjusted Ebitda growth in the high single digits in constant currencies.

The projection is partly based on an estimate that the global eyewear market will grow from €104 billion in 2015 to €136 billion in 2020, with Asia's share rising from 27 to 30 percent, Europe's share declining from 30 to 27 percent, and the Americas' share falling from 41 to 40 percent. The online market is estimated to represent at this stage about 4 percent of the total turnover, and GrandVision feels that the personal interaction of consumers with vision experts will limit its penetration to categories such as contact lenses, ready readers and plano sunglasses.