The management of the international French-based optical retail group says it will ?fiercely? oppose any unfriendly bid for the company, even if the price offered were 35 percent higher than the current stockmarket value of about 22 euros. With 71 percent of its equity floating on the Paris stock exchange and the debt reduced to almost zero following the disposal of its photo shops, executives of GrandVision have been approached lately by many bankers, analysts and investors, including some German operators who had not looked at the company before. Fielmann, which reportedly didn't want GrandVision's photo shops, continues to decline any comment on its intentions.

The price of a takeover offer may be the problem. GrandVision's management is convinced that it can generate higher profits. By raising the efficiency of the present network, it wants to reach an overall operating margin (Ebit) of 9.5-10 percent by the year 2003, as compared to 3.8 percent in 2000 and a budgeted 6 percent in 2001. Still, at least one analyst lowered last month her target price for GrandVision from e33-34 to e27.5-30.6 in case of an external bid, noting that the group's photo stores had a higher profitability than its optical stores.

Another problem in a merger between Fielmann and GrandVision may be the difference in their culture and market positioning, but it's also a great opportunity for complementarities. Like previously in Zurich, GrandVision and Fielmann have recently set up stores not far from each other in Lausanne and Geneva, and they haven't disturbed each other. Anyhow, contrary to a previous report, GrandVision indicates that it has no intention to open any stores in Germany for the time being. Its Swiss store network may instead be raised from 3 to 12 outlets in the near future.

GrandVision sees the biggest potential for growth in the fragmented Italian market, where it wants to become the leading factor, like in France and possibly also in England. It plans to open about 6 new stores a year in Italy ? both in downtown locations and in shopping centers - working up to a network of 45-50 outlets in 5 years' time. The 2001 budget calls for a total of 12 GrandOptical stores with a staff of 230 persons that should generate a turnover of e24 million, not including a few Solaris sunglass outlets.

The group's GrandOptical stores in Italy still had a negative Ebit margin of 8 percent last year, but they are now expected to generate a positive margin of 3 percent in 2001, still way below the 13.5 percent margin achieved by that high-end format in France. Thanks to numerous new openings, Italian sales grew by 78 percent in the 1st half of this year, with a 16.3 percent rise on a comparable store basis, and its average sales per square meter are higher now than those in France. Among its immediate projects, the group is about to inaugurate a prestigious Solaris store at the better end of the Rialto Bridge in Venice.

GrandVision would also like to play an important role in Spain. The French group has offered to take over the Spanish family-owned VisionLab chain of 75 optical stores, the country's second-largest retailer, which sports a nice 7.5 percent net profit margin on annual sales of nearly 100 million euros, but its owners have refused to sell until now. In the meantime, GrandVision will continue to add 1-2 stores a year in Spain, where its 2 stores in Madrid and its 2 stores in Barcelona raised their combined sales by 15.4 percent on a comparable basis in the first 6 months of this year. GrandVision also has 2 stores in Lisbon, and one of them is doing very well.

Aside from GrandVision's continued interest in VisionLab, no other major acquisitions are planned in the near future. The group, which now has a total of 412 optical retail stores around the world, plus 88 joint venture units in the UK, opened only 9 new stores in the 1st half of this year. Another 8 openings should follow in the 2nd half, and about 20 in 2002.

GrandVision's total turnover rose by 12 percent to e403 million in the first 6 months of this year, including the divested photo shops until their sale in May. Excluding them, GrandVision's optical retail network raised its sales by 14.6 percent to e306.9 million in the period. Sales in France were up 11.5 percent to e142.1 million, with increases of 7.2 percent for GrandOptical, 15.3 percent for Générale d'Optique and 20.7 percent for Solaris. On a comparable store basis, the three French chains had sales increases of 5.1 percent, 11.5 percent and 15.7 percent, respectively.

The group's network of 107 directly owned Vision Express stores in the UK and Ireland generated a 12 percent increase in revenues to e119 million, but the increase in pounds was 14.6 percent, with newly transformed stores reaching growth rates of 15-20 percent. The revenues don't include those of the so-called Vision Express joint venture stores, whose sales actually rose by 25 percent, but they included franchising royalties of e4.9 million. The group wants to continue to run directly only about 85 of its 107 directly owned Vision Express stores in the territory, of which 50 have already been renovated. The others will probably be sold or turned into joint ventures.

In Belgium and in other West European countries, the group's sales rose by 42 percent in the 1st half to e28.6 million. The group is still negotiating the sale of its loss-making stores in Argentina and Poland, which should be wound up well before the end of this year.