GrandVision’s comparable sales soar

GrandVision achieved its highest quarterly comparable growth performance in more than three years in the latest quarter, driven by strong sales in the G4 and Americas & Asia segments.

Revenues rose in the third quarter by 10.5 percent from the year-ago period to €948 million, but would have increased by 13.3 percent in constant currencies. On an organic basis, sales went up by 5.7 percent, while on a comparable store basis, they advanced by 5.1 percent. Acquisitions, primarily those of Visilab in Switzerland and Tesco Opticians in the U.K., contributed 7.5 percentage points to the revenue growth.

The management said that one of the key priorities of driving growth and value creation is to strengthen the company's digital business, and to become a leader in optical e-commerce. It pointed out that during the first nine months of the year, online appointment bookings increased by more than 80 percent, while e-commerce sales grew by over 60 percent.

The adjusted Ebitda for the quarter went up by 6.8 percent to €156 million, leading to a decline in the adjusted Ebitda margin of 0.5 percentage points to 16.5 percent. GrandVision said that this was due to the dilutive effect of Tesco Opticians' acquisition and integration costs in the U.K., as well as higher overheads in the Benelux, which offset operating leverage benefits from higher comparable growth.

GrandVision's store network increased to 7,041 stores by Sept. 30 from 7,002 the end of June, as the opening of more than 250 new stores was partially offset by store closings.

In the G4 segment, which includes France, Luxembourg, Germany, Austria, the Netherlands, Belgium, the U.K. and Ireland, the group's sales increased by 10.5 percent – with or without including the effects of exchange rates – reaching €546 million with organic growth and comparable growth of 5.3 percent and 4.8 percent, respectively. Acquisitions contributed 5.3 percent points to the overall sales increase in the region.

Comparable growth was driven by a successful commercial campaign in Germany during the quarter, in which customers could temporarily purchase multifocal spectacles for the price of single-vision glasses. The campaign drove both market share gains and Ebitda margin expansion for the business.

The Northern European markets within the G4 segment all benefited from strong sunglass sales, particularly during July and August. In France, the company continued to achieve market share gains in the third quarter as revenues grew more than 3 percent, as compared with a flat industry performance, benefiting from recent regulatory changes.

In the U.K., revenues grew by more than 20 percent at constant exchange rates, mainly due to the inclusion of the Tesco Opticians business and positive comparable growth, even though comparable growth was negatively impacted by the hot weather during the summer period. Despite these positive developments, the Ebitda margin in the segment continued to be negatively impacted by the dilutive effect of the recently acquired Tesco Opticians business and the related integration costs. It declined by 0.9 percentage points to 20.2 percent.

In the Other Europe segment, the company saw strong comparable growth, particularly in Eastern Europe, which helped offset some weakness in Northern and Southern Europe. Revenues grew by 17.3 percent – or by 19.1 percent at constant exchange rates – to €289 million, with organic growth of 3.4 percent. Comparable growth of 2.6 percent reflected continued high single-digit growth in Eastern Europe during the summer season, and low single-digit growth across Northern and Southern Europe.

Sunglass sales were particularly weak across Southern Europe during the peak summer season. The adjusted Ebitda margin declined by 1.1 percentage points, because of lower organic Ebitda growth and a lower contribution from the Swiss Visilab business, given the timing of commercial campaigns and business seasonality.

In the Americas & Asia segment, revenues declined by 4.0 percent to €113 million, because of negative currency translation effects. In constant currencies, however, they increased by 12.4 percent. On a comparable basis, segment sales rose by 11.5 percent, as most markets in the segment showed continued momentum in the third quarter. The organic growth rate reached 12.3 percent.

The number of stores in the area decreased from 1,777 at the end of 2017 to 1,763 in September, following the termination of an agreement with a department store chain in Chile as well as selective store closings in Brazil, Colombia and Peru, intended to enhance profitability in these markets, offsetting continued openings in Mexico and Turkey.

The adjusted Ebitda margin in the segment improved by 1.8 percentage points to 7.3 percent, driven by the lower losses in the U.S. and a strong operating performance in other key markets, such as Mexico, Russia and Turkey.

GrandVision did not reveal its gross or net income in the quarterly report. For the full year, the company expects to book high single-digit revenue growth, thanks to higher same-store sales and the addition of the Visilab and Tesco Opticians businesses.