GrandVision has confirmed its preliminary sales figures published last month, with full-year sales rising by 5.6 percent in 2017 to €3,450 million, or by 3.5 percent on an organic basis. On a comparable store basis, they were up by 1.8 percent, or by 2.3 percent when adjusted for the effect of fewer selling days due the timing of the Christmas holidays.
As previously reported in our Feb. 2 issue, the company attributed this performance to the expansion of its retail network. It made the highest contribution to the company's annual growth rate in its history last year, adding 1.7 percentage points to the turnover. The number of stores rose by more than 250 in 2017 to a total of 7,001 units, including 100 extra doors across the G4 segment of its business (France, Luxembourg, Germany, Austria, Netherlands, Belgium, U.K. and Ireland).
Furthermore, acquisitions added 2.1 percentage points to the group's revenue growth last year. This included the takeover of Visilab's control in Switzerland and the acquisition of Tesco Opticians in the U.K., whose stores are currently being rebranded as Vision Express.
Among the product categories sold in the group's stores, sunglasses showed the highest growth rate, benefiting from the continued expansion of the Solaris concept across its business. The management said it has used its existing network to open more than 1,300 new Solaris points of sale, bringing their total number to more than 3,500 at the year-end.
The company also highlighted important efforts to develop a fully integrated customer and digital experience, as part of its omni-channel strategy. Over the course of last year, it re-launched or improved many local websites, with new functionalities such as online booking of appointments, virtual try-ons, pick-up at the store and some transactional functionalities. It generated over 56 million website visits across its 60 local websites in 2017.
In the G4 segment, sales increased by 2.1 percent at constant exchange rates to €1,981 million, including a negative effect of 1.5 percent from a weaker British pound against the euro. Of this 2.1 percent, organic growth contributed 1.4 percentage points and acquisitions, particularly Tesco Opticians in the U.K., 0.7 percentage points. Sales were flat in this segment against the previous year on a comparable store basis, mainly due to the impact of the recent implementation of ceilings on health insurance reimbursements in France. The segment was also affected by fewer selling days during the year.
Germany was the best performing market, with 3 percent revenue growth overall. The company now has almost 1,000 points of sales in Germany and Austria, making it the largest and densest optical retail network for the group in the region. The country recorded low single digit organic growth, as a result of continued network expansion.
The U.K. business also achieved low single-digit organic growth, boosted by Tesco Opticians' acquisition, which was finalized in December. In January, the company started with the rebranding process across 209 stores in the U.K. and Ireland, which have a market share of 3 percent and a customer database of 4.6 million people.
The adjusted Ebitda margin in this segment decreased by 0.3 percentage points to 21.1 percent, due to lower comparable growth and operating leverage during the year, along with the temporary market slowdown in France.
In the Other Europe segment, revenues jumped by 9.4 percent in local currencies, reaching €990 million, with organic and comparable growth of 4.1 percent and 3.3 percent respectively. All regions performed well: Northern, Southern and Eastern Europe.
Acquisitions, primarily Visilab in Switzerland, contributed 5.4 percent to revenue growth. The number of stores has increased from 1,818 in 2016 to 1,876. Having previously owned a minority stake of 30 percent, GrandVision acquired a majority stake in Visilab on Oct. 2.
The adjusted Ebitda margin in the Other Europe segment went up by 0.6 percentage points to 15.9 percent, reflecting positive organic growth during the year as well as the margin-accretive addition of the Visilab business.
In the Americas & Asia segment, GrandVision's revenues grew by 13.2 percent at constant exchange rates, reaching €479 million, with growth of 11.8 percent on an organic basis and 6.5 percent on a comparable store basis. The performance was particularly strong in Chile, Mexico and Turkey. In the U.S., GrandVision ended the year with a €15 million loss, related to the restructuring and rebuilding of its operating platform. The work it did in the market last year required the build-up of temporary operational overhead costs on top of the expected cost for the future growth platform.
The adjusted Ebitda margin in the Americas & Asia segment declined by 0.2 percentage points to 2.2 percent, as the longer than expected organizational rebuild in the U.S. resulted in a non-cash goodwill impairment of €38 million.
Overall, the group's adjusted Ebitda increased by 4.0 percent at constant exchange rates to €552 million, while the adjusted Ebitda margin inched down by 0.2 percentage points to 16.0 percent, mainly due to higher-than-expected restructuring costs in the U.S.
Net income was down by 1.2 percent to €249 million.
In the fourth quarter, the group's overall sales rose by 8.1 percent in constant currencies. Visilab and Tesco Opticians contributed 6.5 percent to revenue growth. Organic growth of 1.6 percent masked a decrease of 0.8 percent on a comparable store basis due to fewer selling days and the unfavorable timing of the Christmas holidays. The adjusted Ebitda margin declined by 0.5 percentage points to 15.3 percent.
The latest acquisitions and further growth on a comparable basis are expected to contribute to a high single-digit increase this year in GrandVision's revenues and its Ebitda on an adjusted basis.
Moving forward, the company said the medium-term objective is to achieve average annual sales increases of 5 percent or more through organic growth and the opening of new stores, with only one or two percentage points coming from small acquisitions, as it did in the past five years. The target for adjusted Ebitda is for annual growth in the high single digits at constant exchange rates. These numbers would exclude the impact of any large-scale acquisitions.
GrandVision also confirmed the arrival of its new chief executive, Stephan Borchert, effective Feb. 28. His last role prior to joining the group was president of Sephora for Europe, the Middle East and Africa. He will succeed Theo Kiesselbach who will retire from the management board in April.