De Rigo's consolidated sales rose by 2.6 percent in 2016 to €413.6 million, with a 2.4 percent increase in constant currencies. The company's operating earnings before amortization (Ebitda) declined by 6.3 percent to €29.8 million, representing an Ebitda margin of 7.2 percent, due to a sales decline on a comparable basis and lower profits in certain markets because of currency devaluations and local economic problems.
The operating margin after amortization (Ebit) declined to 3.3 percent from 4.2 percent, but a 42.9 percent jump in the company's contribution to Boots Opticians' pension fund, which was attributed to the Brexit vote a year ago, caused the group to post a net loss of €76,000 against the net profit of €14.7 million registered in 2015.
Without this factor, De Rigo would have reported a slight net profit of around €300,000 for the year. De Rigo's stake of 42 percent in Boots Opticians is not accounted for in its sales or operating results, but it is included in the final results based on the equity method.
The wholesale division of the group saw its turnover rise by only 2.9 percent to €237.8 million in spite of its acquisition of REM Eyewear, which brought in extra revenues of about €15.5 million in the second half of the year, helping to raise De Rigo's sales in the Americas by 58.4 percent to €42.1 million. Combining wholesale and retail revenues, the group's turnover in Europe rose last year by 1.3 percent to €300.8 million.
Aside from higher wholesale revenues in the U.S. and Australia, where De Rigo set up a new subsidiary last year, higher sales were recorded in markets such as the United Arab Emirates, Spain, Germany and Italy, partially offset by the weakness of the markets in Turkey and Asia.
Sales were also boosted by the significant contribution made by three new licensed lines of eyewear – Zadig & Voltaire, Trussardi and Nina Ricci – but the company didn't mention the effect of the loss of two other licenses – Givenchy and Ermenegildo Zegna. On the other hand, De Rigo has obtained the renewal of two important licenses – Chopard and Escada.
The contract with Escada, which has been in place since 2004, has been extended until 2023. The Escada line recently generated double-digit sales increases in the largest European and Asian markets, including the German-speaking countries which are now directly supervised by De Rigo.
Reportedly, De Rigo is aiming to keep above 40 percent the share of sales generated by its three house brands – Police, Lozza and Sting. A major sales increase is expected at the wholesale level for this year with the consolidation of REM and its three main brands – Converse, Lucky Brand and John Varvatos - which De Rigo wants to launch in new markets. Further growth should come from the establishment of a new Australian subsidiary and new ones for the Middle East and the German-speaking countries.
The group's retail division raised its sales by 2.6 percent to €189.8 million in 2016. Higher sales for General Optica and Mais Optica, the chains owned by the group in Spain and Portugal, were partly offset by a 2.1 percent drop at Opmar Optic in Turkey, due apparently to local economic and political problems.
At the end of the year, De Rigo's retail network consisted of 978 points of sale, including 241 franchises, or ten more than at the end of 2015. The partially-owned Boots Opticians chain ended the year with 637 stores.
The investments in 13 new stores and expenses of €13 million for the upgrading of the group's information and logistics systems didn't prevent De Rigo from ending the year with a positive net cash position of €24.4 million.