As of yesterday, when OPSM Group announced strong operating results for the financial year ended last June 30, Luxottica's tender offer for the largest eyewear retailer in the Asia-Pacific region had already been accepted by 74.78 percent of its shareholders, representing 87.91 percent of its equity. The bid is scheduled to be closed tomorrow.
In the past year, OPSM's net profit declined by 21.0 percent to 20,312,000 Australian dollars (e11.9m-$13.0m), but its operating profit (Ebit) rose by 11.5 percent to A$35,250,000 (e20.7m-$22.6m) on 0.5 percent higher revenues of A$492.7 million (e289.5m-$315.5m). Excluding the results of discontinued operations, sales rose by 20.9 percent to A$487.6 million (e286.5m-$312.3m). Before A$5.2 million (e3.1m-$3.3m) in extraordinary items, pre-tax income actually increased by 12.1 percent to A$32.8 million (e19.3m-$21.0m), in line with previous forecasts. Management says it would have been about A$4.5 million higher without the adverse effect of the SARS epidemic on its retail operations in Hong Kong and Singapore.
According to OPSM, which bought a 49-store called The Optical Centre in Hong Kong last November, the SARS disease had a severe impact on discretionary spending in Hong Kong and Singapore, where the group now has 76 and 12 stores, respectively. While its sales in Malaysia were relatively unaffected, the group's total sales in Asia were down 14.5 percent last year and the management expects them to recover only in the medium term at best, lending credibility to Luxottica's discounted bid for OPSM. Even in July, after the region had been declared SARS-free, the company's sales in Hong Kong were still about 25 percent below those of the same month one year ago.
OPSM's Australian optical businesses instead recorded a 7.1 percent rise in revenues in the past financial year. The group's chain of OPSM stores in Australia and New Zealand raised sales by 8.8 percent after a successful rebranding process, delivering 14.2 percent higher earnings. Also the Budget Eyewear chain performed well. Instead, the recently acquired store network of Laubman & Plank turned in disappointing profits, in spite of strong growth, because the implementation of new point of sale technology coincided with the introduction of new supply chain processes.
The total number of stores within the group increased from 531 to 607 during the past 12-month period. Earlier this month, OPSM opened its new A$12 million (e7.1m-$7.7m) EyeBiz facility in the Western part of Sydney, at Chipping Norton, which will supply lenses for all the eyewear sold in the group's stores in Australia and New Zealand, representing about one-third of the total market. In a separate move, the group has placed its key Australian businesses onto a common technology platform for resource planning, POS operations and customer service.
It's not quite sure yet to what extent these new facilities will be integrated with those of Luxottica in the region, including its Sunglass Hut and Face-It stores. After a couple fo extensions, due in part to the hesitations of some shareholders and the late approval of the local stock market authorities, Luxottica declared its tender offer unconditional and final on Aug. 8, after receiving acceptance by the holders of 50.68 percent of OPSM's shares.