After a Challenging Year in 2020, GrandVision Expects ‘Gradual Improvements Toward the Second Half’ of 2021

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SCHIPHOL, the Netherlands—GrandVision NV (EURONEXT: GVNV) reported late last week that its full-year 2020 revenue dropped by 12.2 percent at constant exchange rates to €3,481 million (FY19: €4,039 million) with a comparable revenue decline of 14.1 percent. Adjusted EBITA (EBITA before non-recurring items) fell 43.1 percent at constant exchange rates to €266 million (FY19: €475 million), and the retailer’s EBITA margin fell 411 basis points to 7.7 percent. In its announcement late Friday, GrandVision noted that “strong commercial execution, structural improvements, and cost discipline were more than offset by limited operating leverage due to COVID-19 related temporary store network closures.”

In its Americas & Asia business segment, GrandVision said its Latin America locations and the For Eyes locations in the U.S. were among the “most impacted globally by the pandemic.” Comparable revenue declined 20.7 percent in 2020 in this business segment, but showed signs of recovery in the fourth quarter with comparable revenue down just 1.9 percent.

GrandVision also noted a “positive contribution from operational improvements in the U.S.,” and added that it saw a turnaround along with the “closure of underperforming stores” in this market. The announcement didn’t provide any details on the number of U.S. locations of For Eyes that closed in 2020.

On a positive note, GrandVision reported that its e-commerce sales grew 85 percent last year while retail brands’ e-commerce sales more than doubled compared to the prior year. The net result for the company was a loss of €45 million in fiscal 2020, with a strong recovery from -€212 million in the first half to a profit of €167 million in the second half of the year. The store base decreased to 7,260 stores from 7,406 at the end of 2019, according to the company’s earnings announcement.

GrandVision also noted that it continues to support EssilorLuxottica’s proposed acquisition of the company. The companies are working toward resolving antitrust concerns in the European Union, as VMAIL recently reported.
Under the terms of the proposed deal, EssilorLuxottica would acquire HAL Holding NV's 76.7 percent stake in GrandVision for roughly €7.1 billion.

For its fourth quarter, GrandVision said revenue increased 1.0 percent at constant exchange rates to €981 million (4Q19: €999 million) with comparable growth of 0.7 percent. Adjusted EBITA increased by 8.8 percent at constant exchange rates to €114 million (4Q19: €107 million), according to the earnings announcement.

“2020 has been the most challenging year in recent history for our business, employees, and the communities we serve,” GrandVision chief executive officer Stephan Borchert said. “The COVID-19 pandemic strongly impacted the first half of the year, culminating in a significant number of temporary store closures across many of our markets around the world.”

He added, “The year 2020 was a tale of two halves. After a substantial drop in the adjusted EBITA in the first half to - €24 million, we strongly recovered in the second half to deliver a positive adjusted EBITA of €290 million. … Overall, 2020 was an extraordinary test, and reconfirmation, of the resilience of our company. Our swiftly crafted business continuity plans, highly motivated and resilient teams and strong operational performance in each of our 7,260 stores and support offices enabled us to partially mitigate the effects of COVID-19.”

Borchert also noted that “toward the end of the year, the second wave impact resulted in a slowdown of the recovery we managed to achieve in the 3Q and 4Q 2020, and we expect these disruptions to continue into at least the first quarter of 2021 with gradual improvements toward the second half of the year.”

During the pandemic, GrandVision said it has accelerated the implementation of its omni channel capabilities everywhere across the group. “This has helped us to better address, serve and retain our customers and resulted in a strong increase in digitally influenced store sales, mainly driven by online appointment booking and e-vouchers, as well as direct e-commerce sales,” according to Borchert. He said a strong contributor in this respect was the subscription-based sales of contact lenses and prescription glasses, which will be further rolled out across the group.

GrandVision said its net debt decreased to €539 million at year-end 2020 (FY19: €753 million) with a 1.3x leverage ratio.

Contingent upon the company's financial position not being materially worsened due to the impact of the second wave of COVID-19 in the first quarter of 2021, GrandVision said it intends to propose a dividend for the fiscal year 2019 at the annual general meeting on April 23, 2021.