Annual Report 2019

A message from our CEO


    Significant progress made towards our mission of providing high-quality and affordable eye care solutions to our customers

    Dear Stakeholders,

    I am pleased to share with you that 2019 was an exciting year with strong revenue growth for GrandVision, thanks to the continuous pursuit of our strategic plans and our global team’s hard work and dedication.

    Our results confirm the further strengthening of our position in the growing and evolving eye care market. We continue to benefit from megatrends that are driving growth in the markets. Rising populations, aging, expanding middle classes and urbanization are pushing demand for more and better eye care services and products.

    Meanwhile, the digitalization of health care, including eye care, is transforming our customer journey. And, major consumer trends like heightened health and lifestyle awareness, fashion consciousness and an increasing demand for convenience also favor our business model and strategy.

    Strong topline performance in 2019

    Our revenue increased by 8.7% at constant exchange rates to €4.0 billion for the full year. We had a comparable revenue growth of 4.1%. This has been our best performance since 2015. Our acquisitions added an additional 3.6% to revenue, as we strengthened our position in a number of markets that include Switzerland and Spain.

    Based on our satisfying revenue growth, we achieved EBITDA growth of 5.1%, which reflects our ongoing investments into omnichannel and Product Value Chain initiatives.

    Accelerating the implementation of digital platforms

    Last year, we made significant progress towards our first strategic objective of transforming our business into a leading optical retailer across multiple channels.

    The digital transformation of our industry has shown clear signs of acceleration across all categories in 2019. Also, we pursued multiple initiatives during the past year to position ourselves closer to becoming the leading global omnichannel optical retailer. They included the implementation of enhanced digital solutions across the Group, an acceleration of our e-commerce business performance and the successful expansion of our online contact lens business across Western Europe.

    We particularly strengthened our digital infrastructure by connecting 10 retail brands in eight markets to our global omnichannel platform.

    Thanks to these efforts, our improved omnichannel offer has attracted a significant number of new customers to our business. Enabling customers to access our eye care offers through their preferred channels helps us to achieve our strategic objective of converting customers into fans worldwide.

    Additional strong growth came from our pure play e-commerce businesses, which made tremendous progress in 2019. Pure play online sales increased by more than 64% year-on-year. Main drivers were Lenstore and its ongoing growth and expansion into France and Italy, and the acquisition of Charlie Temple in The Netherlands.

    As a result, GrandVision's group-wide Net Promoter Score, which measures the willingness of our customers to recommend our products or services to others, improved from 62 in 2018 to 65 in 2019.

    Organic and inorganic growth in our core markets

    In January 2019, we acquired the Charlie Temple brand to gain traction in the important pure play online spectacles segment. Charlie Temple is a highly compatible addition to our business and a seamless fit with our approach of providing consumers with high-quality, affordable eyewear via a distinct digital customer journey. Going forward, we plan to capitalize on opportunities to link Charlie Temple’s platform with our brick and mortar business, as well as to expand the brand into additional markets.

    We also successfully expanded our market positions in Spain and Switzerland through two acquisitions. The McOptic business in Switzerland operates in the low-to-mid segment of the market, which perfectly complements the upper market position of our current Visilab business. The acquisition of Óptica2000 in Spain made us the third largest player in the country in combination with our existing +Visión retail brand.

    Evolving our Product Value Chain

    Our second main strategic focus area is our 'End-to-end Product Value Chain' initiative. Throughout 2019, we moved from the planning stage to executing our strategy with the goal of improving customer experience while increasing business efficiency.

    In October, we successfully launched our Regional Fulfilment Hub (RFH) in Porto, Portugal. The facility, fully connected to five operating companies in Northern and Southern Europe, now processes customer orders from lens cutting to full mounting. Centralized facilities like our Porto RFH are designed to further reduce inventory levels, shrinkage, remakes and, combined with the ongoing roll-out of our showroom model, minimize customer lead times. The Porto RFH is the first of its kind, and moving forward, we will expand this model to all our existing and new RFHs.

    Our new RFH model also creates significant environmental benefits such as the reduction of water consumption, energy efficiency and improved waste management.

    Meeting challenges in certain markets

    In 2019, our U.K. Vision Express business was negatively impacted by a weaker general consumer sentiment and reduced customer footfall. Even with our generally resilient business model in place, we were not immune to these impacts. Recent management changes and the ongoing integration of the 200 Tesco stores we acquired in 2018 also created additional operational challenges for us.

    The performance of our U.S. For Eyes business has continued to be below expectations. In Q2 2019 we introduced a new management team with a clear mandate to implement a strategic and operational turnaround plan. The U.S. market is of strategic importance and we remain committed to operating a successful business over the mid-term.

    On a positive note, I am pleased that we successfully delivered on our commitment to turn around our Benelux and Italian businesses in 2019.

    We remain committed to improving the communities around us

    As a leading optical retailer, our mission is to provide more people around the world access to high-quality eye care. We have made substantial progress in integrating environmental, social and governance consideration into our strategy and operations, in line with our ambition to be a responsible corporate citizen.

    Across the Group, we have intensified our interactions with external stakeholders and created an active CSR ambassador community across all countries. Harnessing their expertise and enthusiasm, we are able to provide free eye tests and eye care products to people in need, as well as raise awareness of the importance of eye health.

    We also have continued to further reduce our environmental impact. Our activities range from sourcing more sustainable material for our frame production to creating extensive waste reduction programs in our supply chain and an ongoing investment in RFHs that help us more efficiently manage the resources needed to finish products. And, these efforts are reflected in our reporting score improvements. I am proud to share with you that in 2019 we increased our score with the Carbon Disclosure Project from C to B, which puts us in the upper level of reporting participants.

    People are at the heart of GrandVision’s accomplishments

    The success of our business depends, by and large, on the hard work, values and dedication of our extraordinary people. To support and empower career development, as well as further shape our company for the future, we continued to develop and professionalize our approach to talent management in order to attract and retain the best people. This includes an increased focus on promoting internal candidates, but also better external hires of top talent.

    GrandVision’s combination with EssilorLuxottica opens up new opportunities

    In July, we announced EssilorLuxottica’s intention to acquire HAL’s majority stake in GrandVision for a purchase price of €28.00 per share, which would be increased to €28.42 per share if the transaction is not completed by 31 July, 2020. The purchase price of €28.00 per share represents a premium of 33.1% to GrandVision’s closing price on 16 July, 2019 of €21.04.

    The proposed combination of GrandVision with EssilorLuxottica offers exciting new opportunities for our established retail brands, stores, employees and stakeholders. EssilorLuxottica’s interest in GrandVision is a clear recognition and validation of our successful strategy, state-of-the-art retail platform and talented people.

    We are keeping our employees, investors and other stakeholders well-informed as both companies move through the regulatory approval processes in various jurisdictions. For now, we remain focused on maintaining business continuity and achieving our medium-term objectives.

    2020 and beyond

    Looking forward, I would like to reassure all of GrandVision’s stakeholders that we are confident in pursuing our strategy and vision. The possible integration with EssilorLuxottica will help us further accelerate the achievement of these objectives.

    At the same time, the global retail landscape, including the optical space, will continue to feel the effects of economic and political uncertainty as well as the ongoing introduction of new technology and changing consumer behaviors.

    With this in mind, our 2019 achievements reconfirm the need for GrandVision to keep investing in, and strengthening, our digital activities and global Product Value Chain. This will help us to attract new customers and to convert satisfied customers into loyal fans, thanks to our outstanding product range and services, competitive prices, a modern omnichannel shopping experience and faster deliveries.

    As I reflect on the year behind us, the one lever of success that stands out the most is our people. Our employees share the same passion and ambition to make GrandVision a global retail leader of high-quality optical products and services. With a strong foundation in place and an agile approach to applying new ideas, we are well-positioned to further gain global market share.

    I want to thank all shareholders for their continued trust and support. I would also like to thank all of our employees for their passion and commitment to the success of GrandVision. The progress we have made would not have been possible without their support and dedication to our mission.

    Yours sincerely,

    Stephan Borchert
    CEO, GrandVision N.V.