GrandVision Says COVID-19 Slowed Sales Momentum in Q4, and Notes Continued Support for Deal With EssilorLuxottica

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SCHIPHOL, the Netherlands—GrandVision NV (EURONEXT: GVNV) reported Friday that despite a “strong revenue recovery in the third quarter,” the impact of a second wave of COVID-19 across its markets dampened the momentum in the final months of 2020. As a result, GrandVision said revenue in the fourth quarter grew 1.1 percent (at constant exchange rates), while organic and comparable revenue growth for the quarter totaled 0.7 percent and 0.8 percent, respectively. Overall, the company said worldwide revenue at constant exchange rates declined by 12.2 percent for the full year, with organic and comparable decreases of 13.6 percent and 14.1 percent, respectively. The drop in sales was “driven by the COVID-19 enforced temporary store closures in the first half, as well as an overall reduction in footfall through the year.”

The revenue results announced Friday were preliminary and unaudited, Grand Vision said. For the full year 2020, GrandVision said it expects an adjusted EBITA margin of approximately 7.5 percent. No other earnings details were reported.

In addition, GrandVision, which owns the For Eyes optical business in the U.S., said it continues to “support EssilorLuxottica in the completion of its acquisition of GrandVision and are working through the necessary regulatory approval processes.” The retailer did not provide any details about a timeline for completing the proposed deal.
In mid-2019, EssilorLuxottica (Reuters: ESLX.PA) said it had reached an agreement with a unit of HAL Holding N.V. to acquire HAL’s controlling interest in GrandVision in a deal analysts valued at €7.1billion, as VMAIL reported. The transaction was slowed in 2020 by separate court filings and a dispute over access to operating performance information, as VMAIL reported.

The announcement Friday noted that the deal has been unconditionally cleared in the U.S., Colombia, Brazil, and Mexico and it is currently under review in the EU, Chile, and Turkey, as well as in Russia (where the previously obtained clearance had expired).

In its revenue announcement, GrandVision said its strong third-quarter recovery was knocked off track by the impact of the COVID-19 second wave that “subsequently built up through the quarter and slowed our progress.”
Still, GrandVision said it was able to continue “the strong EBITA momentum from the previous months” in the fourth quarter, but there was “a deceleration in the EBITA growth compared with the previous quarter. In the fourth quarter profit growth exceeded revenue growth.”

GrandVision chief executive officer Stephan Borchert said in the announcement that the “resilience, engagement and relentless focus of all our employees has been a defining element for us and I thank them, as well as our many business partners, for their efforts in enabling us to keep the operations running …. during these difficult times.”
He noted that the retailer’s revenue performance varied “significantly through the months after the outbreak, with a strong recovery in the third quarter as restrictions were lifted. Toward the end of the year, the impact of the second wave resulted in lower retail traffic again and a slowdown of the recovery. We expect these disruptions to continue into at least the first quarter of 2021.”

At the same time, Borchert said the impact on profitability has been “partially offset by strong commercial execution, as well as short term government support in some countries. I am proud that we achieved continued revenue and EBITA growth in the quarter.”

On a positive note, total e-commerce sales grew 85 percent, while e-commerce sales generated by retail brands more than doubled compared to the prior year. Acquisitions made in 2019, including Optica2000 in Spain and McOptic in Switzerland, continued to have a positive impact this year and added 1.4 percent to revenue growth.”