By Andrew Karp: Group Editor, Lenses and Technology
NEW YORK—Although the U.S. optical industry, like the rest of the nation’s economy, remains in a slump, some bright spots are emerging. Specifically, modest gains by independent optical retailers in the first half of this year helped boost revenues for wholesale laboratories, including many of the the industry’s largest labs, according to VM’s new Top Labs 2010 Report.
The report, which ranks the 30 labs by Rx sales (pairs of prescription lenses produced) and the number of Rx jobs produced per day, provides a fresh look at the Top 25 Independent U.S. Wholesale Labs and the Top 5 U.S. Supplier-Owned U.S. Wholesale Lab Networks. Published annually since 1991, the report also measures the percent of uncut Rx jobs produced by the Top Labs, the number of employees at each lab and other key performance criteria.
Rx Lens Sales Propel Growth
Despite a 3 percent decline in the total optical market during the 12-month period ending June, 2010, independent optical retailers generated $13.7 billion in sales, a 1.5 percent increase over the previous year, according to The Vision Council’s VisionWatch survey. Notably, sales of prescription lenses among independent retailers totaled $4.9 billion at the retail level during this period, up by 2.5 percent from revenues from the prior 12-month period.
Correspondingly, the increase in Rx lens sales among independents is boosting sales and productivity among VM’s Top Labs. Although some of the Top Labs saw decreases in their sales or in the number of Rx jobs per day they produce or else remained flat this year, new data from VM’s 2010 Top Labs Report indicates most of the largest labs are growing.
Combined net sales for the Top Labs, including both the supplier-owned lab networks and the independent labs rose to $2,109.2 million, up 4.2 percent from 2009. Total Rx sales reached a record $1,771.3 million, a 3.8 percent increase over 2009. The Top Labs collectively produced a total of 124,945 Rx jobs per day, or approximately 31.9 million Rx jobs annually, a 2.0 percent increase over 2009.
Top 5 Supplier-Owned Networks
Growth among the Top 5 Supplier-Owned Lab Networks was both organic and the result of acqusitions (see story on page 27, “Top 5 Labs That Made News in 2010.”) Collectively, the Top 5 will generate $1,524 million in total net sales, up 3.1 percent over 2009. Total Rx sales, which is based on the labs’ core business of surfacing and finishing prescription lenses and is the basis of the primary ranking of the Top Labs, amounted to $1,347.2 million, a 4 percent increase over 2009. Rx lens sales comprised 91.7 percent of the total net sales for the 5 Top Labs, flat with 2009.
The number of Rx jobs per day for the Top 5 totalled 96,370, up 3.1 percent over 2009. The average proportion of uncut lens jobs among the Top 5 was 35.6 percent, down 1.7 percent from 2009.
The Top 5 currently operate a total of 193 individual lab locations, 18 more than in 2009. The Top 5 work force consists of 9,425 employees in 2010, up 2.7 percent over last year.
Individually, each of the Top 5 Supplier-Owned Wholesale Lab Networks grew in both estimated net sales and Rx sales in 2010. However, only Essilor, Carl Zeiss Vision Laboratories and Hoya Vision Care increased Rx production. The number of Rx jobs per day produced by VSP Labs declined 4.2 percent from last year. Nassau Vision Group Laboratories Rx production was flat compared with 2009.
Sales and productivity increases by the Top 5 Supplier-Owned labs are a direct result of the efforts by the lens manufacturers that own these labs—Essilor, Hoya Vision Care and Carl Zeiss Vision—to aggressively market their own brands of free-form and digitally designed lenses (VSP Labs produce and market free-form lenses designed by Essilor and Zeiss. Nassau Vision Group/Nova Optical Lab is owned by Essilor).
The Top 25 Independents
Among the Top 25 Independent Labs, growth was almost entirely organic. Only one of the Top 25, Precision Optical Group, made an acquisition in 2010, securing a minority interest in CRX Laboratories located in Greenville, S.C. and Athens, Tenn.
Fifteen of the Top 25 Independents increased their net sales in 2010 versus only 14 in 2009. Fourteen of the Top 25 increased their Rx sales versus this year versus only 12 last year, and 12 produced more Rx jobs per day this year versus 10 in 2009.
The total aggregate net sales for the Top 25 Independents was $585.2 million, a 7.0 percent increase over 2009. This represents a significant advance over 2009, when net sales for the Top 25 decreased 4.2 percent from the prior year. Similarly, total Rx sales for the Top 25 climbed to $423 million in 2010, a 3.4 percent increase over 2009. This represents a turnaround from 2009, when total Rx sales amounted to only $408.8 million, the lowest level since 2005.
Rx sales accounted for 92.2 percent of net sales for the Top 25, down 2.5 percent from 2009. Unit sales among the Top 25 fell slightly to 31,127 Rx jobs per day, down 1.3 percent from 2009. Uncut lenses, on average, accounted for 33.6 percent of Rx jobs produced by the Top 25, down 5.7 percent over 2009.
The total number of lab locations operated by the Top 25 increased from 75 in 2009 to 79 in 2010. Despite the widespread unemployment on a national level, the Top 25 increased the size of its work force 4.0 percent from 2009, to 2,805 workers.
The composition of the Top 25 remained almost identical to 2009, with only one change—Superior Optical Labs of Ocean Springs, Miss., entered the ranking for the first time. This contrasts with other recent years in which a number of Top 25 Independents were acquired by Top 5 Supplier-Owned Labs.
Economic pressures did not significantly impact capital expenditures among the Top Labs in 2010. Many of the labs invested in new technology, particularly digital surfacing and finishing equipment and the lab management systems that help run them.
Labs that have implemented this technology say there is often a short-term decrease in the lab’s productivity as staff iron out the technical wrinkles involved in producing top quality free-form lenses. This observation is borne out by the slight decrease in the number of Rx jobs per day among the Top 25 Independents. However, the productivity decreases are offset by an increase in Rx sales, reflecting the higher prices free-form Rxs command.