GrandVision Reports Steep Sales Declines in First Half and Second Quarter

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SCHIPHOL, the Netherlands—GrandVision NV (Euronext: GVNV) reported Wednesday that its revenue declined 26.4 percent at constant exchange rates in the first half, and fell 47.5 percent in the second quarter of 2020. The international retailer, which operates the For Eyes optical banner in the U.S. market, cited the impact of store closures related to the coronavirus pandemic as the key factor in the lower sales. Comparable revenue declined 29.1 percent in the first half and 49.3 percent in the second quarter, the company’s announcement noted.

The company said its store base decreased by 49 stores to 7,271 from 7,320 at the end of March 2020, which it said was “driven by store closures in the ordinary course of business, while store openings were temporarily delayed due to the COVID-19 pandemic.”

GrandVision did not disclose in which markets it closed locations. The company is in the midst of being acquired by EssilorLuxottica (Euronext: EL) in a deal that has become bogged down by a dispute over the sharing of operating information, as VMAIL reported. The company noted that it continues “to support EssilorLuxottica with the shared objective to obtain regulatory approval for the closure of the acquisition” within the 12 to 24 months outlined in last year’s deal announcement.

On an EBITA basis, the company said the adjusted first-half result was negative €24 million, which compares with EBITA of €237 million in the year-ago period. In the second quarter, EBITA was negative €65 million (compared with €129 million), a result “driven by negative operating leverage, particularly in April and May,” the announcement noted.

During the month of June, more than 90 percent of GrandVision's store network gradually reopened, leading to a “strong recovery of revenue and a positive adjusted EBITA,” GrandVision said.

However, business in the “America & Asia” segment was still under pressure in June. This segment was “most impacted by the COVID-19 pandemic,” with revenue decreasing 36.6 percent at constant exchange rates to €148 million in the first half of the year. Comparable revenue declined by 37.3 percent. “Within the segment, only Turkey returned to more normalized revenue and levels in June, whereas Latin American markets remained in lockdown,” the company said.

GrandVision also noted that it booked a non-cash goodwill impairment charge of €75 million, related to its businesses in the U.S., Italy, Colombia and Peru. This was triggered by the severe impact of the COVID-19 pandemic on business performance in these markets, and an additional €35 million impairment charge mainly related to customer data bases.

In June, GrandVision said sales level improved to 84 percent of the previous year, mainly driven by a strong recovery across Europe. In a number of countries, such as Austria, Denmark, Norway, the Netherlands and Switzerland, the company experienced “positive sales growth compared to the previous year, partly resulting from expected customer catch-up effect after several weeks of store closures,” the announcement stated.

GrandVision said its net debt position as of June 30 was €755 million, compared with €753 million at year-end 2019.

“Prior to the COVID-19 pandemic, our financial performance was in line with our expectations,” chief executive officer Stephan Borchert said. “In the second quarter, we saw the full impact of the COVID-19 pandemic on our business performance resulting in a loss for the quarter and the half year due to the steep revenue decline at the peak of the corona crisis in April and May.

“I am very proud of all our teams worldwide for how they have managed to protect our customers, our staff in stores and for how they have continued to focus on the priorities and measures we set to navigate through this crisis and to protect the value of our company,” he added. “Given the initial uncertainty on duration and severity of the COVID-19 pandemic, we feel confident with our current business recovery in June with more than 90 percent of the own store base reopened, resulting in a positive EBITA for the month of June and a net debt position of €755 million at the end of June.”

Borchert also noted that shopping patterns are “evolving at a much faster pace than ever before. We will continue to invest in our strategic initiatives around omni-channel capabilities and product value chain upgrades in order to successfully address these changes and to best fulfill our customers’ demands.”

Borchert said the company’s “banner related e-commerce business development” grew by more than 200 percent in the first half of the year. “As we enter the second half of this year, we will remain focused on our two main priorities of protecting the safety and wellbeing of our employees and customers as well as of returning to best possible business performance under the current conditions.”