Counting the costs to business
From adjusting financial outlooks to implementing social distancing measures, OT takes a look at how EssilorLuxottica, Safilo and Johnson & Johnson Vision have responded to the outbreak
The coronavirus (COVID-19) pandemic has affected all aspects of business across the optical supply chain, and large-scale suppliers are calculating the costs and altering financial predictions for the rest of the year in light of the disruption to business.
In March, EssilorLuxottica announced the company’s outlook for 2020 was no longer valid as a result of the COVID-19 pandemic.
“The impact of the COVID-19 outbreak is real and EssilorLuxottica is not immune to it,” the company said in a statement. Aiming to “preserve the workforce and minimise the impact of the crisis on employees” the company’s key management agreed to voluntary salary reductions, and the board of directors also voted to introduce a similar measure to its own members.
Sharing its first quarter update, the company revealed that consolidated revenue for the first quarter of 2020 was down 10.1%, compared to the same period in 2019.
Despite the challenging figures, the company suggested the figures indicated “good resistance in the current unprecedented global crisis” and added that it has seen online sales accelerate.
In the first countries to have reopened, domestic sales of prescription products have regained momentum since the end of March, the company highlighted.
“While we are adapting the organisation for the few months ahead, early experience from the first countries to open is encouraging. When the crisis fades, the resilient demand for better vision will be visible again and we will be ready to serve it,” said Francesco Milleri, CEO and Deputy Chairman of Luxottica, and Paul du Saillant, CEO of Essilor in a statement.
“The market is going through an unprecedented crisis,” the CEOs commented, adding that the company is “working hard to keep our employees and their families safe, provide essential vision care for emergency workers on the front lines and do our part to support the customers and partners who make up the lifeblood of our business.”
The company heightened industrial hygiene protocols in its facilities and introduced new measures to keep employees safe, from establishing socially distanced practices to providing masks and temperature checks. In a statement outlining the measures the company has taken during the pandemic, EssilorLuxottica confirmed: “As these facilities have remained open along with the company’s online optical retail stores and e-commerce platforms, EssilorLuxottica has been able to continue providing essential eyecare services and products to its customers and ultimately clients, many of whom are on the front lines of the crisis.”
While we are adapting the organisation for the few months ahead, early experience from the first countries to open is encouraging. When the crisis fades, the resilient demand for better vision will be visible again and we will be ready to serve it.
This week Luxottica launched phase two of its ‘management and prevention’ model in the workplace, working with the Department of Molecular Medicine of the University of Padua and of the Microbiology and Virology Laboratory University/Company Padua Hospital.
The model is set to support the company to move into a new normal for the workplace, ensuring the safety of workers, customers and consumers. Measures include a swab test for diagnosing SARS-CoV-2 and badges with digital sensors to notify employees of crossing a minimum distance of 1.5 metres from work colleagues.
For optometrists and wholesale customers, the groups have invested in resources to provide support and introduced delayed payment offers, also highlighting tools that enhance remote operating and disinfection supplies.
To support communities to respond to the outbreak, the company has also donated over 2 million units of personal protective equipment (PPE) to hospitals, public institutions, employees and partners in countries where the company operates. In order to raise public awareness of safety measures during the outbreak, the company said it has also used its “rural network of primary vision care providers to raise awareness among their communities about social distancing, observing basic hygiene and keeping safe during the pandemic.”
Opportunities amidst the challenge
Sharing an update earlier this month, Safilo also highlighted the business cost of the “intensifying economic and financial crisis resulting from the outbreak and spread of COVID-19.”
"In a period that will probably remain unprecedented for the extraordinary challenges we are facing, our thoughts and actions have been primarily focused on the health and safety of all our people, for whom we have immediately and rigorously implemented the safety and prevention regulations provided by government protocols,” commented Angelo Trocchia, Safilo chief executive officer.
He outlined that the production and logistics sites in Italy and across the world are partially operational to ensure production and service levels, while the company is also working on converting some production lines for the manufacture of protective masks and visors to support health professionals on the frontline.
While the first quarter of the year showed a “promising start”, the CEO highlighted that “the sudden and severe halt of demand in March hit our top line and more meaningfully, our profitability as the drop in sales was coupled with temporary production interruptions and supply chain inefficiencies in China, with negative effects on our industrial margin and operating leverage.”
Despite these challenges, Mr Trocchia said that the situation did offer a unique opportunity to “accelerate the digital transformation we outlined in our 2020-2024 Business Plan in December last year.”
He added that the company has been working on several programmes and initiatives to drive traffic in stores when they reopen, as well as working on digital communication campaigns, e-commerce and the new business-to-business platform.
In spring Safilo launched its #united4eyecare initiative to outline the actions the company and its brands have taken in response to the pandemic, repurposing production lines to produce safety glasses and donating masks to frontline staff in hospitals in Italy, Spain and the US.
Ensuring supply through the outbreak
Reporting its first quarter results for 2020, Johnson & Johnson confirmed it saw an operational decline of 4.5% for the Johnson & Johnson Vision business.
Explaining how Johnson & Johnson has reacted to the outbreak, Jakob Sveen, cluster head Northern Europe & general manager UK and Ireland for Johnson & Johnson Vision, said the company’s “immediate response” has been to serve those working “to keep us safe in hospitals, clinics and homes around the world,” adding: “We are applying all of our capabilities to support healthcare professionals, whilst working on the development of a COVID-19 vaccine.”
Mr Sveen added that the company is “partnering with global and local health authorities to address immediate and long-term health care needs, to enable sustainable supply of our critical medicines and medical devices, including contact lenses.”
Discussing how Johnson & Johnson Vision has responded to the operational challenges posed by the pandemic, Mr Sveen said the company is closely monitoring product demand and supply levels to ensure effective distribution, adding that the company’s “robust continuity plans” across its global supply chain have helped it prepare for unforeseen events. These include maintaining critical inventory at major distribution centres away from high-risk areas and working with external suppliers to support preparedness plans.
In order to support optometrists during this time, Mr Sveen said: “We are reviewing how we support our eye health customers in providing care for their patients, offering greater flexibility and support, such as honouring home deliveries where in-store collections have been restricted, and continuing to share information through new digital platforms.”
In the meantime, the company has been working on digital events and courses to support practices and staff, with more than 25 courses available online and a dedicated COVID-19 section of the website with materials and guidance. The company has also been sharing virtual presentations for university students.
“Students and trainees are a very important part of our programmes,” Mr Sveen added. “During this crisis we have maintained close contact with students in our Success Through Education Programme (STEP).”
He added that the company is waiting for guidance from the College of Optometrists around changes required for those on the Scheme for Registration “so that we can support the more than 250 trainees we have in this section of STEP.”
Johnson & Johnson has also released a weekly webinar exploring the steps involved in developing a potential vaccine for COVID-19.