2020 in eyewear manufacturing: “A year of two halves”
Eyewear manufacturers have shared their 2020 financial results, highlighting the impact of COVID-19 across the sector
31 March 2021
Manufacturers have described 2020 as presenting the “most challenging” market conditions for their companies and a “year of two halves,” as they reported financial results for the past year.
The outbreak of COVID-19 and subsequent lockdowns around the world in the first half of 2020 led many manufacturers to experience declines.
The second half of the year saw signs of recovery. However, this too was dampened for some, with a second wave of the virus towards the end of the year and the introduction of further restrictions, particularly in Europe.
Reporting financial results for 2020, Safilo revealed a decline in net sales of 15.2% (at constant exchange rates) at €780.3million (approximately £674m at the time of writing) compared to €939.0m (£800m) in 2019. Adjusted EBITDA for the year was recorded as €1.0m (£864,175), compared with €65.4m (£56m) in 2019.
The company reported gross profits of €362.5 million (£313m), down 24.0% compared to 2019.
The company suggested these results reflect the impact of COVID-19 in the first half of the year, followed by the rebound of sales in the latter part of the year.
“2020 presented the most challenging market conditions we have ever experienced,” commented Angelo Trocchia, Safilo chief executive officer. “I am proud of the work done by our organisation to advance our medium-term strategic agenda, and considering the unprecedented market conditions, I am satisfied with our ability to contain, as much as possible, the impact to our top and bottom line.”
Sales in Europe were down 25.9% (at constant exchange rates) in 2020, and trading activities were described as weak in the second half of the year, with the company giving the reason as a subdued summer season affecting the sunglass business, and the second wave of the virus at the end of the year.
The fourth quarter of the year brought more challenges to the marketplace with new restrictions imposed across Europe, Safilo suggests, and restrictions on travel and tourism particularly impacted specialty channels, such as travel retail.
In Europe specifically, net sales in Q4 fell by 18.0% (at constant exchange rates). Safilo suggested this was a result of the reintroduction of varying restrictions.
Trocchia commented: “In such a still complex environment, we are therefore particularly pleased with our positive finish to the year.”
The last three months of the year saw net sales grow by 3.0% (at constant exchange rates), behind the sequential improvement of wholesale activities, with the US market a particular driver.
Trocchia commented that 2020 saw e-commerce and social digital marketing ‘leapfrog’ in consumer relevance. Safilo’s total online business grew “sharply” in 2020, contributing around €100 million, or 13% to the Group’s net sales. This increased from around 4% in 2019.
Looking ahead, Trocchia shared: “The business environment at the beginning of 2021 remained affected by the containment actions still in place in many countries to halt the spread of COVID-19 and the uncertainties over the scale and timing of the expected rebound in consumer demand across the different geographies.”
The company suggested business activity for the first two months of the year was in line with expectations “for a more moderate start to the year,” compared to the positive sales recorded in early 2020, while the beginning of March suggested a “significant acceleration” compared to this period last year.
Sales performance has been influenced by positive business trends in the US, and the strength of online platforms, as well as a “more marked recovery” in emerging markets, while a number of countries in Europe remain in weak positions, the company suggested.
Trocchia concluded: “As we continue to maintain a prudent stance on the prospects for the current year awaiting further market evidence of a solid sun season, the main assumption of our work today rests on the opportunity for our business, both owned and licensed, to effectively compensate for discontinued and exiting activities, and on the continuation of our cost reduction plan to recover this year a more positive economic profile.”
EssilorLuxottica also saw reduced revenue during the year, reporting revenue of €14,429m (£12m) for 2020, down 17% (at current exchange rates) compared to 2019. The company shared it’s gross profit for 2020 was €8,476, a decline of 21.6% (at current rates) compared to 2019.
The company has seen a ‘v-shaped’ recovery since May, with sales particularly driven by the optical business, representing 75% of revenue.
Fourth quarter revenue was up by 1.7%, while revenue for the second half of the year was 0.3% at constant exchange results.
The lenses and optical instruments division of the business saw revenues up 4.0% in the second half of the year, and for the full year were down 9.5%.
Francesco Milleri and Paul du Saillant, CEO and deputy CEO of EssilorLuxottica respectively, shared: “In the second half, we shifted into a new gear – recovery and reinvestment mode.”
Wholesale activities normalised during the second part of the year, the company suggested, along with the reopening of customers, nearing a similar revenue to the same period in 2019. Retail also recovered in the second half of the year, with the majority of stores able to remain open. Performance in the fourth quarter was, however, impacted by the new restrictions in Europe.
Over the past year, the company reported observing “visible outperformance” in areas such as lenses, optical instruments, optical frames, retail and e-commerce. It also noted an increase in digitalisation across optics including in the practice journey, online interactivity, eye exams and measurements, as well as in the supply chain.
EssilorLuxottica suggested the pandemic had triggered a range of consumer behaviours which it is positioned to be able to address. This has included an “enhanced awareness” from consumers of the need to take care of their eyes, particularly due to increased screen time, while the increase in screen usage has led to a higher demand for myopia solutions, the company suggested.
EssilorLuxottica suggested it was starting 2021 with confidence, commenting: “Taking into account the uncertainties around COVID-19, the positive momentum already visible in Asia Pacific and the hopes that vaccinations will start to normalise the business environment in other regions in the course of the second quarter, the company has the ambition to deliver a performance comparable to pre-pandemic levels.”
The company also expects trends in e-commerce and prescription sales to continue, as well as optical retail outperforming sunglass retail.
GrandVision released its results earlier this year, revealing that revenue had decreased by 12.2% at constant exchange rates to €3,481 million (£2,979m).
Adjusted EBITA decreased by 43.1% at constant exchange rates to €266 million (£229m), reflecting on this, GrandVision’s CEO, Stephan Borchert, called it “a significant reduction in profitability caused mainly due to the loss of revenue, negatively impacting operating leverage in the spring and summer.”
The company reported system-wide sales in 2020, reflecting the retail sales of GrandVision’s practices and franchisees, of €3,818 million, falling 13.4% from 2019 levels.
“2020 has been the most challenging year in recent history for our business, employees, and the communities we serve,” Borchert said.
Borchert described 2020 as “a tale of two halves,” pointing to the disruption in the first half of the year, leading to many temporary practice closures, and a strong recovery in the second half of the year.
Recovery slowed towards the end of the year, with the second wave of the pandemic, disruption the company expected to see continue into the first quarter of 2021, but “with gradual improvements towards the second half of the year.”
The company has also seen the benefits of digital transformation and significantly increased its revenue from these channels. E-commerce sales grew by 85%, and retail brands e-commerce sales more than doubled, compared to 2019.
Borchert confirmed that the company would continue, and accelerate, its omnichannel technologies and capabilities in 2021.
GrandVision confirmed its intention to support the transaction between EssilorLuxottica and HAL, which recently gained clearance from the European Commission.
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