Message from the CEO
GrandVision has delivered a successful 2017, with increased growth in revenue and adjusted EBITDA and a stronger position in each of our markets, thereby creating significant value for our customers and the communities in which we operate.
Revenue rose by 5.6% at constant exchange rates to €3.45 billion for the full year, with organic growth at 3.5%. Comparable store growth contributed 1.8% to revenue growth or 2.3% if adjusted for fewer trading days in 2017. Acquisitions, primarily Visilab in Switzerland and Tesco Opticians in the UK, contributed 2.1% to revenue growth. All three of our regional segments registered organic revenue growth, and among our product categories, sunglasses showed the highest growth rate due to the continued expansion of our Solaris concept.
GrandVision's store network registered its largest-ever organic increase of more than 450 opened stores around the world, resulting in a net addition of over 250 stores, bringing the total to more than 7,000 by the end of the year.
The adjusted EBITDA increased by 4.0% at constant exchange rates, of which half was attributable to acquisitions, mainly the Swiss Visilab business. The EBITDA margin fell by 21 bps to 16% because of lower comparable growth in the G4 segment and high integration and restructuring costs in the United States. Excluding these costs, the margin rose by 20 bps to 16.4%, demonstrating the positive development in our margins in other markets.
Underlying conditions for eyewear have continued to be favorable in the year, supported by long-term consumer and demographic trends that favor our growth strategy with its focus on value and quality. Markets in Western Europe, North America and Asia have shown similar growth levels to previous years, despite the impact in France, our largest market, from changes to insurance reimbursements that have stretched customer repurchasing cycles.
These results confirm the further strengthening of our position in the steadily growing and evolving eye care market. As a globally leveraged organization we are continuing to benefit from megatrends that are shaping and driving growth in the markets. Rising populations, ageing and expanding middle classes are fuelling demand for more and better eye care services and products. Technical innovation, consolidation and de-regulation are transforming the customer journeys with the increasing need for large scale technology and supply chain platforms. Major consumer trends such as greater health and lifestyle awareness, fashion consciousness, functional expectations and the shift to the convenience of omni-channel solutions, also favor our business model and strategy.
In recent years, our response to the changing needs and priorities of our customers has led to the accelerated development of omni-channel capabilities. Increasingly, our customers' eye care experience is being supported by online solutions while other parts of the customer journey remain based in physical stores. We are continuously creating a range of new propositions that enable us to deliver an extended, and deeper customer journey across all channels, including new, digitally powered innovations. These include appointment booking tools and virtual try-on functionalities, in addition to investments in our websites to improve their relevance, user-friendliness and functionality. We have aligned our organizations, both locally and centrally, to effectively meet the needs of an increasingly digitalized future world in eye care.
At the same time, we continue to increase also our physical proximity to customers as part of our omni-channel strategy by expanding and optimizing our existing network of stores. For example, in Turkey, where revenues were more than 30% higher than in the previous year, growth was fueled by new store openings, high comparable growth in existing stores as well as growing ecommerce activities. In just two years we have established ourselves as the market leader in Turkey, with an increasingly dense store network and a complementary online strategy. In total, GrandVision has added 485 stores to the network in 2017 leading to further market coverage as well as accessibility and omni-channel convenience for our customers.
The implementation of our growth strategy is not always without its challenges. For example, in the US, while achieving comparable growth during the year, re-structuring and managerial challenges have, in the short term, delayed the profitability improvement and the kick-off of the planned high growth program. We expect this to change in 2018. In France, we continued to increase market share despite changes to insurance reimbursements, which have negatively impacted customer repurchase cycles and led to a decline of the overall market.
In 2017, we also took further significant steps in acquisition-based growth. In Switzerland our majority acquisition of Visilab in September presents an exciting growth opportunity in this highly developed and profitable eye care market. In the UK, our acquisition of 209 Tesco optical stores in December has given us improved store density, increased scale and market share. These stores will be rebranded to our local banner Vision Express in 2018.
In every country in which we operate, we have fully embraced Corporate Social Responsibility (CSR) through dedicated activities and initiatives. CSR is not a new activity for GrandVision, but it has developed consistently over the years to become an integral part of our business strategy. The publication of our first stand-alone CSR Report in the year reflects the importance we attach to it and our commitment to create value for all stakeholders. As a globally leading provider of eye care we are strongly aware also of our social responsibilities and will maintain a sharp focus on the further enhancement of our CSR objectives and activities.
Long term value creation by providing high quality and affordable eye care to more and more people around the world remains our key objective. Competing locally with global capabilities for the benefit of our customers enables us to achieve market-leading positions in the countries in which we operate. As we maintain this course in the period ahead and focus on our strategic priorities, it will remain crucial to continuously evolve our business model; from being a supplier of eyewear to becoming a leading platform for eye care in the digital age. I am very satisfied with the overall progress we have made over the last years and specifically in this evolution process. I have the highest confidence that our future CEO, Stephan Borchert, will further enhance GrandVision’s position as the global leader in eye care and thereby continue our growth and success story in the future.
This is my final Annual Report as GrandVision’s CEO. I thank all team members and stakeholders of GrandVision for the many years of great cooperation and the opportunity to participate in a unique, rewarding and fulfilling success story. For the past year, I thank each of our more than 36,000 employees for their exemplary passion and commitment to our customers and their local communities – it has been an immense privilege to work alongside them.
We face another exciting and promising year in 2018 to deliver on our vision to provide high quality and affordable eye care to more and more people around the world. Let us continue to work as we have until now, safe in the knowledge that we have the ingredients to succeed in our mission, and to demonstrate every day that in EYE CARE, WE CARE MORE!
Theo Kiesselbach, CEO