Staying the course amidst a global pandemic
The past year has been the most challenging time in recent memory for our business, employees and in the communities which we serve. The COVID-19 pandemic’s impact accelerated through the first half of 2020, culminating in a significant number of temporary store closures across many of our markets worldwide. Our business continuity plans and our operational excellence enabled us to limit the effects of the pandemic and continue to meet the critical needs of our customers. While addressing the severe challenges of the pandemic, we were able to continue the execution of our long-term strategy.
As soon as the potential impact of the COVID-19 pandemic became apparent in our territories, we focused on our people, customers, stakeholders and the Company's financial health. Based on this approach, we operated under three priorities: Care, Cash, and Continuity. Concretely, this means:
- Care: We gave our highest priority to ensure the safety and welfare of our staff and customers. Everywhere that we were able to continue store operations, we rapidly implemented hygiene and safety protocols and equipped stores with distance separations and protective equipment, such as face masks and hygiene gels. In addition, we accelerated necessary investments in customer-facing tools such as optical e-commerce functionality to enable our customers to interact even better with our local online and offline retail brands.
- Cash: We focused on preserving liquidity by setting up a central Task Force to monitor our rolling liquidity forecast including scenario planning. We also successfully renegotiated existing and new credit facilities with our relationship banks.
- Continuity: We focused on balancing continued cost discipline and cash preservation, investments in important strategic initiatives and close collaboration with our business partners; all within a framework of constantly changing scenarios and market developments.
Despite significant disruptions, our employees have demonstrated extraordinary determination to adjust and adapt to the evolving landscape. I am proud of their resilience, engagement and relentless focus in the face of personal and professional challenges. I am also grateful to our business partners, for their efforts in enabling us to keep the operations running where possible, and to serve our customers in a safe and sustainable manner during these difficult times.
In the financial year 2020, we faced significant challenges due to the COVID-19 pandemic.
Our performance varied significantly through the months after the outbreak in March, with a strong recovery in 3Q as restrictions were lifted. By rapidly adapting to the changed environment, we managed to partially mitigate the dramatic decline in customer traffic through higher conversion and intensified online activities. Unfortunately, towards the end of the year, the impact of the second wave of the COVID-19 resulted in a slowdown of our strong recovery in the second half of the year.
Our revenue at constant exchange rates declined by 13.8% for the full year with an organic and comparable decrease of 13.6% and 14.1%, respectively.
Adjusted EBITA was EUR 266 million for 2020, a significant reduction in profitability caused mainly due to the loss of revenue, negatively impacting operating leverage in the spring and summer. Our business continuity plans and ability to adapt quickly to the changed market conditions caused by the COVID-19 pandemic enabled us to limit the impact of these disruptions and continue to pursue key strategic objectives.
Critically, the resilience of our business, paired with continued financial discipline in all our Operating Companies resulted in our strong financial position at year end. Scenario planning and a central Task Force allowed for clarity of communication and effective execution across the Group.
GrandVision – a global leader in its field with significant future upside potential
In 2020, once again we were able to turn more customers into loyal fans. I am proud that we recorded another increase in our group-wide net promoter score from 65 in 2019, to 70 this year. And I do not want to miss the opportunity to thank all our customers worldwide for their ongoing loyalty and trust in our eyecare products and services.
This strongly confirms that our relentless efforts to improve our value proposition have been positively received by our customers. The ongoing operational excellence of our staff in each of our 7,260 stores worldwide as well as in all support offices was a core driver. In addition, we made good progress implementing our strategic agenda, which we shared during the Capital Market Day at the end of 2018. Next to continuous improvement on how to excite and retain customers, the further pursuance of the following strategic initiatives poses a strong prospect to GrandVision's future.
In 2020, we have clearly seen the initial significant benefits of our 2018 digital transformation strategy come to fruition.
In addition to a full deployment of our global omnichannel technology platform in more than 10 retail brands in Europe, we also connected all Latin American Operating Companies to an integrated e-commerce and CRM platform, which are already delivering promising results.
More than 30 retail brands across GrandVision now successfully use our proprietary online appointment booking platform, which was a main driver for the strong increase in our digitally-influenced store sales and conversion gains.
We also significantly increased our revenue from digital channels, either retail brand related e-commerce sites such as Apollo.de or pure play ones like Lenstore.com. We expanded the e-commerce capabilities of our retail brand websites by rolling out the important prescription glasses e-commerce functionality across 15 retail brands in 11 countries. We also made good progress in subscription-based sales in both the optical and contact lens categories.
Furthermore, our Customer 360 platform, which provides holistic marketing and CRM solutions and enables personalized digital advertising activities, has been expanded to 10 markets, including Denmark, Sweden, and the U.S.
All of this has not only supported an evident acceleration of a shift in customer behavior in 2020, but also led to an 85% increase in retail brand related e-commerce sales and a significant increase of digitally-influenced store sales.
In 2021 we continue, and accelerate, to provide all Operating Companies with relevant omnichannel technology and capabilities to offer our customers the most convenient 360 degree access to our eyecare products and services.
Product Value Chain transformation
The second pillar of our strategic plan is the end-to-end Product Value Chain transformation. This initiative, launched in 2018, has two main objectives. It enables a full and effective omnichannel business and it also drives further business efficiency through standardization, automation and global economies of scale.
I am glad to report that we made very good progress in this field. We streamlined our product assortment to a globally unified offer, completed a global product master data repository and started our first eco-friendly product line with DbyD. In addition, our first real Regional Fulfilment Hub (RFH) in Porto, Portugal, now serves five countries in northern and southern Europe, with fully integrated processes from customer store orders to lens cutting and full mounting. In 2020, this RFH began to process online customer orders to deliver a full omnichannel customer experience.
The Porto RFH set-up serves as a blueprint for all other RFHs, which we will transform in the upcoming years. We expect this standardized and centralized network structure to yield significant benefits. These include improved customer experience, better lead times and product availability, and significant efficiency gains in operating costs and working capital.
New store concept
In 2020 we piloted an updated store concept in several markets with a strong focus on improving the customer experience and further integrating our omnichannel-focused customer journey. The results were promising and we have started to roll the concept out in The Netherlands, U.K., France, Switzerland, and Germany with a plan to begin the global roll-out in 2021.
We remain highly-committed to establishing Corporate Responsibility and Sustainability (CSR) as a shared mindset across GrandVision. It is our ambition to integrate it further into our business model to continue to improve the quality of life of more people through affordable or free eyecare and sustainable business practices. To achieve this, we align our global CSR approach with GrandVision’s culture and values, as well as with global sustainability trends and agendas. Notably, this includes the UN Global Sustainable Development Goals.
In 2020, our main focus was to further onboard all GrandVision Operating Companies to our CSR roadmap and environmental, social and governance (ESG) priorities, thus increasing our global contribution to major societal issues. These include gender equality, fairness and transparency in supply chains, climate change, contributions to local communities, and support for underprivileged populations by increasing awareness and education about eye health, as well as donating eyewear and eyecare.
I am proud to share that our ESG rankings, most notably from Sustainalytics and the Carbon Disclosure Project, reflect the strong progress we have made. We achieved an improvement of five points in our Sustainalytics ranking, which led to financial savings from our Sustainability Linked Loan and Revolving Credit Facility. We maintained our Carbon Disclosure Project score of 'B,' on a scale of 'A' to 'F,' which is higher than the Europe regional average of 'C.' And we improved our position in the Tax Transparency Benchmark to the top 10% of participating companies in The Netherlands and we are recognized as a 'Top Scorer.'
To conclude, I am proud of the determination and togetherness that our employees demonstrated across the organization during this very exceptional year and I feel truly privileged to work with such committed colleagues. Employee welfare and safety remain our main priority in the coming months, and we will continue to provide all the necessary support to effectively offer our critical services to customers and communities around the world.
We continue to support the transaction between EssilorLuxottica and HAL regarding the proposed acquisition by EssilorLuxottica of HAL's 76.72% stake in GrandVision, which was announced on 31 July, 2019. To date, the transaction has been unconditionally cleared in Brazil, Colombia, Mexico, Russia, and the U.S., and is still under review in Chile, the EU and Turkey.
We believe the rationale for the transaction remains valid and remain committed to supporting EssilorLuxottica to obtain regulatory approvals in the regions where the merger clearance process is ongoing.
Throughout 2020 we were able to strengthen our existing strategic framework despite the restrictions of the pandemic. Looking ahead, we are prepared to handle the lingering impact of the COVID-19 pandemic.
The developments over the last year have undoubtedly caused structural disruption across the industry. At GrandVision we regard this as an opportunity. Our strategic approach remains valid and we will continue to execute on our operational excellence and our key initiatives to further expand our position as a leading global optical retailer, and thus create shareholder value.
Finally, I want to thank all stakeholders for their continued trust and support.
CEO, GrandVision N.V.
GrandVision’s leadership team. From left to right: Andreas Jacobsen, VP Operations EUR 1; Andrea Hill, VP HR; Frederic Dauche, COO; Stephan Borchert, CEO; Willem Eelman, CFO; Kunal Chakraborty, VP CX&D; Attila Alm, VP Operations EUR 2; Alvaro Vieira, VP Operations LatAm.