Message from the CEO

Dear reader,

At GrandVision, our vision is to provide high quality and affordable eye care to more and more people around the world. In 2016 we continued to deliver on this vision. We expanded our customer reach to 6,516 stores across more than 40 countries, an increase of 6.6% compared to the previous year. This also contributed to the growth of our sales and profit lines. Revenues were 6.5% higher at constant exchange rates, with organic growth at 3.5% including a comparable growth of 2.2% and acquisition-based growth of 3.1%. Adjusted EBITDA increased by 6.7% at constant exchange rates, and our margin grew by 24 bps.

We made progress in each of our three segments. GrandVision’s G4 segment saw revenue growth of 2.6% at constant exchange rates, and continued to deliver high cash flow generation and further strengthened adjusted EBITDA margins. In the Other Europe segment, revenue grew by 3.5% at constant exchange rates, despite lower levels of comparable growth due to the impact of the integration and re-branding process in Italy which in the last quarter of the year has shown increasing traction with the customer. The Americas and Asia segment achieved the highest comparable growth rate of 7.4%, while organic EBITDA rose by over 100%. Here, the ongoing operational and organizational restructuring and integration of the acquired US business For Eyes remains a major point of attention.

The optical retail market continued to benefit from strong fundamentals in the year, although some markets saw a temporary slowdown due mainly to local short-term factors. In this environment, we improved our position across all segments, with organic growth and acquisitions that enabled us to outperform the underlying market. Our business continued to demonstrate its resilience over the full year as consumers cannot significantly postpone their purchases of eye care and generally become more price-sensitive.

We have continued to strengthen and communicate the GrandVision brand globally to present our identity and customer proposition in a consistent way in many places we operate. In many GrandVision retail banners, we introduced our ‘Caring Eye’ logo, connecting our well-established local brand names with the reassurance and benefits of a globally leading provider of eye care. Following the acquisition of the Randazzo business in late 2014, and an extensive phase of customer and market research, we carefully started the rebranding of our Avanzi and Optissimo stores in Italy to GrandVision. As the market leader in Italy we are now using a single retail banner, which allows us to increase customer awareness and communication with a single brand identity through all national and social media channels. Another priority in 2016 was the restructuring and integration of the For Eyes business in the US, which was acquired in December 2015. One of our first major initiatives was to improve and integrate the local supply chain and introduce our differentiating Exclusive Brand portfolio for frames and lenses to our new customers there. We also aligned the local commercial proposition by introducing GrandVision’s proven ‘simple, safe and honest’ customer journey.

With our focus and attention firmly fixed on the long term, we have continued to roll out our global capabilities to enhance the quality and service we provide to our customers. We are finding new ways to leverage our scale and reduce inefficiencies and complexity. Our Exclusive Brands remain a key ingredient of our commercial strategy, as they increase differentiation, deliver true customer benefits, improve conversion, strengthen customer satisfaction and create loyalty. In 2016, we increased our volume share of Exclusive Brand frames by over 10 percentage points to reach nearly 70% of all frames provided to our customers. We achieved this by further enhancing our Exclusive Brand’s styling and technical features, improving the communication of the customer benefits through in-store merchandising and on social media platforms, and by aligning closely with our people’s personal objectives. The Exclusive Brands are contributing to the high-quality-at-affordable-prices proposition to our customers, while offering more attractive margins to the business.

By steadily harmonizing our commercial proposition throughout GrandVision’s retail banners, we have made our Group’s lens assortment more consistent and less complex. This has given us further opportunities to improve the efficiency of our lens supply chain and gain additional benefits. It also continues to give our customers access to the latest in lens technologies, such as blue-light protect lenses and driver lenses.

Last July, Apollo-Optik in Germany launched the next level of GrandVision’s omni-channel technology platform. Its features include the online purchases of prescription glasses and sunglasses, with options for home delivery or trying-out at our stores. Customers can also book appointments for free eye tests, and preselect their products online. Overall, we believe this strategy of combining our national store network with online functionality is the best way to meet our customers' growing expectations in a digitalizing world, and to offer a consistent experience however and wherever they shop.

At GrandVision, we are committed to improving the quality of life of our customers and employees, and creating value in the communities we operate in. We aim to play an important role towards ensuring that more and more people worldwide have access to the eye care and vision correction they need. To this end, many of our colleagues around the world have participated in community initiatives that improve access to eye care for those most in need. In doing so, they enable them to access new and better opportunities in education, social participation, economic development and welfare. For example, our Swedish retail banner, Synoptik, collected second-hand spectacles, which they distributed among disadvantaged communities in Central and Latin America. Meanwhile, our UK retailer, Vision Express, has once more toured the country with its Vision Van, bringing free eye tests to multiple 'hotspots' for bad eye health.

We have continued to detail our Corporate Social Responsibility (CSR) ambitions in the year. These are deeply connected to our business strategy, our global capabilities, and are tailored to our stakeholders’ needs. In the years ahead, we will continue to make a positive difference by becoming even more sustainable and create a positive impact in the way we do business. As part of these efforts we will publish our first CSR Report in 2017.

Looking ahead, we continue to see many exciting opportunities for our growth journey with our colleagues, customers, franchise and business partners, and with our stakeholders in general. We will keep building on our global capabilities and continuously improve the quality and accessibility of our products and services to our customers around the world through our store network and digitally.

I would like to thank our more than 31,000 employees, for their passion and commitment to our customers, to enhancing the quality, affordability and accessibility of eye care. I commend them for their hard work and disciplined alignment behind our strategy, always doing their best to put our customers first, often providing additional effort and time in serving their communities. Their talent, creativity and entrepreneurship have been fundamental to achieving strong and consistent results over the years and are key ingredients for our future success. I would also like to express gratitude to our shareholders. GrandVision is a collective endeavor that has been made possible through their continued trust and support.

Theo Kiesselbach, CEO

GrandVision by Fototica store opening, Brazil