Market environment HY1/2022
During the course of the first half of the year, the ongoing Covid-19 pandemic led to continued restrictions, record-high sick leave rates among employees and low footfall in most of our markets. This situation persisted well into Q2/2022, especially in Germany and Austria. While the pandemic continued to have an adverse impact on our sales levels, the Fielmann Group acknowledges the exemplary work of its people in the stores. To account for the lack of skilled personnel in optical and acoustic retail, we have increased and adjusted the salaries in several markets. Across all functions, this led to additional HY1/2022 personnel expenses of around € 22 million.
Since February 2022, the consequences of the war in Ukraine impact our operations across Europe. The Fielmann Group acts as a responsible family business: We offered job guarantees to all our 269 Ukrainian employees. Dozens who fled abroad have received training and employment offers. For all refugees arriving from Ukraine, Fielmann and ZEISS realised a 3-month solidarity initiative: More than 80.000 Ukrainians received an individually assembled pair of glasses free of charge in Fielmann stores. ZEISS covered the lenses and Fielmann provided the frames, personnel and services. Although our business in Ukraine suffered sales declines of up to 90 % on a monthly basis, we continue to support our people who remained in the country by paying 100 % of salaries. As at 30 June 2022, 35 out of our 36 Ukrainian stores have re-opened, many of them returning to pre-crisis business levels.
Business development HY1/2022
In 2019 we announced our Vision 2025 that builds on our customer centric company philosophy and targets +5 % average sales growth per year by means of digitising and internationalising our family business. We are proud to have delivered on this goal since 2019 – despite the effects the Covid-19 pandemic and the war in Ukraine had on our business. According to the latest forecast, HY1/2022 external sales will reach € 989 million during the first six months of this year (+8 % over the same period last year) while consolidated sales increased to about € 851 million (previous year: € 789.6 million).
While this sales growth is in line with our Vision 2025 path, our cost structure in 2022 had been planned for more dynamic growth. Consequently, our profitability was disproportionately affected: For HY1/2022 we expect earnings to have reached about € 89 million (previous year: € 96 million), corresponding to a 10.4 % EBT margin.
With respect to our main product categories, prescription eyewear and hearing aids delivered strong single digit growth while sunglasses and contact lenses benefited from the development of our omnichannel platform, growing well above 20 % compared to last year. As contact lenses and sunglasses however contribute lower margins, the changed product mix resulted in a gross profit impact of €13 million.
Marc Fielmann, CEO of the Fielmann Group: “Thanks to our outstanding customer service and our superior omnichannel platform, we are delivering consistent growth in an unstable environment. We are particularly pleased with the progress of our e-commerce business: In the first six months of 2022 the Fielmann Group increased the number of parcels shipped across Europe to more than 640.000 which corresponds to +31 % growth over last year.”
Outlook
The Fielmann Group Management Board views the current market environment with concern. The protracted Covid-19 pandemic, the impact of the ongoing war in Ukraine, persistently high inflation levels and rising interest rates all negatively affect consumer confidence while driving cost inflation. In this environment, we expect a development for the full year that corresponds to the pessimistic scenario communicated in our Annual Report. We update our FY/2022 guidance to external sales of approximately € 2 billion (previous year: € 1.94 billion), consolidated sales of approximately € 1.8 billion (previous year: € 1.68 billion) and an EBT of € 190 million (previous year: € 209.7 million).
The Fielmann Group Management Board is taking measures to maintain its strong sales trajectory while boosting the Group’s EBT margin to at least 16 %, as communicated in our Vision 2025. At our Annual General Meeting on 14 July 2022 we will report on our strategic initiatives that will drive profitability in short- and medium-term.
In the long-term we remain optimistic: In times of uncertainty, people buy from companies that offer excellent service and guaranteed quality at the best prices – in the eyewear industry this is the Fielmann Group.
Hamburg, 04 July 2022
Fielmann Aktiengesellschaft
The Management Board