Synsam Group reiterates its financial targets and invests in innovation and increased efficiency

At Synsam Group's Capital Markets Day today, 20 January 2023, Synsam Group will describe how Synsam is transforming the optical retail sector with new technology solutions, and how Synsam is driving growth and increased efficiency. The company reiterates its medium term financial targets and the company's report for the fourth quarter of 2022 will be published on 22 February 2023, as previously communicated.

Synsam drives changes in the optical retail sector through new processes and technology solutions

The optical retail sector has experienced a shortage of opticians for a long time, mainly in regions in Sweden and Norway, which in some cases has limited the possibility to grow and meet customer demand. Synsam continues to drive change in the optical retail sector and will now address this issue by launching new technology solutions for conducting eye examinations, which in turn increases optician capacity. By increasing optician capacity, efficiency can be improved through new ways of working, offering the customer increased availability and quality. As a result, we will be able to meet our customers' demand, expand more quickly in line with our plan and also be able to utilize part of the opticians’ extra time for quality-enhancing measures and more advanced examinations.

Cost efficiency

A cost efficiency program is being implemented, which is expected to reduce the operational cost base by SEK 102 million in 2023 and by SEK 129 million in 2024, compared with 2022. Part of this program includes reduced need for optician consultants. The cost of the program, which will affect the result for the fourth quarter of 2022, is expected to amount to SEK 34 million and will not be reported as an item affecting comparability. In total, the cost reduction is expected to have a positive impact on the EBITDA result for each year.

Growth through store expansion

In the fourth quarter of 2022, 16 stores were opened and during the full year of 2022, 37 stores were opened, which meant that Synsam had 536 stores as of 31 December 2022. The previously communicated target of 90 new stores from 2021 to 2023 is expected to be achievable during the period. Thereafter, Synsam has a target of establishing a total of 90 new stores from 2024 to 2026.

Development per country

Synsam Sweden continues its successful development and is expected to increase its market share in Sweden from today's 34 percent to 45 percent in 2026. Synsam Norway is expected to become the market leader in 2024.

Synsam Finland is expected to have a continued strong growth rate and to grow faster than the group as a whole, as well as significantly faster than the overall market growth in Finland. As part of the overall goal for store expansion in the group, Synsam Finland is expected to open approximately 50 new stores from 2023 to 2026. A strong expansion is expected to make Synsam Finland the market leader in Finland by 2026.

In order to strengthen Synsam's position in Denmark, and primarily in larger cities, the company's successful expansion model, which was used for the significant expansion in Finland in 2022, will also be introduced in Denmark. Synsam's focus in Denmark will be on moving and remodeling stores. In the period 2023 to 2026, the plan is to convert approximately 20 stores to Mega units and to carry out a general upgrade of all stores in Denmark. Synsam Denmark is expected to achieve annual organic growth of 8-10% in the medium term.

Expansion of Synsam Recycling Outlet

As of 31 December 2022, 24 Synsam Recycling Outlet units have been established by the group since the start, of which 15 units were established in 2022. At the end of 2023, the total number of Synsam Recycling Outlet units will have increased to 25 units, at the end of 2024 to 35 units and at the end of 2025 to 44 units. Synsam Recycling Outlet, including stores and the central organization which runs and develops this chain, is estimated to reach an EBITDA margin of 11 percent in 2023, 16 percent in 2024 and 20 percent in 2025. A fully developed Synsam Recycling Outlet unit is expected to have an EBITDA margin of over 30 percent at the store level. Synsam Recycling Outlet is part of the segments Sweden, Denmark, Norway and Finland.

Continued success for Synsam House Brands

The Jämtö collection, which is manufactured in Frösön Östersund, has been a success. Since it was launched in stores in Sweden at the beginning of September, and in other Nordic countries in November and December 2022, it has developed into the best-selling collection within Synsam’s own brands. The production of a Jämtö frame at Frösön reduces CO2 emissions by 30 percent compared to a corresponding frame made in Asia. During 2023, in addition to continuous renewal of existing collections, two new collections are planned to be launched within Synsam's House Brands and manufactured at Frösön. Synsam Group's Production and Innovation Center is an important part of this investment, and during the continued ramp-up phase of the facility, the negative impact on the EBITDA result is estimated to be approximately SEK 25 million in 2023. A positive EBITDA impact of SEK 3 million is estimated in 2024.

Synsam Lifestyle continues to be an important growth driver

Synsam Lifestyle subscriptions build long-term customer relationships. Every year, customers are called to an eye examination and are offered the opportunity to exchange frames. Lifestyle is therefore a unique CRM tool. Synsam's Lifestyle offering continues to be an important growth driver and in the fourth quarter of 2022, the net increase of Lifestyle subscription customers amounted to approximately 33,000, which was a new record for a single quarter. The total number of Lifestyle subscription customers amounted to approximately 511,000 as of 31 December 2022. Churn in the fourth quarter of 2022 went down to 2.11 percent. Quarterly churn is expected to continue to be stable during 2023 in Sweden, Norway and Finland. In Denmark, churn is higher because of a difference in the model due to a different legislation but, all else being equal, is expected to remain stable in 2023. Synsam's lens subscriptions continue to grow and the number of customers as of 31 December 2022 was approximately 129,000. Starting 2023, Synsam's lens subscription will also be launched in Denmark, which is expected to increase sales, partly in the form of specific lens subscriptions and partly as an effect of increased Lifestyle sales. The total number of subscription customers for Synsam is expected to increase to one million by the end of 2025.

Synsam Group reiterates its financial targets

• Growth rate – Synsam Group targets annual organic growth of 8-12% in the medium term, depending on pace of greenfield expansion
• Profitability – Synsam Group targets an annual adjusted EBITDA margin of 25% or more in the medium term, depending on pace of greenfield expansion
• Capital structure – Synsam Group targets a net debt / adjusted EBITDA ratio of 2.5x, excluding temporary deviations  
• Dividend policy – Synsam Group aims to pay dividends of 40%-60% of the net profit for the year  

”Synsam’s journey has only begun. With our strong concepts, we meet customer needs and grow also in a weak market. Sales in January 2023 were off to a great start and for the full year, we expect to reach an EBITDA margin of approximately 25 percent. We reiterate our medium term financial targets” says Håkan Lundstedt, President and CEO of Synsam Group.

For more information, please contact:
Håkan Lundstedt, President and CEO Synsam AB (publ), tel +46 8-619 28 60
Per Hedblom, CFO Synsam AB (publ), tel +46 8-619 28 60

This information is such that Synsam AB (publ) is obligated to disclose in accordance with the EU Market Abuse Regulation. The information was submitted for publication, through the agency of the contact person set out above, at 08:50 a.m. CET on 20 January 2023.

Synsam Group is a leading optician group in the Nordic region, with a differentiated and sustainable Lifestyle offering. Synsam Group offers a wide range of products and services for eye health and eye fashion, catering to the customer's different lifestyles and needs. The group has approximately 4,000 employees, net sales of approximately SEK 5 billion (rolling twelve months until September 2022) and has approximately 500 stores in the Nordics, operating under the brands Synsam, Ai Eyewear and Profil Optik in Denmark. Through digitalization, subscription services and other innovative concepts, Synsam Group is at the forefront of innovation in the Nordic optical retail market across multiple dimensions including customer journey, product offering and ESG. Synsam Group’s share is traded on Nasdaq Stockholm (SYNSAM). www.synsamgroup.com