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While waiting for a rebound in the European market (expected in the next few quarters), Amplifier puts more fuel in the American engine, and with the latest acquisition of stores, announced today, consolidates its presence in North America and in particular on the US market – after having strengthened itself a few months ago in South America, entering Uruguay for the first time – by far the world‘s leading hearing aid. It does so by taking over another 50 stores of Miracle-Ear franchisees, the brand with which Amplifon has operated on this important market since 1999, both through direct and franchised stores. The acquired network, in particular, is one of the main ones in the United States and is owned by three different companies: Hearing Pro, Las Davis Enterprises and Miracle-Ear Centers of Arkansas; includes, as mentioned, approximately 50 sales points located in four states (Arkansas, Kansas, Illinois and Missouri), with an annual turnover of approximately 20 million dollars and approximately 85 employees.
The scenery
«This acquisition – comments Enrico Vita, CEO of Amplifon – is an important new step in the path of further accelerating our growth in the American market, the most important in the world. The operation fits perfectly into our business model in the United States, characterized by the development of an important network of direct stores that operates in synergy with our historic and proven franchising business.”
The acquisition – explains the company itself – is in line with Amplifon’s strategy aimed at further strengthening its positioning in the main market in the world (it is estimated to be worth around 7 billion dollars, i.e. 40% of the global total). Combining the acquired network with Miracle-Ear’s existing direct network should allow the company to accelerate its development in the United States, leveraging greater scale. In general, the Americas, with the United States in the lead, are currently the most dynamic region for Amplifon. «Starting from a relatively low base, i.e. around 200 million euros in revenues in 2019 – explain BofA analysts – the Americas were a high-growth region for Amplifon, which recorded double-digit organic growth for all quarters except one since the start of 2022, compared to the group’s low/mid single-digit growth over the same period.” Growth, as mentioned, «is mainly driven by the United States. Since 2021, Amplifon has consistently outperformed the broader U.S. private hearing aid market, analysts continue, recording record stock gains. Even in 2022, when the overall market was subdued, Amplifon’s activities in the Americas continue to grow.”
Presence in the USA
Miracle-Ear, as mentioned, is the brand with which Amplifon has operated in the United States retail market since 1999. Historically the model was based only on a network of franchisees, but since the end of 2020, CEO Enrico Vita has also created a network of direct stores, in particular through the purchase of franchisees (the first was PJC Hearing), giving rise to a dual business model. Following this acquisition, the Miracle-Ear network reaches approximately 350 direct sales points, in addition to the over 1,200 franchised stores (in the USA Amplifon also works with insurance companies through the Amplifon Hearing Healthcare company). Management has recently clearly expressed to the market the opportunities offered by the United States, which is expected to remain the main driver of growth in the near term. BofA estimates a goal of approximately 2,000 Miracle-Ear stores in the United States (franchisee and direct retail stores combined) in the medium term. Furthermore, the split between Miracle-Ear affiliates and direct stores is expected to rebalance over time, as the intention is to acquire the best affiliates (in terms of location or productivity), as done with PJC Hearing in 2020.
Overall, the Americas (in addition to the USA, by far the most important market, also includes Canada and seven Latin American countries) generated revenues of around 400 million euros in 2022 (around 20% of the Amplifon Group’s total) through over 1,800 points of sale. In December Amplifon also announced its entry into Uruguay, an operation completed this month. The Group – conclude the BofA analysts – remains Eurocentric, with EMEA (currently more profitable) which should be worth 65% of the group’s sales in 2023; but the Americas could go from around 20% to 30% of the group’s sales between now and 2030, with a significant role (around 24%) for the United States.