Data Shows Optical Retail Profit Averages More Than 11% Annually
New figures show retail profits in optometry businesses have grown steadily over the past 12 years, at an average annual rate of just over 11 per cent.
The figure comes from mivision comparisons of the results of the latest Australian Bureau of Statistics (ABS) Health Care Services survey of ‘Optometry Services’, released recently, covering the period 2009-10, with the first and only other study conducted in 1997-98.
The ABS survey of optometry services provides the most comprehensive portrait of the industry to date, revealing there were more than 2,170 optical businesses, operating from an estimated 3,689 locations, generating income of more than AUD$2.5 billion dollars in the 2010 financial year. (According to the ABS, the estimate of 3,689 locations is “reasonable quality data” but the “error rate” could put the total amount of optical retail locations in Australia anywhere between 3,114 and 4,264.)
The ABS results show that the operating profit before tax for optometry businesses during the 2009-10 financial year was AUD$313.4m, representing an operating profit of 12.8 per cent.
In the 1998 survey the industry recorded an operating profit before tax of AUD$89 million, representing an operating profit of 10.9 per cent. While some caution is needed in comparing the two sets of figures, averaged out over the 12 years, operating profits have risen by 11.6 per cent each year, while annual revenue has increased by 9.85 per cent annually.
The ABS survey of optometry services provides the most comprehensive portrait of the industry to date…
Income and Expenses in 2010
According to the ABS, fee for service income of AUD$554.1m accounted for 21.9 per cent of the total income of AUD$2.5b generated by optometry businesses in 2009-10. The majority of income earned was from other income (AUD$2b), which included sales of spectacles, contact lenses and other optical goods, representing almost 80 per cent of total revenue.
Optometry businesses operating on 30 June 2010, generated an average income of AUD$1.2m per business or AUD$667,690 per location.
Wages and salaries of AUD$604.1m accounted for almost a third (27.7 per cent) of total industry expenditure of AUD$2.2b in 2009-10. The main item of expenditure was other expenses, which included the purchase of goods for resale. This accounted for 72.3 per cent of total industry expenditure.
The ABS data reveals that the estimated 2,170 optometry businesses operate from 3,689 locations, serviced a population of 22.3 million people at the end of June 2010. The industry employed or contracted 16,108 people, of which, more than half, 52.8 per cent (8,513 people), were classed as “registered health practitioners or other staff providing health care”.
In 1998, the ABS data showed there were 1,557 optometry businesses in the industry. Most of these businesses (58 per cent) were unincorporated businesses, that is, sole proprietorships or partnerships.
These businesses provided their services from 3,036 locations. The ABS recorded 2,702 optometrists and 2,448 optical dispensers and total employment in the industry of 8,915 people.
Total expenses incurred by businesses in the optometry industry were AUD$733 million. The major components of this expenditure were the purchase of optical goods (AUD$253 million) and labour costs (AUD$223 million).
As with any multifaceted survey of an industry as a whole, the ABS has warned that some of the results obtained in this, only the second complete survey of ‘Optometry Services’, need to be treated with caution.
The ABS also said the two surveys had significant differences – the 1998 result was a two-stage survey measuring optometrists and optometry businesses, but a number of elements changed in the 2010 survey, including the introduction of a different tax system, the types of businesses surveyed, and the use of a different survey methodology.