Geox reports slight increase in H1 net sales

For the first half of 2017, Geox said consolidated net sales increased by 0.2 percent but were down 0.7 percent at constant forex to 451.1 million euros (529 million dollars). Footwear sales represented 90 percent of consolidated sales, amounting to 408.2 million euros (479 million dollars), in line with last year but down 1.3 percent at constant forex. Apparel sales accounted for 10 percent of consolidated sales amounting to 42.9 million euros (50 million dollars), increased 6.7 percent or 5.4 percent at constant forex compared to 40.2 million euros (47 million dollars) of the first half of 2016.

Commenting on the first half trading, Mario Moretti Polegato, Chairman and founder of Geox, said in a media release: “Geox closes the first half of 2017 with sales of 451 million euros, in line with last year. With regard to the second half of 2017, I expect Geox Group to achieve positive results thanks, in particular, to the growth in the initial order backlog recorded by the wholesale channel for the upcoming 2017 fall-winter season, up 8 percent, the expected increase in gross margin and the anticipated improvements in business efficiency”.

Sales performance across markets

Revenues generated in Italy, representing 30 percent of the group's total revenues amounted to 137 million euros (160 million dollars), compared to 143.6 million euros (168 million dollars) of the previous year. This decrease, the company said, is mainly due to the planned rationalization of the mono-brand store network (13 net closures) and the slight decline recorded by the wholesale channel.

Sales in Europe, which accounted for 44 percent of sales increased by 1.6 percent to 198.9 million euros (233 million dollars), due to the planned rationalization of the mono-brand store network (14 net closures), offset by the satisfying level of growth recorded by the wholesale channel across all main markets. North American sales amounted to 28.4 million euros (33 million dollars), down 1.6 million euros (1.8 million dollars) or down 5.5 percent and 8.1 percent at constant forex, mainly, the company said, as a result of the Canadian market.

Sales in other countries increased by 7.3 percent or 3.5 percent at constant forex with positive performance of Russia, Eastern Europe and China.

Wholesale channel performed positively in H1

Revenues generated by directly-operated stores, DOS, representing 40 percent of group revenues, declined by 3.3 percent or 3.9 percent at constant exchange at 181.2 million euros (212 million dollars), again due to the planned rationalization of stores and to the 0.9 percent decline in like-for-like sales of stores. Comparable sales generated by directly operated stores to date, Geox said, are down 0.6.

Sales generated by the franchising channel, which account for 15 percent of group revenues, amount to 67.9 million euros (79 million dollars), reporting a decline of 7.6 percent or 8.4 percent at constant forex. Wholesale revenue, representing 45 percent of group revenues reached 202 million euros (237 million dollars), an increase of 6.7 percent or 5.5 percent at constant forex compared with last year, due to a positive performance recorded in the group’s main markets.

As of June 30, 2017 the overall number of Geox Shops was 1,141 of which 443 were DOS. During first half of 2017, 36 new Geox Shops were opened and 56 were closed, in line with the rationalization plan of the mono-brand network.

The company’s EBIT was equal to 17.5 million euros (20.5 million dollars), 3.9 percent on sales compared with 4.6 million euros (5.3 million dollars), 1 percent on sales of the first half of 2016. EBITDA was 34.7 million euros (40 million dollars), 7.7 percent of sales, compared to 22.1 million euros (25 million dollars) of the first half of 2016. Adjusted EBITDA was equal to 41.2 million euros (48 million dollars), 9.1 percent on sales compared to 22.1 million euros (25 million dollars) of the first half of 2016.

Geox expects slight increase in FY17 profitability

Regarding 2017, the management expects a slight increase in top line and an increase of profitability compared to the previous year. The company said, this is based on assumptions that the wholesale channel proves to be solid, with order backlog for fall-winter 2017 increasing by 8 percent; the wholesale channel is expected to record mid single digit growth for the entire year, as there are expected to be less reorders during the season compared to 2016 and a more selective approach to customer deliveries in line with current market conditions; the gross margin relating to the fall-winter order backlog growing as expected, reporting an increase of over 200 basis points, with regard to the retail channel, comparable sales generated by directly operated stores to date, show a slight decline of 0.6 percent compared to the slight increase expected.

With regard to the second half of 2017, the company said, the speeding up of network optimization in Europe, the planned expansion in more reactive markets such as Eastern Europe and China, and the focus on profitability can also be reflected in an estimated low single digit increase in comparable sales, owing to an easier comparison base are indicators of improved economic performance for this channel compared to the first half of the year.

The management also assumes that the aforementioned slight increase in turnover and the expected improvement in gross margin, combined with the measures taken to boost efficiency and costs control, will allow the group to achieve levels of profitability that are in line with current market expectations and which are therefore still considered to be achievable even if challenging.

Picture:Facebook/Geox