GEOX S.P.A. PRESS RELEASE -THE BOARD OF DIRECTORS APPROVED THE INTERIM MANAGEMENT STATEMENT FOR THE FIRST NINE MONTHS OF 2017
REVENUES EQUAL TO 733 MILLION, SUBSTANTIALLY IN LINE WITH LAST YEAR (-0.9% AT CURRENT FOREX, -1.3% AT CONSTANT FOREX), WITH GROWTH OF THE WHOLESALE CHANNEL PARTIALLY COMPENSATING FOR THE PLANNED OPTIMIZATION OF THE MONO-BRAND STORE NETWORK THE E-COMMERCE CHANNEL CONTINUES TO RECORD DOUBLE-DIGIT GROWTH (+25%) AND RUSSIA, EASTERN EUROPE AND CHINA ALSO CONTINUE TO PERFORM WELL +3.5% INCREASE IN ORDER BACKLOG RECORDED BY THE WHOLESALE CHANNEL FOR THE 2018 SPRING/SUMMER SEASON Biadene di Montebelluna, November 8, 2017 - The Board of Directors of Geox S.p.A., one of the leading brands worldwide in the classic and casual footwear market listed on the Milan Stock Exchange (MSE: GEO.MI), approved today the Interim Management Statement for the First Nine Months of 2017.Mario Moretti Polegato, Chairman and founder of Geox, commented: "Geox is performing well, and we're seeing the first concrete results of our new strategy focused on boosting profitability. I am therefore confident that this first step, together with the investments made in style, new products, the new store concept, the new marketing approach focused on technology & style, and our commercial presence in new high-potential markets, will soon allow us to achieve profitable growth.
Geox has closed the first nine months of 2017 with a substantially stable turnover compared with last year, thanks to the growth of the wholesale channel, with good performance in Russia, Eastern Europe and China, and double-digit growth recorded by the e-commerce channel. These results have partially compensated for the planned rationalization of the mono-brand store network.
The wholesale channel has also reported a +3.5% growth in order backlog for the upcoming Spring/Summer 2018 season, confirming the significant potential of Russia and China, where the Group's presence is still limited but developing well, and of the e-commerce channel, which we believe to be increasingly important for the Group's future strategies.
Lastly, the previously disclosed plans to increase operating efficiency are positively impacting results, as evidenced by the growth in industrial margin and tight cost control, allowing us to record improving profitability compared to last year".
NINE MONTHS 2017 SALESConsolidated revenues for the first nine months of 2017 amount to 732.7 million, substantially in line with last year (- 0.9% at current forex, -1.3% at constant forex), with the growth of the wholesale channel partially compensating for the planned optimization of the mono-brand store network.
Revenues by Distribution Channel
(Thousands of Euro) | 9 Months 2017 | % | 9 Months 2016 | % | Var. % |
Multibrand | 352,689 | 48.1% | 345,796 | 46.8% | 2.0% |
Franchising | 111,009 | 15.1% | 119,690 | 16.2% | (7.3%) |
DOS* | 269,051 | 36.7% | 273,844 | 37.0% | (1.8%) |
Geox Shops | 380,060 | 51.9% | 393,534 | 53.2% | (3.4%) |
Net sales | 732,749 | 100.0% | 739,330 | 100.0% | (0.9%) |
* Directly Operated Store | |||||
Wholesale revenue, representing 48% of Group revenues (47% in the nine months of 2016) amount to Euro 352.7 million, with an increase of 2.0% (+1.5% at constant forex) compared with last year. This trend is due to a stable performance in Italy and Europe, double-digit growth recorded in Russia, Eastern Europe, China and by the online channel.
The slight decline recorded in the third quarter was affected by:
fewer promotional sales due to the planned reduction in stock from previous seasons, resulting from improved operating efficiency
some postponement of Q3 deliveries and a general conservative approach towards credit risk management, especially in some countries that are experiencing renewed turmoil (Ukraine, Thailand).
Revenues generated by directly-operated stores, DOS, representing 37% of Group revenues, declined at Euro 269.0 million (-1.9% at constant forex). This performance is due to:
the planned network optimization in Europe and expansion in more responsive markets such as Russia, Eastern Europe and China (-31 net closures)
stable LFL sales in 9M 2017 (+0.5% vs. 0% in 9M 2016) due to positive Q3 performance (up +3.2%) which was boosted by positive performance in September in all main markets.
Subsequently, comparable sales generated by directly operated stores to date (week 1 - week 44) are substantially stable (-0.2%) caused by the drop in footfall experienced in October. This was due to unusual weather conditions in key markets, as also reported by the industry's players. This is confirmation of the high level of volatility faced by the retail channel in this period.
Sales generated by the franchising channel, which account for 15% of Group revenues, amount to Euro 111.0 million, reporting a decline of 7.3% (-7.9% at constant forex). The performance of the franchising channel reflects the dynamics reported above, and is also due to the store network rationalization plan (-42 net closures) and the slight decline in comparable sales.
Monobrand Stores Distribution Network - Geox Shops
At 30th September 2017, there was a total of 1,095 "Geox Shops", of which 424 DOS. Over the first nine months of 2017, 54 new Geox Shops were opened and 120 were closed, in line with the store network optimization planned in more mature markets and the expansion in countries where the Group's presence is still limited but developing well.
09-30-2017 | 12-31-2016 | 9 Months 2017 | |||||
Geox | of which | Geox | of which | Net | Openings | Closings | |
Shops | DOS | Shops | DOS | Openings | |||
Italy | 309 | 124 | 352 | 129 | (43) | 4 | (47) |
Europe (*) | 315 | 158 | 346 | 173 | (31) | 4 | (35) |
North America | 43 | 43 | 48 | 48 | (5) | 1 | (6) |
Other countries (**) | 428 | 99 | 415 | 105 | 13 | 45 | (32) |
Total | 1,095 | 424 | 1,161 | 455 | (66) | 54 | (120) |
(*) Europe includes: Austria, Benelux, France, Germany, UK, Iberia, Scandinavia, Switzerland.
(**) Includes Under License Agreement Shops (164 as of September 30 2017, 156 as of December 31 2016). Sales from these shops are not included in the franchising channel.
Revenues by Region
(Thousands of Euro) | 9 Months 2017 | % | 9 Months 2016 | % | Var. % |
Italy | 222,393 | 30.4% | 231,174 | 31.3% | (3.8%) |
Europe (*) | 318,259 | 43.4% | 322,758 | 43.7% | (1.4%) |
North America | 43,876 | 6.0% | 46,801 | 6.3% | (6.2%) |
Other countries | 148,221 | 20.2% | 138,597 | 18.7% | 6.9% |
Net sales | 732,749 | 100.0% | 739,330 | 100.0% | (0.9%) |
(*) Europe includes: Austria, Benelux, France, Germany, UK, Iberia, Scandinavia, Switzerland. | |||||
Revenues generated in Italy, representing 30% of the Group's total revenues (31% in nine months of 2016) amounted to Euro 222.4 million, compared to Euro 231.2 million of the previous year. This decrease is mainly due to the planned optimization of the retail network (43 net closures), the slight reduction in LFL sales recorded by DOS, and a stable wholesale channel.
Sales in Europe, which accounted for 43% of sales decreased by 1.4% to Euro 318.3 million, compared with Euro 322.8 million of the nine months of 2016. This performance is explained by the planned rationalization of mono-brand stores (-31 net closures), the low single-digit growth in LFL recorded by DOS, and a stable wholesale channel.
North American sales amounted to Euro 43.9 million, down 6.2% (7.2% at constant forex). The decrease is mainly explained by performance on the Canadian market, the rationalization of mono-brand stores (-5 net closures) and the stable LFL recorded by DOS.
Sales in Other Countries increased by 6.9% (5.0% at constant forex) with positive performance both in the wholesale channel and in terms of LFL recorded by DOS, with particularly strong growth in Russia, Eastern Europe and China
Revenues by Product
(Thousands of Euro) | 9 Months 2017 | % | 9 Months 2016 | % | Var. % |
Footwear | 659,586 | 90.0% | 668,954 | 90.5% | (1.4%) |
Apparel | 73,163 | 10.0% | 70,376 | 9.5% | 4.0% |
Net sales | 732,749 | 100.0% | 739,330 | 100.0% | (0.9%) |
Footwear sales represented 90% of consolidated sales, amounting to Euro 659.6 million, -1.4% (-1.7% at constant forex). Apparel sales accounted for 10% of consolidated sales amounting to Euro 73.2 million, compared to Euro 70.4 million of the nine months of 2016 (+4.0%, +2.9% at constant forex).
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