PRESS RELEASE - FIRST HALF 2017 RESULTS

SALES IN LINE WITH LAST YEAR THANKS TO THE POSITIVE PERFORMANCE OF THE WHOLESALE CHANNEL, UP 6.7% AND ECOMMERCE UP MORE THAN 30% Biadene di Montebelluna, July 28, 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 first half 2017 financial results.

Mario Moretti Polegato, Chairman and founder of Geox, commented: "Geox closes the first half of 2017 with sales of Euro 451 million, in line with last year, thanks to the wholesale channel, increasing by 6.7%, the strong performance of Russia, Eastern Europe and China and the excellent results achieved by the e-commerce channel, up by more than 30%: these results have compensated for the planned store network optimization.

Profitability has improved thanks to our ongoing focus on operating efficiency, tight cost control and continuous implementation of the Group's strategy which prioritises solid and profitable growth.

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%, the expected increase in gross margin and the anticipated improvements in business efficiency".

THE GROU P' S ECONOMIC PERFORMANCE

Sales

First half 2017 consolidated net sales increased by 0.2% to Euro 451.1 million (-0.7% at constant forex). Footwear sales represented 90% of consolidated sales, amounting to Euro 408.2 million, in line with last year (-1.3% at constant forex).

Apparel sales accounted for 10% of consolidated sales amounting to Euro 42.9 million, compared to Euro 40.2 million of the first half of 2016 (+6.7%, +5.4% at constant forex).

(Thousands of Euro)

I half 2017

%

I half 2016

%

Var. %

Footwear

408,216

90.5%

410,081

91.1%

(0.5%)

Apparel

42,904

9.5%

40,194

8.9%

6.7%

Net sales

451,120

100.0%

450,275

100.0%

0.2%

Revenues generated in Italy, representing 30% of the Group's total revenues amounted to Euro 137.0 million, compared to Euro 143.6 million of the previous year. This decrease 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 due to lower reorders compared to the same period of last year and a more selective approach to customers.

Sales in Europe, which accounted for 44% of sales increased by 1.6% to Euro 198.9 million, compared with Euro 195.8 million of the first half of 2016. This performance is 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 Euro 28.4 million, down 1.6 million (-5.5%; -8.1% at constant forex) mainly as a result of the Canadian market.

Sales in Other Countries increased by 7.3% (3.5% at constant forex) with excellent performance of Russia, Eastern Europe and China.

(Thousands of Euro)

I half 2017

%

I half 2016

%

Var. %

Italy

137,032

30.4%

143,609

31.9%

(4.6%)

Europe (*)

198,949

44.1%

195,811

43.5%

1.6%

North America

28,434

6.3%

30,076

6.7%

(5.5%)

Other countries

86,705

19.2%

80,779

17.9%

7.3%

Net sales

451,120

100.0%

450,275

100.0%

0.2%

(*) Europe includes: Austria, Benelux, France, Germany, UK, Iberia, Scandinavia, Switzerland.

Revenues generated by directly-operated stores, DOS, representing 40% of Group revenues, declined by 3.3% at Euro

181.2 million (-3.9% at constant forex). This performance is due to the planned rationalization of stores and to the slight decline (-0.9%) in like-for-like sales of stores that have been open for at least 12 months (comparable store sales) (+1.8% in the first half of 2016).

Comparable sales generated by directly operated stores to date (week 1- week 29) are slightly negative (-0.6%) compared to the 2% growth of the same period of 2016.

Sales generated by the franchising channel, which account for 15% of Group revenues, amount to Euro 67.9 million, reporting a decline of 7.6% (-8.4% at constant forex). The performance of the franchising channel is also due to the store network rationalization plan and the decline in comparable sales, which was slightly greater than the one recorded by directly operated stores.

Wholesale revenue, representing 45% of Group revenues (42% in the first half of 2016) amount to Euro 202.0 million, with an increase of 6.7% (+5.5% at constant forex) compared with last year. This trend is due to a positive performance recorded in the Group's main markets.

(Thousands of Euro)

I half 2017

%

I half 2016

%

Var. %

Wholesale

201,999

44.8%

189,403

42.1%

6.7%

Franchising

67,880

15.0%

73,493

16.3%

(7.6%)

DOS*

181,241

40.2%

187,379

41.6%

(3.3%)

Geox Shops

249,121

55.2%

260,872

57.9%

(4.5%)

Net sales

451,120

100.0%

450,275

100.0%

0.2%

* Directly Operated Store

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

06-30-2017

12-31-2016

I half 2017

Geox

of which

Geox

of which

Net

Openings

Closings

Shops

DOS

Shops

DOS

Openings

Italy

339

129

352

129

(13)

4

(17)

Europe (*)

332

171

346

173

(14)

3

(17)

North America

46

46

48

48

(2)

1

(3)

Other countries (**)

424

97

415

105

9

28

(19)

Total

1,141

443

1,161

455

(20)

36

(56)

(*) Europe includes: Austria, Benelux, France, Germany, UK, Iberia, Scandinavia, Switzerland.

(**) Includes Under License Agreement Shops (165 as of June 30 2017, 156 as of December 31 2016). Sales from these shops are not included in the franchising channel.

Cost of sales and Gross Profit

Cost of sales, as a percentage of sales, was 50.8% compared to 50.5% of the first half of 2016, producing a gross margin of 49.2% (49.5% in the first half of 2016).

Gross margin dilution is due to the increase in product costs, mainly caused by the euro's depreciation against the dollar in 2016, to a reduction in revenues generated by directly-operated stores and to the increased promotions introduced in order to stimulate consumer purchases amid difficult market conditions.

Operating expenses and Operating income (EBIT)

Selling and distribution expenses amounted to euro 24.7 million, in line with last year.

General and administrative expenses were equal to Euro 163.0 million, recording a decrease of Euro 5.8 million compared to the previous year thanks to the actions taken to improve efficiency, reduce structural costs and renegotiate store rents.

Advertising and promotion expenses amount to Euro 10.5 million, equal to 2.3% of revenues, compared to Euro 25.1 million last year. This is primarily due to the different timing of advertising expenditure - compared to 2016 when marketing initiatives were mainly implemented in the first half of the year- and also to the overall optimisation of expenses relating to advertising and display material for stores.

The operating result excluding special items was equal to Euro 24.0 million (5.3% on sales) compared to 4.6 million of the first half of 2016 (1.0% on sales).

Geox S.p.A. published this content on 28 July 2017 and is solely responsible for the information contained herein.
Distributed by Public, unedited and unaltered, on 28 July 2017 15:34:03 UTC.

Original documenthttp://www.geox.biz/static/upload/bod/bod-1h2017.pdf

Public permalinkhttp://www.publicnow.com/view/71E86B6B9914D4A972E1683EB7BFE577D1E1E246