Geox records turnover decline of 6.5 percent in 2018

Geox S.p.A., said in a statement that consolidated sales in 2018 amounted to 827.2 million euros (939.8 million dollars), down 6.5 percent or 5.5 percent at constant forex. The company added that 2 percent sales increase was recorded in the last quarter of the year, driven by the 12 percent sales increase in 2018 and 22 percent in the fourth quarter, by the e-commerce channel. EBIT amounted to 5.4 million euros (6.1 million dollars) compared with 30.1 million euros in 2017 and EBITDA amounted to 38.3 million euros (43.5 million dollars) compared with 64 million euros in 2017. Adjusted EBITDA amounted to 48.2 million euros (54.7 million dollars) compared with 74 million euros in 2017.

Commenting on the results, Mario Moretti Polegato, Chairman and Founder of Geox, said: “In 2018, our industry faced yet another year of incredibly important challenges. Geox has launched an indepth strategic, organisational and distribution review process with its 2019-2021 Strategic Business Plan. Thanks also to the hiring of new important managers in the most significant areas and in the most strategic markets, this process aims at providing Geox with a truly client-centric and omnichannel operating model that is increasingly leaner, allowing the group to respond quickly and effectively to new consumer requirements and sudden changes in the markets.”

Review of Geox’s Q4 and FY18 performance

The company added that sales generated by wholesale stores, representing 44.7 percent of group revenues amounted to 369.9 million euros (420.2 million dollars) in the fourth quarter, down 7.8 percent at current and 6.6 percent at constant forex.

Sales generated by directly-operated stores (DOS), representing 43.4 percent of group revenues, recorded a reduction at 359 million euros (408 million dollars) down 0.9 percent at current exchange and 0.1 percent at constant forex. The company said, 6.9 percent rise was recorded in the fourth quarter due to a positive network effect. Comparable sales generated by directly-operated stores reported a decline of 2.3 percent, and in the fourth quarter alone, comparable sales were up 3.4 percent. To date, Geox said, comparable sales are slightly positive.

Sales generated by the franchising channel, which account for 11.9 percent of group revenues, amounted to 98.3 million euros (111.7 million dollars), a decline of 19 percent or 18.3 percent at constant forex. Performance in the franchising channel, the company added, mainly reflects the planned rationalization of the store network in the last quarters, with a net reduction of 55 stores in 2018 or over 10 percent of the entire franchising network, due to closures and, above all, conversions into DOS, combined with comparable sales performing slightly below the levels recorded by directly-operated stores.

Geox results across geographies

Sales generated in Italy, representing 29 percent of group revenues, amounted to 239.8 million euros (272.5 million dollars), down 6.9 percent due to 18 net store closures in 2018 and unusual weather conditions in March and September, with the subsequent effects on reorders and comparable sales. Positive performance was recorded in the fourth quarter with an increase in comparable sales generated by directly-operated stores of 4.8 percent. Sales generated in Europe, representing 42.9 percent of group revenues, amounted to 354.7 million euros (403 million dollars), recording a decline of 7.4 due to 25 net store closures in 2018 and unusual weather conditions at the start of the spring and autumn seasons. Performance in the fourth quarter was substantially stable, with an increase in comparable sales generated by directly-operated stores.

North America recorded a turnover equal to 50.5 million euros (57.3 million dollars), a decline of 11.2 percent or 7.2 percent at constant forex, due to the negative performance of the wholesale channel. Comparable sales, on the other hand, slightly increased in terms of both full year and fourth quarter results. There were five net closures in 2018. The rest of the world recorded a 2.7 percent decline or 0.9 percent increase at constant forex, in turnover compared with 2017, with a slightly positive trend in LFL sales for directly-operated stores and the wholesale channel.

During the year, the company added that the network of stores operating through licence agreement also underwent a rationalization process, now totalling 138 from the 168 that were in place at the end of 2017.

Footwear sales reached 744 million euros (845.5 million dollars), down 6.6 percent or 5.7 percent at constant forex, while apparel sales amounting to 83.2 million euros (94.5 million dollars), dropped 5.3 percent at current and 3.8 percent at constant forex and recorded double-digit growth in the fourth quarter.

The company’s board of directors has decided to propose a dividend equal to 0.025 euro per share to the shareholders’ meeting, corresponding to a total of approximately 6.5 million euros.

Picture:Geox website