Geox Q1 net sales decrease 11.2 percent

Geox S.p.A. first quarter consolidated net sales amounted to 264.5 million euros (311.6 million dollars), a decrease of 11.2 percent or 10 percent at constant forex. The company said, performance in the first quarter was mainly affected by the unusual weather conditions, the planned optimisation of the store network, fewer promotional sales and the exchange rate effect. Footwear sales, amounting to 239.9 million euros (282.6 million dollars), down 10.3 percent or 9.2 percent at constant forex. Apparel sales amounted to 24.6 million euros (28.9 million dollars), down 19.3 percent or 18.9 percent at constant forex.

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Commenting on the first quarter trading, Mario Moretti Polegato, Chairman and founder of Geox, said in a press statement: “Performance in the first months of 2018 was significantly affected by three factors. The first two factors are linked to the decision to further rationalize the monobrand store network and to reduce stock levels for the winter season, which led to fewer discounted sales, protecting margin performance and supporting cash generation. The third is: particularly unfavourable weather conditions in our main markets delayed the start of the spring season.”

Review of Geox’s first quarter results

Sales generated by wholesale stores, amounted to 143 million euros (168 million dollars), a decrease of 9.7 percent or 8.6 percent at constant forex. Sales generated by the franchising channel, amounted to 42.3 million euros (49.8 million dollars), a decline of 21 percent or 20.8 percent at constant forex. Sales generated by directly-operated stores, DOS, amounted to 79.2 million euros (93.2 million dollars), a decrease of 7.8 percent or 5.8 percent at constant forex.

Comparable sales generated by directly-operated stores to date (week 1 - week 19) report a decline of 4.5 percent improving from -8.9 percent at the end of March. The last two weeks of April and the first two weeks of May, the company added, with normal weather conditions in the main markets, have been particularly positive, showing, on average, an almost double-digit growth in sales.

Revenues generated in Italy decreased by 16.6 percent. The planned optimization of the mono-brand store network (48 net closures in FY17 and 12 net closures in 1Q18) and the unusual weather conditions, especially in March, Geox said, were the most important drivers behind the trend for the quarter. Revenues generated in Europe, amounted to 113.9 million euros (134 million dollars), a decrease of 9.7 percent or 9.5 percent at constant forex, in particular driven by 36 net closures in FY17 and 10 net closure in 1Q18.

North America recorded a turnover of 11.8 million, down 18.3 percent at current forex and 11.8 percent at constant forex, mainly due to the negative performance of the wholesale channel. There was an increase in LFL sales for directly operated stores. Regarding the network, Geox had six net closures in FY17 and two net closures in 1Q18.

A decrease of 3.5 percent or rise of 0.2 percent at constant forex in sales was recorded in the rest of the world compared with the first quarter of 2017 with positive results in LFL sales. Wholesale channel was impacted by different timing in deliveries.

As of March 31, 2018, the overall number of Geox Shops was equal to 1,058 of which 436 DOS. During the first quarter of 2018, 10 new Geox Shops were opened and 47 were closed.



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