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Geox: sales down in 2019 and a complex context

Jan 20, 2020 Italy
Geox: sales down in 2019 and a complex context
The brand’s revenue amounted to 805.9 million euros in 2019, decreasing by 2.6%. Revenue from the footwear segment, which accounts for 89.4% of the consolidated turnover, totalled 720.8 million euros, down by 3.1%
Mario Moretti Polegato, Chairman and Founder of Geox, commented: “2019 was characterised by a particularly complex context. The entire sector is witnessing a significant restructuring process, mainly due to the profound change in consumers’ buying behaviour, with digital solutions becoming increasingly popular. These factors are leading to a substantial reduction in footfall in physical stores, especially those in less desirable and not very strategic locations or in countries characterised by socio-political tensions. In this scenario, Geox has recorded only a slight decrease in sales compared with 2018, thanks to the fact that the rationalisation of the wholesale and franchising channel, aimed at reducing business risk, has been partly compensated for by the substantial growth of the e-commerce channel and by performance in a number of markets, such as Russia and Eastern Europe".

Group Performance

Sales generated by the wholesale stores, representing 44.7% of the group's revenue, amounted to 360.4 million euros, as result of the difficulties faced by smaller players, by the issues with some chains in Europe and by the tensions in certain markets (Hong Kong, Chile, Middle East to name a few) and a decline in Chinese orders as the contract with the existing distributor is approaching its end. Sales in the franchising channel, which account for 10.5% of the group's revenues, reached 84.3 million euros, reporting a decline of 14.3%. Performance in the franchising channel was affected by negative like-for-like sales performance, slightly greater than that of directly operated stores, and by the reduction in the network in Italy, France and Spain. This spontaneous network  rationalisation, brought about by financial  difficulties, was caused by the general reduction in footfall recorded by the sector and,  above all, by the positioning of stores in smaller towns or secondary shopping centres which have been more affected by the growth in e-commerce sales and the changes to consumers’ buying behaviour. Sales generated by directly-operated stores (DOS), representing 44.8% of the group' sales, recorded a slight increase at 361.1 million euros, due to slightly negative like-for-like sales performance (-2.4%) being more than compensated for by a positive network effect. Lastly, the direct e-commerce channel continued to grow considerably (+29% compared with 2018).

Sales by Region

Sales generated in Italy, representing 28.3% of the group's revenue (29.0% in 2018), amounted to 228.5 million euros, compared with 239.8 million euros in 2018 (-4.7%). This trend is mainly due to the performance in the wholesale and franchising channels, which were affected by the rationalisation and distribution optimisation process. Sales generated in Europe, representing 42.7% of total revenue (42.9% in 2018), amounted to 344.3 million euros, compared to 354.7 million euros in 2018, recording a decrease of 2.9%, mainly due to the effects of the rationalisation of the wholesale and franchising channel, as was the case in Italy. North  America  recorded a turnover  equal to 46.2 million euros, reporting a decrease of 8.6% (-11.9% at constant forex) mainly due to the negative performance of the wholesale channel, which has been subject of a careful review and selection process for partners, with a focus on players more in line with the Group's planned strategy to improve brand perception. With regard to the  Asia Pacific region, the reduction of the wholesale  channel is mainly linked to the reduction in orders from a number of distributors who need to get rid of temporary excess inventory, and the agreed slowdown in purchases made by the Chinese distributor, in view of the relative contract expiring towards the end of 2020.

Sales by Product Category

Footwear sales represented 89.4% of consolidated sales, amounting to 720.8 million euros and down by 3.1% compared with 2018. Apparel sales represented 10.6% of consolidated sales, amounting to 85.1 million euros compared with 83.2 million euros in 2018. 

Mono-brand Store Network

As of 31st December 2019, there was a total of 974 Geox Shops, of which 449 DOS. During 2019, 68 new Geox Shops were opened and 109 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.

Board of Directors Update

The Board of Directors confirmed it approved a mutual separation agreement between the Company and CEO Matteo Carlo Maria Mascazziniin relation to his role as employee and Director. The Board has also appointed Livio Libralesso as the Group’s new Chief Executive Officer.

Image credits: Geox

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