Geox posts profit growth in FY17, names Matteo Macsazzini its new CEO

Geox S.p.A. has said that the company’s 2017 consolidated net sales amounted to 884.5 million euros (1,089 million dollars) were in line with last year, down 1.8 percent at current forex and 1.7 percent at constant forex with the growth of the wholesale partially compensating for the planned optimization of the mono-brand store network. The EBITDA adjusted was 74 million euros (91 million dollars), 8.4 percent on sales compared to 52.8 million euros (65 million dollars) of 2016, 5.9 percent on sales. On February 1, 2018, the company's board appointed Matteo Mascazzini as the new Chief Executive Officer.

Commenting on the annual results, Mario Moretti Polegato, Chairman and Founder of Geox, said in a media statement: “2017 performance reflects the first concrete results of our new strategy focused on boosting profitability and achieving a healthy and profitable business. Geox has closed 2017 with a substantially stable turnover compared with the previous year, thanks to the growth of the wholesale channel and improved like-for-like sales in directly operated stores, which recorded a growth of 2 percent in the second half of the year. Operating profit more than doubled, with debt close to zero.”

Review of Geox’s FY17 performance

The operating result (EBIT) was equal to 30.1 million euros (37 million dollars) or 3.4 percent on sales compared to 12.8 million euros (15.7 million dollars) in 2016 or 1.4 percent on sales.

Wholesale revenues, representing 45 percent of group revenues, amounted to 401 million euros (493.6 million dollars), up 1.4 percent at current forex and 1.6 percent at constant forex. This trend, the company said, is due to a substantially stable performance in Italy and in the rest of Europe, double-digit growth recorded in Russia, Eastern Europe, China and by the online channel.

Sales of the DOS channel, which represent 41 percent of group revenues, declined to 362.1 million euros (445.7 million dollars), down 2.3 percent at current forex and 2.1 percent at constant forex, which Geox added, is due to the planned network optimization in Europe and expansion in more responsive markets such as Russia, 16 stores closures in Eastern Europe and China and stable LFL sales of 0.5 percent generated by the directly operated stores against negative 1 percent in 2016. In particular comparable sales in the third quarter grew by 3.2 percent on the back of positive performance reported in September, in all main markets.

Sales of the franchising channel, which account for 14 percent of the group revenues, amounted to 121.4 million euros (149.4 million dollars), a decrease of 9.8 percent and 10.3 percent at constant forex. This, the company said was also due to the 62 net closures and a slight decline in comparable store sales.

As of December 31, 2017, the overall number of Geox Shops was 1,095 of which 439 DOS. During 2017, 70 new Geox Shops were opened and 136 were closed in line with the rationalization plan of the DOS network in more mature markets and the expansion in countries where the group’s presence is still limited but developing well.

Geox’s results across geographies

Sales in Italy, which accounted for 29 percent of sales amounted to 257.5 million euros (317 million dollars), compared to 270.1 million euros (332.5 million dollars) in 2016 due to 48 store closures, reduction in LFL sales recorded by DOS and a stable wholesale channel. Sales in Europe, which accounted for 43 percent of group sales, amounted to 382.9 million euros (471.4 million dollars), compared to 396.6 million euros (488 million dollars) in 2016. The 3.4 percent decrease, Geox added, is mainly due to 36 net store closures, slight increase in the LFL sales recorded by DOS and a stable wholesale channel.

North American sales amounted to 56.9 million euros (70 million dollars), down 6.2 percent or 5.6 percent at constant forex, mainly due to the performance on the Canadian market, the stable LFL sales recorded by DOS and six store closures.

Sales in other countries increased by 8 percent or 7.9 percent at constant exchange rates with positive performance both in the wholesale channel and in terms of LFL sales recorded by DOS with a particularly strong growth in Russia, Eastern Europe and China.

Footwear sales represented 90 percent of consolidated sales amounting to 796.7 million euros (981 million dollars), down 2.3 percent or 2.1 percent at constant forex. Apparel sales accounted for 10 percent of consolidates sales at 87.9 million euros (108 million dollars), compared to 85.2 million euros (104.9 million dollars), up 3.1 percent at current forex and 3 percent at constant forex.

Geox board raises dividend, appoints new CEO

The board of directors has decided to propose to the shareholders' meeting the distribution of a dividend of 0.06 euro (0.07 dollar) per share for a total amount of 15.6 million euros (19.2 million dollars).

On January 18, 2018 the board of Geox acknowledged the resignation of Gregorio Borgo as CEO with effect from the same date and his resignation as an employee with effect from January 31, 2018. On February 1, 2018 the board announced Matteo Mascazzini as the company’s new Chief Executive Officer and executive committee member.

The company further added that SS18 order backlog for the wholesale channel shows a growth of 3.5 percent and an increase in gross margin in line with expectations. The company expects solid growth in the e-commerce channel to continue.

Picture:Facebook/Geox