Geox reported consolidated sales for the first six months amounted to €320.4 million, decreasing by 9.4 percent compared to the previous year, or down 8.0 percent at constant exchange rates. The decline was primarily due to the negative performance of the Wholesale channel and Franchising, only partially offset by the positive trend of the Direct Digital channel.

Wholesales amounted to €156.0 million, down from €185.8 million in June 2023 (-16.0 percent at current exchange rates, -14.5 percent at constant exchange rates), primarily driven by the performance of the SS24 collection, which had fewer orders than the SS23 collection. In the second quarter, the “in-season re-orders” activity, although slightly positive compared to the previous fiscal year, only partially mitigated the overall performance.

Franchising channel sales amounted to €23.4 million, a decline of 15.2 percent compared to the first six months of 2023, impacted by the reduction in the number of stores and negative comparable sales of 3.3 percent compared to the previous year. The number of franchised stores decreased from 288 in June 2023 to 258 in June 2024.

Sales from directly operated stores, both B&M and digital, amounted to €141.0 million, delivering a slight increase from €140.2 million in the first six months of 2023. This performance resulted in a 0.5 percent increase at current exchange rates (+1.6 percent at constant exchange rates). Specifically, comparable sales of B&M stores saw a slight growth of 0.7 percent compared to the first half of 2023.

Geox said, “These performances, achieved in a rather challenging market context further penalized by unfavorable weather conditions, only partially compensated for the negative perimeter effect of €8.5 million, which is still significant and largely attributable to closures in 2023 and, to a lesser extent, to those in the first half of 2024.”

Regional Performance
Sales from the company’s domestic market, based in Montebelluna, Italy, amounted to €89 million, a decrease of 9.9 percent compared to €98.8 million in the first half of 2023. This reduction was reported to be mainly due to the weak performance of its Wholesale channel (-22.3 percent) and Franchised store network (-20.2 percent), only slightly offset by the positive performance of the Direct Digital store network (+21.7 percent).

Sales generated in European markets amounted to €146.4 million, compared to €149.0 million in 2023, showing a decrease of 1.7 percent. The company delivered positive results in France and the Iberian Peninsula due to gains from direct channels, both physical and digital. However, overall performance in the area is still affected by negative results in the DACH region (Germany, Austria and Switzerland) in physical channels, both Direct and Wholesale, only partially offset by good performances in direct digital channels.

Direct stores in Europe reported comparable sales growth of 6 percent, driven by positive performances in both physical and digital channels, up 4.2 percent and +1.4 percent, respectively. Also, the franchisees in Europe recorded a positive performance of 1.7 percent.

North America reported sales totaled €11.7 million, down by 13.7 percent (-13.2 percent at constant exchange rates) compared to the first six months of 2023, across all major sales channels, except for the direct digital channel, which shows positive performance at 5.1 percent.

The “Other Countries” area reported a sales decrease of 20.6 percent compared to the first six months of 2023 (-15.5 percent at constant exchange rates), with negative performance across all distribution channels. In particular, the most significant negative performances were seen in Russia, China and the Middle East, which were influenced by deteriorated macroeconomic conditions and ongoing tensions due to current conflicts.

Group Operating Performance: Other Income Statement Items
The first half of 2024 showed a decline in performance compared to the previous year. The decrease in sales of 9.4 percent and the gross margin, as a percent of sales, increased with respect to the previous year, led the gross margin to a decrease of €16.3 million. The operating cost structure was reduced by €7.2 million thanks to specific and timely actions implemented by management.

EBITDA decreased 27.6 percent to €29.1 million (9.1 percent of sales) compared to €40.2 million in the first half of 2023 (11.4 percent). The EBITDA before IFRS 16 amounts to €4.0 million (compared to €13.9 million in the first half of 2023). EBIT negative for €5.5 million (compared to positive €3.6 million in the first half of 2023)

CEO Comments
CEO Enrico Mistron commented: “The first half of 2024, consistent with what we have seen in the first months of the year, has proven extremely challenging due to the persistence of complex market conditions. Sales for the first six months of 2024 show a contraction of 9.4 percent compared to the first half of the previous year. The consolidation of the positive results achieved by the Direct Digital channel in the second quarter, along with a slight improvement in comparable sales of the Direct B&M channel, partially offset the sales results of the Wholesale channel. The latter, despite recording a second quarter, was essentially in line with the same period of the previous year and thereby reducing the overall gap observed in the first quarter, continues to be penalized by an extremely challenging context in most of our key markets.

“Additionally, sales were also impacted by a still negative “perimeter effect” primarily related to the closures of direct and franchised stores carried out in 2023, totaling €11 million, and by a negative exchange rate effect amounting to €5.3 million, mainly due to the different average exchange rate of the Ruble.

“During the first six months of the year, we implemented specific actions aimed at reducing the cost base to adapt it to the changed context. Thanks to the adoption of these measures, which are also crucial in perspective, the overall performance of the period at the EBIT level was contained and amounted at €-5.5 million. As previously announced, the management is working on the preparation of the new strategic plan 2025-2027, which will be presented during the year”.

Outlook
Looking ahead, Geox reiterated its previous guidance, stating,

“In analyzing forecasts for the current year, it remains crucial to deeply examine and consider the main variables that define the macroeconomic context, the sector dynamics of the market in which Geox operates, and the evolution of the international geopolitical situation in the coming months.

“Inflationary pressure, although slowly decreasing, especially in the €area, and the tight monetary policy adopted by central banks, continue to negatively influence market dynamics and consumer behavior. Consequently, both the semester and the forecasts for the rest of the year are heavily affected. As previously highlighted, the results for the first half of 2024, despite being supported by encouraging like-for-like (LFL) sales in direct-operated stores (DOS), both physical and digital, remain significantly impacted by the difficulties of the Wholesale segment.

“Given the context and the short-term uncertainty that still characterizes our main reference markets, the company expects sales for the full year 2024 to decrease by mid-single digits compared to 2023, with operating margins increasing by 50 basis points (for the full year). These forecasts are, however, due to their nature, subject to significant uncertainties in terms of the geopolitical and cost inflation environment.”

Image courtesy Geox