Geox reports 9.7 percent percent decline in nine month sales

Italian footwear player Geox reported consolidated sales for the first nine months of 525.5 million euros, down by 9.7 percent or 9 percent at constant exchange rates due to the negative performance of the wholesale channel and franchising, partially offset by the positive trend of the direct digital channel.

Commenting on the outlook, the company said that the results for the first nine months, despite being supported by encouraging like-for-like sales in both physical and digital DOS, remain significantly impacted by the difficulties of the wholesale segment. Given the context, the company continues to expect the full year to decrease by mid-single digits, with operating margins increasing by 50 basis points.

“The results of the third quarter of the 2024 confirm the trend observed in the first half, with comparable sales in the direct channel, both physical and digital, showing healthy performance, while sales in the multi-brand channel remain under pressure,” said the company’s chief executive officer Enrico Mistron.

Mistron added further saying: “In line with the network optimization initiatives already undertaken, management has launched a further revision of its distribution model to better address current and future market needs. In this context, the group initiated procedures in order to close direct operations in China and in the United States."

Review of Geox financial results

Wholesales representing 52.3 percent of the group's sales amounted to 274.6 million euros, down 15.4 percent at current exchange and 14.5 percent at constant exchange rates driven by the negative performance of the SS24 and FW24 collections as well as by a reduced number of active customers.

Franchising channel sales, accounting for 7.3 percent of the total sales, amounted to 38.1 million euros, a decline of 21.7 percent impacted by the reduction in the number of stores and negative comparable sales of 1.1 percent. The number of franchised stores decreased from 282 in September 2023 to 248 in September 2024.

Sales from directly operated stores (DOS), both brick and mortar and digital, accounting for approximately 40.5 percent of the group's sales, amounted to 212.8 million euros, a decline of 4.2 percent or 3.5 percent in physical stores, while comparable sales (LFL) increased by 2 percent. The number of Geox DOS decreased from 261 in September 2023 to 247 in September 2024.

Sales generated through DOS digital channels increased by 30.2 percent driven by comparable sales increase of 11.4 percent.

Geox sales performance across markets

The company said that sales from the domestic market representing 27.3 percent of the total sales, amounted to 143.7 million euros and a decrease of 9.6 percent mainly due to the weak performance of the wholesale channel, down 18.5 percent and the franchised store network, down 20.1 percent, only slightly offset by the positive performance of the direct digital store network, up 13.6 percent.

Sales generated in European markets accounted for 45.5 percent of the group’s total, amounting to 238.8 million euros, a decrease of 3.3 percent. Positive results were reported in the UK and Benelux area and flat results in France. The company added that the overall performance in the area was 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 by 8.9 percent, driven by positive performances in both physical and digital channels, delivering 6.1 percent and 17.1 percent, respectively.

The North America area reported sales of 19.3 million euros, down by 9.4 percent or 8.5 percent at constant exchange rates with a decline across all major sales channels, except for the direct digital channel in Canada, which showed positive performance at 10.2 percent.

The "Other Countries" area reported a sales decrease by 20.2 percent or 17.4 percent at constant exchange rates, with negative performance across all distribution channels. In particular, the most significant negative performances were seen in Russia, South-East, and the Middle East areas, influenced by deteriorated macroeconomic conditions and ongoing tensions due to current conflicts.

Footwear representing 90.7 percent of consolidated sales, amounted to 476.7 million euros, down by 9.4 percent or 8.8 percent at constant exchange rates and apparel accounting for 9.3 percent for the total at 48.8 million euros decreased by 12.3 percent or 10.6 percent at constant exchange rates.

At the end of the nine months, the total number of Geox shops was 618 of which 247 were DOS. During the period, 21 new Geox Shops were opened and 58 were closed.