Mario Moretti Polegato, Chairman and Founder of Geox, commented: “In 2018, our industry faced yet another year of incredibly important challenges. Despite these difficult circumstances, Geox nonetheless managed to demonstrate the value and the great potential of its brand. Faced with these significant developments in the system in which it operates, Geox has launched an in-depth strategic, organisational and distribution review process with its 2019-2021 Strategic Business Plan (...)The aim is to make the relevance and desirability of the Geox brand significantly grow again, expanding the target audience to also include new types of customers".

As 2018 was characterised by difficult market conditions experienced by all industry players, these have also guided a number of specific choices made by Geox. The industry experienced extremely unusual weather conditions across all the group's main regions. In particular, March was exceptionally cold, while September and the first half of October were exceptionally warm. These conditions inevitably affected the start of both the spring-summer and autumn-winter seasons, leading to a drop in initial demand for products and, as a result, less stock replenishment during the season. In addition to this: a widespread drop in consumer confidence in all the main markets caused by certain economic-political issues; increased competition due to a number of operators, mainly in the sportswear industry, moving into  the casual and urban style segments; increasing  growth  in  e-commerce to the detriment of physical store networks. 2018 was also characterised by a higher number of promotions by the main brands.

Sales in 2018

Geox consolidated sales in 2018 amounted to 827.2 million euros (884.5 million euros in 2017), down by 6.5% (-5.5%  at constant forex). Positive performance was recorded in the last quarter of the year (+2.0%), mainly thanks to the good performance of the e-commerce channel (+12% in 2018 and +22% in the last quarter alone).

Sales generated by wholesale stores, representing 44.7% of group revenues (45.3% in 2017), amounted to 369.9 million euros (-7.8% at current forex, -6.6% at constant forex). A decline driven by a combination of factors: a more selective approach towards certain partners and certain markets aimed at reducing business risk, which led to the cancellation of a number of orders; fewer reorders owing to the unusual weather conditions experienced both at the start of the spring-summer season and at the start of the autumn-winter season; fewer sales of discounted goods from previous seasons; a more unfavourable exchange rate effect. Sales generated by directly-operated stores, DOS, representing 43.4% of group revenues, recorded a reduction at 359.0 million euros (-0.9% at current exchange rates, +0.1% at constant forex). The network effect is slightly positive as the new openings and taking over the direct management of previously franchised stores substantially compensated for the closures planned as part of the completion of the rationalization programme. The negative performance is therefore mainly due to the unusual weather conditions in March and September, which had an impact on footfall and sales volumes in stores. Good performance was recorded in the fourth quarter (+6.9%), also thanks to a positive network effect. Sales generated by the franchising channel, which account for 11.9% of the group's revenue, amounted  to 98.3 million euros, reporting a decline of 19.0% (-18.3% at constant forex). Performance in the franchising channel mainly reflects the planned rationalization of the store network in the last quarters, with a net reduction of 55 stores in 2018 (over 10%  of  the  entire  franchising  network)  due  to  closures  and,  above  all,  conversions  into  DOS,  combined  with comparable sales performing slightly below the levels recorded by directly-operated stores.

Sales generated in Italy, representing 29.0% of Group revenues (29.1%  in 2017), amounted to 239.8 million euros, compared with 257.5 million euros in 2017 (-6.9%). Sales generated in Europe, representing 42.9% of group revenues (43.3% in 2017), amounted to 354.7 million euros, compared with 382.9 million euros in 2017, recording a decline of 7.4%. As was the case in Italy, this performance was mainly due to the aforementioned rationalization of the mono-brand store network (25 net closures in 2018) and to the unusual weather conditions at the start of the spring and autumn seasons. Performance in the fourth quarter was substantially stable, with an increase in comparable sales generated by directly-operated stores. North America recorded  a turnover equal to 50.5  million euros, reporting a decline  of  -11.2% (-7.2% at constant forex) mainly due to the negative performance of the wholesale channel. The Rest of the World recorded a 2.7% decline in turnover compared with 2017 (+0.9% at constant forex).  During  the  year,  the network of stores operating through licence agreement also underwent a rationalization process, now totalling 138 from the 168 that were in place at the end of 2017.

Sales by category of product

Footwear sales represented approximately 90% of consolidated sales, amounting to 744.0 million euros, down by 6.6% (-5.7% at constant forex) compared with 2017. Apparel accounted for 10% of consolidated sales, amounting to 83.2 million euros compared with 87.9 million euros in 2017 (-5.3% at current forex, -3.8% at constant forex) and recorded double-digit growth in the fourth quarter thanks to customers’ positive reactions to the new collection.