Companies

Wholesale continues to weigh on Geox’s performance

Nov 25, 2024 Italy

In line with the first half, the footwear company has reported a decline in sales for the first nine months of the year, as the wholesale channel continues to weigh on overall performance

In the first nine months of 2024, the company’s consolidated sales totalled 525.5 million euros, down by 9.7%, or 9.0% at constant exchange rates, on a comparable basis to the same period of last year. “Such decline is primarily due to the negative performance of the Wholesale channel and Franchising, only partially offset by the positive trend of the Direct Digital channel”, said the company in the statement.

Distribution Channels

The wholesale channel recorded a decrease in nine-month sales of 15.4%, or 14.5% at constant exchange rates, to 274.6 million euros. As a result, wholesale accounted for 52.3% of total sales, as compared to 55.7% in the first nine months of 2023. Both the SS24 and FW24 collections were significantly down from the previous year, and the number of active customers declined. Sales from the franchising channel also fell by 21.7% year-over-year to 38.1 million euros.

Sales from directly operated stores (DOS), both B&M and Digital, represented approximately 40.5% of Geox’s total sales in the first nine months, amounting to 212.8 million euros. While B&M sales decreased by 4.2%, or 3.5% at constant exchange rates, to 164.9 million euros, digital sales increased by 30.2% to 47.8 million euros, “driven by excellent comparable sales LFL (+11.4%) and an expansion of the reference perimeter due to the opening of new marketplaces”.

Geographical Areas

In the first nine months of the current year, Geox’s sales in Italy decreased by 9.6% year-over-year to 143.7 million euros and accounted for 27.3% of total sales. Sales in the remaining European markets generated a total of 238.8 million euros, a decrease of 3.3%, on a comparable basis to the same period last year.

“Positive results are reported in the UK and Benelux area and flat results in France. However, overall performance in the area is still affected by negative results in the DACH region (Germany, Austria, and Switzerland)”, the company said.

Geox’s nine-month sales in North America decreased by 9.4%, or 8.6% at constant exchange rates, to 19.3 million euros, on a comparable basis to the first nine months of 2023, and represented 3.7% of total sales. The ‘Other Countries’, including Russia, Southeast Asia and the Middle East, recorded a decrease of 20.2%, or 17.4% at constant exchange rates, to 123.7 million euros, and accounted for 23.5% of total sales.

In addition to “macroeconomic conditions and ongoing tensions due to current conflicts”, Chief Executive Officer Enrico Mistron recalled that “management has launched a further revision of its distribution model to better address current and future market needs”.

In this context, the group has initiated procedures to close direct operations in China and the United States and replace them with more efficient and locally adapted distribution models. “Operations in these markets have not been profitable” in recent years, he said.

Outlook

For the full year 2024, the Italy-based company expects a mid-single-digit decline in sales over 2023, with operating margins increasing by 50 basis points. The forecast includes the significant impact of the difficulties in the wholesale segment and is always subject to significant uncertainties regarding the geopolitical and macroeconomic environment.

Image Credits: shoes-report.com

Italy Companies Footwear Geox Quarter Results Results