• Revenue: EUR320 million for the first half of 2024, down EUR33 million compared to the previous year.
• Sales Contraction: 9.4% decrease in sales compared to the first half of the previous year.
• Wholesale Business: Down EUR27 million, a 16% year-on-year decrease.
• Direct-to-Consumer Channel: Brick-and-mortar sales at EUR110 million, EUR7 million lower than the same period in 2023; Digital sales increased by EUR7.1 million.
• Store Count: 630 operated shops as of the first half of 2024, down from 655 in December 2023 and 678 in June 2023.
• EBIT: Negative EUR5.5 million.
• Net Financial Position: Negative EUR112 million, with an increase of EUR23 million compared to December 2023.
• Footwear Revenue: Decreased from EUR325 million to EUR292 million.
• Apparel Revenue: Stable at EUR29 million.
• Cost Reduction: Costs decreased by EUR9 million, from EUR176 million to EUR169 million.

• Warning! GuruFocus has detected 5 Warning Signs with FRA:GHH.

Release Date: July 31, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Geox SpA (FRA:GHH) reported a good level of reorders, indicating strong product sell-through in wholesale stores.
• The direct digital e-commerce channel showed positive performance in the second quarter.
• There was a slight improvement in the direct brick-and-mortar channels during the second quarter.
• Cost reduction measures were implemented, resulting in a decrease in operating costs by EUR9 million in the first half of 2024.
• The company is preparing a new strategic plan for 2025-2027, focusing on building resilience and future growth in profitability and cash.

Negative Points

• Sales for the first half of 2024 contracted by 9.4% compared to the previous year.
• The wholesale business experienced a significant decline, down EUR27 million year-on-year.
• The closure of certain direct-operated and franchised stores negatively impacted sales.
• The EBIT was negative EUR5.5 million, reflecting a decrease in sales.
• The net financial position worsened, with an increase in net debt by EUR23 million compared to December 2023.

Q & A Highlights

Q: Can you provide insights on the static evolution of operating costs for this year and any potential savings in the second half? Also, what trends do you foresee for the wholesale channel next year? A: We are focused on cost reduction, having already achieved EUR9 million in savings in the first half. We expect costs to remain flat in the second half, with structural costs decreasing and operational costs increasing due to growth in our digital channel. Regarding the wholesale channel for next year, the Spring-Summer '25 campaign is in line with 2024, with positive like-for-like growth in normal accounts.

Q: Could you elaborate on the drivers behind the positive performance of the digital channel and its profitability compared to the Group average? A: The digital channel is crucial for us, showing growth in like-for-like sales and expansion in the number of marketplaces. We are also cleaning the market to maintain brand value. The profitability of this channel is in line with the Group average, driven by increased direct-to-consumer sales.

Q: What are the main drivers for the expected 50 basis points increase in operating margin for the next year? A: The margin increase is primarily driven by the growth in direct-to-consumer sales, expected to rise from 40% to 42.2% by year-end. Additionally, we benefit from better actual costs compared to initial forecasts, supporting our margin goals.

Q: Can you provide an estimate of the net financial position expected by the end of 2024? A: We anticipate the net financial position to be stable, ranging between EUR105 million and EUR110 million. This projection assumes no significant changes in currency values or derivative impacts.

Q: What strategic actions are you taking to enhance the digital channel and its impact on overall sales? A: We are expanding our digital presence by increasing the number of marketplaces and operators. Additionally, we are ensuring market cleanliness in terms of pricing and product offerings to strengthen brand value. This strategy is expected to boost sales and profitability in the digital channel.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.