Earnings Release • Jan 18, 2018
Earnings Release
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| Informazione Regolamentata n. 0742-2-2018 |
Data/Ora Ricezione 18 Gennaio 2018 17:52:57 |
MTA | |
|---|---|---|---|
| Societa' | : | GEOX | |
| Identificativo Informazione Regolamentata |
: | 98097 | |
| Nome utilizzatore | : | GEOXN04 - Libralesso | |
| Tipologia | : | REGEM; 3.1; 2.2 | |
| Data/Ora Ricezione | : | 18 Gennaio 2018 17:52:57 | |
| Data/Ora Inizio Diffusione presunta |
: | 18 Gennaio 2018 17:53:00 | |
| Oggetto | : | premilinary sales; resignation of CEO Gregorio Borgo; Cooptation of Matteo Mascazzini; Financial Calendar |
Press release - inside Information. FY2017 |
| Testo del comunicato |
Vedi allegato.
PRESS RELEASE - INSIDE INFORMATION
THE BOARD OF DIRECTORS OF GEOX S.P.A:
1. EXAMINED FY 2017 PRELIMINARY SALES AND NET FINANCIAL POSITION
Biadene di Montebelluna, January 18, 2018 – The Board of Directors of Geox S.p.A., one of the leading brands worldwide in the classic and casual footwear market listed on the Milan Stock Exchange (MSE: GEO.MI), met today under the chairmanship of Mario Moretti Polegato.
"The expected figures for 2017," commented Mario Moretti Polegato, "reflect the first concrete results of our new strategy focused on boosting profitability and achieving a healthy and profitable business.
Geox has closed 2017 with a substantially stable turnover compared with the previous year, thanks to the growth of the wholesale channel, with good performance in Russia, Eastern Europe and China, double-digit growth recorded by the e-commerce channel and improved like-for-like sales in directly operated stores which recorded a growth of 2% in the second half of the year, exceeding expectations. These positive results have partially compensated for the planned rationalization of the mono-brand store network.
As already disclosed, plans to increase operating efficiency are also underway, with the expected growth in industrial margin and tight cost control. Together with the improved performance of directly operated stores, this will allow us to record increasing profitability compared with 2016, substantially in line with market expectations. Furthermore, the focus on management efficiency and tight control of working capital have also led to the excellent cash generation of Euro 67 million, after making investments for Euro 30 million. The group is therefore in a very solid financial position, with net debt of just 5 million at year end, in line with expectations. This profitability, together with our good cash flow, makes me confident that we can continue our policy of distributing dividends to shareholders.
I am therefore confident that these results, together with the investments made in style, new products, the new store concept, marketing focused on the combination of technology and style, and a strong commercial presence in high-potential markets, will allow us to achieve profitable, solid and long-term growth soon.
On behalf of the entire Board, I would therefore like to take this opportunity to thank Gregorio Borgo for his commitment and valuable contribution to the Company, for the projects undertaken and for the results achieved this year and make my best wishes for his new professional opportunity that will allow him to better combine personal and professional aspects.
I also welcome Matteo Mascazzini who will be the new CEO with effect from February 1, 2018. Matteo Mascazzini boasts a twenty-year career in the global fashion and luxury industry, with experience in retail and international development. Thanks to his relevant expertise, I am sure that he will be able to boost the growth of the Group and align marketing strategy, communication, brand, product and commercial distribution in order to allow Geox to achieve important results in terms of growth and profitability."
2017 consolidated net sales amount to Euro 884.5 million, substantially in line with last year (-1.8% at current forex, -1.7% at constant forex) with the growth of the wholesale channel partially compensating for the planned optimization of the mono-brand store network.
| (Thousands of Euro) | 2017 | % | 2016 | % | Var. % |
|---|---|---|---|---|---|
| Wholesale | 400,995 | 45.3% | 395,318 | 43.9% | 1.4% |
| Franchising | 121,404 | 13.7% | 134,621 | 14.9% | (9.8%) |
| DOS* | 362,130 | 40.9% | 370,824 | 41.2% | (2.3%) |
| Geox Shops | 483,534 | 54.7% | 505,445 | 56.1% | (4.3%) |
| Net sales | 884,529 | 100.0% | 900,763 | 100.0% | (1.8%) |
* Directly Operated Store
Wholesale revenues, representing 45% of Group revenues (44% in 2016) amount to Euro 401.0 million in line with expectations (+1.4% at current forex, +1.6% at constant forex). This trend is due to a substantially stable performance in Italy and in the rest of Europe, double-digit growth recorded in Russia, Eastern Europe, China and by the online channel.
Sales of the DOS channel, which represent 41% of Group revenues, declined to Euro 362.1 million (-2.3% at current forex, -2.1% at constant forex). This trend is due to:
Sales of the franchising channel, which account for 14% of the Group revenues, amount to Euro 121.4 million, with a decrease of 9.8% (-10.3% at constant forex). This trend reflects the dynamics reported above and is also due to the store network rationalization plan (-62 net closures) and the slight decline in comparable sales.
As of December 31, 2017, the overall number of Geox Shops was 1,095 of which 439 DOS. During 2017, 70 new Geox Shops were opened and 136 were closed in line with the rationalization plan of the DOS network in more mature markets and the expansion in countries where the Group's presence is still limited but developing well.
| 12-31-2017 | 12-31-2016 | 2017 | |||||
|---|---|---|---|---|---|---|---|
| Geox Shops |
of which DOS |
Geox Shops |
of which DOS |
Net Openings |
Openings | Closings | |
| Italy | 304 | 137 | 352 | 129 | (48) | 4 | (52) |
| Europe (*) | 310 | 155 | 346 | 173 | (36) | 5 | (41) |
| North America | 42 | 42 | 48 | 48 | (6) | 1 | (7) |
| Other countries (**) | 439 | 105 | 415 | 105 | 24 | 60 | (36) |
| Total | 1,095 | 439 | 1,161 | 455 | (66) | 70 | (136) |
(*) Europe includes: Austria, Benelux, France, Germany, UK, Iberia, Scandinavia, Switzerland.
(**) Includes Under License Agreement Shops (168 as of December 31 2017, 156 as of December 31 2016). Sales from these shops are not included in the franchising channel.
| (Thousands of Euro) | 2017 | % | 2016 | % | Var. % |
|---|---|---|---|---|---|
| Italy | 257,520 | 29.1% | 270,118 | 30.0% | (4.7%) |
| Europe (*) | 382,893 | 43.3% | 396,565 | 44.0% | (3.4%) |
| North America | 56,893 | 6.4% | 60,678 | 6.7% | (6.2%) |
| Other countries | 187,223 | 21.2% | 173,402 | 19.3% | 8.0% |
| Net sales | 884,529 | 100.0% | 900,763 | 100.0% | (1.8%) |
(*) Europe includes: Austria, Benelux, France, Germany, UK, Iberia, Scandinavia, Switzerland.
Sales in Italy, which accounted for 29% of sales (30% in 2016) amounted to Euro 257.5 million, compared to Euro 270.1 million in 2016. This trend is mainly due to the planned optimization of the retail network (-48 net closures), the slight reduction in LFL sales recorded by DOS and a stable wholesale channel.
Sales in Europe, which accounted for 43% of Group sales, amounted to Euro 382.9 million, compared to Euro 396.6 million in 2016. The 3.4% decrease is mainly due to the planned rationalization of the mono-brand store network (-36 net closures), the slight increase in the LFL sales recorded by DOS and a stable wholesale channel.
North American sales amounted to Euro 56.9 million, down 6.2% (-5.6% at constant forex) mainly due to the performance on the Canadian market, the stable LFL sales recorded by DOS and the rationalization of the monobrand stores (-6 net closures).
Sales in other Countries increased by 8.0% compared to 2016 (+7.9% at constant exchange rates) with positive performance both in the wholesale channel and in terms of LFL sales recorded by DOS with a particularly strong growth in Russia, Eastern Europe and China.
| (Thousands of Euro) | 2017 | % | 2016 | % | Var. % |
|---|---|---|---|---|---|
| Footwear | 796,664 | 90.1% | 815,538 | 90.5% | (2.3%) |
| Apparel | 87,865 | 9.9% | 85,225 | 9.5% | 3.1% |
| Net sales | 884,529 | 100.0% | 900,763 | 100.0% | (1.8%) |
Footwear sales represented 90% of consolidated sales amounting to Euro 796.7 million, -2.3% (-2.1% at constant forex). Apparel sales accounted for 10% of consolidates sales at Euro 87.9 million, compared to Euro 85.2 million (+3.1% at current forex, + 3.0% at constant forex).
The Group balance sheet shows a net financial position of Euro -5.4 million strongly improving from Euro -35.9 million as of December 31, 2016.
This result is mainly due to the profitability improvement, the strict control of the net working capital and in particular to the decrease of inventories. Capex at Euro 30 million, in line with 2016.
Please note that the figures related to 2017 sales and net financial position are preliminary and unaudited. Financial statements for the Fiscal Year 2017 will be approved by Board of Directors next February 23, 2018.
The Board of Directors of Geox S.p.A. has acknowledged the resignation of Mr. Gregorio Borgo as CEO with effect from today and his resignation as an employee with effect from January 31, 2018 in order to pursue a new professional journey. The BoD has expressed full gratitude and appreciation for his high professionalism and the precious contribution given to the Group and the positive results achieved in the year.
After the resignation as an employee and Director, Mr Borgo will receive the payment of what has already been accrued as provided by the national labour law at the date of resignation as remuneration, fixed emoluments, accruals and retirement allowance.
As a consequence of his resignation, Mr Gregorio Borgo has not maintained any rights in the Company long – term incentive plans (monetary incentives and stock options). Mr Borgo does not hold any Company shares to date. Finally a non-competition agreement and a non-solicitation agreement for employees and collaborators, different from what provided by law, have not been taken into consideration.
The above is in line with the Group remuneration policy and has been approved by the Remuneration and Appointments Committee.
Geox S.p.A. Board of Directors has appointed Mr. Matteo Mascazzini as Board Member today, with the favourable opinion of the Board of Statutory Auditors, and has made the proposal to appoint him as CEO of the Company during the next Board Meeting to be held on February 1, 2018.
Matteo Mascazzini, 48 years old, boasts a twenty-year career in the global fashion and luxury industry, with experience in retail and international development. He comes from the Gucci Group where, for over ten years, he held leading roles in EMEA, US, Japan and Hong Kong and in the retail and consumer management. Previously, from 2003 to 2007, he was COO/CFO in the US and Japan for Giorgio Armani and, from 1995 to 2002, for Gianni Versace Group he held the position of Controller in the US and then in the group.
On behalf of the entire Board of Directors, the Chairman of Geox S.p.A. has expressed his strong appreciation for the appointment of Matteo Mascazzini, highlighting his extensive international experience in the luxury and retail sector.
Matteo Mascazzini does not hold Company shares; his curriculum vitae is available below.
| FEBRUARY 23 | Board of Directors: Financial statements for the Fiscal Year 2017 |
|---|---|
| APRIL 17 | Shareholders' meeting: Approval of the financial statements for the Fiscal Year 2017 |
| MAY 15 | Board of Directors: Approval of the Interim Management Statement as of March 31, 2018 |
| JULY 31 | Board of Directors: Half Year Report for the six-month period as of June 30, 2018 |
| NOVEMBER 13 | Board of Directors: Approval of the Interim Management Statement as of September 30, 2018 |
The company informs that the Interim Management Statement includes information on revenue trends.
After each of these Board of Director meetings, a press release will be distributed and an investor conference call to present results for the relevant period to the financial community will be held at 5:30 pm CET. Any amendment to the aforesaid dates will be duly communicated.
In compliance with the Instructions accompanying the market Rules as organised and monitored by Borsa Italiana S.p.A., (art. IA.2.1.3) Geox S.p.A. notifies that, subject to approval by the shareholders' meeting, any dividends for fiscal year 2017 will be paid in May 2018.
Curriculum vitae
| Mar 06-Aug 07 | COO – Giorgio Armani Corporation – New York, US |
|---|---|
| Apr 04-Feb 06 | CEO – Giorgio Armani Australia Pty Ltd – Sydney, Australia |
| Apr 03-Feb 06 | Chief Financial Officer – Giorgio Armani Japan Co. Ltd. – Tokyo, Japan |
Market analyst and Sales Administration Coordinator
The preliminary results for 2017 included in this press release, which have been prepared in accordance with the International Financial Reporting Standards issued by the International Accounting Standard Board (IASB), have not been audited. The final results could differ from the preliminary results as a result of events and circumstances that are currently not predictable.
This document includes forward-looking statements, relative to future events and income and financial operating results of the Geox Group. These forecasts, by their nature, include an element of risk and uncertainty, since they depend on the outcome of future events and developments. The actual results may differ even quite significantly from those stated due to a multiplicity of factors.
The manager responsible for the preparation of the company's financial documents, Mr. Livio Libralesso, hereby declares, in accordance with paragraph 2 article 154 bis of the Testo Unico della Finanza that, based on his knowledge, the accounting information contained in this document corresponds to the results documented in the books, accounting and other records of the company.
INVESTOR RELATIONS Marina Cargnello, Simone Maggi ph. +39 0423 282476; [email protected]
Livio Libralesso General Manager – Corporate, CFO
UFFICIO STAMPA Juan Carlos Venti: ph: +39 0423 281914; mobile +39 335 470641; [email protected]
The Geox Group operates in the classic and casual footwear sector for men, women and children, with a medium/high price level, and in the apparel sector. The success of Geox is due to the constant focus on the application of innovative solutions and technologies that guarantee both waterproof and breathable products. Geox is one of the leading brands in the "International Lifestyle Casual Footwear Market". Geox technology is protected by 35 different patents and by 10 more recent patent applications
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