GEOX GROUP 1H19 RESULTS PRESENTATION JULY 30, 2019
1H19 RESULTS* | HIGHLIGHTS TOTAL SALES:EURO 399.4 MILLION, -3.5% (-3.6% AT COSTANT FOREX) MAINLY EXPLAINED BY: • LOW SINGLE DIGIT DECREASE FOR WHOLESALE (-2.8%) WITH AN IMPROVING TREND COMPARED TO THE SS19 INITIAL ORDER COLLECTION (-9.1%) THANKS TO HIGHER SALE OF OLD SEASONS STOCK AND HIGHER IN-SEASON RE-ORDERS. • SLIGHT INCREASE FOR DOS (+0.8%) AS A RESULT OF A POSITIVE SPACE EFFECT AND A LOW SINGLE DIGIT NEGATIVE LFL (-2.2%) MAINLY DUE TO UNUSUAL WEATHER CONDITIONS IN APRIL AND MAY. DOUBLE DIGIT GROWTH FOR THE DIRECT ONLINE CHANNEL (+26%). • DECREASE FOR THE FRANCHISING CHANNEL (-21.9%) MAINLY DUE TO A NEGATIVE PERIMETER EFFECT (APPROX. -10%), A MID - SINGLE DIGIT NEGATIVE LFL AND SOME DELIVERY SHIFTS THAT WILL BE RECOVERED IN 2H19 GROSS MARGIN: +50 BPS VS 1H18 EBITDA*: EURO 18.7 MILLION (EURO 25.2 MILLION IN 1H18) NET FINANCIAL POSITION (ANTE IFRS 16 APPLICATION): EURO - 30.8 MILLION (EURO -19.7 MILLION IN 1H18) NEW IMPORTANT COLLABORATIONS WITH WWF AND DISNEY FOR KIDS *The IFRS 16 reporting standard came into force on January 1, 2019. The figures in this presentation and the relative comments, unless otherwise specified, exclude the effects of applying this standard in order to allow for a correct comparison with the previous year. The following schemes show the individual effects of applying the new standard for Geox Group at June 30, 2019. EBITDA excluding the effects of adopting the new IFRS 16 reporting standard 2
1H19 RESULTS | NET SALES BY CHANNEL NET SALES BY CHANNEL (MLN € ) WHOLESALE • QUALITY OVER QUANTIY STRATEGY ONGOING 1H18 1H19 • IMPROVED TREND COMPARED TO INITIAL ORDER COLLECTION (-9.1%) THANKS TO HIGHER SALE OF OLD SEASONS STOCK (DRIVEN BY THE INCREASE IN 414 399 INVENTORIES IN 2018) AND HIGHER IN SEASON RE- ORDERS 191 186 174 176 49 38 FRANCHISING WHOLESALE FRANCHISING DOS TOTAL • NEGATIVE SPACE EFFECT (APPROX. -10% VS 1H18). 48 NET CLOSURES AND CONVERSION TO DOS IN 1H19 -2.8% -21.9% +0.8% -3.5% -2.7% c.FX -21.8% c.FX +0.5% c.FX -3.6% c.FX • LFL MID-SINGLE DIGIT NEGATIVE • SOME DELIVERY SHIFTS THAT WILL BE RECOVERED IN 2H19 • FRANCHISING RECAPTURE IS NOT PART OF THE NET SALES BY CHANNEL (IN %) STRATEGY *[1H18] DOS DOS 44% [42%*] • LFL SLIGHTLY NEGATIVE (-2.2%) AFTER A WEAK PERFORMANCE IN APRIL AND MAY • SLIGHTLY POSITIVE SPACE EFFECT WHOLESALE 46% [46%*] • DOUBLE DIGIT GROWTH (+26%) FOR THE ONLINE CHANNEL FRANCHISING 10% [12%*] 3
1H19 RESULTS | LFL DOS LFL DOS (ONLINE AND OFFLINE) 2Q19 TRADING AFFECTED BY A 3.4% DIFFICULT APRIL/ MAY (UNUSUAL WEATHER AND TOUGH COMPARISON BASE). TREND BACK TO POSITIVE IN 1Q18 1H18 9M18 FY18 1Q19 1H19 JUNE, BUT SOFT BEGINNING OF -2.3% -2.2% SALES SEASON -4.3% -4.7% LFL BY QUARTER -8.9% LFL DOS ONLINE ONLINE CHANNEL INSOURCED IN EUROPE 26.0% 25.0% IN JULY 2018 DIRECT ONLINE CHANNEL IN NORTH AMERICA: 11.7% INSOURCING CONCLUDED IN 8.1% 8.2% 7.8% LFL BY JUNE 2019 QUARTER 1Q18 1H18 9M18 FY18 1Q19 1H19 4
1H19 RESULTS | NET SALES BY REGION NET SALES BY REGION (MLN € ) ITALY • NEGATIVE TREND FOR WHOLESALE AND FRANCHISING MAINLY DUE 1H18 1H19 414 TO RATIONALIZATION AND NETWORK OPTIMIZATION (IN LINE WITH 399 STRATEGIC PLAN) • LOW SINGLE DIGIT GROWTH FOR DOS AS A CONSEQUENCE OF A POSITIVE SPACE EFFECT AND A SLIGHTLY NEGATIVE LFL. 180 175 • DIRECT ONLINE CHANNEL: +29% 124 116 86 86 24 22 EUROPE • WHOLESALE SLIGHTLY NEGATIVE MAINLY DUE TO QUALITY OVER ITALY EUROPE NORAM ROW TOTAL QUANTITY STRATEGY • -8.6% LOW SINGLE DIGIT GROWTH FOR DOS: LFL FLAT (BETTER THAN -6.5% -2.8% +0.7% -3.5% GROUP AVERAGE) AND A SLIGHTLY POSITIVE SPACE EFFECT. -10.0% c.FX -6.5% c.FX -2.9% c.FX +1.0% c.FX -3.6% c.FX • DIRECT ONLINE CHANNEL: +35% NET SALES BY REGION (IN %) NORAM *[1H18] • CLEANING UP OF THE EXISTING WHOLESALE DISTRIBUTION ITALY 29% • LFL DOS LOW SINGLE DIGIT NEGATIVE IN USA; STRONG COMMITMENT [30%*] ROW 22% TO RE-FOCUS BUSINESS ON THE MOST APPROPRIATE LOCATIONS. [21%*] • DIRECT ONLINE CHANNEL (INSOURCED IN JUNE 2019): +36% NORAM 6% ROW [6%*] • POSITIVE PERFORMANCE DRIVEN MAINLY BY EASTERN EUROPE THAT SHOWED A HIGH SINGLE DIGIT GROWTH IN LFL DOS AND A DOUBLE EUROPE 44% DIGIT GROWTH IN WHOLESALE [43%*] • APAC: WHOLESALE SLIGHTLY POSITIVE AND DOS LOW SINGLE DIGIT NEGATIVE ALSO AFFECTED BY HK TURMOIL AND CHANGES TO OPERATIONS IN CHINESE DIRECT ONLINE 5
1H19 RESULTS | NET SALES BY PRODUCT NET SALES BY PRODUCT (MLN € ) 1H18 1H19 414 399 377 364 37 35 FOOTWEAR APPAREL TOTAL FOOTWEAR APPAREL TOTAL -3.3% -5.8% -3.5% -3.4% c.FX -5.6% c.FX -3.6% c.FX NET SALES BY PRODUCT (IN %) *[1H18] APPAREL9% [9%*] FOOWEAR 91% [91%*] DOUBLE-DIGIT GROWTH (+18%) FOR APPAREL IN DOS THANKS TO A POSITIVE PERFORMANCE OF THE NEW COLLECTION. ALSO VERY POSITIVE REACTION TO FW 19 COLLECTION BY WHOLESALE PARTNERS 6
1H19 RESULTS| NEW IMPORTANT PROJECTS IMPORTANT COLLABORATION A SUSTAINABLE VERSION OF WITH WWF FOR KIDS OUR ICONIC NEBULA TM IMPORTANT COLLABORATION WITH DISNEY FOR KIDS SUSTAINABLE A FULLY MATERIALS SUCH AS SUSTAINABLE RECYCLED COTTON POLYESTER UPPER RECYCLED RUBBER MADE FROM AND LWG CERTIFIED RECYCLED BOTTLES LEATHERS 7
1H19 RESULTS| GEOX SHOPS NETWORK RETAIL NETWORK – # GEOX SHOPS - JUNE 30, 2019 DECEMBER 31, 2018 JUNE 30, 2018 GEOX SHOPS of which DOS GEOX SHOPS of which DOS GEOX SHOPS of which DOS X-STORE ROLL OUT 279 149 286 143 291 140 ITALY PLAN UPDATE 274 156 285 154 294 152 EUROPE 180 X-STORE AT THE END 36 36 NORTH AMERICA 37 37 39 39 OF 1H19 FROM 136 AT THE END OF FY18 398 107 RoW* 407 110 416 105 1,015 444 1,040 TOTAL 987 448 436 * I ncludes Under Distribution Agreement Shops (133 as of June 2019 138 as of December 2018 vs 150 as of June 2018) which are shops opened under license by partners in the Middle East and in the Far East. Sales from these shops are not included in the franchising channel FRANCHISING EVOLUTION NET OPENINGS CLOSURES OPENINGS DELTA 2Q19 VS 2Q18 = -48 POS (7) ITALY 1 (8) GEOX SHOPS 4 EUROPE (11) (15) FY17 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 EVOLUTION (1) - (1) NORTH AMERICA TOTAL 488 458 454 440 433 415 406 NUMBER IN 1H19 RoW* (9) 23 (32) DELTA -62 -30 -4 -14 -7 -18 -9 TOTAL (28) (56) 28 8
1H19 RESULTS| INCOME STATEMENT 1H19 GROSS MARGIN INCREASE (+50 BPS) MAINLY THANKS TO SPECIFIC MEASURES IFRS 16 EXCLUDING 1H19 1H18 IN % IN % ON SUPPLY CHAIN EFFICIENCY AND TO CHANNEL MIX. PART OF THE IMPACT IFRS 16 INDUSTRIAL MARGIN IMPROVEMENT HAS BEEN ABSORBED BY THE HIGHER IMPACT (EURO MLN) PROMOTIONAL SALES DONE IN 2Q19 NET SALES 399.4 399.4 414.1 100% 100% SELLING AND DISTRIBUTION COSTS DOWN BY 1.2 MILLION COST OF SALES (196.1) (196.1) (205.2) (49.6%) (49.1%) G&A TREND REFLECTED MAINLY THE HIGHER COSTS RELATED TO DOS GROSS PROFIT 203.3 203.3 208.9 50.9% 50.4% PERIMETER INCREASE AND TO LOGISTICS SELLING & (22.4) (22.4) (5.6%) (23.6) (5.7%) DISTRIBUTION TAXES AT EURO 3.2 MILLION. IT IS IMPORTANT TO UNDERLINE THAT THE GROUP DID NOT RECOGNIZE APPROX. EURO 2.5 MILLION OF DEFERRED TAX ASSETS G&A (165.1) (1.2) (166.3) (161.6) (39.0%) (41.6%) A&P (13.0) (13.0) (12.8) (3.3%) (3.1%) EBIT ADJ 2.8 (1.2) 1.6 10.9 0.4% 2.6% SPECIAL ITEMS - - (2.1) (0.5%) EBIT 2.8 (1.2) 1.6 8.8 0.4% 2.1% NET FINANCIAL (4.9) 2.6 (2.3) (2.4) (0.6%) (0.6%) EXPENSES EBT (2.1) 1.4 (0.7) 6.4 (0.2%) 1.5% INCOME TAXES (2.9) (0.3) (3.2) (4.8) (0.8%) (1.2%) 1.5 0.4% NET RESULT (5.0) 1.1 (3.9) n.m. EBITDA 54.0 (35.4) 18.7 4.7% 25.2 6.1% 9
1H19 RESULTS| BALANCE SHEET JUNE 2019 JUNE IFRS 16 EXCLUDING DEC JUNE 2019 IFRS 16 2018 2018 IMPACT IMPACT (EURO MLN) INTANGIBLE ASSETS 47.2 47.2 50.2 47.9 TANGIBLE ASSETS 377.2 (313.0) 64.2 65.8 60.0 OTHER FIXED ASSETS, NET 36.4 1.5 37.9 39.1 37.0 TOTAL FIXED ASSETS 460.8 (311.5) 149.3 155.1 144.9 OPERATING WORKING CAPITAL 235.5 235.5 209.1 252.6 OTHER CURRENT ASSETS (16.8) (1.1) (17.9) (17.7) (22.8) (LIABILITIES), NET INVESTED CAPITAL 679.5 (312.6) 366.9 346.5 374.7 NET FINANCIAL POSITION (CASH) 344.4 (313.7) 30.8 (2.3) 19.7 STAFF SEVERANCE AND RISK 8.4 8.4 8.1 7.4 FUND SHAREHOLDERS’EQUITY 326.6 1.1 327.7 340.8 347.6 INVESTED CAPITAL 679.5 (312.6) 366.9 346.5 374.7 10
1H19 RESULTS| OPERATING WORKING CAPITAL OPERATING WORKING CAPITAL EVOLUTION (EURO MILLION) 252 253 235 227 226 218 214 209 194 192 2011 2012 2013 2014 2015 2016 2017 2018 1H18 1H19 % OF 29.8% 24.5% 23.8% 28.3% 27.5% 22.2% 28.0% 25.6% 25.3% 29.0% SALES OPERATING WORKING CAPITAL DETAILS (EURO MILLION) (EURO MLN) 1H19 1H18* CHG FY18 OPERATING WORKING CAPITAL AS A PERCENTAGE OF SALES DECREASED TO 29.0% IN INVENTORIES 292.4 304.0 (11.6) 312.1 JUNE 2019 (29.8% AS AT JUNE 2018) ACCOUNT RECEIVABLES 148.6 182.3 (33.7) 133.1 THIS IMPROVEMENT IS MAINLY DUE TO THE PERFORMANCE OF RECEIVABLES (IN LINE ACCOUNT PAYABLES (205.5) (233.6) 28.1 (236.0) WITH SALES TREND IN WHOLESALE AND FRANCHISE) OP. WORKING CAPITAL 235.5 252.6 (17.2) 209.1 INVENTORIES DOWN BY APPROX 12 MLN € VS JUNE 2018 % ON SALES 29.0% 29.8% -80 BPS 25.3% *Data restated in compliance with IFRS 15 11
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