GEOX GROUP 1Q19 SALES PRESENTATION MAY 10, 2019
1Q19 SALES | HIGHLIGHTS TOTAL SALES:EURO 260.9 MILLION, -1.3% (-1.6% AT COSTANT FOREX) MAINLY EXPLAINED BY: • SLIGHT DECREASE FOR WHOLESALE (-1.9%) WITH AN IMPROVING TREND COMPARED TO THE SS19 INITIAL ORDER COLLECTION (-9.1%) THANKS TO A POSITIVE TIMING IN DELIVERIES, HIGHER SALE OF OLD SEASONS STOCK AND HIGHER IN-SEASON RE- ORDERS. • POSITIVE LFL DOS (+3.4%) DRIVEN BY A DOUBLE DIGIT GROWTH FOR THE DIRECT ONLINE CHANNEL (+25%) • DECREASE FOR THE FRANCHISING CHANNEL (-12.9%) MAINLY DUE TO THE EFFECTS OF THE NETWORK OPTIMIZATION OF THE LAST QUARTERS (APPROX. -10% THE PERIMETER EFFECT) AND SOME DELIVERY SHIFTS. LFL FLAT AND THE NEGATIVE PERIMETER EFFECT WILL BE GRADUALLY REDUCED THROUGHOUT THE YEAR INCREASING INTEREST FOR GEOX FROM DIGITAL AND TRADITIONAL MEDIA 2
1Q19 SALES | NET SALES BY CHANNEL WHOLESALE NET SALES BY CHANNEL (MLN € ) • QUALITY OVER QUANTIY STRATEGY ONGOING 1Q18 1Q19 • IMPROVED TREND COMPARED TO INITIAL ORDER COLLECTION (-9.1%) THANKS TO POSITIVE TIMING OF DELIVERIES, HIGHER SALE OF OLD SEASONS STOCK 264 261 (DRIVEN BY THE INCREASE IN INVENTORIES IN 2018) AND HIGHER IN SEASON RE-ORDERS 143 140 • A SLIGHTLY POSITIVE IMPACT FROM FOREX 84 79 42 37 FRANCHISING WHOLESALE FRANCHISING DOS TOTAL • NEGATIVE SPACE EFFECT (APPROX. -10% VS 1Q18). -1.9% -12.9% +5.8% -1.3% 18 NET CLOSURES AND CONVERSION TO DOS IN 1Q19. -2.0% c.FX -12.6% c.FX +4.9% c.FX -1.6% c.FX PERIMETER EFFECT WILL BE GRADUALLY REDUCED THROUGHOUT THE YEAR • 1Q19 ALSO IMPACTED BY SOME DELIVERY SHIFTS THAT WILL BE RECOVERD IN 2Q19 • LFL FLAT NET SALES BY CHANNEL (IN %) • FRANCHISING RECAPTURE IS NOT PART OF THE STRATEGY *[1Q18] DOS 32% WHOLESALE 54% DOS [30%*] [54%*] • LFL POSITIVE (+3.4%) • SLIGHTLY POSITIVE SPACE EFFECT • DOUBLE DIGIT GROWTH (+25%) FOR THE ONLINE CHANNEL FRANCHISING 14% [16%*] 3
1Q19 SALES | LFL DOS LFL DOS (ONLINE AND OFFLINE) PERFORMANCE +0.5% IN 2H18 3.4% 1Q18 1H18 9M18 FY18 1Q19 CURRENT TRADING YTD (W18) IS -2.3% SLIGHTLY NEGATIVE DUE TO A -4.3% -4.7% DIFFICULT APRIL/FIRST WEEK OF LFL BY MAY (UNUSUAL WEATHER AND QUARTER -8.9% TOUGH COMPARISON BASE) LFL DOS (ONLY ONLINE ) PERFORMANCE ONLINE CHANNEL CURRENT TRADING YTD (W18) INSOURCED IN EUROPE FOR ONLINE CHANNEL 25.0% IN JULY 2018 +15% IN 2H18 REMAINS STRONGLY POSITIVE (+24% YoY) 11.7% 8.1% 8.2% 7.8% LFL BY QUARTER DIRECT ONLINE CHANNEL IN NORTH AMERICA: 1Q18 1H18 9M18 FY18 1Q19 INSOURCING EXPECTED TO BE CONCLUDED IN JUNE 2019 4
1Q19 SALES | NET SALES BY REGION NET SALES BY REGION (MLN € ) ITALY • NEGATIVE TREND FOR WHOLESALE AND FRANCHISING MAINLY 1Q18 1Q19 264 261 DUE TO RATIONALIZATION AND NETWORK OPTIMIZATION (IN LINE WITH STRATEGIC PLAN) • HIGH SINGLE DIGIT GROWTH FOR DOS THANKS TO A LFL POSITIVE (BETTER THAN GROUP AVERAGE) AND A SLIGHTLY POSITIVE 114 113 SPACE EFFECT 83 80 58 56 EUROPE 12 11 • WHOLESALE SLIGHTLY POSITIVE THANKS MAINLY TO POSITIVE ITALY EUROPE NORAM ROW TOTAL TIMING IN DELIVERIES • MID TO HIGH SINGLE DIGIT GROWTH FOR DOS THANKS TO A LFL -9.8% -4.0% -1.0% +3.8% -1.3% POSITIVE (BETTER THAN GROUP AVERAGE) AND A SLIGHTLY -13.1% c.FX -4.0% c.FX -1.1% c.FX +3.4% c.FX -1.6% c.FX POSITIVE SPACE EFFECT NORAM NET SALES BY REGION (IN %) *[1Q18] • CLEANING UP OF THE EXISTING WHOLESALE DISTRIBUTION • LFL DOS SLIGHTLY NEGATIVE IN USA; STRONG COMMITMENT TO ITALY 31% ROW 22% RE-FOCUS BUSINESS ON THE MOST APPROPRIATE LOCATIONS [31%*] [21%*] ROW • POSITIVE PERFORMANCE DRIVEN MAINLY BY EASTERN EUROPE NORAM 4% THAT SHOWED A DOUBLE DIGIT GROWTH IN LFL DOS AND [5%*] WHOLESALE • APAC: WHOLESALE FLAT AND DOS SLIGHTLY NEGATIVE EUROPE 43% [43%*] 5
1Q19 SALES | NET SALES BY PRODUCT NET SALES BY PRODUCT (MLN € ) 1Q18 1Q19 264 261 240 236 25 24 FOOTWEAR APPAREL TOTAL FOOTWEAR APPAREL TOTAL -1.4% -0.6% -1.3% -1.8% c.FX +0.1% c.FX -1.6% c.FX NET SALES BY PRODUCT (IN %) *[1Q18] APPAREL 9% [9%*] FOOWEAR 91% [91%*] DOUBLE-DIGIT GROWTH FOR APPAREL IN DOS MAINLY THANKS TO: 1) A POSITIVE PERFORMANCE OF THE NEW COLLECTION 2) AN EASIER COMPARISON BASE 6
1Q19 SALES| GEOX SHOPS NETWORK RETAIL NETWORK – # GEOX SHOPS - MARCH 31, 2019 DECEMBER 31, 2018 MARCH 31, 2018 GEOX SHOPS of which DOS GEOX SHOPS of which DOS GEOX SHOPS of which DOS X STORE ROLL OUT 281 145 286 143 292 140 ITALY PLAN UPDATE 277 155 285 154 300 154 EUROPE 168 X STORE AT THE END 37 37 NORTH AMERICA 37 37 40 40 OF 1Q19 FROM 136 AT THE END OF FY18 396 107 RoW* 407 110 426 102 1,015 444 1,058 TOTAL 991 444 436 * I ncludes Under Distribution Agreement Shops (132 as of March 2019 138 as of December 2018 vs 168 as of March 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 1Q19 VS 1Q18 = -43 POS (5) - ITALY (5) GEOX SHOPS 3 EUROPE (8) FY17 1Q18 2Q18 3Q18 4Q18 1Q19 (11) EVOLUTION - - NORTH AMERICA - TOTAL 488 458 454 440 433 415 IN 1Q19 NUMBER RoW* (11) 13 (24) DELTA -62 -30 -4 -14 -7 -18 TOTAL (24) 16 (40) 7
1Q19 SALES| COMMUNICATION AND MARKETING FOLLOWERS : 230 k ↑ 65 k (+40%) in the last 8 months DIGITAL MEDIA CAMPAIGN: KICK OFF IN ITALY IN 2H18 ROLL OUT PLAN: MAIN EUROPEAN COUNTRIES IN 2Q19, ASIA IN 2H19 TOTAL EDITORIAL PAGES DOUBLE DIGIT GROWTH IN EUROPE IN 1Q19 ALSO THANKS TO FORMULA E 8
OUTLOOK 2019 THE PRUDENT AND SELECTIVE APPROACH AND RATIONALISATION OF THE WHOLESALE CHANNEL, AIMED AT SUPPORTING THE GROUP'S SOLIDITY AND IMAGE, HAVE ALSO CHARACTERISED INITIAL ORDER COLLECTION FOR THE 2019 AUTUMN/WINTER SEASON. IN THIS CONTEXT, MANAGEMENT THEREFORE BELIEVES THAT ANNUAL SALES IN THE WHOLESALE CHANNEL WILL SHOW A MID SINGLE DIGIT DECREASE COMPARED WITH 2018 FIGURES. THESE EXPECTATIONS WILL NONETHELESS BE DEFINED BY ACTUAL ORDER PERFORMANCE DURING THE SEASON, WHICH IS AN INCREASINGLY SIGNIFICANT FACTOR FOR THE FINAL FIGURES. THE NUMBER OF MONO-BRAND STORES IN THE NETWORK IS EXPECTED TO REMAIN SUBSTANTIALLY STABLE: DIRECTLY-OPERATED STORES ARE EXPECTED TO CARRY GREATER WEIGHT, THANKS TO A NUMBER OF TARGETED OPENINGS (ESPECIALLY IN CHINA) AND A LIMITED NUMBER OF CONVERSIONS OF FRANCHISED STORES, AS STATED IN THE BUSINESS PLAN. THIS WILL MORE THAN COMPENSATE FOR THE CLOSURES OF A NUMBER OF NON-PERFORMING DOS. THE ONGOING RESTYLING PLAN WILL CONTINUE, AIMED AT IMPROVING PERFORMANCE, WITH THE INTRODUCTION OF NEW WINDOW DISPLAYS, NEW ASSORTMENT STRATEGIES AND NEW POLICIES FOR IN-STORE VISUALS. AS HIGHLIGHTED ABOVE, FROM THE SECOND HALF OF APRIL ONWARDS, SALES PERFORMANCE IN STORES HAS SHOWN AN IMPORTANT WEAKNESS, MAINLY CAUSED BY UNUSUAL WEATHER CONDITIONS IN THE MAIN MARKETS, WITH A SUBSEQUENT REDUCTION IN FOOTFALL, AND BY A CHALLENGING BASIS FOR COMPARISON. THE EFFECTS OF THE RETAIL EXCELLENCE PROGRAMMES ARE EXPECTED TO BECOME INCREASINGLY SIGNIFICANT AS THE YEAR GOES ON. SALES GENERATED BY DIRECTLY-OPERATED STORES (DOS) IN 2019 WILL ALSO BENEFIT FROM A SLIGHTLY POSITIVE NETWORK EFFECT, AS DESCRIBED PREVIOUSLY. THE DIRECT E-COMMERCE CHANNEL IS EXPECTED TO CONTINUE TO GROW AT A STRONG PACE AND MAY ALSO BENEFIT FROM A NUMBER OF ADVANCED CRM TOOLS THAT WILL BE LAUNCHED. INSOURCING OF THE E-COMMERCE CHANNEL IN NORTH AMERICA IS EXPECTED TO BE COMPLETED BY THE END OF JUNE. ANNUAL SALES IN THE FRANCHISING CHANN EL ARE EXPECTED TO DECREASE, ALTHOUGH THEY ARE EXPECTED TO IMPROVE COMPARED WITH THE TREND RECORDED IN THE FIRST QUARTER. THIS IS THANKS TO THE EFFECTS OF DIFFERENT DELIVERY TIMINGS BEING REABSORBED AND A NETWORK EFFECT THAT WILL DIMINISH OVER THE COURSE OF THE YEAR. INVESTMENTS IN DIGITAL COMMUNICATIONS WILL CONTINUE IN ORDER TO BOOST A MORE MODERN PERCEPTION OF THE BRAND.DURING THE SECOND QUARTER, THE DIGITAL CAMPAIGN USING KEY INFLUENCERS, ALREADY LAUNCHED IN ITALY, WILL ALSO BEGIN IN SOME OF THE MAIN EUROPEAN MARKETS, AND WILL BE EXTENDED TO ASIA BY THE END OF THE YEAR. IMPORTANT IT PROJECTS AND INVESTMENTS WILL ALSO CONTINUE, IN LINE WITH THE STRATEGIC BUSINESS PLAN, IN ORDER TO SUPPORT THE BUSINESS AND GUARANTEE A TRULY OMNICHANNEL OPERATING MODEL. THE MAIN ADVANCED SALES TOOLS (CLICK AND COLLECT, RESERVE IN STORE), WHICH ARE CURRENTLY BEING PILOTED IN A NUMBER OF STORES IN ITALY, WILL GRADUALLY BE ROLLED OUT THROUGHOUT THE REST OF THE NETWORK, AS PROVIDED FOR BY THE STRATEGIC BUSINESS PLAN. 9
ANNEXES 10
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