'Geox will have to grow in the future' - Chairman Mario Moretti

15 May '09

4 min read

The Board of Directors of Geox S.p.A., the Italian company leader in the classic and casual footwear market approved the first quarter 2009 financial results.

Mario Moretti Polegato, Chairman and founder of Geox, commented: “Despite the difficulties of the current macroeconomic situation, we are satisfied with these results as they show a further 5% growth in sales compared to the already strong performance in the first quarter of 2008.

Even though the global trend in consumer spending is still very weak, we believe that thanks to our flexible business model and to the actions that we introduced to hold down costs, Geox will be able to take advantage of this downturn to reinforce its leadership position. The ability of the Group to innovate its product constantly, to expand into new segments and to grow in new markets, together with its solid balance sheet, maintains intact my confidence in the opportunities that Geox will have to grow in the future".

THE GROUP'S ECONOMIC PERFORMANCE
Sales
Consolidated sales for the first quarter of 2009 increased 5% (4% at constant exchange rates) to Euro 384.2 million. Footwear sales represented 91% of consolidated sales, amounting to Euro 348.1 million, with a 3% increase compared to first quarter 2008. Apparel sales accounted for 9% of consolidated sales equal to Euro 36.1 million, showing a 33% increase.

Italy remains the Group's main market accounting for 36% of sales (35% in the same period of 2008) equal to Euro 138.2 million, a 9% increase compared to the first quarter of 2008.

Europe generated 48% of sales (52% in the same period of 2008) amounting to Euro 184.9 million, a 3% decrease. North America grew 23% (18% at constant exchange rates) and the Other countries grew 26% (18% at constant exchange rates).

Analyzing sales by distribution, the Geox Shop channel (franchising and Directly Operated Stores - DOS) showed significant growth, with sales up 19% compared to the first quarter of 2008. In the first quarter of 2009 this channel represented 26% of sales (23% in the same period of 2008).

Multibrand shops still represent the Group's main distribution channel, accounting for 74% of sales compared to 77% for the first quarter of 2008, with a 1% growth.

Sales of DOS opened by at least 12 months (comparable store sales) increased 9% for the first quarter of 2009. As of March 31, 2009 the overall number of Geox Shop was 953 of which 220 DOS. During the first three months of 2009, 22 new Geox Shops were opened and 9 have been closed. The new openings include, among others, shops in Hamburg and Paris. In April, 26 new Geox Shops have been opened.

Cost of sales and Gross Profit
Cost of sales, as a percentage of sales, was 48.3% compared to 46.8% in the first quarter of 2008, producing a gross margin of 51.7% (53.2% in the same period of the previous year). The decrease in Gross Profit is primarily due to higher promotional selling activities through the DOS channel, in January and February, and to a different regional sales mix.

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