Geox expects sales of its directly-operated stores (DOS) to have declined by 20 percent in the first quarter because of the impact of Covid-19. In the 12 weeks to March 22, comparable sales for DOS dropped by nearly 15 percent because of store closures, first in Italy and then throughout Europe and North America. Sales were also be affected by the planned downsizing of the network. Geox intends to close 50 DOS this year, which will be partly offset by some openings in Russia and in Europe, to complete the network of outlets. Overall this will shrink the network by about 5 percent. At the end of 2019, Geox had 454 DOS.
As of March 27, only about 90 of the group’s 820 mono-brand stores, comprising DOS and franchises (but excluding distribution licenses), were open. The stores in operation are mainly in China, Hong Kong, Macau and Japan. However, local populations still have low mobility, so footfall is down. In China, Hong Kong and Macau, same-store sales dropped by nearly 55 percent in the first 12 weeks of the year.
In the same 12-week period, comparable store sales were down by about 15 percent in Italy, by nearly 10 percent in the rest of Western and Northern Europe and by about 20 percent in North America. The decline was much sharper in March, reaching 75 percent in Italy, more than 40 percent in the rest of Europe and 40 percent in North America.
E-commerce has been resilient since the beginning of the year, rising by 23 percent overall, 33 percent in Italy, 31 percent in the rest of Europe and 5 percent in North America.
Geox also expects a decrease in first-quarter sales in the wholesale and franchising channels.
In wholesale, the group anticipates cancellations for deliveries of the spring/summer collection scheduled in April, May and June and negative effects on orders for the autumn/winter collection.
Regarding franchisees, Geox expects further downsizing of the network and an increase in provisions for returns compared with 2019. For the DOS, the group does not rule out accelerating and increasing closures if rental costs are not reduced in line with sales performance. Store refurbishments will be slowed down, but Geox will pursue projects to introduce new window displays, assortment strategies and in-store visuals.
Geox is negotiating and obtaining substantial rent reductions for stores affected by lockdowns. To lower labor costs, it is accessing public aid, such as the “cassa integrazione” temporarily layoff scheme in Italy. It is postponing non-essential investments, including advertising, and reviewing the release of the spring/summer collection, which has not been presented to the market and could be partly re-proposed next year.