Geox plans to open only about 150 single-brand stores this year, compared with 216 openings in 2008, as sales growth declines and the business environment remains uncertain. Last year’s figure was already scaled back from an initial plan for 250-300 store openings as the company revised its targets in a deteriorating market.

The company also ruled out the acquisition in the short term of a footwear retailer, such as Stiefelkönig in Austria, because none of the potential targets has the right fit.

Geox earmarked €45 million in capital expenditures this year, compared with the €96.3 million spent in 2008, of which a large part will be used for store expansion. In 2008, more than €77 million were spent on the store network.

The number of new directly operated stores scheduled this year is 15-20, down from 73 openings in 2008. At the end of 2008, Geox had 940 single-brand stores, of which 218 were directly operated. The reduction in investments puts on hold for an undetermined period the group’s target of at least 1,500 mono-brand stores initially set for the end of 2010.

Geox closed 2008 with a 15.9 percent rise in turnover to €892.5 million, lifted by extra-European markets and the development of its apparel line, still largely concentrated in Italy. The figure was slightly higher than the expectations of financial analysts, whose consensus of estimates was €887 million.

At constant currency rates, sales rose by 16.6 percent.


Footwear sales rose by 12.5 percent, and by 13.6 percent at constant currency rates, to €808.4 million and apparel revenues jumped by 62.5 percent to €84.1 million. The company’s long-term goal is to push apparel sales to the same level as footwear. In 2008, footwear represented 90.6 percent of revenues and apparel 9.4 percent, compared with a split of 93.3 percent and 6.7 percent in 2007.

With the roll-out of apparel outside Italy, especially in Europe, the line is forecast to total around 12 percent of sales in 2010. The percentage is expected to reach 40 percent of Italian sales next year, according to the company’s business plan.

By region, overall revenues rose by 13.1 percent to €333.0 million in Italy, by 12.2 percent to €404.3 million in the rest of Europe, by 27.6 percent to €49.8 million in North America and by 37.9 percent to €105.3 million in the rest of the world.

At constant foreign exchange rates, the company's turnover rose by 12.0 percent in Europe, excluding Italy, by 36.4 percent in North America and soared by 41.8 percent in the rest of the world.

By channel, sales rose by 11.6 percent to €609.0 million at multi-brand shops, by 15.6 percent to €142.9 million at franchisees and by 39.3 percent to €140.7 million at directly operated stores (DOS). Comparable sales at DOS rose by 3 percent.

Growth in group sales slowed down last year from the 25.8 percent rise seen in 2007 and is expected to experience a weaker pace in the coming months. Geox said that the order intake for the spring/summer collection is only 6 percent higher than a year earlier. The increase is usually a reliable indicator of first-half sales.

The order intake rose by 5 percent for Italy, fell by 1 percent for the rest of Europe, increased by 2 percent for North America and jumped by 40 percent for the rest of the world. Orders for footwear were up by 3 percent and those for apparel increased by 39 percent.

The company is confident about 2009 and its chief financial officer, Luciano Santel, said that even if January and February are not important months for the group, because they are a period of sales, «the year has started very well.»

Financial analysts do not share the group’s rosy view and believe that growth could practically come to a halt this year. The consensus of their estimates indicates that 2009 sales could end up rising by only slightly more than 1.0 percent to €903 million.

The expansion of the group’s distribution network, and the additional overhead costs it generates, is forecast by analysts to slash 2009 earnings before interest, tax, depreciation and amortization (Ebitda) to about €179 million and net profits to around €99 million, according to analysts.

The group did not give a full-year guidance but admitted that if sales rose by 6.0 percent for the whole year, profitability would slightly fall because of the increase in general and administrative expenses (G&A) due to the store expansion.

Geox had last year a drop in Ebitda to €199.5 million from €200.9 million in 2007 due to rising expenses, especially G&A costs, which rose to €187.4 million from €133.4 million and included a €2.0 million asset impairment charge on its shops.

Ebit fell to €170.5 million from €179.7 million a year earlier and net profits slumped to €117.6 million from €123.0 million. The company nevertheless kept its dividend unchanged at €0.24 per share.

The company closed the year with a cash pile of €58.2 million, nearly halved from €106.8 million at the end of 2007, stemming from a fall in the operating cash flow, higher investments and the payment of more than €62 million in dividends.