Geox sees 2021 sales rising to €950-1,000 million by 2021 under a revised three-year business plan, representing an average annual increase of 6.5 percent. Footwear and apparel would grow at similar paces.
Under the plan, sales would increase at an average annual rate of 5 percent a year in Italy to reach €265-280 million in 2021. They would grow by an average 6 percent annually in the rest of Western Europe to €405-420 million, by 12 percent in North America to €60-70 million and by 10 percent in the rest of the world to €220-230 million. At the end of the period, Italy would represent 28 percent of total sales, the rest of Europe 42 percent, North America 7 percent and the rest of the world 23 percent.
By channel, sales are seen rising an annual average of 11.9 percent for DOS to reach €445-460 million in 2021. DOS are expected to benefit from an annual increase of 8 percent on comparable basis, combined with the addition of about 100 stores between 2019 and 2021, with more than 15 net openings a year and the conversion of about 20 franchised stores a year. It also aims to increase annual average sales per square meter to €6,500 in the DOS by 2021 from an estimated €5,000 in 2018.
Geox expects to have 540-560 DOS in place by 2021, representing 52 percent of its mono-brand store network, compared with an estimated 445 at the end of 2018. The number of franchised stores will drop to 320-340 units, or 31 percent of the total, from 440, while the number of shops managed under license agreements will rise to 160-180 from 150. The overall mono-brand network is predicted to remain broadly stable at 1,020-1,080 units in 2021 against an estimated 1,030 at end of 2018.
Franchised stores are predicted to suffer an annual decline in sales of 4.3 percent to €75-85 million by 2021, with net closings and conversions of about 100 units in three years, partially offset by comparable store sales rising by an average 4 percent a year.
Online sales are due to rise at an annual average rate of 26.5 percent, with comparable sales up by 25.5 percent, to €40-45 million in 2021.
Meanwhile, wholesale revenues expected to grow at an annual rate of 3.3 percent to reach €390-410 million in 2021, when key accounts would represent 35 percent of the total, independent stores 38 percent, third-party websites 25 percent and concessions 2 percent.
At the end of the business plan, the retail business should account for 59 percent of total sales, against an estimated 55 percent for 2018, while wholesale revenues would slip to 41 percent from 45 percent.
Geox anticipates that its gross margin will improve by 3.0 percentage points between the end of 2018 and 2021, with 1.5 points stemming from the higher percentage of retail sales and the remainder from supply chain efficiencies and higher sell-through margins. It also expects that the Ebitda margin will rise to around 10 percent in 2021.
The company is targeting expenditures of 5 percent of sales in advertising and promotion, with 60 percent going to digital media and 40 percent to traditional supports compared with the current split of 30 percent for digital and 70 percent for traditional media.
Between 2019 and 2021, Geox expects annual capital expenditure to average €40 million and depreciation and amortization €38 million. Of the €120 million of capital expenditure outlined for 2019-2021, €65 million would be used for the store network, €35 million for information technology and €20 million for other projects. Over the three-year period, the working capital is seen at a range of 24-37 percent of sales.
Kepler Cheuvreux believes that the targets set in Geox' business plan are “very challenging,” while the broker Equita said they were weaker than its own assumptions, prompting it to cut its forecast for Geox' 2020 Ebitda by 17 percent to €80 million.