Most of the Geox stores around the world started a few days ago to offer the company’s new line of sports shoes, whose sales are conservatively expected to reach between 300,000 pairs and 500,000 pairs in the first full year of operation. The company has commissioned only 150,000 pairs for the current Spring/Summer season, and some are also being sold in 600 selected multi-brand footwear and sporting goods stores in Italy on an experimental basis. Over the coming months, Geox will roll out the collection in its numerous other single-brand stores in other European countries.
Geox unveiled its first collection of sports shoes last week, after four years of research and development and isolated tests with specific models in Germany and elsewhere,
The volume will remain marginal compared with the 35 million pairs of shoes that this leading Italian brown shoe company expects to sell by 2010 under the new business plan outlined in the previous issue of Shoe Intelligence. Geox considers the next three years or so as a start-up phase where it will try to apply the proven strategies it has used to develop its brown shoe and casual apparel businesses.
The focus will first be on developing the business in its home Italian market this year before gradually expanding abroad, starting with Europe. Over the next two years the sports range will not have a significant impact on the group’s sales or operating margins. A notable contribution to the profit and loss account is only expected at the end of the business plan.
Its first line of sports shoes, called Alpha, basically consists of three models carrying a retail price of €100 to €135 a pair, in line with the pricing of its brown shoes, and replicates the concept of shoes whose sole “breathes,” thanks to a special patented punctured waterproof inner membrane that lets perspiration evaporate. Alpha uses a new patented technology and designed called Net. Instead of running the entire length of the foot, the sole of the shoe consists of a simple outside anti-slip frame in rubber and a supporting protective “net” made of a technical material that enhances the breathable properties of the shoe. The upper is made breathable through the use of an air mesh in polyester, with micro-injections in polyurethane and calf leather, encapsulated into a microfiber ring and supported by a soft material called Geobuck.
The membrane will be produced in the group’s Romanian plant and the rest of the shoe will be made in China. The outer rubber frame of the sole can be adapted to other sports, allowing Geox to envisage entering other market segments.
The three initial models, which have started to make their appearance in Italian stores under the Geox Net brand, can be used for running and fitness activities in the gym, and they have three different levels of performance. A high- performance shoe, available only for men, will enable long-distance running. A middle-range sneaker for men and women is recommended for light jogging over a 5-mile stretch. The lowest-tier model, intended for older men, offers a higher shock protection and is advised for use in the gym or for light running. At a later stage, Geox plans to offer a line of sports shoes for children.
Company executives are confident that the project will be successful because the concept of eliminating sweating has not been a selling point for the big sports brands, allowing Geox to develop its own market niche by concentrating on that argument in its marketing message.
Geox has not hired any professional athletes to endorse the product, but it will run an amusing advertisement on satellite television in Italy featuring Marcello Lippi, the manager of the Italian national football team that won the World Cup in 2006. He was invited to the presentation of the new project in Milan alongside the group’s photogenic founder and chairman, Mario Moretti Polegato.
The launch of the Geox Net brand opens the way for the future development of a collection of sports-specific clothes. Geox is currently rolling out its own collection of casual apparel, also based on the concept of letting perspiration evaporate. It represented 6.7 percent of sales in 2007 and the ratio is planned to rise to half of total revenues.
Meanwhile, on March 31, Geox reached a milestone when it replaced the troubled airline, Alitalia, in the S&P/Mib blue chip index of the Italian Bourse, which groups the country’s 40 largest companies by market capitalization. Geox was listed on the Milan stock exchange on Dec 1, 2004, and has a market capitalization of about €2.7 billion.
Geox will reach another milestone when we publish our annual brown shoe charts, which are certain to show that the company moved in 2007 from third to second place behind Clarks in the rankings of the biggest brands of lifestyle casual footwear, overtaking ECCO for the first time. For Geox and ECCO, our sales estimates include the turnover of company-owned stores and licensees.