Geox’ sales results for the first nine months of the year and its Spring/Summer 2008 orders confirm that its growth momentum is strong and will at least last until the middle of next year. The ongoing development of its apparel line, which will eventually represent half of overall sales, and the planned launch next Spring of a new line of sports shoes, starting at its own stores, should help to keep the sales momentum going for several years.
The company plans to present a new technology for its sports shoes next February, and to test it initially in Italy, France, Germany and Spain. The goal is to sell as many pairs of sports footwear as those of the many other types of shoes that are currently in its ample product range. Another previously stated goal, following the recent launch of a new line of breathable and waterproof apparel, is to get as much turnover from clothing as from footwear.
The company is also looking for the acquisition of a retail chain that would help it to obtain good locations for its stores – in Europe or in the USA – but nothing suitable has yet been found. The company, which is targeting larger premises to help accommodate its new clothing line, is considering such a move to avoid overpaying prime retail space in view of the current competition among fashion groups for exclusive locations.
Overall group sales rose by 26 percent to €693.8 million in the nine months to Sept. 30, and they would have risen 27 percent at constant currency rates. Beating the forecasts made by financial analysts, Geox’ operating income before amortization and depreciation (EBITDA) was up by 34 percent to €210 million. Profit before interest and tax (EBIT) increased by 37 percent to €195.4 million, and net profit rose by 41 percent to €129.7 million. The gross margin rose to 55.0 percent of sales compared with 52.9 percent a year earlier, and it is still expected to reach 56 percent for the full year
Geox plans to produce more than 27 million pairs of shoes this year, up from 21 million pairs in 2006. The volume was only 9 million pairs in 2003. However, while the group’s long-term target is to improve operating margins, no significant change is expected in 2008 due to its investment plans. The group’s strategy is to grow faster through its retail channel than through wholesale sales (more in Shoe Intelligence).
