Geox (GEO) Q3 2024 earnings summary

Executive summary

• Net sales for the first nine months of 2024 were €525.5 million, down 9.7% year-over-year, mainly due to wholesale and franchising declines, while direct digital channels performed strongly.

• Direct channels (physical and digital) showed positive trends, with DOS digital up 30.2% and comparable sales up 11.4%; DOS B&M comparable sales rose 2.0%.

• Actions to reduce the cost base and adapt to new market conditions included winding down direct operations in China and the U.S., shifting to local partnerships.

• A new strategic partnership in China is being finalized to replace the direct distribution model.

• The new business plan presentation has been postponed to next year to better consolidate expectations for 2025.

Financial highlights

• Net sales declined by €56.5 million year-over-year, primarily driven by a €51.8 million drop in wholesale and franchising, partially offset by growth in DOS B&M and web sales.

• Net working capital stood at €163.5 million, or 24.7% of revenue, down from €176.8 million a year earlier.

• Net debt was €145.8 million, with €138.4 million in bank debt as of September 30, 2024; net debt is stable year-over-year.

• Inventory reduced to €220.4 million (from €259.0 million), and trade receivables fell to €129.9 million (from €150.8 million).

• Negative currency effects (€4.8 million) and perimeter reduction (€16.2 million) further impacted sales.

Outlook and guidance

• Full-year 2024 sales are expected to decline by mid-single digits versus 2023, with operating margins forecast to improve by 50 basis points.

• No significant EBIT margin benefit expected in 2024 due to one-off transformation costs from winding down U.S. and China operations.

• Net debt at year-end is projected to be €110–115 million, a slight deterioration from 2023.

• High forecast uncertainty remains due to geopolitical and inflationary risks.

• Positive like-for-like trends in DOS B&M and Digital are expected to continue, with no major further rationalization in B&M and more marketplace agreements.