Italian shoemaker Geox is no longer at the sunny side of the street
Italian Geox shoemaker has a rough time and has suffered years of weak sales since the financial crisis started, especially in its home market. This has affected also its shares value dropping 90 % since 2007 peak
There are problems too, and operating income fell 80 % in the first nine months of the ongoing year. Italy accounts for 32 % of group revenue, ales fell 24 % following a 14 % decline already in the same period of 2012. In 2013 Geox expanded its store presence in Italy by 7 % at the beginning of 2013.
As we all know, the Geox offering entails shoes featuring soles that keep feet ventilated. This seems to be no longer the USP, as there are others offering the same comfort and efforts to diversify seems to be flopping. The company’s apparel division registers falling sales by 20 % in the first three quarters of 2013 and footwear declined by 11 %.
Due to all of these negative facts, the company had to reduce its marketing and promotion spending by 19 % over the nine month reported period. On the other hand it put some means in the global expansion of stores by increasing its numbers by 5 % so far, and as indicated the investment went into the expansion in Italy. The company pays still dividends and the majority (71 %) go to the owner Mario Moretti Polegato. On September 30 the company showed a negative free cash flow, thus a net debt position. There are only hopes that the Italian market will improve again, but experts doub this will be the case in 2014, then the company will not find the breath as its breathing shoes.