Welcome everybody. Revenues for the first quarter of 2023 are very good. The 21% growth is due to both the multi-brand customer order backlog and the year-over-year shipment advance that allowed us to deliver an excellent level of service to the market. Comparable sales for our stores are growing almost double-digit and have offset both some non-strategic stores closures and the initial weakness in online sales. In April, we saw some signs of caution from the market. However, comparable sales in stores remain positive while online sales are recovering well. Growth at the end of April stands at 8%, and we can estimate that we will also see this growth in June. We are therefore seeing a good start of 2023 despite an international geopolitical context that is still uncertain and an inflationary environment that seems more persistent than expected.
A very positive factor is that the careful purchasing policy, the reduction of discounts and the reduction in time and cost of delivery confirm expectations for a good increase in industrial margins. The results obtained by Geox in this uncertain and uncertain and volatile context is short term, strengthen even more the path we have taken, allowing us to look with confidence at the medium to long-term prospects of both our brand and entire sector. Let me hand over to Livio Libralesso, our CEO, for the result presentation.
Thank you. Good morning and good afternoon. Thank you for joining us today to discuss the Q1 Sales, Current Trading and Some Trends expected for full- year 2023. Mr. Polegato gave a quick view regarding the main topics. Net sales were at EUR 223 million, up 21%. Really strong quarter that is not only due to the double- digit order backlog that we collected regarding spring/summer 23 in wholesale, but also for 50% due to really a different and an easy comparison base. The adjusted net financial position before IFRS 16 lease liabilities was EUR 98 million. In December last year it was EUR 50 million. This increase is totally linked to the working capital evolution. Net working capital was at EUR 142 million or 18% on sales versus 16% in March last year.
We will comment in a while this increase. Current trading is positive. Year to date, last Friday, like-for-like of our network is up 4% both on 2022 and on 2019, with a relevant improvement in markdowns. It's important to stress the fact that at April, year- to- date sales were, let's say, at a normal comparison base. It's important to immediately give to you the fact that wholesale sales at the end of April was up 13%, in line with the initial order backlog, franchising up mid-single digit. Summarizing these trends, total sales at the end of April were up high single digit or 8%, and we consider this growth rate as a good proxy of June growth rate. Supply chain issues are really improving with the level of service really close to pre-pandemic level.
Please go to page four to see the status of the network rationalization. Nothing new. During the last 12 months, we closed approximately 64 stores, out of which 30 in this quarter. Today, the network is composed by 787 stores, out of which 291 are DOS. This optimization will be almost completed within 2023 with additional 17 net closures. The DOS channel is still suffering a little bit of negative perimeter effect. It seems that like-for-like is able to compensate. Flip at page five to describe like-for-like. The entire network is open and the pandemic has been declared over. We see a recovery in touristic flows with also a good percentage of tax refund customers, however still below pre-pandemic period.
Q1 like-for-like is 3.5% positive as a combination of a strong brick-and-mortar that is growing 9% and a double-digit decrease in e-commerce that until March has been really weak. Starting from the first week of April, e-commerce sales revamped with five weeks in a row positive double- digit on last year. Year- to- date, like-for-like is mid-single digit positive also on 2019, despite the fact that traffic is still down 20%. It means that all the other retail KPIs are really improving. We are also delivering a good reduction in markdowns, 300 basis points year- to- date. April and May have been positive but below expectation.
Also reorders from wholesale and franchising are below last year. We need to wait a little bit in order to see if this is due to the still challenging weather condition or to a prudent approach of customer spending, facing a more persistent than expected inflation, inflationary context and recession threat. Please go to chart number six to comment the top line. Total sales arrived at EUR 244 million, recording a growth of EUR 39 million or 21%. As I said, initial order was really positive and then the different timing in deliveries in wholesale and franchising. An important thing is that this year the level of service is really good and consequently we are not suffering any material cancellation of our healthy order backlogs.
This growth is driven by brick-and-mortar with a weight of 75% on total sales, while digital accounts for the remaining 25. Please go to page seven to comment top line split by channel. All channels were positive. Wholesale was up 33%. In April, after the reabsorption of the deliveries shift, it was 13. Franchising was up 32. In April, total sales were up 5.5. The DS channel delivered a slightly positive growth, 1.3%, as a combination of a sound brick-and-mortar like-for-like, positive 9%, that balanced the negative perimeter effect and the weakness of e-commerce in Q1. As said, e-commerce is contributing to the growth starting from the first half of April. Also in April, the channel is globally slightly positive. On page eight, there is a very quick overview to net sales by region.
All regions were strongly positive for the reason discussed. Italy was up 30%. Europe grew 10%. North America was up 50%, also thanks to a really good e-commerce performance, really positive in comparison to Europe. Rest of the world was positive 29%. On page 12, the details of net sales by product. Just to say that the footwear grew 25%, while ready-to-wear was down 3%, impacted by the shortage of product during the sales period in January and in February, due to the fire event that occurred last year. As you may remember, it destroyed 30% of the product, and we have been fully reimbursed by the insurance company in December, January and February. Please go to chart number 10 to comment working capital and net financial position evolution.
It is necessary to spend some details. The net operating working capital stood at EUR 142 million, up from EUR 112 million in March last year, and EUR 77 million in December 2022. It accounted for 12% on last 12-month sales. It was 16% in March last year, and 10% in December 2022. As you remember, I said in the last conference call that 10% is not sustainable and the normal rate of our business today is in the region of 16%. In June, you will see again a sharp decrease to 10%, and then at year-end back to 16%, to 16% in December. The trend is really a roller coaster, and it is because 2023 is really a year of strong discontinuity in working capital and cash flow for two factors.
On the one end, the group with the full winter 2022 has finished reusing the excess of unsold inventory and is now coping with the increase in orders exclusively by increasing purchases of new products. On the other end, the supply chain problems experienced in 2022 are leading to a shift of more payments to the first half of this year in the amount of about EUR 80 million. While the reestablished reliability of the supply chain in 2023 is leading to an advance in spring summer 2022 payments in the amount of about EUR 57 million. Overall, the first half of this year will therefore record higher payments to supplier of about EUR 75 million, notwithstanding the fact that we have just purchased EUR 17 million more. We are really managing a stronger balancing in payments of suppliers.
This has led to a strong reduction in trade payables compared to December 2022, with a consequent increase in working capital and an equal absorption of cash. The second quarter is expected to generate a positive cash flow with a reduction of net debt compared to March. Net debt at the end of March was at EUR 115 million. The fair value edge of derivatives was positive at EUR 17.7 million, and consequently, net financial position before IFRS 16 for lease liabilities was at -EUR 97.8 million versus -EUR 58 in March last year. Please go now to page 11 for the outlook regarding 2023. I want to be a little bit detailed in order to make you doing really a good math regarding the full year.
We have said that remembering year to date like-for-like is positive mid-single digit. Total sales at the end of April, 8% growth rate, and 8% will be the growth rate of H1. Moving to H2, fall winter 2023 initial order backlog is up 12%. We will invoice 12% more in fall winter 2023 in comparison with the fall winter 2022. However, we assume the same level of reorders and also the same level of early shipment of fall winter in H1 and of spring summer 2022, 2024 in Q4 2023 in the region of EUR 17 million.
It is also important to notice that we have assumed for the forecast that Ruble will be on average in the region of 87, 90 in comparison with the second half of last year that was in the region of 60. This means that we will experience, in the total year, at least EUR 16 million of lower sales due to the conversion of US dollar and Ruble. At the end, we assume that second half will be positive, low single digit. Having this in mind, we revised a little bit the target. I confirm that we are in line with the business plan. Previous guidance was a growth in top line of 6%-8%. Now I'm saying 4%-6%. However, there is a really good news. Supply chain is really performing.
We didn't use material. All freight discounts are really decreasing, consequently, we will deliver an increase in gross margin in the first half in the region of 200 basis points. In the second half, for the time being, I can increase the guidance to 150 basis points. It is materially higher than the full- year guidance that was 130-150 basis points. This will recover the prudence in the top line that we are now suggesting. We are now ready to open the Q&A section and take your question.
Excuse me, this is the Chorus Call conference operator. We will now begin the question-and-answer session. Anyone who wishes to ask a question may press Star and One on their touch-tone telephone. To remove your question from the question queue, please press Star and Two. We kindly ask you to use handsets when asking questions. Once again, if you wish to ask a question, please press Star and One on your touch-tone telephone. The first question is from Andrea Bonfà of Banca Akros.
Good afternoon. Sorry, I'm still doing my homework for, from all the information that you provide us. My first, anyway, gut question is, can you explain again how does it work your Forex calculation for the second half on the Ruble and on the dollar, and how this does not translate into an impact on the gross margin? Thank you very much.
Okay. You know that Russia, for us, is in the region of 10% of the total turnover. Last year it was EUR 70 million. If we consider sales in Ruble because we have a company in Russia that sells directly in Ruble to the final customer and then converting euros, euro for consolidation purposes, it is clear that given the same amount of Ruble, to translate at the second half at 60 or 90 is completely different. For sure, we are also translating costs, cost of goods sold and expenses that will decrease. The impact of this exchange rate conversion is just on the profit of the company.
Given the fact that, in any case, transfer pricing is, we, let's say, maintaining EUR most of the margin. From a profitability point of view, there is not a material impact. It is more a top line impact. The same is for US dollar, because now we are assuming an average rate of 1.10, and the last year, if I remember well, was in the region of 1.00 or 1.05. This is the same. It's an impact on top line. It is not a material impact on profit.
Okay.
The other benefit from the supply chain, reduction of transportation costs, and in any case, a weaker US dollar for the transportation, means that these efficiencies are compensating all the other factors on the gross margin, including the fact that there is a negative channel mix because the increase of wholesale sales is increasing respect, in respect of retail sales.
Okay. If I may, in the, if you let's say that now there are a lot of moving parts, but, if you had an EBIT in mind, let's say at the beginning of the year, with this reduction, let's say potential reduction in sales, but higher gross margin, is the EBIT, the absolute EBIT you had in mind, confirmed or is it different?
Confirmed and changed.
Okay, thank you very much. In case I come back.
Okay.
As a reminder, if you wish to register for a question, please press star and one on your touchtone telephone. The next question comes from Federico Belduati of Kepler Cheuvreux.
Good evening, everyone. My question is regarding working capital, since it has increased from 10% to more or less 18% of sales. I'm asking if this is the normalized level we should expect for the year end of 2023, or if it's more due to a seasonality effect. Thank you.
You will see really a strange trend in working capital. June, again, in the region of 10%, because we will anticipate also for winter 2023 purchases from suppliers, and consequently, at June, we will have more or less 100% of the buying and 100% of payables. We will deliver the goods to the market, again, without air freight and again without suffering, we hope, cancellation. Also the second half is in a good trend to improve gross margin. Also in the second half, we will pay more suppliers than last year. At year-end, finally, we will have the, let's say, normal stabilized incidence of working capital on last 12 months of sales that will be in the region of 16%.
This is materially lower than the guidance we gave in 2021 in the business plan that was in the region of 21%-23%. This is due to the fact that in the business plan, the network optimization was in the region of 20%. As a matter of fact, given the several waves of COVID, we decided to rationalize more. If we look at the numbers, finally, we rationalized 30%. We materially reduced the invested capital. To give an example, at the end of 2016, 2019, the invested capital with EUR 800 million of turnover was in the region of EUR 600 million.
This quarter, with last 12 months of sales in the region of EUR 700 something million, the invested capital is a little bit low, higher than EUR 350. There is really a strong reduction in invested capital, and this is the reason why we have been able to keep under control the debt, notwithstanding the huge losses that we suffered in 2020 and 2021. This year, the group is back to a good level of EBITDA, consequently. We will be also at a net result, and we will be able to, let's say, absorb this strong discontinuity in working capital because as you have seen, last year, we've been able to squeeze until 10%.
It's no longer possible because now we have to finance the growth of the top line buying new products. We, as a matter of fact, got rid of unsold goods. Now it's necessary to buy if we want to deliver and to be in line with our order backlogs.
Okay, thank you. If I may, I would like to make a question also on the sales. You cut your guidance. Looking at your results, I noticed that apparel was more or less flat compared to last year. I'm asking if the reason behind also this cut is from apparel or if there are other underlying reasons? Thank you.
No, no. Q1, as a matter of fact, is made by, let's say, I would say more than 80% regarding the sales period in January and February. We were empty of product for sales. Consequently, apparel really delivered a negative like-for-like in comparison with last year due to the shortage of product. Apparel in spring/summer is doing according to the expectation. Apparel in spring/summer is not so important because, when, you know we, produce and deliver more jackets than total looks. Consequently, fall/winter is the real core season for apparel.
Okay, thank you.
Once again, if you wish to register for a question, please press star and one on your telephone. The next question is from Oriana Cardani of Intesa Sanpaolo.
Yes, thank you, and good evening. I've a question on net debt. Can you give us an idea of your target of net debt for the year end? Thank you.
Let's say that we more or less maintain the guidance on 2024. For sure, maybe not 20 or 30, but 40 or 50, but in that direction. This year is a little bit challenging, we are doing our best as we have written in the press release in order to protect the cash flow because, as I have said, to give an example, to pay in this six months EUR 75 million more than last year. Having bought just EUR 17 million more in products means that there is really a rebalancing and the working capital is fastly going to normality. I think that at year-end, the debt will be higher than what we expected at the beginning of this year.
There is a lot of weapons and action that we can put in place in order to maintain debt under control.
Okay, thank you.
The next question is from Andrea Bonfà of Banca Akros.
Sorry, Oriana, just to give you a bracket. We have seasonality during the year. In my opinion, our debt will, in any case, be within the brackets of EUR 80 at the low and EUR 100, as net with financial position, EUR 130, EUR 140 at the top. In any case, within these brackets. June and December, as you know, are always best pictures in terms of debt in comparison with March and September, because first and third quarter suffer from the seasonality of the business. June and December, we always have cash generating quarters.
For any further questions, please press star one on your touch-tone telephone. Gentlemen, at this time, there are no questions registered.
Maybe, if I ask, there was another.
Excuse me, sir. I apologize, Mr. Andrea Bonfà. We connected for a follow-up. One moment, please. Mr. Andrea Bonfà.
Yes. Hi, Livio . If can you explain to us how the early deliveries assumption that you mentioned in your slide with the same level of last year, so the EUR 17 million in 2022, are impacting the guidance for the H2 growth, which let's say move from...?
This is a little bit difficult to understand because it is due to differences between years. In 2021, no early shipment. In 2022, four quarter, EUR 17 million. 2022, as you may remember, we delivered an unexpected jump in the top line, and this has been due to the fact because The expectation was in the region of more than EUR 700 million, EUR 715 million, and then, all of a sudden, EUR 735 million last year. Why? Because the, let's say, unexpected fastest recovery of the supply chain allowed us to match the requested due dates of our customers regarding spring, summer 2023. In June 2023, we will ship early shipment of fall, winter in the region of EUR 17 million.
In December 2023, we will ship again EUR 17 million of spring, summer 2024. What does it means? That in H1 2023 and H2 2023, there is no effect regarding early shipments. The positive effect of early shipments occurred last year in the second half, and consequently, it is really a tough comparison base this year that there is not this effect. Maybe if you want, I can send an email because it is really difficult to understand. If you look at the differences, you will find that this drove to a really tough comparison base for second half this year in comparison with the last year that had a benefit of EUR 17 million of turnover, not regarding fall, winter.
Now that's clear, Livio, the fact that you got an auto winter order intake up double digit to 12%, if I'm correct, why is that impacted from a stable assumption in early deliveries?
Because last year, second half last year benefit from 17 mi. You had the full winter deliveries plus EUR 17 million of spring, summer. We did not anticipated to H1 EUR 17 million last year because fall, winter 2022 was in delay as spring, summer 2022. Second half last year had 100% of fall, winter, plus EUR 17 million of spring, summer. This year, fall, winter, second half, we'll have the entire fall, winter 2023, less EUR 17 million shifted to first half, plus EUR 17 million from spring, summer. There is a difference of EUR 17 million. If you add to this difference the exchange rate translation difference regarding Rubles and the U.S., you will have more than EUR 20, EUR 25 million of difference. That is the reason why second half will grow just low single-digit.
Okay. Thank you very much.
Sorry for this math. It is really unbelievable. I challenged my finance control in order to understand, but this is unfortunately the reality. The business is performing, 2023 is really the year where all the trends are rebalancing and coming back to normality.
Okay. Thank you very much.
Okay.
Sir, we have another question from Mr. Francesco Brilli of Intermonte.
Good evening, Livio. Thanks for taking my question. Yes, I'm a little bit struggling to understand everything, but probably the last explanation is made things a little bit clear. My question was, apart from the Russian Ruble impact that was, I mean, something in continuously changing, but wasn't it predictable, this effect? I mean, the EUR 17 million anticipation last year and your expectation for this year wasn't, I mean,
No.
I'm struggling to understand what changed?
No. What-
From the last release.
You are right. Regarding the last press release, you know, I said 6-8. Now I'm saying 4-6. This is not a surprise for us. It was completely factorized inside our guidance. Why we are decreasing of just 2% on sales the guidance? Because the news flow, the two information that we have as news flows is first, reorders from wholesale in spring/summer 2023 are below last year. It means that the fact that we delivered last year late shipments, consequently, our clients finished the season with a higher percentage of unsold goods. Given the fact that they bought new season with an increase close to 17%, they are suffering a little bit of excess of inventory, and consequently, they are reordering less. This is for sure one of the reasons.
The second reason of our prudence, just of 2% on total sales, is due to the fact that spring/summer 2023 is positive. Is really positive in the brick-and-mortar. It is growing 9%. The real full speed of spring/summer is a little bit lower than our budget. This is the reason why I'm really waiting for sunny weather in order to see if it will increase the speed of the increase of spring/summer or spring/summer will again run at 5%, 6% globally in terms of like-for-like. In this case, this means that the inflationary context is a little bit impacting, in my opinion, the spending of our customers. For the time being, we are not sure if it is the worse weather or this prudence for macroeconomics events.
You are saying in case of the spring/summer evolution is particularly good, you could be in the position of confirming the old guidance?
Yes. Yeah, for sure, because it is just a 2%. The real important, in my opinion, news today is that our guidance regarding the top margin is improved because we're being surprised in the speed of recovery of the supply chain.
Okay, thank you.
Gentlemen, there are no more questions registered at this time.
Okay. Thank you very much. Feel free to contact by mail us, me or Federica Vello or Maria Chiara Garatti, our assistants or the address investorrelations@geox.com. This is the last time that we are without the investor relations because starting from the 12th of June, a new person will be on board, really skilled, so it's a pleasure to announce that the team will increase in June. Thank you very much.
Ladies and gentlemen, thank you for joining. The conference is now over and you may disconnect your telephones.