Good morning and afternoon, everybody. Nine months 2022 results show a significant improvement over 2021. Revenues are up 23% with double-digit increases across all distribution channels and major geographical areas. Comparable sales for the shops were also up in the third quarter compared to 2019. These are the first important results of phase two of our strategic plan, the growth phase. After the major rationalization and cost efficiencies carried out in 2020, 2021, we now have more resources to invest in the activities most relevant to the business, such as product innovation and marketing. We are currently on television with our advertising campaign, and we soon inaugurate our new shop in Corso Vittorio Emanuele in Milan.
The entire year 2022 will therefore see significant growth in revenues and key economic indicators in line with the plan, despite an extremely more complex scenario than we could have imagined. The conclusion of the sale campaign for the Spring-Summer 2023 collection with double-digit growth in orders reinforces our conviction on the goodness of the choices made to date. In the coming months, we will therefore continue along this path by adopting strict cost control, also in view of the difficult operating environment. Thank you very much. I leave the stage to Geox CEO, Livio Libralesso.
Thank you, Enrico. Good morning and good afternoon. Thank you for joining us today to discuss nine-month sales, net financial position, and some trends for full year 2022. Let's start with slide number three with the executive summary. The second phase of our business plan, Bigger and Better, is gaining traction. Net sales were at EUR 569 million, up 23% on September 2021, boosted by our investment in product and in brand revamping. Q3 is up 15% and above our expectation, and in this quarter like-for-like of our DOS is + 7% on Q3 2021 and 5% on Q3 2019. Net working capital is under control at EUR 123 million, well below nine months 2021 that was at EUR 157 million.
The adjusted net financial position before lease liabilities was EUR -45 million. In December last year, it was at EUR -64 million. In September 2021, it was EUR -95 million. Moving to current trading, like-for-like year to date in week 44 is up 21% on 2021 and flat on 2019, delivering also a relevant improvement in markdowns. Q4 to date registered a soft start versus Q4 2021, mainly due to late receiving and to the unusual weather condition in October. Trading is improving in November. Now, also on wholesale Spring-Summer 2023 initial order campaign, as Mr. Polegato said, has been concluded with double-digit growth in line with our plan and also in line with the planned expansion in gross margin for next year. The issues regarding supply chain and port congestion are improving, especially for freight costs.
However, they remain higher than pre-COVID level, but really better than in the first nine months of this year. Please go to page four to comment another pillar of the business plan. I mean to optimize brick-and-mortar retail and to invest in digital to shift turnover to this new channel. During the last 36 months, we closed approximately 260 stores or 25% of the network. Today, the network is composed by 716 stores, out of which 318 are DOS. This optimization has been substantially completed. We are now also investing in selected new good location, High Street Kensington, Covent Garden in London, and in the coming days, sorry, we will open a new flagship in Corso Vittorio Emanuele in Milan.
Please go to chart number five to elaborate on actual like-for-like. Dark blue boxes contain the average percentage of closure for lockdown by quarter experienced in 2021 and 2022 in order to better understand the comparison base. This year, the network has been substantially open, fully open. While last year, the network was closed on average 34% in Q1, 20% in Q2, and fully opened in Q3. The yellow line represents like-for-like versus previous year, and you can see that like-for-like by quarter is very solid this year and delivered a +52 in Q1, +32 in Q2, and +7 in Q3 with really a perfect totally open comparable, base. Performance has been higher than the percentage of closure. On the other hand, the blue line represents like-for-like evolution versus 2019. The trend is very positive in terms of recovery.
Finally, Q3 is 5%+ versus Q3 2019. This means that all the retail KPIs are improving substantially, recovering the gap still present on traffic -20%. I mean conversion rate, average selling price, and units per transaction, joined also with a material reduction in discounts. Please go to page six to comment nine months top line split between brick-and-mortar and digital. Total sales were at EUR 569 million, with a solid increase of EUR 106 million versus last year. I'm very pleased to confirm the solid growth of 23% is driven by brick-and-mortar channels that are up 30%, while digital, including e- tailers, is up just high single digit.
This trend in digital is absolutely aligned with the market trends and reflects the stabilization of volumes after two years of overperformance in digital sales due to the severe lockdown in brick-and-mortar. The weight of digital sales on total sales is 27%. Please go to page seven to comment on the top-line split by channel. All channels were positive. Wholesale was up 20%, driven by the initial order collection and also by a good in-season management, both for Spring-Summer 2022 and Fall-Winter 2022 to date.
The franchising channel was really positive, +36%, after the total reopening of the network and experiencing also a good level of reorders and some positive time effects on deliveries. The DOS channel delivered a positive growth, +25%. This is a combination of a sound brick-and-mortar trend in like-for-like +39%, partially offset by the residual negative perimeter effect and the low-to-mid single-digit negative online performance of our Geox.com.
On page eight there is a very quick overview to net sales by region. All regions were positive. Italy was up 34%, supported by a strong like-for-like in retail, 38% in DOS and 33% in franchising, and also by a strong wholesale that is up 28%. Europe grew 23% based on the same drivers. Wholesale was growing at 20%, and retail, especially in Germany, German-speaking countries, running a little bit slower than in Italy, delivering a growth of 26%. North America was up 22%. Rest of the World was + 13% in total, as a combination of two performances different by geography.
Asia Pacific was flat, and this is due to the business restructuring in Japan, where we liquidated the subsidiary, moving the business to a new distributor, and to the full lockdown in Shanghai greater area from March- June, and still partially in place. However, China is just 2% of our business. This tough situation in China is not impacting Geox as a group. On the other side, Eastern Europe countries continued to be positive double digit. On page nine, the details of net sales by product. Just to say that ready-to-wear was experiencing a good season, both in terms of sell-in and sell-out. It grew 30%, while footwear grew 22%. In a while, we'll comment the news flow regarding ready-to-wear. In the meantime, please go to chart 10 to comment working net working capital and net financial position evolution.
The net working capital landed at EUR 123 million, with inventories and receivables under control and reflecting the positive business evolution. Payables are increasing given the fact that they are related to increased weight of fresh inventory, with payments still not due. Net working capital on last 12 months' sales is 17%, a very low level and more in line with our business plan guidance that in the medium term is in the region of 20%. It reflects the fact that we have been able to get rid with aged inventory, and now we must buy more in order to fuel the increase in sales in 2022 according to our plan and also for the increase registered in the order backlog of Spring-Summer 2023. Bank debt at the end of September is EUR 114 million.
There is an increase in comparison with June, mainly due to the usual Q3 seasonality, EUR 16 million, and to some advanced payments, EUR 16 million, that we did in the third quarter to support our suppliers in buying raw material for next Spring-Summer 2023 to avoid any delay in this new season. This amount will be fully reabsorbed within year-end. The fair value of our hedging instrument is really positive, amounting to EUR 70 million, with both a careful strategy on exchange rate and interest rate. The adjusted net financial position before our lease liabilities was additionally down at EUR -45 million versus EUR -96 million in September last year. Please go now to page 11 to comment on a company-specific issue regarding Q4. However, I want to underline with no impact in the profit and loss.
At the end of September, a fire broke out at a third party warehouse responsible for the management of a substantial part of our ready-to-wear, excluding e-commerce. Garments destroyed and contaminated by the fumes have no possibility for recovery or new production during this season. This event mainly affects the remaining part of Fall-Winter 2022 deliveries to customers and to our directly operated stores, and to a lesser extent, garments from previous season. However, Fall-Winter 2022 deliveries were close to completion, and so our best estimate of the impact is around 25% of orders for wholesale and franchising channels, and 30% of orders for our DOS will not be shipped. Therefore, it is estimated that about EUR 12 million of lost sales and EUR 6 million in lower margins will be recorded in Q4 of 2022.
However, the company has more than sufficient insurance coverage in case of such events. For the part covered by orders, the company is insured at net selling price, so including also the margin, and also including orders from our own retail companies. While for the part not covered by orders, mainly relating to previous collection, the products are insured at cost value. In addition, all the other direct costs relating to the management of the fire event will also be reimbursed, as well as any indirect cost on a flat rate basis in the region of 5% of the total claim. We assume that this event will not impact the economic result of the year. On the other hand, there will be some impacts on the presentation of the income statement lines regarding Q4. First, lower sales to third parties.
Second, lower comparable sales of our mono-brand stores for a total amount, as I said, of EUR 12 million, and lower gross margin estimated in EUR 6 million. This impact will be more than fully offset by a positive single item, presumably stated under other income, and the correct and the best disclosure to be provided in the financial statement at year-end is currently under discussion with our auditing firm. From a cash point of view, the company assumes to receive within December an advance payment from the insurance company in the order of 25% of the reimbursement within December, while the residual part of the insurance claim could shift to the beginning of 2023 with a possible temporary effect on the net financial position as at December 2022.
We are really working in strict contact with the insurance company to be able to receive the full amount within December. The actual situation is that the warehouse operation for the receipt, quality control, ironing, and shipment of garments is working, and while work is underway to restore the part of the building that was affected by the fire and fumes in order to restore full storage capacity. We do not see any impact on future business because we'll be able to manage the Spring-Summer 2023 on time.
Please go to page 12 for the outlook. Considering that Q3 delivered a positive trend above expectation, +15% on last year, considering that week 44, like-for-like is positive, +21%, with a relevant improvement in markdowns, and given the assumption that in our view, Q4 is assumed to be weaker than the other quarters due to the fact that it has been impacted by EUR 12 million of lower sales regarding ready-to-wear, and the disclosure that we did in June regarding EUR 10 million of cancellation due to late deliveries, our target is to deliver a quarter in line with last year.
This is important because given the fact that during the nine months, we delivered EUR 106 million increase in turnover, it is clear that our guidance that we will hit EUR 700 million is absolutely confirmed. Because the group is pushing also on reorder, and there is room to recover a material part of the cancellation given the good momentum of the brand, also supported by the advertising campaign regarding Fall-Winter. We are now on television in many countries. In addition, management is continuing to implement and reinforce all the necessary action in order to mitigate the impact with a tight cost control of the weaker than expected growth in gross margin due to ongoing geopolitical supply chain and energy issues. In this respect, we confirm that we will be able to recover the gap of 60 basis points registered in H1.
Given the performances of Q3, we believe to be able to deliver also a slight increase in gross margin compared with the last year for the full year, maybe in the region of 50 basis points or something better. We completely reiterate and confirm the previous guideline regarding full year 2022. Today, I can say that we can respect the average consensus, so more than EUR 700 million and an EBITDA before IFRS 16 in the region of more than EUR 22 million. Also at EBIT, we confirm the consensus that is slightly negative. Until today, we let's say do not give up the possibility to target break even if it is really challenging in this volatile environment.
I'm pleased to say that the business plan and the strategy is gaining traction and is in line with the business plan until 2022. For 2023, what we have said is that order backlog regarding Spring-Summer is in line with the business plan. We are now preparing a Fall-Winter 2023 campaign. Consequently, when we will approve the financial statements in February or early March, we can also disclose the Fall-Winter 2023 campaign. The target is to grow double-digit also in Fall-Winter. We are experiencing really an improvement in delivery days. I assume that the Spring-Summer 2023 will really decrease the recourse to air freight, experiencing really decrease in the extraordinary cost of 2022. Also, freight are reducing the cost from Far East. Bene. We are now ready to open the Q&A section and take your questions.
Thank you. This is the Chorus Call conference operator. We will now begin the Q&A session. Anyone who wishes to ask a question may press star and one on their touch-tone telephone. To remove yourself from the question queue, please press star and two. We kindly ask to use handsets when asking questions. Anyone who has a question may press star and one at this time. The first question is from Francesco Brilli with Intermonte. Please go ahead.
Good evening. Thanks for taking my question, and congratulations for results. I have a couple of questions. The first one is on the guidance on top line. It seems a little bit conservative on full year, and higher than EUR 700 million, considering a run rate of top line in the fourth quarter, that would be similar than the nine months. Assuming that, it seems that the impact from this fire is slightly higher, or there's something that I'm missing or just as you wanted to keep on a safe side for the full year in light of something?
The second one is on margins and the costs below gross margin. You confirm in the percentages that you were describing in the first half. Is there a possibility, I mean, more than one chance that you hit a positive figure at the EBIT level for the full year 2022? If you can provide us with some additional color on the net financial position that you are targeting for year-end. Thank you.
Last year, we did in the fourth quarter EUR 145 million. Our challenge is to be in line with last year because as I have said, EUR 12 million of sales regarding ready-to-wear and ten million regarding the cancellation for late deliveries in wholesale means EUR 22 million. Something that represents what we would have expected as a growth in the fourth quarter. I was a little bit prudent in top line to EUR 700 million because in June, we were really concerned about our business in Russia. As a matter of fact, today I can say that 2022 will be in line with 2021 in terms of volumes. In addition, we have to take into consideration that ruble, Russian ruble last year was on average 88.
This year is on average 75. We will see at the year-end that the Ukrainian and Russian business put together, thanks to also to this really strong improvement in the exchange rate, will be over last year. In addition, we delivered a good third quarter, so I believe we can completely recover the EUR 22 million lost in sales in the fourth quarter. Running the math, last year the full year was EUR 610 million plus EUR 100 million we have already delivered as increase in September, means that we will overcome the 700 million to land in the region of EUR 710 million. In my opinion, top line is absolutely secured.
Margins, we are experiencing continuing reduction in markdown and consequently 300 basis points in September is something really important. We are experiencing also a reduction in freight and transportation in this fourth quarter. We believe to be able to deliver, as I said, at least 50 basis points of increase in the gross margin this year in comparison with last year. We are also keeping under control all the other costs and expenses. For the time being, I'm quite confident to deliver the EBIT of the consensus. The volatility and the turmoil is really not predictable today. Also we have to understand what about the consumer spending approach and attitude of people in Europe.
For the time being, I prefer to stay on the EBIT of the consensus that is slightly negative in the region of EUR 3 million-EUR 5 million. In any case, maintain the most of our commitment to try to improve as much as we can this result, and zero is the really challenging target. For sure I will not say positive. Breakeven is really our challenging target. Net financial position. I would have maintained the EUR 85 million that we, let's say, more or less disclosed since the beginning of the year. The real news is what about the reimbursement of the insurance company. EUR 85-EUR 100 is the brackets. In case we will be able to cash the entire amount, it will be in the region of EUR 85 million.
If a part of the reimbursement will shift to 2023, January or February, in December, maybe EUR 95-EUR 100 before derivatives. We, in any case, assuming that U.S. dollar will remain in the region of parity, will have, in any case, EUR 40 million of positive value of our derivative also at the year-end. Net financial position could be in the region from 45-60, depending on the reimbursement.
Thank you.
Prego. I can be really, let's say, clear, because mid-November there is not much time period to be, let's say, managed until year-end.
Yeah. Thank you very much.
The next question is from Oriana Cardani with Intesa Sanpaolo. Please go ahead.
Yes, good evening again. Thank you for taking my question. The first one regards to pricing. Are you satisfied with the current level or are you thinking of increasing the price also for the Fall-Winter 2023 season? The second question concerns the rationalization of the network. Can you give us an update on your plan for next year? Which geography would you concentrate reductions or possible investments? Finally, the outlook. Can you share with us what your expectations are on the gross margin trend for next year and what factors should drive it? Thank you.
Okay. Thank you. Pricing for Fall-Winter 2023. Let's talk about the history. Spring-Summer 2022, 4%. Fall-Winter 2022, 8%. Spring-Summer 2023, more or less 8%, and also Fall-Winter 2023, 8%. We think we are enough. It's important also to maintain, let's say, coherence of our price positioning. However, what we are seeing in the market is that this is a common practice, and so all the markets shift above the price that all brands were used to play in before this inflation pressure.
Regarding Spring-Summer 2023, as I said, in any case, at least at the sell-in level, this has been accepted by our trade because we delivered an 18% increase in the initial order backlog. It means 10% in quantity plus 8% in average prices. The network. We are more or less fine with this number. As a matter of fact, I assume that in the first half of next year, we will rationalize a little bit in China, but I mean, we will close shops that are no longer performing in China due to the lack of traffic due to the lockdown that in any case are undergoing also at this date.
This means that the shop-in-shop will not impact our top line because the amount is really poor. Maybe we will close five-six stores in Canada because Canada is also showing a lower recovery in traffic compared to Europe. We are going to close some stores that in terms of size are too big for the current level of performance. All in all, in my opinion, the network rationalization is more or less done. Gross margin next year, I assume that we can for the time being reconfirm our project to increase gross margin in the region of 100 basis points-130 basis points per year.
This year, we suffered a little bit, and maybe we will be able to deliver half of this growth. Next year, given the fact that we have been able to solve the issue regarding delays on delivery, Spring-Summer 2023 is absolutely in line with the production plan. You will see at year-end really a strong increase in inventory, fully balanced by a strong increase in payables, because we will be able to really buy or to have in transit versus Europe more than 80% of the Spring-Summer 2023 collection, and this means early deliveries and then early cash from our customers, but even more importantly, a better sell through.
This means that we are going to reduce materially the air freight cost that we suffered this year, and joined with the fact that freight are really half, in my opinion, in the region of $4,000-$5,000 compared with $8,000-$9,000 we experienced in nine months 2022. I guess I assume that this plan regarding gross margin expansion in 2023 is achievable.
Great. Thank you very much.
The next question is a follow-up from Francesco Brilli with Intermonte. Please go ahead.
Yes. Just a follow-up question on the gross margin. Should we consider the baseline for next year, 2023, I mean, the level you will achieve as of today? Or should we consider, I mean, a more normalized gross margin without the impact of one-off that you experienced this year? I mean, as a baseline in 2022, as you would have achieved 100 basis points and then projecting another 100 basis points next year in 2023. The second one is just something on a follow-up on pricing. If you are seeing some problems next year to maintain this level of prices and going forward, or if you see some room for price decrease throughout 2023? Thanks.
Baseline, let's assume that this year we will be able to deliver 50 or a little bit more increase in comparison with last year. Last year, it was 46.7, so we should start the comparison base from 47, something. Increasing 100, it means that we should be able to reach more than 48 in 2023, and then something more in 2024. The target in the business plan regarding 2024 was 50.5. In case we assume that the 87 basis points we lost this year in terms of expected growth will remain, 2024 should be in the region of 50, I would say. No material change in our estimation. What about the future?
As I have said, in my opinion, what will remain in 2023 is the increase in the oil and in the energy. What about the freight? I said $4,000-$5,000 in comparison with $8,000-$9,000. Before COVID, it was $1,500-$2,000 per container. In any case, freight today are the double of pre-COVID situation. However, what it is important to underline is that we are fighting this year to reach breakeven at an EBIT level with just EUR 700 million turnover and two hundred basis point lower gross margin than in 2019. It means that we have really reduced the breakeven point of the company.
Once we will be able to deliver a better profitability in terms of gross margin, this company will start to deliver a profitability, and then increasing the turnover, let's say, satisfactory profitability. More or less, we are not changing the business plan, notwithstanding all these important news regarding international environment, inflation, energy, and so on.
Very clear. Thank you.
As a reminder, if you wish to register for a question, please press star and one on your telephone. The next question is from Federico Belluati, Kepler Cheuvreux. Please go ahead.
Okay, thank you. My first question is regarding the incidence of the freight cost over sales. How much is it, more or less? The other one is regarding the hedging against interest rates. Could you give a brief description of your interest rate exposure and for how much time, how long you are gonna covered against an appreciation of interest rates? Thank you.
Sorry, I prefer to resume your question because there was a lot of echo. The first one is
Okay. Sure.
How much the incidence of transportation costs and the hedging strategy we have. Starting from the hedging strategy.
Yeah, yeah. No, the other one was regarding the interest rates. The exposure you have to interest rates.
Yes, yes, sure.
Thank you.
Hedging strategy regarding interest rate, you know that we received a loan in 2020 with the guarantee of SACE, so let's say a so-called COVID-19 loan. We decided in July 2020 to hedge the 75% of the amount over a four-year period. Consequently, 75% of this amount is hedged below 1%. The remaining part is at variable rates. We started to reimburse this year that loan. We will reimburse this year in the region of EUR 10 million, I would say. In my opinion, we are covered against additional increase, additional spike in interest rates because 75% of our debt is fully hedged at July 2020 rates. What about the incidence of the freight on our product?
To give just a number, if we talk about freight, sea freight, it is not so material because it was in the region of half a EUR and now is in the region of a little bit more than EUR 1. The real impact this year is due to air freight. We have been obliged due to the lockdown first in Vietnam, impacting Spring-Summer 2022, and then in China in the first half impacting Fall-Winter 2022. We have been obliged to deliver by air freight more than two million pairs with really an important increase in air freight that pre-COVID was EUR 3-EUR 4 and the average of this year is EUR 7-EUR 8 .
We — W e will save a lot of costs due to the fact that, also, thanks to the new team in supply chain, we have been able to solve our production issues, having a better management of the supply chain. This is the reason why I feel confident to be able to deliver in any case a gross margin expansion next year.
Okay, thank you.
Once again, if you wish to ask a question, please press star and one on your telephone. For any further questions, please press star and one on your telephone. Mr. Livio Libralesso, there are no more questions registered at this time.
Okay. Thank you very much for all your interest, questions. In case you have any doubt or you need any additional information, feel free to contact Simone Maggi or myself by mail or by phone. Thank you very much for your time. See you in early March for the full year statement. Thank you very much.
Ladies and gentlemen, thank you for joining. The conference is now over, and you may disconnect your telephones.