Good evening. This is the cars call conference operator. Welcome, and thank you for joining the Geox first quarter 2025 sales results conference call. As a reminder, all participants are in listen-only mode. After the presentation, there will be an opportunity to ask questions. Should anyone need assistance during the conference call, they may signal an operator by pressing star and zero on their telephone. At this time, I would like to turn the conference over to Mr. Luca Amadini, Investor Relations Manager of Geox. Please go ahead, sir.
Good evening, everybody, and thank you for joining our call today. This is Luca Amadini speaking. I'll introduce you to today's call speaker, the Group CEO, Mr. Enrico Mistron, and the CFO, Mr. Maldi. Mr. Mistron, we start by providing you a brief overview of our first quarter performance, and then, Andrea, we'll delve deeper into financial results. Following that, Enrico and Andrea will be happy to take your questions. I would like to remind you that the presentation may contain statements that do not reflect the reported financial results and other historical information. Any forward-looking statements are based on the Group's current expectations and projections concerning the future events. Forward-looking statements involve risk, uncertainties, and other factors that may cause actual results to differ significantly from what is expressed or implied. Many of these factors are behind the Group control or estimates.
Let me now hand over to our CEO, Mr. Enrico Mistron.
Good evening, and thank you for joining us today for our First Quarter 2025 result presentation. 2025 marks the first year of implementation on our business plan that is named RENAISSANCE, and it is structured in two phases: the first, strategy rerouting and performance improvement, and the second, acceleration. The results achieved in this quarter are fully aligned with our expectations, so we are very happy and proud of it. In this context, First Quarter sales declined by 2.4% year- over- year. Nevertheless, it is worth highlighting the solid performance of our web channel that showed a plus 4.6% increase, and which partially offsets the weaker performance of the wholesale and retail channel due, in particular, to the rationalization of the network.
In fact, the retail channel, however, recorded a like-for-like sales in line with the previous year, and this, considering the uncertain macroeconomic environment characterized by persistent pressure on consumer demand and evolving geopolitical tension, is a great result. On the profitability side, we are beginning to see the positive effects of the efficiency and cost rationalization measures launched last year, continued in the first part of 2025, and set to progress through the remainder of 2025 and into 2026, in line with the first phase, as mentioned before, of our strategy rerouting induction plan. These measures are delivering tangible benefits in terms of operating profitability, driving adjusted EBIT of the quarter to significantly outperform in respect to last year by approximately 330 basis points.
Alongside these encouraging results on the margin front, I would also like to highlight the early positive feedback we are receiving on some of our recently launched products. In particular, our new Spherica Plus shoes featuring our fast in technology is gaining strong traction across all our main markets, which gives us confidence for the coming quarters and following years. We remain vigilant on the macroeconomic environment. Trade policies recently announced under the spotlight, and as you know, last year we closed the U.S. branch, so it will not impact our results for this year and the following years. Even if we are not impacted in this measure, we cannot estimate the potential broader consequences of an escalation in the global tension. Looking ahead, our focus remains on maintaining a disciplined and selective approach, investing in the most profitable markets, further optimizing our processes, and maintaining strict cost control.
We are fully aware of the challenges that lie ahead, but the progress we have made in these first quarters reinforces our confidence in the directions we have taken and in the medium sustainability of our business model. With that, I now hand over to Andrea Maldi, who will walk you through our financial performance in greater detail. Please, Andrea.
Thank you, Enrico. Good afternoon, everybody. I will try to deep dive you into the financial quarter results. First of all, let me say that we are commending a good financial quarter where Geox is, despite a slight decrease in sales of about 2.4%, setting the threshold of the sales of the quarter at EUR 190 million, is coming back to profitability thanks to the action on the cost optimization that started last year and are producing results already in the first quarter. The net financial position is stable. The bank debt is about EUR 108 million, which has to be compared with the EUR 103 million that we registered at December 2024. And the net working capital amounts to EUR 145 million, which is 20% of the net sales as of March 2025.
If we start from page five of the presentation and we try to have a look at the sales by channel, first of all, we need to discount for the starting point of last year the perimeter of China and U.S., which are two markets that have been closed during 2024 and which account for a value of EUR 5 million overall. So we set the starting point at EUR 180 million, and we can say that we are pretty flat compared to the result of the first quarter of 2024.
Worth to note is that the wholesale channel registered a decline in sales of about EUR 2.3 million, which is mainly delivered by a softer selling campaign on Spring/Summer 2025, mainly in the, let's say, rest of the world market, which has been partially set by an increase in terms of timing and acceleration in delivering of our products in the first quarter of 2025. The retail channel registered a decline of EUR 2.3 million as well, which is 5.5%, and there is a mix of combination of effects. Clearly, there is an important perimeter effect because of the fact that the number of shops, brick and mortar, at March 2024 were in the range of 615, while we are now moving into a number of 594.
The perimeter effect, which is due to the rationalization of these shops and will be mitigated by year-end with the opening of new shops, has an impact of about EUR 1.5 million, which is clearly the negative side of the story. The positive one is that our like-for-like performance is substantially in line with the first quarter of 2024, which is clearly a good result in a moment in which our industry is affected by strong decline, even in the retail and the U.S. channel. The web, overall, wholesale web marketplace and our website have been able to compensate the decline of the two other channels with a growth of EUR 4.5 million, mainly driven, as we said, by the positive performance of like-for-like of our DOS WEB.
If we try to give a snapshot of the sales of the first quarter by region and we move to the next page, we can see that clearly Italy, which is our core market and accounts for most of our revenue, 30% of our revenue, is more or less flat with last year, which is another good result, clearly with two trends. The wholesale that has a slight decline, while the retail have been able, web and physical, have been able to compensate the decline that we got in the wholesale in Italy. Europe overall is flat, just an increase of 1.8%, which is EUR 2 million. We need to point out the switch between a bit of wholesale delay compared to last year with the positive performance of the overall e-commerce.
When we look instead at the rest of the world, we have a higher decline in sales in the region of 12%, but it is worth reminding that this is mainly driven by the closing, the perimeter change, and the closing of the market of the U.S. and China, which actually determined the vast majority of the change in sales. As usual, we move to a check into the sales by product, and we can see that still, as we know, our upper business accounts for 10% of our total sales. The upper has seen a decrease of EUR 2 million, which clearly, in terms of percentage, is a higher effect, 6.9%, while overall the footwear decreased by 1.9%, which is a lower impact in percentage compared to the upper. I think that on page nine, we can have a look at the financial structure.
Our operating working capital, as we mentioned, reached the level of EUR 144 million, which is clearly higher than December 2024, but when we compare the like-for-like with the first quarter in terms of, given the fact that we have a higher seasonality in the analysis of the working capital, if we compare with the first quarter of 2024, we have been able to lower from EUR 163 million -EUR 144 million. Even if we look at the percentage incidence of the working capital with the sales, we move from 23.5% - 21.9%, which is a good indicator of how we are managing our inventories and the fact that we are trying to optimize our stock structure in terms of time to market, time to deliver, and liquidation of the whole season that we have in our stock.
This is clearly impacting in a positive way our financial debt that has reached the value of EUR 108 million with an increase compared to December 2024, almost roughly about EUR 5.4 million, which is clearly a good result because clearly this is the part of the year in which we are absorbing capital for the purchase of our season on the Spring/Summer and of our products.
Again, if we look at the dynamics, we can say that we benefit clearly of the increase of the capital increase, 20%-70% of the capital increase that has been committed and that we are seeking to finalize by the end of June has been already, and this is granted by the main shareholder, has been already accounting our financial debt, which is in the region of EUR 20 million, while we have absorbed capital from our cash from operation for about EUR 26.7 million, including CapEx. Given the fact that overall we can see that we are having a very good, let's say, first quarter because, as we said, despite the fact that we have a decline in sales, we have been able to recover a strong profitability.
We have an increase in EBIT of about EUR 6 million compared to last year for the same period, and this is due clearly to an optimization of cost. Some of this cost, I think that 60% of the cost will be a timing effect, and another portion will be instead consolidated in our cost base for the rest of the year. Given all these kinds of elements, we are looking carefully at what's going on for 2025. We remain prudent, and we say that based on the assessment that we made with our business line, our expectation is to confirm the guidelines that have been provided to the market for the year 2025 with a bit of decline in sales, which is in the region of a single digit, low single digit, and we confirm the trend of profitability and marginality that we have committed to the market.
I think that the statement when we look at 2025 is that we are forecasting to have a year in line with the first year of execution of our business plan. Thank you, and I'm here with Enrico and the team to get your question.
Excuse me, this is the call for conference operator. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on the touch-tone telephone. To remove yourself from the question queue, please press star and two. Please pick up the receiver when asking questions. Anyone who has a question may press star and one at this time. The first question is from Oriana Cardani of Intesa Sanpaolo. Please go ahead, madam.
Yes, good evening. Thank you for taking my two questions. The first one is about the reaction to current uncertainty, macroeconomic uncertainty. Are you considering modifying your CapEx plan in terms of timing or size or accelerating in some aspects your efficiency plan? My second question regards the product. Have you already presented the Spring/Summer collection to your main wholesale partners? Can you tell us something about this collection, what kind of innovation has been introduced? Thank you.
Good. For the first question, I'll let Andrea answer, and I will answer your second question. Let's start from the first, Andrea.
Thank you, Oriana. It's the third from the first one, which was, if I got properly, we are mentioning any kind of contingency plan or evaluation of CapEx decrease/acceleration according to business region. The second, any kind of contingency plan on cost due to the market conditions. I think that these are two very good points. As we said, we are very happy about the way we have closed the financial quarter, but we know that the year is really challenging, and we are not forecasting to have a better result than expected and then committed to the market in 2025. On the other side, we are assessing our testing our sales for 2025, and we know that we might have some decline that, as we said, are in the range of a lower single digit.
So far, we have arranged a contingency plan in terms of further cost reduction, which is basically 90% the execution of what we have already planned in 2024 in terms of action. We think so far that we have the power, the capability, sorry, to execute on a contingency saving plan in the range of EUR 5 million-EUR 6 million, which is able to compensate what we see in quarter one as expectation for the decline in sales in 2025. Therefore, the combination of the two elements gives us enough confidence, again, I'm saying so far as of today, to maintain the same level of profitability and EBIT target that we have for the year 2025.
In terms of CapEx, you know that most of our CapEx are invested in the opening of new shops for the retail or refurbishment of the oldest one, and the other are mainly on the IT structure for the maintenance of our complex IT structure to support the business. Even in this case, we are accelerating a bit on the retail structure because we feel that it's important in this moment. Now that we have finalized the reduction and the rationalization of the shops, we are just making the new opening in the right place where we want to be and where we think that the shops are going to be profitable. Therefore, we are accelerating a little bit the, let's say, the opening of direct shops and franchising in some of the key areas to maintain our sales value.
At the same time, we have been able to provide contingency plan on CapEx in the range of EUR 1.8 million-EUR 2 million, if needed, that we will execute during the year accordingly to the path of the sales. I hope that I've been able to quite detail. I give to Enrico the stage to comment on the second point.
Thank you for the questions. Very important question. First, I believe that the company that makes products needs to be focused on the products. Definitely, we did have a lot of sign-ups that we need to go back and focus on the products. We do have NPS scored by our consumers that says that we need to give back some value for money to the products. We do have low performances on the sell-through, all our multi-channel stores that require us to be focused on the products. We do have other several KPIs that tell us that we need to be focused on the products. During the past month, we have been very focused on the products, and we are ready here to launch a new Spring/Summer 2026. We are working on several key moments in this launch.
Number one, the 21st and 22nd of this May, we are ready to organize sales events. We will group each other here at the headquarters with a lot of key account managers, sales reps, counter managers. Everybody is on the road to show them the new collections that would set a new creative direction, a new style that combines performances, technology, and styles that are the two routes, two of the three routes on which we will build our brands. Style, innovations, and sustainability. Second, we are working to organize the showrooms. May of May, so in one week, we will have a very good and pretty new showrooms at the headquarters, where we will invite most of the most important accounts, especially European accounts, but it was the time to reconnect with very important accounts and distributors that we have in Asia and Middle East and Latin America.
Number three, we are working on preparing the Fashion Week event in September. Number four, we are working to have a kind of preview of the new collection in our flagship stores in order to create a kind of expectations for the consumers. Number five, we are working heavily on the launch of the marketing campaign that we will launch February and March 2026. On one side, we did work on the products, and very soon you will see not the full collection, but part of it that will set the new way we are going to the market. On the other side, how we communicate this product to the consumers. It is a momentum of discontinuity from the past, and we hope, crossing fingers, that consumers will appreciate the direction that we are starting to give to Geox since now.
Understood. Thank you very much.
Welcome.
As a reminder, if you wish to register for a question, please press star and one on your telephone. For any further questions, please press star and one on your telephone. Mr. Amadini, there are no more questions registered at this time.
Okay, perfect. Thank you very much for participating in this call and for staying with us this evening. Let me just give you a quick reminder of the next call in 2025, the first of results that will be held next July, the 3rd. Thank you again, and please feel free to contact myself for any follow-ups you may need. Goodbye and good evening.
Ladies and gentlemen, thank you for joining. The conference is now over. You may disconnect your telephone.