Good afternoon. This is the Chorus Call Conference operator. Welcome, and thank you for joining the Geox First Quarter 2026 Financial 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. Let me introduce you the today's call speakers, the Geox Group CEO, Mr. Francesco Di Giovanni, and the CFO, Mr. Andrea Maldi. Geox would like to remind that any forward-looking statements disclosed during this call involve risks, uncertainties, and other factors that may cause actual results to differ significantly from what is expressed or implied. Many of these factors are beyond the group's control. At this time, I would like to turn the conference over to Mr. Francesco Di Giovanni, CEO of Geox.
Please go ahead, sir.
Thank you very much indeed. Well, good evening. Thank you all for joining us today. We're going to talk about the first quarter of 2026 results. The first quarter of 2026 recorded a 3% sales decline versus our budget across all sales channels and all geographic areas. This represents a 12.5% sales decline compared to the same period of last year. On a more comparable basis, however, such a decline was 10.3% when we included the impact of decisions taken to close some less relevant stores and certain non-profitable digital channels. While the performance of the wholesale brick-and-mortar and web channels was expected as a consequence of the 2026 spring/summer campaign, and therefore included in our budget, the performance of the retail channel was well below our initial expectations.
Although the trend had begun in the second half of 2025, it dramatically intensified in the first month of the current year. The consequence is a widespread drop in traffic, both for us and for the market, of approximately 8.8%, of which 8.1% in our regular stores and 10.1% in our outlets, that according to our collection, can be observed across the entire sector. Despite the decrease in sales, the initiatives of rationalization and cost efficiency we implemented during the second half of last year are now generating savings in the operating cost structure of about EUR 10 million in the quarter.
These savings contributed to record in the first quarter an adjusted EBITDA higher than budgeted and give us confidence that the group will be able to confirm the forecast set out in the budget approved in December, both in terms of operating margin, adjusted EBITDA margin equal to approximately 2.3%, 2%-3%, sorry, and the reduction in bank debt compared to 2025. We expect indeed the bank debt to settle in the range of approximately EUR 67 million by the end of the current year, also supported by the planned optimization of production, inventory management, and working capital cash flow. I also want to emphasize, however, that the focusing on industrial processes and cost containment is not the only leverage that management is pursuing.
Although it is essential in order to enable the group, moreover, under unfavorable market conditions, to invest in its future. On the contrary, we are focusing much of our efforts on our top line. To this extent, we have brought back to the center of our group strategy, R&D, our R&D capabilities, leveraging on our expertise in technological innovation, which have always defined the brand's heritage and values and its historical success. We are now about to launch on the market revolutionary solutions, which will initially be distributed by our own retail network. Moreover, over the past few months of very intensive work, we developed the spring/summer 2027 collection that will be presented to our international sales force next week.
The style of the collection, which is combined with the technological context of Geox products, has been entrusted to a globally renowned design studio, which is an international benchmark in footwear design, with a goal to bring a renewed creative and stylistic energy to the Geox brand, offering a much shorter time to market of our products. In an increasingly complex global environment marked by conflict, instability, uncertainty, we continue to closely monitor recent market developments. Although these dynamics have had, thus far, a relatively marginal cost impact on our operation, which we have so far managed to absorb and that are reflected in our first quarter results, as well as in our current year forecast, we believe that any further deterioration of the geopolitical landscape is likely to affect the top line performance as a consequence of traffic deterioration in our reference markets.
For this reason, we consider it essential to maintain a prudent approach, combining growth in higher margin products, distribution channels and markets with a continuous optimization of processes and cost containment. I thank you very much for your patience. I will now turn the floor over to Andrea Maldi, who will walk through our financial performance in greater detail, and very willing to get your questions at the end of the presentation.
Thank you, Francesco, good afternoon, everybody. Thank you also because Francesco gave us a quite a clear picture of sort of the main financials that have characterized the period of the three months 2026. I will try to deep dive a little bit more on sales and on channel to give you further color on the specific performance of our channel distribution. As we discussed from the very beginning, the sales as of March 26 set at the level of EUR 165 million, with a decline of EUR 23 million compared to the period of last year, which is a 12.5%.
As already mentioned by Francesco, if we look at a comparable basis, taking off the perimeter effect of the reduction of shops and some of the marketplace platform which were not profitable, the decline is going down to 10.10%. We have different speed of the declining or improving along the different channels. If we start from the wholesale physical, the brick-and-mortar physical, clearly the results of -8% , which is representing a value of business of EUR 68 million versus the EUR 74 million of the previous year, is mainly driven by registering the initial orders of the campaigns pre-summer 2026 that has been done last year, and that's already factored in our budget and forecast numbers. No surprise on the wholesale.
We are simply registering what's going on in terms of the invoicing process of the order that we have already captured. At the same time, we need to register the decline of the wholesale web, which is quite significant over the quarter, EUR 11 million out of the EUR 36 that we have registered in the 2025. This is mainly driven by different kind of reason. First of all, we have the strong impact of the Russia platform, mainly referring to an important customer, which is Wildberries, that has really declined significantly due to the different kind of geopolitical situation.
The investment, just to give you some numbers, if you think that back in at the end of 2023, beginning of 2024, this customer was having orders with Geox for about EUR 10 million per season. We are now forecasting in the entire 2021 just EUR 1 million of sales. It's another important element to mention when you look at the wholesale web platform that is clearly the cleaning of some of the off-price sales. When we say cleaning, we mean our approach to a more consistent omnichannel market go-to-market strategy, where we have clearly understood that some of our sales in the off-price were really affecting the consistency of the price and sales coming from the other distribution channels.
At the same time, we still have some other important platforms which are growing within this kind of declining platform. We are clearly working strongly on the offering strategy and segmentation to cover more consistently the kind of platform like Amazon, where we are able to improve our performance strongly in this distribution channel. If we look at the retail has been a bit of hit over the quarter because we have reached a value of EUR 56 million against the EUR 61 million of the previous year, same period.
The main input, as already presented by Francesco, has been driven by a difficult traffic, a bad traffic condition, which has affected the entire period in the range of 8% decline compared to last year, which has clearly given us the hit of the EUR 5 million of lower performance, which are clearly a gap compared to the 2025 business, but are representing a gap also with our budget assumption, where we were forecasting a much better traffic.
Despite we are confirming our operational excellence in the shops, given by the fact that our conversion rate, so our capability to transform in sales as being stronger over the entire network of our shops, not only in Italy, but globally speaking, and mainly in the Europe market. The overall set of this kind of different speed in the different channel, as we discussed, gave us a hit of EUR 24 million, which has been clearly offset during the quarter by a stronger capability of the lever cost control in action to reduce the impact of the loss of the margin in the range of EUR 10 million.
We are also having a better than expected payback and payoff of the action that we took back in 2025 in order to prepare and to set the business in 2026. If we move for a while from the channel view to the geographical footprint, which is discussed and presented in page eight, we can see that Italy, which is clearly a market standalone in terms of weight of overall business, EUR 55 million. EUR 53 million against EUR 55 million done in 2025, is down 4.6%. Europe, which is clearly all the rest of the main European market, is down significantly from EUR 86 million to EUR 75 million, 11.7%.
We are mainly impacted by the DACH area, which is clearly confirming a negative trend. France, which is experiencing a deterioration of the performance overall across all the channels. On the other side, we have to register when we look at Europe, the positive DOS like- for- like performance in all countries, with the exception in the first three months of France. If we look at the rest of Europe, the decrease is in the region of EUR 11 million, and clearly it's mainly represented by our operation in countries which are clearly under an instability from the geopolitical condition that are globally impacting the business.
Worth to mention clearly, as we discussed before, the decline of Russia, mainly on the wholesale, not in the shops which are working properly and providing quite a good set of performance, as we said, mainly in wholesale and wholesale platform, as we discussed before. I would like just to bring you a little bit to page 10 when we discuss the overall brick-and-mortar distribution network evolution. As you can see, we are continuing our review of the distribution of the our shops, direct and indirect. We are in March 2026 at 562 overall manager shops against the 570 at December 2025.
If you look back at the first three months of 2025, the gap is quite important because we were running on average of EUR 594 million. This is mainly driven by a selected approach in reviewing operation with the aim of improving profitability across the P&L of Geox Group, group level. Which is quite paying back because as you can see when we discuss of the overall recoverability of cost that we have done in 2025 and in 2026 in the first three months, which is this is also driven by the saving of cost, where we've been able to cut investment or cost which were not directly profitable or were, that were in a way, deteriorating our target margin that we are pursuing.
If we look at the financial review, clearly what we also discussed the working capital, which, as of March 2026, is setting the value as EUR 140 million, which is not far from December 2025, EUR 135 million, and pretty much a little lower than March 2025, where we're at the level of EUR 144 million.
As you know, we are deeply impacted on the working capital discussion about our seasonality, which is clearly impacted by the way we manage business in the first three months of the year and in the first three months of the second half of the period. We are normally transferring, moving from inventory to sales and to receivable, the season that we have purchased. In the third three months, we are monetizing the cash of your sale plus the retail performance.
Having said that, and considering the fact that the working capital is measured against the 12 months rolling sales, we need to register an increase in terms of percentage from 22.3% to 24.1%, despite inventory quality and inventory stock level is getting better. EUR 160 million against EUR 205 million at the same period of the three months of 2025, and the rest of payable and receivable are moving accordingly to our conditions.
I think that, having taken in consideration, what we have discussed with Francesco and myself and with the deep dive overall of the business, we are looking at 2026, and we are overall in the year, and we are able to confirm the target in terms of EBIT margin adjusted compared to our expectation and our previous communication to the market. At the same time, we are forecasting a bank debt in the range of the EUR 60 million-EUR 70 million with an improvement compared to our initial expectation and which is in a way the proof of concept of the fixing, a restructure and reorganization that we are doing overall in the business model.
Despite we need to register clearly a decline in sales, which is moving a percent in the area compared to 2025 in the area of the mid- to high- single digit.
I think that, just to close, as we already mentioned, as Francesco was already explaining some of the strong initiative that we are carrying over, we are still working deeply on finalizing a review of our business plan. We will announce in the future when we will be ready, considering also the fact that we need to take into consideration the evolution of the geopolitical situation that is impacting globally the world. Thank you very much. We can open the Q&A session.
Thank you. 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 yourself from the question queue, please press star and two. We kindly ask to use the handset when asking questions. Anyone who has a question may press star and one at this time. First question is from Oriana Cardani Intesa Sanpaolo.
Yes, good evening. Thank you for taking my four questions. The first one is about current trade. Can you give us some details on the trend that you saw in April and start of May? The second question is on the first quarter sales performance by category. Is there a significant difference between Men's, Women's, Children's, and between the Premium and the Value segments? On the positive side, were there any product lines that stood out? The third question is about the potential reaction to the current macroeconomic uncertainty on the CapEx plan. Are you considering modifying your investment plan? Could you please remind us your budget for this year in terms of size and type?
Finally, regarding the product strategy, you have announced the decision to hire a new external studio to innovate the style. In the meantime, the macro scenario has deteriorated and can further deteriorate. Do you think that more structural changes to the product may be necessary in the future? For example, rethinking the range, focusing on some segments that are more resilient or something like that. Thank you.
Should we answer this one question at a time, or should we collect all the questions and then?
No, we answer all these questions.
Well, let me take the last one. This is Francesco. Let me take the last one and perhaps give you a glimpse on the other two questions you asked regarding CapEx profile and products where we suffered the most. As far as the strategy is concerned, to get along an external designer, this is a decision that was taken back in November 2025. The reason for that is actually two or even more manifold.
The first one is that we had to put more focus on our style, inasmuch as our style was for a good portion of it the consequence of a very long industrialization process that had features in the company. i.e., to take from the design of the collection to the production of the samples, to the final production of the collection and the delivery to both our wholesale customers and our retail customers, it took approximately between 18 months and 24 months. As a consequence of that, our collections were historically not updated in terms of colors, in terms of shapes, in terms of offer, compared to the competition.
The decision to go along with an external designer was therefore to try to get as close as possible in terms of time to market to where our competitors are. That was a very important decision in the process. Now, that carried with it a number of risks which we have mitigated internally because we have accelerated the process, the industrialization process. We indeed next week, as I anticipated, are going to present to our international sales force the new collection for spring, summer 2027. This has been done in record in a record number of months, five months compared to 24 months approximately of the previous process.
Is there any change that is suggested by the current turmoil in the market? First of all, I believe that very few of us, certainly not me, can speculate on how long this turmoil is going to rocket our boats. We find rocking our boats, sorry. We find that so far, we have been able to absorb the cost that were indeed the result of this turmoil. Is it going to make a significant change in our future offer? Of course not, because the collection has been designed. However, next week, we will start the sales campaign, and we will see the reaction of our wholesale clients.
Depending upon their orders, we'll have a better feeling of where the market is moving, is currently moving. In terms of resilience, well, we know for sure that luxury is normally more resilient than the lower or the lowest part of the market. We believe we have a balanced offer. The collection was designed with the idea of providing a good offer to both the wholesale channels as much as the retail.
As a matter of fact, one of the issues that we've been focusing our attention on in the next collections is a more distinct product offer, more focused on wholesale and some of it, more focused on retail so that we can indeed differentiate our offer more than we have done so far. I would say that on this, I'm happy to answer any further questions that may come, and I would switch to the issue of CapEx. Most of our CapEx, and I'm not gonna go into the details in terms of numbers, but I leave that to Andrea to go into greater details. Our CapEx range is approximately between EUR 15 million and EUR 20 million.
If we include what I still consider an investment in marketing, we are more in the range of EUR 35 million-EUR 40 million, combining marketing investments and other, let's call it, hard assets investments. Among the hard assets, the Geox effort over the last few years has been that of retail, direct retail investments. Now, we can anticipate that we are reconsidering that as a strategy for the future. We are discussing internally indeed how we can switch most of our investment effort to communication and to developing proper tools to participate with greater effort on the digital market. Digital is performing better today than wholesale and retail.
We believe that that is an area where we will need to put more brain power and money to make it a market segment where growth is pursued with greater effort. We still have some rationalization to be made in our direct retail. We still have some flagship shops that are not worth the amount of money we have invested in. We will work on it. We have constraints, of course, because we have contracts, medium to long-term contracts. We need to understand how to unwind without too much of a damage. There are a number of items, a number of subjects where we're focusing our attention.
Most of the investments are going to go into, information technology tools that might be instrumental to develop our digital business. As far as marketing is concerned, we have switched significantly our investment from production to communication. We had invested too much of an amount in production when, we had the benefit of,
Ambassador Penélope Cruz.
The ambassador, the Penélope Cruz Ambassador. We have in 2025, we have reconsidered that communication strategy. We are now producing even with the taking advantage of artificial intelligence. We are producing at a far lower cost. Being the amount of investments we're going to make in communication, basically the same, if not slightly higher than last year, that translates into the fact that we are going to communicate far more using not only the traditional tools that have been used by Geox in the past, i.e., basically, television. We have switched a lot of effort on into other channels. [Non-English content]
Digital channels. [Non-English content] Pay TV.
Pay TV, for example. Rather than
[inaudible]
other digital channels, social, and so on.
[inaudible]
Indeed. If you have an opportunity to look for Geox on the web, you will see a lot more communication through content creators with influencers. We are gradually switching, or switching, I should say, from traditional channels to more up-to-date channels. That is to my expectation, something that we should see the result in the relatively near future. Last but not least, I leave Andrea with the proper numbers. We have been on a segment of our offer between baby, women and men. We've been consistently performing well in men. Men like our technology.
They even like our style, which at times I find quite surprising. Never mind. It's a good performer. We are not bad in babies, although we have seen some peaks in certain or in part of our offer and more weakness in other parts of the other offer. We have basically not succeeded with all the collabs that we had launched, that is focused more on certain of them. Some of them have not been successful. Where we have consistently failed is on the women collection. Women collection has had a poor performance over the last few seasons. Even the current season is not good.
Let me tell you, I hated to take distance from what was done in the past, because I believe that a company is a continuous, is an animal that has a continuous life. Don't forget that in 2026, we are selling the spring/summer collection that was originally designed almost 24 months ago and produced almost 12 months ago. The fall/winter that was designed approximately 18 months ago and was produced less than six months ago. We are in a transi-- 2026 is a transition year. I would love to think that with the new collection, we can indeed turn around the perception of our offer.
To that extent, the collection that is going to be launched is going to be presented to the sales force next month, next week, sorry. In the coming two or three months should actually give you, give us confirmation if we have gone in the right direction or not. Sorry if I took a lot of your time, but I took advantage of this opportunity to introduce some of the subjects where we are brainstorming a lot internally.
First of all, thank you, Francesco, because you waived me from the duty of going through all the questions that has been posed kindly by our analyst. I think that we are just, we just need to conclude a little bit the question, the current trade. The current trade so far, Oriana in April, as of the week 19, is not showing us a particular difference from what we have seen in the first quarter, unfortunately. It means that the traffic is a bit better, but still down in the range or the area of the 8%. At the same time, when we look at our own DOS, we are registering a better, a little bit better performance in our regular shops.
We are down 5.8% compared to the overall 8% that we are discussing for the first quarter. At the same time, we are seeing that we are having a different speed when we look at the digital, so our own web DOS, our own website, where we are registering a performance which is quite positive, like for like 10%, which is mainly driven, as we said, by the good performance of the digital channel of the website, but also the marketplace on a like- for- like base. Just to give you the color on what's going on, what we have seen so far on the retail, physical and digital.
All the other question I think that have been properly addressed by our CEO. Just the color on the CapEx, the range, we were setting our target around EUR 50 million. We are thinking to cut a little bit of some of the investment that are not directly connected to production and sales, but at the same time to support the new collection and the investment on the new collection for summer 2027, we are increasing a bit the investment that we are going to do in the area of the stamps and sole instruments to develop a new collection, which is going to be a game changer.
For the fall winter.
For the spring/ summer 2027. That's, I think that this should address properly or should we are giving you all the info.
Oh, yes. Thank you. Very clear.
Thank you.
Gentlemen, there are no more questions registered at this time.
Thank you for participating in our quarter call, and, see you in the next, for the next meeting, for the half year.
Ladies and gentlemen, thank you for joining. The conference is now over. You may disconnect your telephones.