Good evening. This is the Chorus Call conference operator. Welcome and thank you for Joining the Geox First Nine Months 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 to today's 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 risk, 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.
Good evening, and thank you all for joining us today. We are going to be introducing the nine months 2026 financial results, which with no doubt we can affirm that we have been facing a very difficult and sharply contracting market due to a broader consumption dynamic and specific market conditions. Alongside the well-known impact of fierce market competition and the deterioration of geopolitical tension, including, as we have seen, a dramatic change in the climate that has characterized all of Europe, which are the most relevant markets for us during the last months, during the summer period. In recent weeks, it has also been marked by a widespread popular protest related to the rising cost of living, which has placed a further pressure on consumer demand and adversely affected the operations of our retail stores.
In this context, we have been leveraging on all actions under our control to recover profitability, even at times accepting the potential consequence of losing sales volumes in exchange for better margins. The effect of this strategy translates into a more efficient operating cost structure of approximately EUR 26 million during the reporting period, enabling the company to confirm its expectations for year-end results in terms of operating profitability with an Adjusted EBIT margin of around 3%-4% on sales. The significant rationalization measures which we have implemented across production processes, together with the optimization of procurement timing and methods, contributed in the first nine months to a reduction in bank debt, which stood at around EUR 50 million. This is a truly significant result considering the debt amounted to approximately EUR 93 million at the end of fiscal year 2025.
The debt reduction was also driven by the completion of the planned second phase of the capital increase, totaling EUR 21 million by the end of September 2026. By note, this is in line with the commitment made by our shareholder LIR as part of the original financing plan, but we can anticipate that in the first two weeks of the month of October 2026, an additional EUR 9 million were injected in our equity. Sales reported in the first nine months of 2026 marked a decline of 9.4% on a comparable basis, excluding therefore the impact of deliberate choices to close stores and discontinue certain distribution channels and relationship with clients, with unprofitable customers or customers the credit of which was disputable under the current market circumstances. The decline compared to the same period of last year equals 11.7% and affected essentially all sales channels and geographic areas.
The wholesale brick and mortar web channel performance reflected a well-known and unfavorable trend in the spring-summer 2026 and fall-winter 2026 campaigns. While the retail channels was impacted by the strong and widespread All countries in which Geox commercial networks operate, and in particular, I would say, the customers we dedicate our attention to, which are the middle class, which have been suffering the most over the last few months and years during the global economic environment. In this challenging environment, however, Geox continued to invest. We have refocused our strategy on research and development, and we are focusing on our expertise in technological innovation, which have always defined our brand's heritage and value.
Just as a reminder, the first collection that we will hopefully sign a change is the Spring/Summer 2027 collection, which results from the collaboration with the globally renowned design studio, which is an international benchmark, and that has brought a renewed creative and stylistic energy into the Geox brand, as well as new kids collection for the first time in years. Thank you very much indeed, and I'll leave the floor to Andrea Maldi to comment on our financial results. Happy to answer any questions should the need be.
Thank you, Francesco, and good evening, everybody. I'd like to start the dive on the financial. As commented previously by Francesco, the sales as of September 2026 reached a level of EUR 435 million, which means - 11.7% compared to previous year, which is better represented if we look in a comparable basis, the decline is 9.4%, taking out all the perimeter effect of the different channel mix. As overall snapshot, the bank debt as of September 2026 amounts to EUR 49.7 million compared to the EUR 92.6 million in December 2025, and the EUR 106 million as of September 2025 as a comparable basis of the nine months.
Clearly, the benefit that we have achieved on the financial and debt has been mainly driven by the closing of the first phase of the second wave of the capital increase, and also for an amount of EUR 21 million, as previously commented by Francesco, but also from the efficient cash flow and working capital management that we will comment further during the presentation. If we look at the sales from a channel mix point of view, and we start from the wholesale, unfortunately, wholesale suffered, and this is mainly due to the softer sell-in campaign in the 2026, both of the seasons, Spring/Summer and both fall-winter 2026. The overall decline of the wholesale in the period is about 10.5%. If we look at retail brick and mortar, clearly, we underperformed compared to last year for about 9.9%, which is roughly EUR 18 million.
The web, mainly driven by our own website, as you said, from a like-for-like point of view, performed positively in the range of 6.5% compared to the same period of September 2025. Worth to comment also the so-called web wholesale, which is where we sell, we have the model of selling business with our platform, which, due to different circumstances, underperformed compared to September 2026 for about EUR 17 million, which is a drop in the range of 20%. If we look at the sale by region, clearly, starting from Italy, which is a way of representing our business, we have a negative performance in the wholesale and DOS channels, while we have instead a positive performance in the web channel.
In particular, if we look at our web DOS, like-for-like, the performance was quite positive with an increase of 15.2%, which is a good signal of the performance of our web tools in the nine months. Europe overall is down 1.7%, more or less with the same dynamics of Italy. We have been overall negative in most of the country. France delivered a deteriorating performance across all channels, while the rest of the countries register a positive performance in the DOS web like-for-like, with exception, as we said, of France. The rest of the world has been mainly impacted, if we look at the area, by the drop of the business in the Middle East and Africa regions. Clearly, deeply, the most important driver of this decline is the geopolitical and economic condition due to the different areas of world area that are live, unfortunately, in those days.
Quick comment on the products. Products from footwear and apparel. Apparel decline by 7.7%, which is lower compared with the decline that we had on the footwear, which has been instead in the region of 12.1%. Overall, the mix in between apparel and footwear is maintaining the same kind of weight, more or less in the region of 9%, 10% of the apparel compared to our overall sales structure. I would like to comment a bit, as we said before, on the Operating Working Capital, which is one of the, together with the bank debt, one of the good news of this nine months. We have been able to set the Operating Working Capital as of September 2026 in the area of 20%, with a significant decline compared to the same nine months of September 2025, where the level was 15.7%], sorry.
Also improving compared to December 2025, where Operating Working Capital, we closed with a 22.3%. Improvement is mainly driven by two factors. The significant improvement that we had within our inventory structure. We have been able to improve, purchase less, maintaining the same value of sales. The advantage that we took from an inventory perspective is quite significant. We are registering an inventory level as of September in the region of EUR 145 million compared to the EUR 225 million that we had in the previous period. Clearly, this is reflecting an important preservation of cash and cash generation within the nine months, despite the decline on sales.
Looking at the year end, I think that we can say that we are in the position of confirming the expectation that we set in our previous comment on our 2026 outlook that we made when we set the capital increase, despite the fact that we are moving for sure in the lower range of the different fork that we present in terms of sales. From my point of view, I'm done. If you have any question.
Excuse me, this is a Chorus Call conference operator. We will now begin the question-answer section. Anyone who wishes to ask a question may press star and one on your touchtone 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.
Yes. Good afternoon. Thank you for taking my two questions. The first one is on the Spring/Summer 2027 collection. Could you share some comment regarding the order intake for this collection? The second question is on the perimeter contribution in 2027. Do you expect the perimeter effect to remain negative next year? Thank you.
Do you want to?
No, no.
If we start from our SS27, thank you for the question, Oriana. Let me try to give you a fair answer on both questions. If we start from the Spring/Summer 2027 campaign, I think that despite a softer sell-in compared to SS26 in the range of 9%, we are quite satisfied with the results of the campaign, which is, by the way, also showing up on the market our new first collection with our new designer, thanks to the investment that we made last year on the restructuring of the advisor on the design collection.
The reason why I am saying that we are quite satisfied is because of the fact that despite this softer sell-in results, we need to sterilize the effect of our own decision to continue cleaning some of the piece of the wholesale, where our sales were not productive, were not producing, let us say, positive contribution effect. And we need also to discount from this analysis the fact that we are decreasing our business in the APAC area, where we are changing the strategy. We are searching for a new partner, and we need to rebuild in the next couple of years a new network of partners through which develop countries that in the past were quite significant for Geox, for example, Korea, Indonesia, a bit of China.
Taking off these two effects, which is geographical perimeter of Asia and our own choice to clean up some of the sales, as I said, this kind of sales were not bringing Geox in the right position that we want to have from a brand perspective. The sell-in of the order that we have registered for the campaign are overall flat, and in some cases, in some area of account, a bit positive compared to the SS26, which is a good result from our point of view in terms of the way we look at the wholesale.
May I perhaps elaborate further on a couple of points? We have made a choice which we have been pursuing consistently, at least ever since I have been involved with the company, which is being extremely rational on credit. The deteriorating market conditions do not affect only Geox, it affects everybody and it affects our clients as well. We need to be very careful not to push for volumes that eventually may translate into, say, critical situations as far as our cash position is concerned, in addition to margins. What Andrea was making reference to, I am not going to name the clients that we have decided to relinquish, but it is important for you to understand that there was a trade-off, a choice to be made between pursuing volumes and pursuing a strategic value for our company.
The clients we have relinquished were indeed the clients that, for two reasons, were not consistent with our strategy. I can elaborate on the strategy in a short while. Both because of their distribution channels were particularly low in the process, and in addition to that, they were very often exactly in the same malls where we have our own direct presence, which basically means that there was a dichotomy between what we were offering or what we are offering in our shops and what they were offering, which is, of course, a segmentation of the market does work in that respect, what they were offering in their own shops.
All in all, we made a decision to relinquish a very significant volume of, thank God it was only shoes, by the way, but in all three categories, men, women, and kids, for a better future, for a better story regarding the future of Geox. As far as APAC is concerned, I wish to confirm what Andrea just said. There was an issue. Sorry, let me go back to the Spring/Summer 2027 in another, taking it from a different perspective. Spring/Summer 2027 is the first new collection that we developed with the new designer. What is important is that in all the categories where we suffered the most, i.e., women in particular, we have seen a very significant recovery in orders. So, although we have lost volumes in many respects, all our clients have shown a really different reaction to our offer.
That is comforting to us because we were indeed in need to change the trend, although we have not changed the trend in terms yet, in terms of turnover, but we have changed the trend in terms of reaction to our offer, despite the fact that our clients had indeed in their inventory still products that they had not sold from the previous seasons. So that is a very strong message that we see very positively to build on in our future. By the way, I am sure you are aware that in a matter of few weeks, we are going to be starting the sales season for the Fall/Winter 2027. So we will reconvene in a matter of few months. We will update you on that as well. Then going back to APAC.
What we have faced, as far as APAC is concerned, is the weakening not just of the local market, which does not affect only Geox, but it affects, generally speaking, the industry, but even more of our clients in those markets. Our clients in those markets which were selling our products in markets which were in more trouble have been affected even more because they are positioned where even the local middle class is able to spend, which is the worst combination a company can have. Shrinking market, poor positioning, clients in difficulties. What we have seen, and this is a matter that is affecting all markets worldwide, is a reduction of the spending capacity of the middle class. That is one of the reasons why we are pushing our presence in the market toward the higher level of the middle class. We do not expect to go into luxury.
There is no point for us to try something that would definitely not work. But certainly, by improving our offer, we are confident that we can address that part of the middle class which is less affected by what is happening at the moment around the world.
Thank you, Francesco, for answering the comment. I think that the second question, Oriana, your second question was mainly related to our kind of network distribution rationalization. This is bringing me back to a comment that I did not make for the first nine months of 2026, where probably you notice, and you are right, say that we have quite an important perimeter effect. Overall, our network distribution moved from 570 doors to 517 doors. Worth to notice that within that kind of rationalization, most of the closure came from 2026 net closure of distribution agreements in Asia, backing exactly the comment that Francesco was making related to the APAC area, and 18 network closure distribution of franchisee deal.
Less of the decrease of our network distribution came from our own DOS, which I mean, in particular, I can tell you that we decreased the size overall in net place of eight closures of DOS. Looking at 2027, we do expect the perimeter to remain quite stable. Even in the business plan that we released a few weeks ago in September, our perimeter in terms of DOS will continue to evolve in terms of seeking for the best profitable DOS and punctual opening in the case of opportunity. But the rationalization of our own direct network is terminated. I think that with 2026, even the franchisee restructuring has been almost completed.
The franchisee restructuring and closing is mainly driven again by our own choice to get out of agreements where we were performing, as Francesco was saying, in terms of sales, but we were not performing in terms of profitability and contribution, and the cost of maintaining that kind of business was higher than the opportunity that we have in terms of sales. I would like to say that 2026 has been still a year quite impacted by our rationalization, and we should be pretty stable in 2027.
Clear. Thank you very much.
The next question is from Chiara Rotelli of Mediobanca. Please go ahead.
Thank you. Thank you all. Just two questions. One is on current trading. Can you comment on your retail performance in October and beginning of November? Again, related to this, is still your DOS Web performance positive in October and November? Hello?
Please, management.
Can you hear us?
Yes.
Okay. Sorry, we're back. Francesco?
Okay. Well, let me tell you, we have faced two months in September and October very, very tough indeed. We have seen a dramatic decrease starting July, deteriorating massively in August, and in September. October was not particularly better. We have seen an improvement. Actually, we have seen quite a fairly dramatic improvement with the change in the atmospheric conditions.
Winter is coming.
With weather. Yeah, indeed. Winter is finally coming, and we are positioned to serve our customers. I want to tell you, we come from an internal discussion on this subject because we were not ready, as a matter of fact. We had not planned to see weather conditions so hot during the months of September and October. In our shops, we had our winter collection, basically, or say, the first products that accommodate the winter collection mid-season. But people were still buying ballerinas and sandals and moccasins and so on. We are somewhat responsible for a good portion, or at least for a portion of our lack of performance in those two months. It's a learning. We'll improve in the future. But now, we are seeing a traffic that has recovered quite dramatically.
Okay. On your web performance?
Well, it has gone along, basically. We have had a better performance in absolute terms. We've grown quite significantly during the year for the nine months. We've seen a better performance in the second quarter, approximately 6.4% growth, and globally 7.4% growth. Could you do better? Yes, we could do better.
Just to-.
Please.
Just another comment at this point. We have seen clearly, two speed. Our own .com was growing quite significantly in the first half. We were close to the double digit with 9.2%, as we commented before in our semester closing data. Unfortunately, we have seen, as Francesco was saying, a bit of slowdown in the third quarter. Overall, the growth is the one mentioned by Francesco, 6.4% overall in the nine months. We are expecting a soft November and December, for what we have seen in those two weeks of November. Therefore, we will for sure close the year with a positive performance in terms of like-for-like, but in the range of the, let's say, 4%, something like this, clearly, which is lower compared to our budget expectation.
Okay. Thank you.
Welcome.
As a reminder, if you wish to register for a question, please press star and one on your telephone. Once again, if you wish to ask a question, please press star and one on your telephone. For any further question, please press star and one on your telephone. Management, there are no more questions registered at this time.
Thank you very much for your attention, and I think that from our side, we can close the conference.
Thank you very much indeed. Thank you for your questions.
Ladies and gentlemen, thank you for joining. The conference is now over. You may disconnect your telephones.