Good morning. This is the Chorus Call conference operator. Welcome, and thank you for joining the OVS Full Year 2024 Financial Results. As a reminder, all participants are on listen-only mode. After the presentation, there will be an opportunity to ask questions. Should anyone need assistance during the conference call, they may seek an operator by pressing star and zero on their telephone. At this time, I would like to turn the conference over to Mr. Stefano Beraldo, CEO. Please go ahead, sir.
Hello. Good morning to everybody, and thank you for attending this conference relating to the full year 2024 results. I will start with a general overview. I think that we had, again, a very good year, which has been characterized by a difficult start because of very negative weather conditions, which affected, as has already been reported, the first half of the year. In spite of this, we end up with the first half, which has been positive, and the second half, which has been very, very strong, bringing total sales to more than 6% versus last year, mostly generated by like-for-like and merchandising initiatives, basically. I want to mention some of those initiatives. In OVS, Piombo is achieving a material turnover, more than EUR 100 million, approximately EUR 120 million. Piombo grew by 3%-4% versus last year.
We are introducing new initiatives regarding Piombo, like Piombo Tech and Piombo Contemporary, which are generating expectations for a possible enlargement of the size of Piombo sales in the next coming quarters. Another initiative, which has been very positive, has been the one dedicated to the younger generation, like B. Angel. In B. Angel, we had an important growth, approximately 50% of growth in 2024 compared to 2023, more space, more merchandising, and even higher sales through, which means that the initiative is very solid and generating good cash margin. Also, Altavia and Utopia are the two initiatives, which the first of them started basically in 2024, and Utopia is in the second season. Both these initiatives are generating solid growth and are attracting, and this is even more important, new customers, people which are looking for more sporty and outdoor garments and Generation Z with Utopia.
Also, it's worth mentioning the continuous support to the growth and to the introduction of our brand to new customers generated by the beauty department. The beauty department inside the OVS store is becoming an important part of the business, accounting now for more than EUR 100 million. The growth in year 2024 has been about 20%, and we expect this growth to continue at high single-digit, maybe low double-digit growth also in 2025, thanks to new initiative improvements in the merchandising. This segment is continuously attracting new customers, generating also important cross-selling opportunity in favor of the woman segment, which, by the way, is for the third consecutive year the portion of our business which is growing the most. I want to take the opportunity also to mention the result of Le Copain in the beginning of the year 2025.
We introduced Le Copain in OVS with this spring-summer season, and the initial results are more than encouraging, are very solid. In this moment, we believe that based on the first couple of months of sales, this initiative has been another success and will have the potential to achieve the same sales of Piombo. Obviously, Piombo is also dedicated to men when Le Copain is only women. Basically, we expect that from Le Copain we can achieve in 2025 probably EUR 40 million sales, and in the future even more. A couple of words about international. We decided to mention even in the press release one small reference to the international activities which are growing, either in term of top line. We had approximately +15% in the top line entirely generated by like-for-like.
We are cleaning a bit our network and focusing on the most performing store and starting operating in new countries with franchising partners. It was mentioned a new agreement that we have with Mexico, a new agreement that we have with Japan, two countries where two of the biggest local players decided to start working with OVS and with some of our brands on the basis of a wholesale basically agreement. Basically, we do not enter in CapEx or rent or SG&A risk, and the margin is going to be good. Even in 2025, based on this new agreement, we expect another, hopefully, 10-15% growth in sales and profitability as well.
In term of initiatives, I think that we continue to demonstrate that we have the power to generate ideas and always or almost always successful ideas, which are bringing to our brand a new and most enlarged customer base, also with more elevated customer profile in term of per capita spending, which is allowing us, together with the improvement of the quality of the stores, windows, and atmosphere, and also, most importantly, quality of the merchandising, we are also continuing elevating our average price and increasing the conversion rate, which is good evidence that independently from market expectation and behaviors, sometimes consumers are maybe concerned, like now, about the international situation and the uncertainty and the electricity bill, which is increasing.
What we see is that OVS, as a destination, continues to remain the preferred place where Italian families are deciding to go, and this is demonstrated by the very high conversion rate. A couple of words about SG&A. SG&A has been impacted by the cost of labor increase, which has been higher than normal. You are already aware that last year the new labor agreement has been signed, and this impacted almost EUR 15 million in our profit and loss. A material amount of SG&A, about EUR 20-25 million, has been generated by growth, so new openings.
Unfortunately, we have been affected in the last portion of the year by this one-off element, which we have been forced to report as EBITDA, even if it is an extraordinary element of EBITDA, which refers to a couple of situations where customers in financial trouble and under the protection of the composizione negoziata della crisi, for the ones of you who are familiar with the Italian. It is a kind of capital level, differently from what had been reported before, forced us to a major and higher depreciation of our credit.
Another element has been the change in the tax law regarding the research and development activities, which impacted all the credit generated in the fashion industry by these activities, which has been subject to a change in the law, which forced all of us to claim and to enter in negotiation with the tax authority because the change in the law has forced all of us to change our accounting policies, basically our credit versus the state because part of this credit has been not recognized. This extraordinary impacted by about EUR 5 million in our account. The adjusted EBITDA, if you want to say that, once the non-recurrent element would be not considered, is about EUR 200 million. We believe that this means that the company has been able to confirm to be a very solid player in this market.
CapEx has been high compared to our historical level for the last year in terms of extraordinary CapEx because we completed, as we announced, the three-year program of innovation in several of our technological innovations, like the new deposit, the opening in the body of the center dedicated to rework the products which are left over, and in order to increase the life cycle of those items with a positive aspect also in terms of profitability for the following year because thanks to this investment, a high amount of goods of garments will be refurbished and reported for the following year as new. Also, we mentioned the good performance of Stefanel in the second part of the year. This is not material in our account because it remained very small, approximately EUR 25 million turnover for the full year.
It is worth mentioning that after a period of uncertainty or negative performance generated by the collections which were made by a former manager, now finally, I believe we have found the solution with a new manager in charge of it, a new designer. In the second half, Stefanel sales grew double-digit compared to the past. Also in this first part of the year, the Stefanel sales are very promising. That is it for now, and I hand the word to Francesco Leoncini.
Before doing it, I remember also that in light of the good net financial position and cash generation, we decided to propose to the shareholder meeting a dividend of EUR 0.11 per share, which means an increase compared to the ordinary dividend of more than 50%, and also an increase of 10% compared to the total dividend which has been distributed the year before. Thank you. Francesco, I leave the word to you.
Thank you, Stefano. I move now to page number five with some further details on the income statement. Most of the comments have already been provided by Stefano, so I quickly summarize the plus 6% in sales, the growth of 91 basis points in gross margin that, despite the inflationary pressure, led to an EBITDA increasing by EUR 13 million over last year.
With the net result growing a couple of million, in this case, also penalized by some increase in the tax rate due to some new international regulations that impacted our group. I move to page number six with some more colors of this performance over the quarters. We have already commented over time the first three quarters. Just to remember, a good Q1, a very weather-penalized Q2 with sales growing just 3%, but then with a strong Q3, in that case, weather was favorable. A Q4 that was basically a normal quarter in terms of sales that, unfortunately, did not translate in a further increase in EBITDA because all these one-off items mentioned by Stefano, that is the provision, the loss on receivable, and the adjustment on the fiscal credit, happened and took place in Q4.
The EUR 60 million reported is net of these costs that need to be based on accounting principles reported above EBITDA. I move to page number seven that provides a breakdown by channel and brand with all positive figures. Both franchising and direct stores are growing. Both brands, OVS and UPIM, are growing. Particularly, UPIM, in the course of 2024, had very strong results, plus 8% in sales that translated into a plus 16% on the business unit EBITDA that now passed also the line of the 10% margin with OVS consolidating an EBITDA margin above 13%, in line with the best practice of the industry. On page number eight, we start to have a look to all the financial items of the company.
In a context said of growing business, we also managed to generate cash out of the working capital, global EUR 12 million as a combination of flat-ish trade receivable, sign that we have very strong credit management policies vis-à-vis all the franchisees, and that is a slightly cash-generative item. On inventory, compared to last year, we see a EUR 25 million increase due to a couple of elements. On one side, the growing of the beauty that requires some stock to be put in the store as starting stock, especially for the new opening or the new opening within our stores. On the other side, we have still alive the issue of the Suez Canal that forces to have a longer shipment time.
Last year, it was just taking place, so we were in a sort of ramp-up phase, and now we have normalized with about EUR 20 million stock in transit higher than last year. On payables, sorry, we said we are benefiting of the growth of the business, plus 6%, and that are more or less EUR 24 million, and the rest are due to this anticipation extra purchases on goods. Page number nine, we have the view on capital expenditures that are basically in line with last year, even if, I mean, of course, the topics that we touched during this year changed. Last year, we completed basically the automation of our container near Piacenza DC, and this year, the main investment was on the innovation center in Bari, where we deal with rework of garments.
In terms of IT, we also had during this year the rollout of the new cash system that easy the interaction with customers and also all the omnichannel activities. In total, we reached EUR 95 million, EUR 94 million like last year, and we expect 2025, of course, to reduce this peak of investment. Page number 10 provides the view on the cash flow, cash flow that is increasing by EUR 5 million versus last year as a combination of EUR 13 million higher EBITDA, a working capital still cash positive and in line with previous year, like the investments that were substantial, and the fact that during 2024, we terminated our tax credit related to the past year losses, COVID-related losses. We had a strong increase in the tax payment, also with the double effect of the first year in which we recover a view vis-à-vis the government.
The element I would like also to highlight is that single-year cash flows can somehow be impacted by extraordinary elements like payments arriving or paid one day or the day after. Over three years, we are now in front of a row of over EUR 60 million cash generation that totals about EUR 200 million. A view that provides a solid feeling on the cash generation capacity of this company. Page 11, what have we done with this cash generated? Basically, we gave it all to our shareholders either by direct dividend distribution that increased over time by EUR 11 million in 2022 to EUR 25 million in 2024, with an increase in buyback. As anticipated by Stefano, this year, based on the results, we expect to further increase the dividend distribution to EUR 0.11 per share.
We are also proposing to the shareholder meeting to go ahead with the buyback plan with EUR 10 million for the coming months. Page number 12 provides a view on the net financial position that is basically stable given the fact that we are distributing all the cash generated with a leverage ratio between 0.76-0.80. Basically, a super safe number that even overtaking the average of the last 12 months is 1.3. In a situation of normal business. Page 14, we move to the future. With a couple of one dedicated slide that we thought was necessary to comment the storm that affected the markets over the last 10 days, that is the tariffs, the DAX of US. Of course, we are worried in general about how such a relevant topic was dealt with with growth and back and forth.
In general, we see for OVS positive elements. The first one that we already recorded is the improvement of the value of euro vis-à-vis the dollar. This allowed us to fill one of the gaps that we still had a few months ago that was how to cover in summer 2026 because at that time, the euro dollar was 1.03, 1.04. Now we are managing to cover it with, let me say, a standard value of 1.10 plus in terms of coverage. The other is depending on how this saga will end, but most probably there will be some reduction in import from the Far East to the U.S. This will free up production capacity in those countries to the benefit of negotiation with suppliers. Both these two items we think have a positive element vis-à-vis OVS.
In general, on page 15, the expectation for 2025 are of continuing in the growth, first of all, in the business-related items that are the appreciation of our collections. As said by Stefano, we launched with a very successful plan, the Les Copain brand. All the other elements are moving well. We expect 2025 growing both in terms of EBITDA and cash generation vis-à-vis 2024. The initial months of this year were affected a little bit by the weather. We are comparing, as said, with excellent results in 2024. We are managing to keep basically these results. We hope, of course, in rebound of the weather in May, June, that are the focus months for our business. Last year were very negative. We expect an improvement in that moment. That's it. I will say a link to the Q&A session and give back the word to the operator. Thank you.
Thank you. This is the conference operator. We will now begin the question and answer session. Anyone wishing to ask a question may press star and one. On the telephone, to remove yourself from the question queue, please press star and two. We kindly ask you to use handset when asking questions. Anyone with a question may press star and one at this time. The first question is from Luca Orsini Baroni of One Investments. Mr. Baroni, your line is open. Mr. Baroni, maybe your telephone is on mute. The next question is from Daniele Alibrandi of Stifel.
Yes. Good morning, gentlemen. Thanks for taking my question. And congrats for the results. Two questions and follow-ups. I'll start with the follow-up. First one is if you can give us an idea of what is the tax rate guidance for this year. Second follow-up on Stefano. You mentioned double-digit growth in H2. I remember H1 was minus 8, Q3 plus 5. I would say there has been there was an acceleration in Q4. Just checking on this. The two questions are the first one on gross margin.
What should we expect for 2025 in terms of gross margins gains as we are seeing energy costs decreasing, the US dollar is weakening, which should be helpful for your sourcing? Also, a potential resolution of the conflict in the Red Sea could actually push freight rates down. Just want to check this with you. Last question on Goldenp oint, if you can give us an update on the numbers last year, the strategy you wish to implement here, the cost of the option, and the potential synergies you can extract as basically market is not factoring anything there yet. At some point later this year, I guess in September, we have to adjust the numbers. Thanks for the answers.
The tax rate going forward should be around 26%. Of course, we are working on some potential benefits coming from the Italian legislation supporting some investment, especially in the south of Italy or in the digital IP transformation like Industria 4.0, Industria 5.0, and the so-called ZES. If all these measures will be effected on our tax rate, it will go down about around 24%. For the time being, 26% is what we have in our plan.
Okay. On the question relating the gross margin 2025, I expect that as a balance between different elements, the gross margin might remain more or less stable. After a couple of years of price increases, which we have been able to pass to our customers, also thanks to the improvements that we made in our store and in our merchandising, we decided for year 2025 to keep prices more or less stable. The dollar that you correctly mentioned will be an advantage mostly on 2026 sourcing because the recent weakening of the dollar is enabling us to start buying dollars for spring-summer 2026 at a much favorable rate compared to this year and last year. On the other side, most of the sourcing for year 2025, as usual, has been hedged. We have a very small advantage, almost immaterial, compared to 2024 in year 2025.
All the advantages will be taken, and we are buying dollar now to the advantage of 2026. Other aspects, as you correctly mentioned, might generate advantages like the shipment cost. In this moment, with the huge turmoil that we see in the market, it's difficult to incorporate those kinds of benefits in our assumptions. On the other side, we must be also conscious that the market this year might require some further markdown in case the customers would be reluctant to spend. We don't know what will happen in the consumer feeling. We don't have evidence in this moment of negative aspects which are impacting our customer base. We believe, again, that if there will be a continuation, if I may say, of the downtrading trend which is affecting the market, OVS will be properly positioned to take advantage of it like we are doing now.
I prefer to remain skeptical in my expectation of gross margin this year. We are working in order to have 2026 with a further improvement in gross margin, not because of a further price increase, but because of a lower cost of goods, mostly thanks to the two elements which have been mentioned: the dollar. Also, and this is going to be very important, the present situation of high customs duty is creating a sort of strong reaction in the Far East suppliers. We are receiving continuous requests from vendors to meet and to start discussing prosecution of our orders for 2026. In exchange for this, they are ready to give us a better condition because, as Francesco mentioned, they are concerned because one portion of their production capacity will be void next year due to reduction of sales in the United States.
This is already happening. This is not a speculation or something theoretical. This is happening because the orders from our competitor, which are operating in the United States ., like GAP or Abercrombie, are basically strongly reduced or in a steep-standing position waiting for news from the customs duty side, which apparently will not be good for them. It is difficult to give you a more precise guidance. As Francesco said, we believe that the success of some projects, like the growth of beauty, the growth of B Angel, the growth of other elements, will generate a positive effect by default in the like-for-like sales. The gross margin will be more or less stable. We started an important activity of cost-cutting.
This is not because we are scary, but because we believe that given the international turmoil, it is appropriate for us to try to make some savings in our FD&A structure, which will generate some million of advantages in year 2025 compared to year 2024. All in all, that's why we are confident that year 2025 will be another year where top line and EBITDA will grow. We have some negative elements, again, like the cost of labor increase. You might remember that the National Labor Contract foresees a three-year distribution of the cost increase. The first year has been 2024. The second year is 2025. In lower extent, it will impact also 2026. Stefano, Stefano in the second half grew by 25%. That's why after the first half, double-digit negative, we end up with a positive like-for-like.
In the first part of the year, the sales are increasing again, like-for-like compared to the year before. Goldenp oint, still soon to draw conclusions on the impact on our sales and profitability. All in all, the results of Goldenp oint in year 2024 have been EUR 3-4 million lower than our expectation. This generated in our negotiation with the owners the decision to change our agreement regarding the sequence of options. Basically, we are reducing by this amount the cost of the second call option. Also, the first option that we expect to exercise within July, instead of being paid to the present shareholder, will be injected in the company. Basically, 50% of this price will be to the advantage of our stake. From the industrial point of view, everything is moving in the right direction.
We did not have time, basically, to activate initiatives at the merchandising level because of the seasonality of this business, which requires, as you know, months in advance before generating new products and introducing those products in the store. The first signals are very good. For instance, I can tell you that the segment of nightwear, where we are very strong and they were very weak, has demonstrated to be a big opportunity because in the last part of the year, 2024, we had the opportunity to introduce part of this segment, moving some of our products from our dedicated store, changing the label to Goldenp oint. The increase of sales has been immediate and very material. This means that from this category, in year 2025, we will see an important sales growth. Same happened to the fitness line.
We have a fitness line in OVS, and we introduced in the second part of last year, very successful. Some of those items have been given to Goldenp oint as a pilot, and the sale through has been super strong. They went out of stock in a few weeks. It is clear to us that the store is reacting to every new good idea and good segment of product that we will generate. One other information, in the first two months of the year, we started converting, better to say, refurbishing, according to a new image, some stores of Goldenp oint. Even without a completely new merchandising, which will be visible in the second part of year 2025, the stores which have been refurbished are increasing sales by about 15% compared to similar stores in the same geographic area which have not been refurbished. All good signals. I hope to have answered your question completely.
Yes. Thank you very much.
The next question is from Domenico Ghilotti of Equita.
Good morning. My first question, if you can give us a sense of what was the performance compared to the market. So if you have a sense of your market share performance in 2024 and any change in the competitive landscape. The second question is on the CapEx. In general, the CapEx level for this year, but more in particular, we should expect maybe also the mix in CapEx changing a little bit, so more dedicated to store openings and store refurbishment or the same compared to last year. The third, you were mentioning in the press release also the opportunity to push the beauty also through dedicated monobrand stores. If you can elaborate on this initiative also. Thanks.
Thank you, Domenico. Your first question regarding the market, I can tell you that in year 2024, in the last quarter, the market has been reported by Sita Ricerca negative by minus 2%, and the total year, the market has been positive by 0.7%. Those figures are according to Sita Ricerca . Our performance has been plus 3.7%. Sorry, our performance like-for-like has been 3.7%, I see. In total, we achieved a 6% increase. Basically, one year again, we overcome the market performance. In the first month of this year, we are again outperforming the market, which started negative with a minus 1%, more or less, minus 0.7% in February and minus 1.2% in March. We are performing better than the market again. In terms of competitive landscape, nothing special to mention, if not that Benetton is really deciding to disappear from the market. They are closing stores.
We are benefiting from this trend because we are opening stores that were formerly managed by Benetton partners. For instance, in the Puglia region, which is in the south of Italy, we are about to open about 10 stores, small or mid-size, with the former Benetton partner. Those stores will become Goldenp oint, will become Stefano, and this is really an opportunity. From a more general point of view, Inditex is still doing well with mostly all of their formats, not increasing number of stores, but performing well, in our opinion. Primark is, on its market positioning, continuously growing and performing well. Pepco seems to have some trouble. They grew very much, but they are not delivering quality in the proper way. All the others are suffering. The mid-market is suffering hugely.
The performance of Stefano is particularly encouraging, given that in the bridge and premium part of the market, most of the players are really suffering. This is, again, a confirmation of the right positioning where OVS stands because we are really attracting a big amount of those customers buying Piombo and now also buying Les Copains. CapEx question, the mix is changing because the reduction of CapEx is mostly related to the special project, which has been accomplished. Basically, the new opening CapEx, dedicated CapEx, and the refurbishing dedicated CapEx remain more or less the same. Because the total amount we reduce, the mix is changing in favor of revenue-generating CapEx. On the beauty, beauty is really, I think, the most important project that we have been able to create and generate in the last five years.
Sales density of beauty in our stores is much higher than the apparel, which is normal. EUR 6,000-EUR 7,000 per sq metre sales with a slightly lower margin means that the GM ROI or the gross margin per sq m of beauty is almost double compared to the margin generated by the apparel. Beauty is useful not only to attract new customers in OVS stores generating cross-selling, but also to generate absolute EBITDA per sq m. Regarding your question about the opening of standalone stores, I'm happy to say that in Pavia, we opened last week our second pilot, and the results are even better than the Ferrara first pilot. In the first six months, Ferrara is generating 20%-30% sales higher compared to our budget. The store, we expect that we'll achieve EUR 1 million sales.
The store is a 90 sq m store, so more than EUR 10,000 per sq m. It will be a very profitable store. In Pavia, the start has been even higher. The first day does not mean anything special, but there were few people queuing and waiting for the opening of the store. We are achieving sales in absolute value in the first days, which are comparable to a full-format OVS store five times bigger. Very good start. Now we decided to enter in the second phase of our, call it pilot, but it is not that much a pilot anymore. It will become a development plan. I think that we will open this year between 10 and 20 beauty stores. We are looking for locations now, and this business is very promising.
Thank you.
The next question is from Andrea Bonfa, Banca Akros.
Hello. Good morning to everybody. My question is related to the months of May and June. Stefano, assuming that weather normalizes, how much sales would you recover compared with last year in terms of absolute number? Are we talking of 40 million more, 30, 50? Just an idea. Thank you very much.
When I think and my team is thinking, I touch wood. Because we are talking about something which is not dependent from our power, it will be a material number. Maybe EUR 20 million could be achieved. Also because as of now, weather continues to be very negative. You are in Italy, and you know that today is cold, it is raining, etc. We believe that most of the sales which characterize the start of the real spring sales period still has to come. I expect a strong rebound because our assortment is well in place. We have no delay this year. Why?
Last year, we suffered some delay in the arrival of merchandising. Could be EUR 30 million, could be even more. Very much will depend from weather. If weather will change, as apparently will happen in 10 days from now, we start mirroring the worst days of last year because as of last year, as of today, sales were very good and weather was positive. From mid-April, weather changed drastically. We have easy comparisons starting from next week, basically. Let's cross fingers, EUR 30 million minimum we expect to increase compared to last year.
Thank you very much.
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One thing maybe I will say because I think that we missed mentioning one element. We told you that during 2025, CapEx will be reduced. We did not give you a guidance. We believe that at least EUR 10 million less CapEx will be done in year 2025, if not EUR 15 million. Thank you for attending this call, and I wish you a nice Easter period. Have a nice day. Ciao.
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