Good afternoon. This is the Carlsberg Conference Operator. Welcome, and thank you for joining the OVS First Quarter 2025 Financial Results and Goldenp oint Deal Update 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 * and zero on their telephone. At this time, I would like to turn the conference over to Mr. Stefano Beraldo, CEO of OVS. Please go ahead, sir.
Thank you, and good afternoon to everybody. The first quarter was a bit weaker than expected, but in our opinion, good, considering, first of all, the tough comparison with the first quarter of last year that achieved a plus 5% in sales, bad weather in April, and worth noticing that we did better than the market again for another quarter. The market recorded a minus 2%, probably on the basis of the general fragility of the consumer spending attitude given the customs duty imposed by Mr. Trump recently and the prosecution of certain war scenarios. We had a very good start of the second Q with the weather that has not been favorable again, but in spite of this, may generate a mid-single digit growth, which is even improving thanks to an excellent performance of sales during the month of June.
After five months, almost five months of year 2025, we are fully confident about another year of growth. One aspect I think it was mentioning, and we made a reference in our press release, is that finally, after 20 years, when I have seen almost only and always headwinds, we have a combination of positive tailwinds, which will generate a positive contribution to the gross margin. I refer to weak dollar; I refer to weakness of suppliers which are losing turnover in the U.S. market and looking for new turnover in Europe, and weakness also in some raw material clusters, like linen, just to mention one.
Last aspect, which is important to comment from our side, is the decision that we have taken, and I'm very happy with this decision, to convince the owners of Goldenp oint that given our right to exercise our first call option, that brought us to 51% of the company, we convinced them that it was better for the company to accelerate the full control of the company and to buy also the remaining 49% as of now. This is because after 12 months of combined joint operation, we found the confirmation of the grounds on which the launch of the brand was based. We can say that we spent 12 months learning, and the learnings are so interesting that we believe we know what to activate in order to anticipate and take full advantage of the potential of this brand and this company.
Having said that, I hand the word to Francesco for a more detailed explanation.
Thank you, Stefano. I would start on page number four with the key income statement items, highlighting, as said, a growth, still a positive sign on sales after the excellent performance of 2024. Further growth that was driven mostly by two categories: womenswear, where we are expressing our strength in terms of creating collections. Particularly, this 2025 was characterized by the launch of the Les Copains collection that had a very good performance in the store and which is also accelerating now in the summer period, having a clear summer taste in its DNA. Furthermore, we have a certainty, which is beauty, which is more or less the third year in a row for which we can comment on growth results.
We are also working in order to expand in our store the space dedicated to this category that is also characterized by sales density more than double versus the normal apparel. Overall, the EBITDA result is slightly declining versus last year, EUR 1.5 million. This is basically due to some mathematics that affect the first quarter, that is, a quarter which is the weakest among the four in terms of sales, while the SG&A are more or less constant. The unavoidable, let me say, plus 2% increase overall on the base cost cannot be absorbed by 0%-6% growth in terms of net sales. This decline also then translates into a profit before tax, which is slightly lower than last year, more or less by the same amount.
The positive news, as said by Stefano, is that this delay versus last year has been fully recovered in the initial part of Q2, with May still without a strong, favorable weather, and June that, having finally summerish weather outside, sees a further acceleration in the growth rate. Page number five provides some further view on the breakdown of the sales. We see a good performance in DOT, while franchising is slightly declining, mostly because of phasing effect. We are not worried at all overall here. This phasing effect on franchising affects a little bit UPIM, which is our brand more exposed on this channel. As I said, overall, the performance is a plus 0.6% in the quarter and a plus much higher in the year to date.
Another thing that is worth mentioning is that this growth that we are experiencing up to now is also growth that happens at full price. This has also a positive impact on the gross margin. While last year, 2024, when the weather remained bad or winterish until the end of June, of course, we managed to defend ourselves in terms of sales, but only the month of July with some more pressure on discounts. This provides a good picture for the full year. On page number six, we have the picture of the net debt, which is more or less in line with last year, and hence also the leverage ratio, net financial position on EBITDA is stable, dancing around 1.34-1.35, which is a level of absolute also flexibility in order to manage the cash in the most appropriate way.
Of course, the net financial position as of 30th of April is a peak in terms of cash absorption because of seasonality, a seasonality that is more and more increasing year- after- year, but that then is compensated by a very positive seasonality generally in Q4. We can confirm our target for a cash generation north of EUR 70 million for fiscal year 2025. Page number seven, as already commented by Stefano, we provide an outlook for the year, which again is expected with a positive sign on all these key elements, EBITDA and cash generation. We have a good outlook in this case also on 2026, because sometimes having also a longer visibility as working on since summer 2026 gives us these positive elements on the dollar, on the line, and the raw materials, and on the bargaining power.
In case on that, we can come back in case of further questions. I move to page number nine to provide some more space, I think, for the key topic of today's meeting, which is, of course, the acceleration in the Goldenp oint deal. As most of you may remember, last year, we signed an agreement that envisaged a progressive involvement in more steps of OVS, and that envisaged more or less at this period of time a second step that is translated in the full acquisition. I will come back on that to express all the reasons behind. The first element that is confirmed is a strategic approach to the market under where it is still a very fragmented market. There is a clear leader, but not a clear second player.
OVS has a very good market share in the segment, and together with Goldenp oint, we could really reach a critical mass to start becoming the number two in the market and start from that for even a further growth. As said, we had already purchased the first 3% in July 2024 with an agreement with the property of the company that allowed us to have one year of learning together with them. We learned many things. On page number 10, a couple of elements. The first one is the synergies on cost, which is fully confirmed. We worked together to the good part of the full winter 2025, and we are further increasing for summer 2026. We can confirm a general 10-15% reduction of purchasing price, which means a 3% gross margin increase.
This gives you, basically, with some maths, the fact that the gross margin of Goldenp oint is already in the range of 70%, which is 10 percentage points higher, more or less, than what we can achieve on normal apparel, given also by the fact that we are dealing with small cart sales and sales with a sales assistant that helps the customers. It is a good starting point, of course, to grow and have a good marginality in this business. The second element, which is maybe the core of the launch of Goldenp oint, is the assortment improvement. Goldenp oint is confirming its absolute strength in the beachwear, but beachwear is a category that has sales over four months in the year. We found the opportunity to provide also the expertise of OVS on underwear and nightwear.
The results were very promising, more or less with a 30% growth in each category already in this year that is a transition year in order to have the full, let me say, assortment reshaped in 2026. On the other side, we learned also by some mistakes that were made in the course of the year on other categories like leggings and outerwear and other knitwear that was, for instance, sold in Goldenp oint. We think that we have all the elements so that in a couple of years, we can really bring a significant increase in the sales versus the previous level. Furthermore, the third element is also the introduction of accessories and beauty corners that are performing very well in OVS. Also the pilots that we run in this period in Goldenp oint are confirming the very good performance.
Page number 11, beyond what we plan to do on the current network of almost 400 stores, so already very relevant network located also in prominent places, both in the city centers and in top shopping malls, we still have some room for network improvement and development. The first is that together with our store design, we developed a new image that is more contemporary, more appreciated by our customers, but at the same time, technically more efficient because the capacity of having the visibility of the product is increased. Also, it is possible to store more products and so increase the potential of each store. To date, we refurbished about 10 stores with this new image, and we are recording a double-digit increase on these stores. The other element is the network growth.
One strength of OVS is our network of partnering franchising, and we are leveraging these assets in order to accelerate the growth of Goldenp oint, not only with directly operated stores that we keep for tier one location, but together with these partners, we are able to open about 50-60 stores per year. We have a three-year plan to open about 160 stores, and the first step or the first 22 openings already took place in summer 2026. These would, of course, give economy of scale to the business and increase its profitability bottom line. Page number 12 is a quick view of the deal structure. We, as said, had an opportunity.
We pushed somehow in order to accelerate gaining the full control of the company, also to be more in charge, more direct in this relaunch of the brand, which, of course, is an element that requires all our attentions. We reached also an agreement with more favorable terms versus the previous one, giving the chance to current shareholders to monetize immediately its investment. Some figures of what this acquisition will mean on 2025, that is six - seven months, ideally from the 1st of July until the end of the year, sales should be in the range of EUR 50 million - EUR 60 million, with a positive EBITDA also capturing the most positive part of the year. At year end, the net financial position impact should be in the range of EUR 25 million - EUR 30 million. This is, of course, not the reason of our acquisition.
The reason of our acquisition is what we expect to achieve in two, three years, that is EUR 140 million-EUR 150 million net sales, driven by both the growth on the like-for-like and network expansion, and profitability at the EBITDA level in line or even higher than the one of apparel of OVS. As said before, we have today a leverage ratio of 1.34. This acquisition, which is not, in the end, so material, will be fully financed by our lines without any particular capital structure. Leave the words to the questions and ready to answer.
Thank you. This is the Carlsberg 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. We kindly ask to use handsets when asking questions. Anyone who has a question may press star and one at this time. The first question is from Andrea Bonfà from Banca Akros. Please go ahead.
Hello. Good afternoon to everybody. Very quickly, is it possible for you to give us sales and performance figures for 2025 of Goldenp oint in the sense that you already anticipate with the 2024 result that the performance this year is slightly below expectation, and this might also explain the lower price? Let's say at the announcement of the deal, Goldenp oint was making EUR 100 million. Is this confirmed or are they lower this year? In order to understand the basis from which to calculate the sales expansion in two, three years' time. The second question is, what are the CapEx requirements for the network expansion of Goldenp oint?
Finally, if I may, let's say on the same perimeter of OVS, excluding Goldenp oint, if you are confident with the current consensus for 2025. Thank you very much.
The last question is without Central Goldenp oint.
Yeah.
Hello. Hello. Thank you for your question. The year 2025, which is undergoing, started a bit lower than expected, but considering that weather did not facilitate the achievement of good results and given the exposure of the company to the beachwear, what we can tell you is that we believe that the year-end results will be in line with last year. Result in terms of sales with more or less EUR 100 million. One year before, they were EUR 90million - 92 million. In 2024, the turnover was about EUR 90 or 92 million, and this year is going to be about, we believe, about EUR 100 million.
The summer season started extremely well, so much higher than last year. What did not perform according to our expectation was basically the leggings, which were entirely prepared by the existing management. What we have been able to adjust because it has been already part of our activity, which has been described by Francesco as the underwear, and the nightwear performed extremely well. The EUR 10 million more of turnover can be seen as a mix of some new openings, some closure of store inefficient and non-performing store, a slightly positive life-for-life, mostly generated by underwear and beachwear now and nightwear, and penalized by leggings. In terms of CapEx, some CapEx has already been made during the former period to rejuvenate and refurbish some stores. About 15-17 stores have been refurbished with very good results compared to the other stores of the network.
On average, more than 15% sales increase compared to similar stores in similar catchment areas, which have not been refurbished. In the future couple of years, we expect in two, three years, we expect to spend another EUR 15-20 million CapEx, basically to refurbish stores with good expectation of sales increase. This will be done in three years' period. Regarding the outcome, the outlook which I gave and also Francesco gave about the full year, the outcome, the outlook is without the turnover of Goldenp oint if this is the question.
As of today, we believe that given the results which we have achieved as of now, given the expectation that we have for the rest of the summer season, and given the good project that we have in pipeline for the second part of the year, particularly the very good performance of Les Copains, which is the first time our customer will see in autumn-winter, we have no reason not to believe that the year will be another good year without and before Goldenp oint.
Having been said by Francesco that we will consolidate the better part of the year of Goldenp oint results, which start from June, but we will consolidate starting from July, I think that there will be a positive effect that will compensate the additional net financial position that we will incorporate, as we said, in the range of more or less EUR 20 million - EUR 25 million.
Thank you, Stefano. Thank you very much. Can you remind us what the seasonality of Goldenpoint is? We know that it's profitable in the second half, but does it mean that if we sum up the first one, the first half is break-even, or how is it the performance for, let's say, this year?
I believe it will end up with zero this year as a result of maybe EUR 4 million, maybe EUR 5 million, maybe EUR 6 million.
I don't know in the second half, and negative EUR 4 million - EUR 6 million in the first half. Typically, the first quarter for this company is a disaster. The second quarter is okay. The third quarter is very good, super good. The fourth quarter is good because of Christmas. Given our strength in nightwear, which is receiving its boost during winter season and the third or fourth quarter particularly, we believe that we will be able to improve the performance of the company in the second half compared to the past, and also to introduce, as for the first element of visibility that we have already achieved, a satisfactory performance of underwear, which is more important also in the first half of the year.
We will rebalance the seasonality, even if the company will remain mostly impacted in positive terms by the sales of summer for the beachwear and winter for the nightwear and pajamas, basically, and nightwear.
Thank you all very much. The very last one. In the past, you mentioned that you could have paid the consideration with treasury share. Was that the case? And if you can start to understand, what was the consideration of the absolute amount?
We preferred to go plain maneira. The price that we agreed that we did not disclose for confidentiality reason that we promised, and we received the request from the family as a condition to finalize the deal in this way, which is extremely favorable for us, was not to disclose the price. We preferred to arrive at a final price, give liquidity to the family that probably needs liquidity now for other purposes, and no treasury share is involved.
Thank you very much.
Thank you.
The next question is from Domenico Gilotti of Equita. Please go ahead.
Good afternoon, everybody. First is a clarification on Goldenp oint. Just to understand, the EUR 25 million - EUR 30 million additional debt, is this including the payment plus the working capital requirements to supply the stores with the new collections? How should we look at this number that you have mentioned? Second, if I look at 2026, should I expect that sourcing is the main driver for improvement in profitability in Goldenp oint together with, say, sales density?
Regarding the first question, I will say that the answer is no. The net financial position represents the company's financial position, including all the working capital needs. We do not expect major working capital movement generated by this. On top of that, in the consolidated balance sheet of OVS, we have to consider the price of the acquisition. It will be extremely favorable compared to the former one, which was a visit, which is, as we said, not material given the size of our company and given the size of this amount. Regarding 2026, I think that the first driver of profitability for Goldenp oint will remain the life-for-life growth, driven by all the segments where we have already identified a huge potential for the growth.
Maybe the only one that we do not expect to improve that much is the beachwear, where the company is already performing well, but in socks, nightwear, underwear, and leggings, we feel comfortable that we will be able to improve materially the life-for-life. Other value generation will be generated by opening stores, but as you said, probably the second most important will be the gross margin improvement thanks to the favorable external condition that we mentioned before regarding OVS, which are also true in light of the similar sourcing model and sourcing countries in Goldenp oint.
Okay. Thanks. A follow-up on this. You are mentioning the dollar weakness. I presume that clearly you had already hedged the second half of this year, so you have now good visibility instead of better condition for the spring-summer 2026. Is it correct that you have already hedged?
Yes, it is correct. It is correct. Given the present level of dollar within the flexibility provided by our internal process control procedure, we are buying dollar heavily also for the second half of the year. The average dollar ratio compared to last year is really, really better. In this moment, more than five points of advantage. Hopefully, we will end up even with more. We could achieve something like EUR 30 million advantages in cost of goods sold, which we do not expect to be given away in terms of price competition. There will be some, obviously, some risk that maybe other competitors might become more aggressive. Given our present good sales momentum, which is in place since several years, and the good image that the OVS brand is enjoying in light of the consumer, we do not expect that we need to give up or give away most of this advantage.
Hopefully, next year, we'll be able to increase our gross margin and our EBITDA materially thanks to this positive effect.
Okay. Last two questions are on Q1 results. Particularly, you were mentioning clearly the labor cost. I'm trying to understand what was the underlying trend in Q1, and what should I expect for the full year? Because if I remember well, there will be some smoothing in the second half. On the CCAG flow, actually, it was a bit, so the absorption was stronger than usual. You were mentioning the seasonality has increased. I'm trying to understand why is this happening at this level?
I start from the second part of your question. This is the last quarter where we compare the effect of SWIFT with last year, with the year before.
Basically, in this quarter, we still see the increase of sourcing that we made one month in advance compared to the average because we did not want to enter in the risk of receiving late deliveries that could have impacted negatively sales. We expect that at the end of second quarter, this disadvantage in terms of stock level will be entirely recovered. That is why Francesco spoke about seasonality. In this case, it is a combination of seasonality and the last quarter with the SWIFT effect, which is comparing with the before SWIFT sourcing. The stock increase is good in terms of quality. In terms of aging, we have good stuff, and we are already decreasing the level of stock as of today because in the last 45 days after the quarter, which I said has not been that strong as we maybe expected because of the reason that I mentioned.
We are already scaling down, if I may say, the stock level in this day. We expect that by the end of July, we do not have any more of this effect, even because in July, we expect to generate more cash than last year because we are realizing that the market is polarizing between consumers that want to buy Jumbo, they want to buy Les Copains, they want to buy sweat item at more than EUR 100 each, and they do not care about sales. Consumers, which are mainly the older part of OVS consumers, are generating high traffic in the month of the sales. Because we do not want to lose them, we plan to be probably more aggressive than last year during the sales period in order to make happy those customers.
Because we have a very solid gross margin, we can easily invest part of our advantages in higher pressure on discount during the sales period to take advantage of this land. Labor cost? Labor cost, sorry. Labor cost is basically a plus 3% generated, as I believe we told you. Our comment has been already consistent, I think. We are now facing the last year with the labor cost increase effect. There will be a small tail probably also in 2026, but very small. We expect for a full year, 2025, a plus 3% increase as expected. In the first Q, we have this plus 3%. Maybe if you have seen some cost increase, maybe it refers to energy cost, which increased compared to last year in the first Q, but now are again normalized.
Okay. Thank you.
Thank you.
As a reminder, if you wish to register for a question, please press star and one on your telephone. The next question is from Luca Bacoccoli of Intesa Sanpaolo. Please go ahead. Mr. Bacoccoli, your line is open. Please go ahead. Mr. Bacoccoli, maybe your line is muted. We do not hear you. Once again, if you wish to ask a question, please press * and one on your telephone. The next question is a follow-up from Andrea Bonfà of Banca Akros. Please go ahead.
Thanks again. If I may, on Goldenp oint, I think you mentioned in the past that one of the problems of this chain was that they expanded in expensive locations with some very expensive shops. Is that still the case, or have these shops been closed? If you can comment on that.
Looking after , 2026 forecast, the asset is breakeven more or less this year in the EBITDA. How much shall we expect in terms of progression for 2025, sorry, for 2026? And the target that you mentioned in your presentation of reaching group average profitability, is that referred to basically 2027? Is that correct?
The question regarding the cost of the rent, I do not think I ever said that the rents are expensive. Clearly, there are top locations which are expensive, obviously, because rent goes in line with the quality of the location. Because most of the locations of Golden point are excellent, if not good, on average, the price per square meter is high, but it is not higher than the value of those locations. There is not an issue of location cost. Some stores we are closing because they are not performing well.
Maybe they are too small, like Corso Vittorio Emanuele. If you go in Corso Vittorio Emanuele, you cannot even walk inside the store. Better to transform into a jewelry, maybe. Those stores to be closed are exceptions considering the total number of stores. Regarding the expectation for 2026 EBITDA, if I catch your question, no, the EBITDA expectation is positive. We believe that it will be maybe five, maybe six, maybe eight, but it will be positive depending from the aspect that we mentioned. We expect a positive EBITDA in year 2026. Regarding the achievability of our group typical profitability, might be 2027, might be 2028. It's too early to be said.
Hopefully, once every initiative will be completely rolled out with the new stores, the new refurbished stores in place, and all the synergies achieved, I expect that Goldenp oint might and should generate even higher profitability compared to the group. Today is too early to tell as it has been achieved because all the job has to be done.
Thank you very much.
As a reminder, if you wish to register for a question, please press * and one on your telephone. Once again, if you wish to ask a question, please press * and one on your telephone.
Okay. Given that no more questions is coming, we thank everybody for attending this conference call and looking forward to meeting and seeing or listening and speaking with you after summer. I wish a good holiday once you will do it to all of you. Bye.
Ladies and gentlemen, thank you for joining. The conference is now over. You may disconnect your telephones. Thank you.