Good evening. This is the conference call operator. Welcome, and thank you for joining the Geox first half 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 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 it expressed or implies. Many of these factors are behind 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 are going to comment on our first half of 2026 financial results. I must say that Geox, as much as many other competitors, have faced a very challenging and sharply contracting market in this first half of 2026, which was already impacted by extremely fierce competition, which we all faced, and other extraordinary events, both natural events, such as very high temperature for such a long period of time. In addition to wars that have created uncertainty in many segments of the population, and in particular to those who are the main component of our customers. How did we react to all of that? To all of this?
We, as you may probably remember, we started last year with a significant revision of our cost structure in order to equip the company to face a challenging situation. We were coming from a very challenging situation. The result of that strategy has translated in an adjusted EBITDA of approximately EUR 13 million for the period, compared to EUR 9 million in the same period of last year, which is a percentage, a very significant improvement. The adjusted EBIT for the period is approximately EUR 6 million, compared to EUR 1 million in the same period of the previous year.
The bank debt has been reduced further to EUR 95 million compared to more than EUR 100 million at the same period of last year, at the end of the same period of last year. Working capital is representing 21.9%, 22% over the last 12 months sales, and is perfectly in line with seasonal dynamics.
All the efficiency measures allow to generate a saving in operating cost of approximately EUR 19.1 million in the first half of the current fiscal year. All these major decentralization measures implemented in product processes and in order to facilitate time to market to our products, the result of this has not really come to full fruition yet, but it will come into full fruition during the current fiscal year. We have changed timing and method in procurements and sourcing strategies that have generated already a very significant benefit in terms of cost, but moreover, allow us to project a reduced bank debt by the end of the year in the range of approximately, to get to approximately EUR 40 million- EUR 45 million at the end of 2026. This represents a very significant improvement considering that the debt stood at EUR 93 million at the end of 2025.
Needless to say that, to contribute to this reduction, there is also the contribution by the capital increase. There is this part of the financial maneuver for approximately EUR 30 million. Even by removing the EUR 30 million, the improvement is really significant, really dramatic. We reported sales in the first half of 2026, with a decline of 8.8% on a comparable basis. What it means on comparable basis? Some of this drop is market driven. Some of this drop is driven by our own decisions, which are related to reducing participation or eliminating participation to sales channels that do not generate margins, clients that have conditions that are not acceptable under the current market circumstances. In addition to that, some additional credit control, which is very relevant as a market deteriorates for everybody, including, of course, ourselves.
On a comparable basis, the same period is 11.4% drop, and this is across all the channels, wholesale, retail, and even unfortunately, the .com. The second half of 2025 was further affected by the very delicate situation international markets, as we all know. In all this very challenging environment, we have kept investing. We have changed a number of things that are related to our marketing spending. We are spending far less in producing our commercial ads. We are spending more in terms of communicating. We are investing a lot in our technological products. We have recently introduced, and was very successful, a new sandal that is called the Climasandal, and we distributed approximately 20,000 pairs in our top shops around the world, and it was sold out in a matter of weeks.
This is a new technology, which is called the Ventilated Cushioning System, which allows an active ventilation of the feet while walking, where wind is generated, thanks to the natural walking motion. This comfort and lightness makes this product unique compared to all other products offered on the market. In addition to that, we should consider that 2026, we are still selling the collections that do not benefit yet of the investment we have made on the new designer, who is helping us. The new collection that will hit first the market in the first half of 2027 is currently sold to our wholesale channels. We are recording a quite significant, interesting result in terms of success of this new collection. This is all to say that we have not backed up despite the very bad market. We keep investing in our product portfolio.
We are keep investing on our technology. We keep investing in communication. As a matter of fact, we invest more than before in communication, considering that by using artificial intelligence, we have reduced dramatically the cost of production, and therefore we have increased very dramatically the cost of distribution. I guess this is it for the moment. Happy to answer any question. I will pass the floor to Andrea Maldi to get deeper into the analysis of our financial results. Thank you very much for your listen.
Thank you, Francesco. Good afternoon, everybody. I will try to deep dive you through the numbers of the first half of 2026. Let me start from the page number seven of the presentation that has been distributed, which is starting from the commenting on sales. As you can see, the sales are sitting at a level of EUR 270 million in the first six months of 2026. This means clearly registering a decline compared to the first half of the previous year, in the range of EUR 35 million. Out of the EUR 35 million, more than EUR 8 million are coming from a reduction in perimeter effect. Perimeter effect, which means a reduction mainly of physical shops or closing of platform, as we will see later during the presentation, that we did consider not profitable at the time.
The gross margin, on the opposite, is giving us positive signals because it's moving from the 51.2% of the first year to the 52.6% of first half of 2026. This is mainly driven by improvement in the way we manage our operation and the purchase of our products. Thanks to the mix of channel, which is most favorable when clearly the D2C channel is improving in terms of weight compared to the total sales. The last comment, which is clearly very important, is about the EBIT, which is moving to the level of EUR +5.6 million compared to the EUR +500,000 the same period of 2025. This is another important positive result of the semester, which is basically a result in the sense in which despite the decline of sales, our profitability is strongly increasing, mainly to the efficiency that we are driving in the operation.
Just to further explain what I was mentioning so far, if we move to page eight, we can see the results, a bridge on the net results. It's clearly coming out from looking at the chart that the results from operation, so focusing on the attention of what we are driving in terms of operation, is showing a decline on gross margin of EUR 40 million, which is the result of the decline on sales of the EUR 35 million. This is completely offset by an improvement on cost, OpEx, in the range of EUR 20 million, which is basically saying that at the end, the performance from operation is improving compared to last year for about EUR 5 million. This is clearly one of the positive element of the first six months for 2026.
The company is strongly focused on improving operation and driving efficiency, while at the same time, cleaning the marketing and trying to position the product to, in a way, softer the decline of the market in terms of sales. If you look at the sales by channel, we move to page nine, I think that we need to comment the fact that wholesale market is declining from EUR 100 million- 88 million. No big surprise in the first half of 2026. This was pretty much expected because this is mainly driven by the order campaign that we have registered the year before, when we conclude our campaign with our own sales distributor.
Instead, what is a bit disappointing in our performance in the first half of 2026 is the decline on the retail side, which is down 8.5% compared to the previous year, the same period in the previous year. It's worth to say that out of the EUR 11 million decline, EUR 4 million are driven by perimeter effect, so reduction of shops which were not profitable. The negative performance, so the performance which is directly linked to our operation, is amounting to EUR 7 million, which is clearly mainly impacted by the decline in the store traffic. The physical decline in the store traffic, and let me say, in our shop, it's something that all the retail, the entire retail market is experiencing.
Clearly, part of this decline is surely due to the macroeconomic and geopolitical condition, which has clearly impacted the capability of consumers to spend, especially on goods that are not considered primary goods. If we look at the sales on the digital channel, I think that it's worth to comment the double speed. The positive one is the one related to our .com, which is still growing up with the like-for-like performance in the range of 10%. Despite we are increasing over the period, the discount that we applied on the website. If we look at the wholesale platform, the wholesale business instead is mainly decreasing significantly in the range of EUR 8.6 million, which is clearly coming mainly from some clean of the market, order reduction on the Russian area, and on other important key customer.
If we would like to move directly on the financial element of the performance, which is page 16. As we can see, we are managing an operating working capital as of June 2026 of about 21.9%, which is improving from December of 2025, which was sitting at 22.3%, and in line more or less with the same period in June 2025. Worth to say that the improvement in the operating working capital is mainly driven by efficiency in inventory. Inventory is improving significantly in terms of aging and quality of the stock, as well as in terms of quantity. We are reworking with new approach on the way we purchase, and we are working with better sell-through and better efficiency, which means clearly a better management of our stock and a better management of our cash flow.
The results are pretty evident because our bank debt as of June 2026 amount to EUR 95 million, which is EUR 5 million lower than the one that we had at the same period in June 2025. Despite the reduction from June 2025 to June 2026 of the sales and the reduction of sales of EUR 45 million in the last semester, we have been able to prevent any kind of cash erosion because our cash is resulting in improvement compared to June 2025 of about EUR 5 million, as I already mentioned. If we try to forecast and to have a look of what will be our full year 2026, basically we can see that we are still seeing a decline on sale compared to the full year 2025.
We will be in the area of the high single-digit for about, let's say, estimate in the range of about EUR 550 million in sales at the end of the year. We've EBITDA adjusted still in the range of the EUR 30 million-EUR +33 million, which means that we are still working well in terms of recovering profitability, and we are confirming the estimates for the EBIT remain unchanged in the area of the 2%-3%. The dramatic improvement is coming on the financial position, where we are expecting to close the year in the range of the EUR 40 million-EUR 45 million, which means that the new approach on managing working capital and the cash that is produced from operation, despite the decline on sale, is strongly positive.
I think that the last point that I'd like to comment is the fact that we are still working deeply on finalizing our review of the business plan. Mainly an adjustment and a communication related to the year 2026, 2027, 2028, and 2029. We are expecting, and we will be ready to make further communication on this point, probably in early September. Thanks. We are really open to guest questions.
This is the call conference operator. We will now begin to Q&A session. Anyone who wishes to ask a question may press star one on the touch-tone telephone. To remove yourself from the question queue, please press star two. We kindly ask to use handsets when asking questions. Anyone who has a question, may press star one at this time. The first question is from Oriana Cardani of Intesa Sanpaolo. Please go ahead, madam.
Yes. Good afternoon. Thank you for taking my questions. The first one is on the evolution of the gross margin. Do you see further room for expansion in the second half of the year? The second question is on the one-off cost. Can you provide us with an estimate of the one-off budgeted for this year? Third question is on current trade. Can you give comment on July trends? Have you got any first preliminary feedbacks on the spring/summer collection by customers? Thank you.
I did not really take note.
The one on margin.
The first one is related to the margin, to the gross margin. Gross margin is improving. Is improving from, I guess it's 52% to 52 point something percent compared to 50% last year, if I'm not mistaken, or the previous period.
Yes, we are still seeing an improvement-
Yes.
going through the end of the year.
This is mainly driven again by the mix effect because we are still counting on a weight of the direct to consumer, thanks also to the website, which is going to give more weight to the direct to consumer compared to wholesale. At the same time, we are expecting to get more efficiency that we have embedded in the full winter campaign, which is really a campaign where the cost of goods is normally higher and therefore the percentage, our improvement that we made on the way of purchasing is going to give us another boost in the range of 0.5 overall basis point.
In any event, the gross margin is going to go from 49%-51%, more than 51%. Second question was, if I may ask again. The one-off costs. One-off costs are estimated approximately EUR 3.8 million for the full year 2026.
Current rate.
Current rate.
The current rate.
Excuse me one second.
Current rate is an interesting question. Market is still tough, no doubt about it. We are facing a slight improvement, as a matter of fact. Not enough to recover, needless to say, the loss that we have recorded for the first six months, sorry, for the first two quarters. As far as the spring-summer 2027, we are now selling the new collection to the wholesale channel. Our first result is that we are improving significantly on almost all the collection. We are seeing a bit of more reflective on the women's sneaker, not massive problem. However, we should always consider that we are rationalizing very significantly some of our sales channels and clients. We are getting out of clients where we feel we have too big of a credit risk. At this stage, with this market, not only we suffer, but our clients suffer as well.
The danger is to consider that nothing changes while everything changes. We do have clients, not just in Italy, but also in Italy. Our very most important client in Italy is currently a question mark for us, and we are reconsidering our commitment to this customer. I can't make a disclosure at the moment, but in due time, we'll do it. We do have the same issue in Russia, for example, where we have clients asking for terms and conditions that are unacceptable in terms of payment terms, in terms of not being covered by proper insurance or insurance companies. This is a problem that is affecting some other regions we are facing. It's enough to open a newspaper, listen to news. There are significant issues with temperatures across Europe. France is on fire. Spain is on fire.
There are issues, these issues do have an impact on our and their creditworthiness. We need to keep that in mind because there is no point to run after turnover if that turnover does not translate into a sustainable profitability.
Clear. Thank you.
As a reminder, if you wish to register for a question, please press star and one on your telephone. For any further questions, please press star and one on your telephone. Gentlemen, there are no more questions registered at this time.
Thank you. This is Francesco. If there are no further questions, we are very happy to take any. If there are none, I would like to thank you very much for the only questions we got from our analyst. I do hope that our reaction or our feedback was satisfactory.
Thank you. Ladies and gentlemen, thank you for joining. The conference is now over. You may disconnect your telephones