Geox looks to emerging markets to return to profit
today Jul 31, 2013
MILAN, Italy - Italian "breathable" shoe maker Geox plans to return to growth by closing unprofitable stores, pushing harder into emerging markets and cutting costs through layoffs and a reduced product offering, the company said on Tuesday.
Geox forecast continued pressure on its operating profit margin for the rest of 2013 as it posted first-half earnings before interest, tax, depreciation and amortisation down 53 percent to 26.8 million euros ($35.51 million).
Sales in Italy, where Geox makes over a third of its revenue, dropped more than 20 percent from a year earlier as recession-hit customers in the medium-price bracket where it aims its shoes and apparel avoided the shops.
Geox said it wanted to expand in China, Hong Kong and Russia and would close under-performing stores "aggressively" to reverse a slump in total sales, which declined by 10 percent, in line with a forecast the company made in May.
"Our strategy is to clean up our network once and for all in a total manner," Chief Executive Giorgio Presca said on a conference call.
The company said it was negotiating 71 redundancies in Italy and would reduce the clothing range it offers alongside its staple shoes, which aim to blend style and comfort and make up around 85 percent of revenue.
Geox will outline a detailed business plan in November.
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