Nov 18, 2013
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Geox turnaround plan targets 1 billion euro sales by 2016

Nov 18, 2013

MILAN, Italy - Italian shoemaker Geox SpA is targeting annual sales of about 1 billion euros ($1.4 billion) by 2016 under a strategic plan that also sees a return to profit growth via international expansion.

La boutique Geox de Vérone

Geox, a maker of leisure footwear touting perforated soles that stay waterproof while allowing the feet to breathe, said on Friday it would refocus on its mainstay footwear business after scrapping a clothing line.

The company, whose domestic sales have been squeezed by Italy's lengthening economic downturn, said it aimed to improve on sales which stood at 807 million euros in 2012 by opening more stores in growing markets.

Presenting the business plan in Milan, Chief Executive Giorgio Presca - who came up with the perforated sole idea while walking in the mountains - said Geox's efforts to simplify its business had already been "pretty aggressive".

Geox, which also targeted annual core earnings or EBITDA of around 110 million euros in 2016, had on Thursday posted EBITDA down 56 percent in the first nine months of 2013.

The "targets are not out of reach, though they need positive macroeconomic trends in our view," said one analyst.

The group had said in July it planned the strategic rethink which it promised to detail this month.

Sales in Italy, which provides over a third of Geox's revenue, dropped 24.1 percent year-on-year in the first nine months as the country's longest recession in 60 years squeezed consumer spending.

To guard against weakness in Italy, Geox is investing in new shops and securing wholesale customers in markets where it sees growth, such as the Nordic countries, the United States and China.

These countries "represent the biggest potential for Geox in the future," Presca said during the presentation.

Geox has closed 100 less-profitable stores this year across its network and opened 158 in places including Beijing, Shanghai and Hong Kong.

Geox wrote in slides to accompany the presentation that it expects its business in Europe, the Middle East and Africa and the Americas to stabilise in 2014 and start growing again in 2016.

"We are confident in our business plan," Chairman Mario Polegato, who holds a 71 percent stake, said during the presentation. "I want to maintain my current percentage of shares."

Shares in Geox rose 3 percent to 2.06 euros by 1325 GMT, taking a place among the top 10 gainers on the Milan bourse, which was broadly flat. ($1 = 0.7430 euros)

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