Geox cautious on 2015 targets, flags problems in China

Italian shoemaker Geox said on Thursday its operating and net profit would rise this year but stopped short of confirming its financial targets due to problems with its distributing partner in China.

Geox reported a 9.3 rise in 2014 sales to 824 million euros ($908 million), beating an average analyst forecast of 810 million euros based on Thomson Reuters SmartEstimate.

The group forecast sales of 887 million euros this year in a 2014-2016 business plan it presented in November 2013 as it embarked on a turnaround of its business.

But it is now looking for a new distribution partner in China and a new partnership is unlikely to be in place before 2016.

"Asia Pacific, which represents around 7 pct of annual sales, cannot be expected to grow in 2015," a Geox top executive told an analyst call.

Geox said it had filed for arbitration to review its accord with its Chinese distributor as the partner wanted to drastically cut investments in new shops while keeping an exclusivity agreement in place.

The distribution accord accounts for around 40 percent of Geox' business in China, where it also directly operates shops, and 1 percent of its total sales, management told analysts. The crisis in Ukraine is another factor of uncertainty.

Geox swung to an operating profit of 4.9 million euros in 2014, from a loss of 34.6 million euros a year earlier, as same-store sales rose 7.9 percent.

Earnings before interest tax, depreciation and amortisation (EBITDA) met analyst expectations rising fourfold to 43 million euros. The November 2013 business plan targets EBITDA of 110 million euros in 2016.