Geox S.p.A. (GEO) Earnings Call Transcript & Summary

Ladies and gentlemen, welcome to the Geox Group Full Year 2020 Results Conference Call. [Operator Instructions] The call is chaired by Geox Vice President, Mr. Enrico Moretti Polegato; and the CEO, Mr. Livio Libralesso. Now I would like to turn the conference over to Mr. Enrico Moretti Polegato. Please go ahead, sir.

Good evening, everybody. For over a year, health, economic and social conditions have been severely affected by the pandemic. In this context, Geox has taken all action necessary both to protect the company's foundations and to define a business model that is more in line within the buying behavior among consumers. These measures have allowed us to keep our financial position under control, achieve significant cost savings and, above all, speed up the reorganization of the group's distribution network. Geox is defining a new business model focused on the digital channel and consumer centricity. On this basis, we are resolutely continuing with the process to rationalize all nonprofitable assets in order to free up more resources for initiatives with greater potential such as our e-commerce channel, advertising and high-growth markets such as China or Russia. Despite the overall complexity of the situation, we have recorded encouraging results over the last few months, giving us confidence in the validity of the strategies undertaken. In fact, we have just successfully completed our restructuring process in Canada, and we are about to conclude similar actions in other important countries. These measures will create a more efficient store network that is well suited to the current environment and to the digital channel. The e-commerce channel already recorded 41% growth in 2020 and now is growing at an even faster pace in 2021, up 70%. Positive results are also being recorded in Russia and China, where store closures are no longer an issue. We are seeing double-digit growth in these markets. The key technologies and project in the spring collection, Playkix and Spherica, are also performing well. These projects are the result of our uninterrupted commitment to results and innovation. They are and shall continue to be supported by TV advertising campaigns in all of our main markets. Conditions are still difficult, but we are confident that the work we are doing, together with our brand distinctive features and the gradual return to business as usual, will help us to embark on a new path of growth and profitability. This is all from my side. Thank you for listening to me. Let me hand over to Livio, our CEO, for the comments on our results. Thank you again.

Thank you, Enrico. So good morning and good afternoon. Thank you for joining us today to discuss the full year 2020 results. Geox already disclosed the numbers regarding the sales trend in the press release dated January 29, and so today, I will just give a quick overview to top line information in order to focus on strategy, current trading profit and loss and some trends for 2021. Let's start with Slide #2 with the highlights. And so sales at EUR 535 million, down 32% (sic) [ 33% ] are due to 2 main reasons: the rationalization of the store network and the impact on wholesale and the retail of COVID-19 emergency. The commerce channel continued to record strong growth in 2020, plus 41%, thank you also to the acquisition of new online customers. As of December 31, the digital channel, direct and indirect, represented around 26% of group's total revenues with a good level of profitability. And 19% direct e-commerce on DOS sales and 37% wholesale e-commerce on wholesale sales. This means that the digital transformation of the business model is gathering speed aimed at perfectly integrating the physical and digital channels with an increasingly omnichannel approach. I will say a new retail approach. The adjusted EBIT is negative EUR 111 million, reflecting the material drop in sales, while the management has been able to almost compensate the various costs due to the emergency with a 15% reduction on operating expenses, I mean, close to EUR 60 million. Finally, the group balance sheet is quite solid, and the net debt is under control, thanks to the action taken. The net financial position at December 2020 pre-IFRS 16 amounts to euro EUR 99.8 million of debit versus a cash position of EUR 6 million at December last year. Focusing on slide on current trading. In a while, you will see that the review of the business model is recording its first positive results. It is aimed at defining a more streamlined and efficient distribution network with a perfect integration with the digital channel. The start of 2021 is showing a number of encouraging signs in the market and channels less affected by the closures. Positive like-for-like sales performance in Russia, plus 18% since the start of the year and plus 18% also compared with 2019. In China, we're recording a plus 76% since the start of the year. The direct e-commerce channel has recorded in 2021 even stronger growth with plus 72%. We are also experiencing encouraging initial sales figures for the new innovative projects launched with the spring/summer '21 collection. I mean, Spherica for the adults and the Playkix for kids, also sustained by a TV advertising campaign that will be live in a while. Unfortunately, all in all at a global level, current trading is negative 26% year-to-date due to the fact that last year, pandemic started in March in Europe. So January and February suffered from a hard comparison base. The Board of Directors also approved a proposal to submit to the next shareholder meeting for a new long-term incentive plan for management in the form of a stock grant and cash to support the objective for the 2021/2023 strategic business plan, which is in the progress of being defined. Please go to Chart #3. Here, there is a summary of the 2 streams of action taken as a response to COVID-19. On the left, there is the management of the emergency. And the top priority has been to protect the health and safety of our employees and customers. The safeguard of the liquidity position. And all in all, the group has been able to generate cash in the second half, maintaining the debt under control. In addition, an effective cost management, as said, has been delivered with the EUR 60 million of reduction. On the right, we wanted to underline that COVID-19 is also extremely pushing ahead the speed of the transformation initiative such as the network optimization. So we are focusing on high-quality, larger and integrated stores within digital. We're implementing a deep review of the geographic footprint with important savings. We announced the closure of an additional 110 smaller and less profitable stores and the opening of 20 larger stores in the next 3 years. And we are also closing some stores where the level of rent is no longer deemed to be in line with the current economic scenario. The second pillar is the focus on digital, and we are rolling out the entering in a new marketplace of important partners in Europe and North America, the new direct e-commerce site in Russia will be launched within year-end, and we are also strengthening the digital -- our relationship with the digital platform in China like Tmall, VIP.com and JD.com. We are also reinforcing the investment on our capabilities regarding the direct e-commercial channel. Last but not least, a merchandising boost approach. This is really part of the strategy. We are going to use innovative merchandising tool, leveraging on a better segmentation of the distribution. The aim is the reduction of the number of SKUs with a focus on best seller, iconic product in order to increase the gross margin. We are also using the customer data and analytics to offer more product in line with customer needs and the leveraging on a centralized inventory strategy in order to make our inventories available where the demand is showing. Let's go to Page 4. There are some early sign of improvement in Geox relevance versus the final customers. According to a vast survey made by KPMG involving more than 100,000 customers in Europe and 235 brands, it is important to underline that Geox has been included by KPMG in the list of Italy's top 10 companies regarding Customer Experience Excellence and Omnichannel Index. You can see that we are together with Amazon, Apple, Netflix, Adidas, Zalando, Nike, PayPal. So it's really -- we are really proud of this third-party survey. At the same time, Geox has been also named by Ipsos and Largo Consumo as Italy best footwear brand in terms of the shopping experience in our brick-and-mortar chain. As far as sustainability is concerned, Geox has been awarded for the best project on sustainability for e-commerce packaging in relation to deliveries. And regarding our people, Geox has been named as Italy best training scheme in 2020 in digital learning and upskilling project by the Italian Association on HR Managers. Finally, this is really important because, for us, Russia is doing really well, Geox Russia has been named by the Committee for Economic Development in Russia and the Conference Board as the best company in Russia in 2020 in relation to the quality of product and service in footwear sector. And Geox Country Manager in Russia has been named as the best manager in our industry in 2020. So let's say there are some soft indicators regarding the discontinuity that we are trying to push on performances regarding Geox. Please go to Page 5. This chart helps to explain that in our industry, COVID-19 is impacting 4 season in a row that you find on the left. Retail-wise, the lockdowns and the restriction to the mobility of people and the cancellation of any tourism impacted both spring-summer '20 and the fall-winter '20, especially during the full-price periods. Unfortunately also, spring/summer '21 is impacted by the current lockdown and maybe also for winter '21 might be weak, at least in countries where vaccination are low. However, we assume that like-for-like in 2021 will be positive double-digit compared to 2020. But the assumption as of today is not to reach the level of 2019. Wholesale-wise, we can say that spring-summer '20 has been affected by cancelation and for winter '20 by the early hard stop of the initial order campaign in March '20. In 2021, according to our portfolio, wholesale is expected to be double-digit positive compared to 2020 but, again, still lower than 2019 due to the prudent approach of our clients in the initial order campaigns. Opportunities may arise from in-season reorders. Let's move to the current trading analysis. Please go to Page 6, where there is the current status as of week 10 or March 14 of lockdowns regarding our store network. 20% of the network is closed during the week, and this percentage grows at 34% in the weekends, I mean, including the closure of commercial centers like in Italy. And unfortunately in Italy now, we have just started the 3 additional period of lockdown in many, many regions. On the left, there are the year-to-date current total like-for-like performances split by continent and the contribution of online only. So you see that North America, total is, like-for-like, minus 45% with an online plus 63%; Italy, like-for-like year-to-date, minus 34%, online plus 36%; Europe, minus 29% year-to-date and the online is plus 84%; in Russia, plus 18%, as I have said, also compared to 2019; in Asia Pacific, the like-for-like DOS is plus 39%, including online, plus 33%. Page 7 to see additional information on current trading. After a tough comparison base in January and February 2021, now that we're likely starting to benefit from an easier comparison base, the first 2 weeks of March, week 9 and week 10, like-for-like is plus 23%, with brick-and-mortar flat notwithstanding the closure and online up plus 120%. Year-to-date, in any case, as I said, the like-for-like is minus 26%. Please go to Page 8 to see trends in traffic and like-for-like. You can see that there is a perfect correlation between traffic and sales. However, like-for-like is steadily performing better than traffic, and this is due to the fact that all the key -- the retail KPI and especially the conversion rates are improving. You can see also the spike in week 10 in our like-for-like. Please go to Page 9 to understand the reason behind the growth of e-commerce experienced in all the main countries. As said, the 2020 year-to-date is up 41% and our online and represent 19% of sales, DOS sales. 2021 year-to-date is up 72%, represent 32% of DOS sales. 30% of the revenues came from our loyalty program customers, and the growth is driven by kids, up 100% in full year '20 and also in 2021. So really, kids -- baby and kids are performing really well during these months. Go to Page 10 to comment net sales by channel very quickly. Wholesale is down 28% impacted by the pandemic and mainly due to higher cancellation in spring-summer '20 for EUR 21 million. Initial order decrease for EUR 50 million mainly regarding fall-/winter '20 due to the hard stop of selling campaign in March. And in addition, a delivery shift to 2021 in the region of EUR 20 million, I mean, no early deliveries of Spring-Summer '21 incurred in 2020. Franchising is delivering a real big drop of minus 49%, EUR 18 million due to the store closure during the lockdown and EUR 17 million due to the rationalization of the perimeter, minus 17%. There is also a delivery shift of EUR 6 million to 2021. DOS is down 35% and totally in line with the like-for-like. And the short difference is due to the store closure and the perimeter during 2020. On Page 11, a very quick view to net sales by region. Italy, minus 45%, has been more impacted by the store closure, 17% of the perimeter given the concentration of DOS and franchising stores in this country. Europe is down minus 27%. We are quite, let's say, satisfied because, as you can see, we are performing a little bit better than competitors in Europe. And Europe has been also less affected by the rationalization because it was just 9% of the perimeter. North America is down 46%, having a higher weight of DOS. And especially, Canada is experiencing still today a slow recovery in traffic given the particular distribution footprint, really big commercial center that are really suffering from the limitation of movement of people. Rest of the world is down 27% with the impact mitigated by the positive result in our wholesale in Eastern Europe and the strong performance in Russia, where DOS delivered good results with a double-digit positive like-for-like also in Q4 last year. On Page 12, net sales by product. As a matter of fact, footwear and apparel performances are similar, and apparel continues to be in the region of 10% on total sales. On Page 13, you can find the store network evolution. The rationalization plan is ongoing. And in 2020, Geox experienced 107 net closure, as planned. It is important to mention that the Canadian reorganization process has been approved by the court and finalized. So now the company is in [ bonus ] again with a very positive result. In terms of perimeter, we have been able to close 12 stores and keep open 20 stores, out of which 12 with just rent fully variable and no minimum guaranteed. And for the remaining 8 stores, the rent had been significantly reduced in the region of 35%. In addition, we have an option to disclaim every stores within 12 months without paying any penalty in case we decided to do so. The outstanding debt of CAD 4.2 million or EUR 2.8 million has been settled through a payment of a lump sum of CAD 0.5 million, I mean, EUR 300,000. So in 2021, there will be a positive effect of the reversal of the cancellation of the debt accrued in 2020. That was CAD 3.7 million or EUR 2.5 million. As you know, as announced in January, we have also approved a new rationalization plan for DOS 110 in the next 3 years, and you can find the details in the chart. On Page 14, there is the income statement. First of all, it is IFRS 16 compliant. And in the annex, you can find the profit and loss excluding IFRS 16 impact. Sales, EUR 535 million, as commented. The gross margin is EUR 232 million or 43.3% on sales with a 620 basis point decrease. 350 basis points are due to an extraordinary EUR 18 million write-down of inventories considering the increase of unsold goods due to COVID-19. The remaining 270 basis points are explained by a different channel mix with a lower weight of DOS revenues, a higher average markdown due to the closure of the store during the full-price season where instead the discount policy has been reduced and some negative production variances linked to COVID-19. The total operating costs are EUR 343 million, down 15%, with a net saving of EUR 59 million, out of which EUR 37.5 million in our DOS chain for personnel and rent reduction; EUR 14 million personnel and G&A at the headquarter; EUR 3.2 million advertising and promotion; and EUR 4.3 million other costs, mainly logistics and selling and distribution expenses. As a matter of fact, in any case, we might underline that we incurred as an extraordinary cost due to the COVID EUR 72 million, out of which EUR 18.4 million, as I have said, the inventory write-down already commented in the margin; EUR 13.6 million of impairment and restructuring charges -- it is important to underline that in any case, this is exactly the same amount we recognized in June, so the outcome is that December confirms the valuation made in June and no additional charges; EUR 6 million regarding receivable; and EUR 5 million regarding other extraordinary costs. I want to add that this information, if we consider the days with 0 turnover due to the closure, during those days, the company incurred EUR 28 million of selling expenses regarding DOS. And these are part of the EUR 72 million I said. The EBIT is at minus EUR 111 million. Important to underline that we did not recognize EUR 25 million of deferred tax assets. And so the net loss is more or less equal to the pretax result. So it means that for the next more than EUR 100 million pretax, Geox will not pay or will not incur any taxes in the future. Please go to Chart 15 for the balance sheet. It remains quite safe, and invested capital is decreasing in line with the depreciation of the right-of-use of our stores. Please go to Chart 16 to comment on net working capital and net financial position evolution. As you can see, we've been able to maintain stricter control over working capital, and it is lower than the one at the end of 2019. The decrease is due mainly to receivable, really strict management of receivable, minus EUR 34 million. And also, inventory are down, thanks to the action taken on a careful buying in 2020 regarding both for winter '20 and the early buying of spring-summer '21. And you can see on the right that in terms of net financial position before IFRS 16 and the fair value hedge of derivative, we can see a slightly positive cash generation in the second half. Please go to Slide 17 to comment on the cash flow statement. I will comment the evolution excluding IFRS 16, so the last 2 columns on your right. The free cash flow is negative. And consequently, you can see that the cash flow from economics is negative of EUR 55 million. Cash flow from operating working capital and current assets and liabilities is negative EUR 21 million. And in addition, we spent CapEx at EUR 18 million, exactly in line with the rationalization we announced early in April last year. So at the end, the net financial position is a debit of EUR 99.9 million after the fair value hedge of derivatives. Please go now to slide 18 for the outlook. As you know, it's very hard to provide an outlook given the actual context and especially regarding both the duration and the extent of the new lockdown measure in all of the group's main markets. However, there are some trends. So sales performance in the first 10 weeks of 2021 has continued to be affected by temporary store closure in the main European markets, while last year, the effects of the pandemic only began in March 2020. For this reason, from the beginning of March onwards, like-for-like sales performance will benefit from really a weak basis of comparison, considering the fact that on average, over 70% of our DOS was temporarily closed last year in March and April. On the other hand, we have seen a positive trend that is being recorded in the main markets where temporary store closure are not currently an issue, I mean, Russia, 18% positive; China, 76% positive. And also, the direct e-commerce is recording even stronger growth, I remember, 72% in 2021. And based on the current information available, we can expect the store that are closed at the moment to gradually start reopening from the second half of April 2021, although there is still a great deal of uncertainty. However, in the second half of the year, we hope that the vaccination campaigns should help to support a gradual return to business as usual. So all in all, we assume that the like-for-like in 2021 will be positive double digit compared to 2020, but the assumptions of today is not to reach the 2019s level given the tough Q1 results. In 2021, wholesale is expected to double digit positive -- to be double-digit positive compared to 2020 but, again, still well below 2019 due to the prudent approach of our clients in their initial order campaigns. Opportunities may arise from in-season reorders. The group also continues to be focused on continuing its initiative to protect the company cash flow and cut operating cost, as was the case in 2020. And in particular, over the course of the year, cash flows are expected to benefit from the sale of certain products from 2020 collection, with -- which, despite being paid for, have actually never been presented to or seen by our customers due to the store closure. So cash flow will also benefit from this product being sold via the group outlet. In the meantime, the group is really keen to free up resources to continue to invest and pursue its initiative aimed at transforming and boosting the efficiency of the business model based on customer centricity and a fully omnichannel approach and a segmented distribution. I'm done, so we are now ready to open Q&A session and take your question.

[Operator Instructions] The first question is from Francesco Brilli with Intermonte.

Can you hear me?

I hear you somewhat.

Hello?

Please, Francesco, go ahead.

Okay. Just 2 quick questions from my side. The first one is on A&P costs. I see that the level of A&P overall in 2020 has not been lowered significantly. I expected -- now I just wanted to ask what to expect for the next year, if you're continuing to push another tightening on promotion and if you have some color to share with us on the results of the last campaign you recently launched on the market on the campaigns for kids and all the other investments in promotion. And the second one is if you could be somehow a little bit more granular on the -- on what we should expect for the like-for-like for the next year. I understand that growth in double digits, not growing at the same level of 2019, but if you could give us -- provide us with some indication on which percentage of 2019 that you're aiming at.

Okay. Francesco, so for sure, we are, let's say, rationalizing the company in order to free up resources. We want to invest these resources in advertising and promotion and in the investment in the, let's say, transformation journey that we started a couple of years ago and now we are really pushing because, as you have seen, results are encouraging. So sooner or later, so -- and in my opinion, today is time to say in 2022, so today's spring-summer, we will try to revamp the brand. And this is really the first -- the top priority that -- because, let's say, a brand -- to create a brand revamping and then to be able to maintain a momentum and increase the relevance for our final customers is the really quick -- we might say that will immediately make things better for Geox because, how to say, merchandising boost and reducing the SKU, a new approach to our sourcing are absolutely important but will deliver results in 12 months from today. So for the time being, it is also important to start to wake up our customers, I would say, in order then when the synchronized projects will be ready at the same point in time and then the customer will visit the store, he will find the proper product, the proper visual merchandising, the proper -- and we'll learn then also a new language and a way to communicate our brand values according to the new strategic marketing project that we are putting in place. So let's say that as a matter of fact, we will keep -- you have seen that we are in TV also during these tough times. And as a matter of fact, back-to-school last year has been really important. The fact that we did a TV campaign really created momentum regarding the brand, and you have seen that kids is really booming. And also, in the collection of fall-winter '21 campaign, the really positive result experienced by our wholesale channel helped a lot in order to gain good orders regarding kids. And so to make this long story short, it is clear that we would like to invest in advertising in 2021 more than in 2020. As a matter of fact, we are really prudent today because there is the new campaign regarding Spherica that is ready to start, but we are postponing country by country week by week the launch of the TV campaign because really that -- this project, Spherica, let's say, sold more than 100,000 pairs in the wholesale and also we decided to put 100,000 pairs in our retail network. So it's really important to create the momentum. But for the time being, in any case, just the [ win-loss ] and the presentation of this product in the stores, joined with the advertising campaign for Playkix, immediately these 2 products jumped to be the top seller of spring-summer '21 campaign. What about the like-for-like? Your second question. Difficult to say. However, in my opinion, I would say, at the least, we should recover 50% of the gap. So maybe the bracket is quite large. I would say a minus 10% or a minus 20% compared with 2019. And this is totally due to the expansion of the lockdown measures. As a matter of fact, it is quite tough because Germany is closed still since the beginning of the year and is going to open, I hope, at the end of March; U.K. is closed from the beginning of the year and will open early April; Asia has just reopened a couple of weeks ago; Czech and Slovakia are closed. So it's quite difficult to make a forecast. My expectation, if we are lucky, we could, let's say, land at minus 12%, minus 13%. In case of a worst scenario, that will impact just the first half. It could be in the region of minus 15%, minus 20% compared to 2019. In any case, plus 30%, plus 40% and even more compared to 2020. But the comparison base is not so meaningful. We must -- and internally, we consider 2019 as the comparison year. 2020 is just not meaningful.

The next question is from Marco Baccaglio with Kepler.

I have 2 questions. The first one is if you can help us regarding this comparison, 2021 against 2019, understand how much sales will be lost due to the closure of shops comparing the 2 period. Any clarification on this like-for-like between minus 10% and minus 20%? This is, I assume a number, which is also including online. And the second question is on the cash flow statement. You're obviously operating with less shops. You had only EUR 18 million of investments in 2020. What should we think is the right number for Vision '21/'22?

So starting from the CapEx, yes, we have been really strict in 2020, EUR 18 million. 2021, if turnover will improve, as we were commenting before, maybe there is room to increase eventually the CapEx, I would say, in the region of EUR 25 million total. However, before I have to see the increase in the turnover, and then I will release eventually CapEx to be invested for sure in the IT platform for the digital transformation and eventually also in the store network. As you have seen, we keep investing in the store network because we did a really strong brand statement in Paris with RUE DE LINOIS and really a nice reshuffle of the stores. And the performance are -- is positive starting from mid-December. So notwithstanding the tough situation in Paris, RUE DE LINOIS is performing well. So this demonstrates that the renewal of the stores helps the brands and the path to better quality and better customer perception. And also, we did really a brand statement, opening it with supporting our partner, a really important store in Dubai, at the Dubai Mall. And also, we are opening in Russia. So let's say, in any case, from EUR 18 million to EUR 25 million, having a look to the development of the sales and of the profitability. Regarding the like-for-like, yes, it includes the online. So it is the total like-for-like. And it's -- what I can say is that in each country, when we are going to reopen, we see immediately that there is a rebound. I'm not able to understand if this is due to the fact that the people are waiting for the reopenings, and so it is a sort of rebound, and then it will normalize and stabilize once the reopenings will be, let's say, the -- at a normal speed. However, I think that the projects we are implementing in customer experience and customer excellence, as we have seen, we are winning, let's say, rewards. And this is really -- I have been really surprised that people are not, let's say, pushed there but, as top of mind, indicate the Geox both on the customer retail excellence and in omnichannel integration and as the best retail chain in Italy regarding the shoe business. So it's really important, I think, that the efforts we are doing to improve our retail KPI that are all improving, as you have seen in the chart. We are always up more than 20% performance compared to the drop in traffic. So profitability of the stores -- of the remaining part of the store that we consider strategic for the brand position is really important. And consequently, we have also hired a new leadership in the retail channel, really strong, in my opinion, with experiences made in Foot Locker, in Desigual, in Polo Ralph Lauren and, consequently, with really an international experience and the sort of plug-and-play approach because we have been able to convince this guy to join the project and is really excited. And I am really seeing that our approach to retail must increase the profitability. So I don't know from 20% to -- from 10% to 20% below 2019. Today, I would say, more or less, 15%. But it is important to reopen the chain, and then we will see all the projects, the efforts and the result that we are pushing in our retail management. As a matter of fact, spring-summer '20, fall-winter '20, we have not been able to see the results unless the improvement in the customer experience due to the, as indicated, the store closures.

Sorry, Livio, I did not catch the issue about the stores which have been closed for restructuring you are applying. So what were the sales of that -- were in 2019 of the stores that you're closing more or less?

No. I said that if we consider the base of 100% closure, so, I mean, store by store, no revenues, those stores -- let's say the group incurred for those stores EUR 28 million of costs.

No, no, my -- so I'm sorry, maybe we do not understand each other. You are closing stores. So you closed the 107 DOS in 2020. You're going to close another 45 in '21. So with a 150 store -- 140, 150 stores, how much were the revenues of these stores which are not there anymore in 2021? How much was the business that they were generating in 2019?

So for the new closure, 110, the impact will be in the region of EUR 65 million to EUR 70 million. And the impact on the forward contribution will not be, let's say, material because they were not big, loss-making stores. What we can say is for sure, efficiencies in transportation, in warehouse management and in the retail structure. So for the other -- or the number of store we closed during 2020, I do not remember the number today because I have in mind that the average this year, that is in the region of EUR 30 million. But I can give you the information by mail using a similar analysis.

[Operator Instructions] Next question is a follow-up from Marco Baccaglio, Kepler.

I have a last question on e-commerce. You're giving very good figures. Is it obviously, I understand, including a change of perimeter? So in countries where you were not offering e-commerce and now you have it? So the question is, what is your degree of coverage of e-commerce in your markets? Are you almost done with extension of e-commerce globally? Or how much is it left?

Let's say that this is really a like-for-like because we in-sourced the e-commerce in Italy in 2018, and then we launched e-commerce in U.S. and Canada in 2019. And in China, let's say, those numbers include Tmall and JD. So it is really like-for-like. What about 2021? For sure, we are going to launch the e-commerce site in Russia, I hope, within November. So let's say no material impact in 2021. But for sure, it will be important in 2022. And we are also going to open VIP.com in China. And the other, let's say, perimeter effect will be that we are live with the first-to-marketplace in France with La Redoute. And now we have a plan to roll out 15 marketplace in 18 months. So this is also a change in the perimeter. I have a -- and the figure regarding what you asked regarding the perimeter, so let's say that in DOS, the perimeter effect, the closing was in the region of, as I said, EUR 24 million in '20 -- 2020. I don't remember the 2019 full year period. But I can give you this information. For franchising, it is a little bit more because the perimeter effect of franchising is EUR 12 million plus -- so close to EUR 17 million, EUR 18 million.

Gentlemen, there are no more questions registered at this time.

Dana. So thank you for your attention, really appreciated. In any case, if you may have any additional question or doubt, feel free to contact me or Simone Maggi, and we will be happy to answer. Thank you very much for your time.

Ladies and gentlemen, thank you for joining. The conference is now over, and you may disconnect your telephones.