OVS SpA

MIL:OVS

Earnings Call Transcript 2021-Q3

[Operator]

Good afternoon. This is the Chorus Call conference operator. Welcome, and thank you for joining the OVS 9 Months 2020 Financial Results Conference Call. [Operator Instructions]

At this time, I would like to turn the conference over to Mr. Stefano Beraldo, Chief Executive Officer of OVS. Please go ahead, sir.

[Stefano Beraldo, executive]

Thank you. Good afternoon to everybody who is joining this third quarter results call. This time, I invited to this call also one more person of our OVS team. So the call will be attended from our side from Andrea Tessarolo and Nicola Perin. But I also invited Francesco Leoncini, who is in charge of business analysis and business development. He will help me to comment some of the slide, given that he's much better than me in explaining numbers in a very effective way.

Let me only start by saying that I believe that we had, in my opinion, a terrific third quarter. In a very negative market environment and negative market dynamics, we overperformed the market largely, as will be seen in a while in a very clear way.

We had a great performance also in the digital channel, both with OVS, which is more meaningful, and also with UPIM. And also in term of profitability, it's worth mentioning that the impact on EBITDA that should have been generated simply mathematically by the margin -- by the reduction of margin implicit in the lower sales has been compensated by 2/3 with cost reduction. Only part of those cost reduction generated by state relief like Cassa Integrazione and 3/4 of this cost reduction generated by internal actions. This enabled us to limit the reduction of EBITDA generated by the lack of sales.

On the other side, it's worth also mentioning that also the inventory has been managed in a, I think, highly efficient way. Because with almost EUR 300 million of lower sales, the cost of goods sold that was embedded implicit in those sales should have been about EUR 100 million. So if our company would be rigid and without the necessary level of flexibility, the inventory increase should have been approximately I believe EUR 90 million, EUR 100 million, while we are landing at a stock increase of something more than EUR 10 million. So this is -- this has been achieved thanks to a very high level of flexibility introduced in our business model.

From a business perspective, I would like to mention that in the second half, we are now almost at year-end because in January, we will start with the usual sales period. I think it's worth mentioning the great success of the challenging decision, which was to introduce Piombo in our assortment. I think this is one evidence of something that rarely is done by value companies. I think we are the only company which has been able to bring on board a luxury brand, a luxury designer passionated with the idea of giving his creativity to the advantage of the customer of a democratic inclusive value player like we are.

And as a matter of fact, about at the end of the season, I'm happy to say that Piombo is generating a turnover per square meter which is 50%, 5-0, higher compared to the remaining part of demand and compared to the performance generated by the space that 1 year before was allocated to other -- to similar category without using the Piombo brand.

We are also happy about the good growth of digital. We have been able to remove some bottleneck in our logistics system that prevented us in the first slowdown to take full advantage of the huge growth of the e-commerce demand. And now we are able to sell every day approximately 1,500 orders, managing 1,500 orders, and we are working in order to increase this limit.

And finally, I would like to mention the excellent performance in the quarter of the underwear. As a general trend of the market, you might have seen also some figure about other player in this segment like Calzedonia, which are reporting good growth. We are reporting as well the biggest growth in this segment, either in men and in women. So this Piombo and underwear, this segment has been the driver for the good performance of OVS in the third quarter, combined with the usual good behavior of the kid segment.

So having said that, I leave the word to Francesco, please.

[Francesco Leoncini, executive]

Thank you, and good afternoon to everybody. It's -- yes. Okay. I would like to guide you through the document that you received, starting from the main themes that we will touch over the presentation.

The first one is the positive sales performance that recorded a plus 6% over the quarter, and that was also plus 10% until mid -- starting from mid-October, the restrictions related to the second wave of COVID started to limit our operations with the closure of the shopping malls. This drove, compared to a minus 3% recorded by the market, a significant increase in the market share that we will analyze also in some more depth in a moment. So OVS moved from 8.05% share to 8.2%.

The good result of sales allowed us to deliver for a second time in a row an EBITDA which is very similar to the one reached last year in -- let me say, in a normal situation. That is EUR 38 million for the quarter. And this year, were also coupled with a much higher cash generation, about EUR 50 million because this result was achieved in parallel with a strong action on inventory reduction that we will see in the working capital.

The combined effect of strong sales and actions on the inventory and the positive cash flow allowed to close the 31st of October with a net financial position of EUR 357 million, which is about EUR 35 million lower compared to last year position.

Finally, as recorded yesterday in the morning, there was the shareholders' meeting that unanimously approved the capital increase aimed at acquisition that could take place in the 2021.

And so I would move -- I would ask you further, I would move one moment to Page 11 to have a deep dive on market share. Just a few words on how market share is calculated by this independent player, which is Sita Ricerca. They calculate the market share over 12 months, so it refers to the previous 12 months. And they update every 3 months their result. So there is a big quarter that enters and the previous quarter that exits.

Given this that we tried to smooth the partial movement that could take place just in 1 quarter, we see that there are a group of 3 players that really outperformed the market in the quarter. One is well known because it's on all the newspapers, Amazon. But OVS and Calzedonia made basically the same result as Amazon and doubled the growth that was, for instance, achieved by Zalando. That is to say that the Italian consumer is true, on one side, is going into the online channel; but on the other, tends to recognize more value to the players like OVS that is constantly available on the territory and is constantly open. We try to do our best to be open also in the red zone, thanks to the kids department. And so we are trying really to be close to the consumer.

On the other side, we have Miroglio and especially H&M that this quarter really downperformed versus the market. And H&M lost almost 34 basis points in just -- as the effect of this quarter. We'll again go afterwards, in case, for further details.

Let's move back to Page 3 with the results of the quarter. The net sales, as said, are EUR 20 million higher versus last year from EUR 340 million to EUR 361 million. These results was partially reduced in terms of gross margin, in terms of profitability -- the incidence of the profitability, given the fact there was the shift in the sales period from July-August to August-September. So in a higher incidence of discounted sales. But in the end, the result was basically the same in terms of EBITDA to last year and also drove, of course, a similar result in terms of EBITDA and profit before tax. The net financial position, I said, is improving by EUR 38 million.

If we move to the following page and so to the view over the 9 months. I think the most relevant item already anticipated by our CEO is the waterfall at the bottom of the slide. Last year, in the 9 months, we achieved EUR 100 million. This year, basically due to the lockdown and to the store closed, we lost EUR 254 million. And that translated into gross margins miss, more or less, EUR 160 million.

We achieved to recover 2/3 of this loss that is close to EUR 100 million, and so closing the result to EUR 40 million in the 9 months. Out of the EUR 98 million I said, the states helped -- state support to the Cassa Integrazione was about EUR 25 million. But there are other -- about EUR 40 million, EUR 45 million are related to the negotiation with the landlords. This is the second pillar of our cost recovery.

And the third that accounts for EUR 30 million, EUR 35 million is a daily activity that each of us is trying to achieve in order to limit cost, especially at store like energy saving, reduction of point-of-sale marketing. So money attention to every cost item that could be reduced.

Page #5 provides some views on -- numeric view over the split by channel. You can see franchise doing slightly better also due to the higher weight of kids. And for the rest, I would say nothing to highlight more than normal.

While Page 6 on the working capital has some hidden pressure, let me say, as the number does not change a lot. But while on trade receivable and trade payables, this is close to normal, the results on inventory, so a limit increase of EUR 13 million, needs to be put into relation with the lower costs that we experienced over the 9 months, which accounts to about EUR 100 million.

As being, let me say, an upper end retailer, we do not buy for 1 month to the other, but we have to order the collections more or less between 6 and 12 months before. So both the spring/summer, and also partially for winter wear already purchased. And we managed through all the flexibility that we put in place starting from a couple of years ago to make a strong break in order to either cancel or postpone some orders. And so we managed to limit the stock increase to just EUR 13 million. This was on another basis of the success that then we saw on the financial position.

Moving to the CapEx, Page #7. As planned, and I think also announced even in previous calls, we reduced for 2020 activities. But we try to limit the impact on the new openings that will deliver also a further EBITDA growth in 2021. So this is the item that was less affected. While, of course, we postponed some refurbishment of current stores and some investments on the logistics.

Page #8 gives all the detail about the cash flows. I will focus on the third quarter. The EBITDA is more or less the same as last year. Then this activity on working capital, so a lower intake of goods and a strong push during the same period to consumers allowed to generate EUR 30 million more on the trade working capital line. Other more or less EUR 5 million come from CapEx reduction and other items. So basically, we increased by EUR 35 million over the quarter in this period. Of course, the 9-month view is affected by the EUR 60 million EBITDA loss incurred between March and May due to the lockdown.

Page #9 provides the picture of the ratio -- the leverage ratio, which is decreasing to 3.7%, down from 4.3% at the end of July. Of course, the results are slightly higher than in 2019. That was a normal year. So basically, this year, even in presence of the COVID and the loss of EUR 250 million sales, we managed to keep this relevant KPI under control.

Then we have some slide -- one additional point, as mentioned already fully by Stefano on the introduction of Piombo that is -- that proved to be extremely successful in -- especially in the month of October, of which we have the results. And I bring -- I take the word to Stefano to further comment on that.

[Stefano Beraldo, executive]

Thank you, Francesco. So basically, I already mentioned why we introduced Piombo. The idea was to offer to our customer base a more elevated and well-done component of our assortment without losing on the other side our ability to be completely satisfactory for our customer in term of entry level. So we are not missing our entry-level products. But with Piombo, we are trying to also introduce a new reason to visit an OVS store to new segment of customers.

And as a matter of fact, we are experiencing new traffic and new customer clusters visiting our stores, thanks to Piombo. That introduced also the reason why we are looking at other opportunities to increase traffic and interest versus our stores.

As a matter of fact, during the month of December, we introduced The Body Shop in our website and in several stores as a brand which is fitting with our beauty -- small beauty department. We introduced Tally Weijl which is a well-known European fast fashion brand, specifically dedicated to young teenagers, female, which is having trouble at European level, which is closing stores and presence in Italy but which has a goodwill with reference to those customer target that I was mentioning. And from the initial signals, it seems that it's going to be another interesting introduction.

I don't remember if I mentioned that in January or February, we are introducing in the kid segment Gap. This will enter in our website and also in our -- in some selected stores. So basically, OVS is continuing to take care of its customer base with its merchandising but also inviting some special guests, let's say, in order to compete and to give one more reason to visit our stores.

Coming to the outlook, and I go to Page 12 of our presentation. Unfortunately and also unexpectedly, starting from the third week of October, we had to cope with new restrictions put in place in order to contain the pandemic. And we had to face a scattered situation with some regions becoming red. In those regions, including Lombardy, which is the biggest for our business together with Lazio. We experienced the closure of all the store but the kid segment, thanks to the initiative that has been welcomed by the government since the first lockdown. But clearly, we suffered a lot.

And we had also to cope with the closure of the shopping mall. This is something we are strongly against. We think it is not reasonable because you can see from the newspaper and from visiting the stores of the Italian cities that as more as you close outlets, so store square meter footprint, you limit the possibility of the citizens to buy in certain stores, which are the one that might be even better controlled in term of limiting the access to a predefined number of visitors, which are the shopping mall. And closing those shopping mall, you oblige all the population to crowd and to be present in the cities where they are creating aggregation, which are causing the government to wonder what they have to do next. So this is why we decided to be a bit less convinced about the achievability of our target in term of economic results because we are still uncertain about what will be the outcome of the decision of the government. Probably today, there will be some decision regarding a possible lockdown -- stronger lockdown during Christmas.

Nevertheless, the advantage that we have generated as of the end of October was so big compared to our forecast made after the first lockdown that we might even still achieve our target. But this will depend very much from how much of the turnover lost during the next weekend, in case the closure of the shopping mall will be confirmed. And I guess it will be confirmed, unfortunately will be recovered during the other days of the week before Christmas, which is very important. So we are talking about few million of difference, not dozens of million, but this is why we are a bit less plain in confirming our economic result.

On the other side, the advantage that we have achieved today, as also because of the explanation given before regarding the working capital. In term of financial position, we are convinced that in light of the feasibility that we have today there should be no problem in achieving our financial targets.

On the other side, maybe this gives me the option also to make a comment regarding the general situation of the market. Clearly, the second wave caused another huge quantity of problem to companies which are more fragile. And we are convinced that, unfortunately, for the system, some of these companies will be forced to stop fighting. We have already several evidence in the market of companies that are not able to plan next year's sourcing and presence in the market.

And this is why we decided to go for this request of capital increase. We believe that in this moment, our company, because of the positioning versus the customer base, which is a positioning very close to families, to daily needs not as much depending from fashion, but more suitable to enjoy also the market trend, which are more inclined to privilege consumptions for a home for loungewear, for homewear for the better staying at home other than at the office.

And as a matter of fact, we are drastically reducing the sales of formal suit, for instance, or back-to-office garments with a huge increase of fleece or more comfortable dressing, which is very much in line with the OVS nature and DNA.

So we believe that because of several reasons, we are properly placed to be the preferred option once people need a basic solution -- good quality, basic solution to daily problems. And in light of this, this is why I believe we are outperforming the market compared to most of our competitor. And this capital increase which has been unanimously approved which I underline, I think, in my opinion, a great signal, means that the company is considered from us and from our main shareholder as the company that has a role to continue consolidating this market, which is becoming, unfortunately, even more difficult with companies which are even more fragile.

A couple of words about Stefanel. Maybe some of you who will have some questions. But basically -- also, as a matter of finger crossing, I prefer to minimize my comments related to Stefanel. We have been forced to announce -- to confirm our interest because yesterday morning in the local pages of Corriere della Sera. Some news were reporting the interest of 2 groups: one being the asset; two, the privatization today to the liquidation to the end of the administration and control area, which was the process under which Stefanel was managed in the last couple of years.

So we couldn't miss giving confirmation that the news were true that we had an interest and as we roll further interest is not only for the network of stores. 20, 30 stores doesn't make the difference for us but also for the brand. And in case we will be assigned this company, this growing concern inclusive of brand, we believe that due to our superior sourcing and our capacity to make garments at every level of quality, including bridge and premium with our present supplier base. This will be an opportunity for us to introduce inside OVS. As a component of the premium segment of the network because Stefanel is super reputed as a network brand, the Stefanel brand. But also, we believe that it's worth considering Stefanel as a great opportunity for us to continue giving life to this brand on a stand-alone position given the recognition of the brand, which is still high. And this would give us the possibility to play in a market with a higher price point, very close in our thinking to Zara, becoming a real alternative also to the customer of Zara, which are women mostly. Thanks to the better margin that we can generate and reducing the prices, which was one of the issues, in my opinion, that caused the Stefanel difficulties.

Stefanel is also a very interesting possibility for us to have a further lag in the kids segment with the openings of Stefanel store. We are thinking that -- we know that there is a bigger quest from our partner for a higher price point. Always in the value-premium segment, not in the premium/luxury or -- in the value bridge, sorry, segment and not in the premium/luxury, obviously.

Finally, the reputation of Stefanel at the international level might be exploited, adding eventually Stefanel stores mostly franchising to our 300 stores that we have out of Italy today.

One mention, not least, we have been awarded by the Global Fashion Agenda as the 1 of the 10 international companies out of the 86 who -- which participated this Copenhagen. There was a convention called Circular System Commitment. Basically, we have been considered 1 of the 10 best new practices, thanks to the [ echo colores ], so the identity card that we decided to launch in order to clarify and to be transparent regarding the content of our products, starting from the disclosure of the vendor, to the information regarding water consumption, CO2 tender recycle attitude of the government itself.

So that's it. Thank you, and we are here for your questions.

[Operator]

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

[Francesco Brilli, analyst]

I have a couple of questions from my side. And then the first one is on profitability. Just would like to ask if -- I see for the first 9 months, if I'm not wrong, the drop to of lower sales, is in the range of 60% into EBITDA. Is it something that we could expect also for the remainder part of the year? And also on cost savings, I see that in third quarter, cost -- incremental cost savings was -- were lower than the previous quarter than the first half. If you could provide us with a rough indication on the trend on this metric and cost savings?

And the second question is if you have some update on the scouting of the targets for your M&A activity for next year.

[Stefano Beraldo, executive]

I answer starting from the second question. And I say that, no, for the time being, there is nothing that it is more advanced than it was 1 month ago. So no, there are no news. We are looking at some potential opportunity but nothing closer to the point to be disclosed. In any case, we are only looking to Italian companies. We are looking to apparel.

Regarding the first question, I think the question is not easy for me to answer. And maybe I look to my team if they have another answer. For sure, we have a much less support from the state in the Cassa Integrazione component. Because in the third quarter, basically, we couldn't benefit a material amount of Cassa Integrazione, while in the first -- in the second, sorry, it was possible because in the second quarter -- in the third quarter, we had much less lockdown compared to the second.

[Francesco Leoncini, executive]

As for the rent, they did not give up.

[Stefano Beraldo, executive]

And same story for the rent, sure, because we accounted most of the savings related to the rents in the month of the lockdown. So there is a bit of accountant principle application here because it is not easy to allocate rent saving to the periods without a certain level of judgmental evaluation. We decided to apply the principle that the advantages in term of cost has been included mostly to the period where we had most of the lockdown.

[Operator]

The next question is from Andrea Bonfa with Banca Akros.

[Andrea Bonfa, analyst]

I got 2 questions. One is, Stefano, if you allow me, a more philosophical one. I mean after the -- fortunately, the coronavirus experienced an impact on the industry. You think that you can, let's say, manage your business with such lower working capital going forward? Or do you think nothing has changed compared to, let's say, with the previous...

[Stefano Beraldo, executive]

Sorry, sorry, sorry. The quality of your voice is not good. So if you can maybe repeat it.

[Andrea Bonfa, analyst]

I'll repeat it. I'm without headphone. Sorry. No, I was thinking, Stefano, for you after the same experience of the coronavirus, do -- you can manage your business with a structurally lower working capital? Or is -- nothing has changed in term of how you manage your business? And the second one is when can we assume that, let's say, costs, seasonality, return to normality? It will be with the first quarter 2021, if that is correct? Because I presume that you still need to fix your year-end payment with the last quarter of the year.

And the third one, you mentioned a decline in the apparel market of minus 3%, minus 3.2%. I had in mind much worse figures. If you can recap for us what's the state of the art in the apparel Italian market, just to have an idea of the progressive performance, if it's possible, and not too much of a hassle.

[Stefano Beraldo, executive]

Okay. So in term of cost and when we are going to return to normal, I would say that in the last 6 months, we had many, many learnings. From a certain point of view, I'm not going to buy anymore or I'm not going to plan anymore what is more than what I'm going to sell. And I prefer in risky times, in risky periods to buy less and eventually to experience a lower like for like in the future with -- but avoiding to create inventory growth just because I'm more optimistic.

And this will be achieved without losing too much opportunity, thanks to the strong reduction of the buying cycle. It is true what Francesco said: we buy from 6 months to 12 months ahead. But this is mostly for the kids where it is very difficult to buy in season. But on men and women, we are increasing more and more the amount of in-season order.

And basically, even for kids, what we started doing a couple of years ago and which is becoming now a regular business, is that instead of making 100% order in the beginning when we plan our needs, we fix with the vendor the 100% of the order, but we place 90% of the order. So more and more, there is an amount of the order which will be confirmed only in a second stage.

And given that we are moving into the direction of increasing our smart basic and reducing the risky fashion, we are in a position to ask and to agree with the vendors that part of the fabrics that eventually wouldn't be confirmed during the season will be carry forward to the next season. This is reducing structurally the risk of inventory without leaving the company, without the opportunity -- losing the -- without forcing the company to lose the opportunity to experience better sales compared to the ones that we planned.

So there is a structural reduction working capital. And the risk to lose like for like will be compensated by increase of in-season order and also by the increase of concession brand, even small concession. If you go in the store today, you will see brands like October or like Apricot, which are inside OVS. They make cash too for OVS. And we can sometime buy or reorder with a 3-, 4-week advanced order. So we are introducing several tools in order to protect the top line by reducing at the same time the risk in the inventory.

In term of -- and this is impacting mostly the working capital and the quality of the year-end stock. In term of cost, there are 2 components of cost, which has been reduced, I guess, I would say, structurally. Part is related to the overhead of the headquarter. Thanks to the continuous improvement in digital innovation, we are reducing structural cost.

One example for all. The pandemic caused the DNA of our sourcing structure to change. People doesn't travel anymore. So we are basically not traveling in the last 10 months. And life is continuing, and collection are made. And we are not concerned about the quality of collection for next spring.

How can it happen? With the introduction of a lot of new digital screen with a software that enables our PMs to improve constantly the quality of the planning, interacting with the vendors on a remote basis and adjusting and changing in real-time, all the components of the design up to the final model. It's incredible as we are not losing effectiveness, but we are avoiding people to make 2 or 3 trips overseas per year. And this is another element of structural reduction. Our people are traveling more in the computers now, in the web page and less in the aircraft. And this would be true also for future.

Another kind of cost that will be structurally reduced refers to cost of rent. Every research from McKinsey to Il Gazzettino, which is the local newspaper, tells to citizens that e-commerce is growing and physical store are in trouble. Our landlord cannot miss reading either McKinsey or Il Gazzettino or Il Giorno. So basically, everyone is aware that the value of the real estate is decreasing. And so part of our cost advantage, we became structural in terms of a permanent reduction of rents.

And to the extent that any time a landlord will decide that he is not willing to reduce the rent, we have to take a decision. In some case, we will remain because maybe the store is so profitable that we will continue managing that store. But in other case, we are placing -- we are noticing landlords that we are utilizing our right of early termination. And in many case, we are receiving a huge discount because there's no alternative to OVS in many cases.

So I don't know how much, but there will be millions of rent reduction on a structural basis to be carry forward for the next years.

Then the question regarding the market share. According to Sita research, market has been down in the third quarter by 3.2%.

[Nicola Perin, executive]

But in the 9 months.

[Stefano Beraldo, executive]

To be honest, we believe that -- and I told you several times, sometime when a figure were against us, now the figure are in favor of us but I repeat the same. Sita Nielsen, because of the methodology, is not able to capture bigger changes in the market. They are very clever when the market changes, 2%, 3%, 4%. But if the market changed by 10%, they can't really appreciate these big movements.

So I think that the market is down in the third quarter more than 3%, but this is personal judgment. The official figures tell that the market is down minus 3.2%. On a full year basis, the market according to Sita is down by 34%. And this market is including -- it is excluding, sorry, only the physical market. So there is part of this minus 34%, which has been shifted in favor of e-commerce.

In the physical store, the market is down 34% in 9 months. OVS is down 26% in 9 months. I hope I answered to your question.

[Andrea Bonfa, analyst]

Very useful. If I may, the last question, is that also sort of an idea in term of absolute value? Was the impact of the sales shift from July to August just in order to normalize Q2 and Q3 performance?

[Stefano Beraldo, executive]

If possible, it is. If I have this number now...

[Nicola Perin, executive]

About EUR 15 million.

[Stefano Beraldo, executive]

EUR 50 million?

[Nicola Perin, executive]

Yes.

[Stefano Beraldo, executive]

5-0?

[Nicola Perin, executive]

No. EUR 15 million or I will check. Just a minute.

[Stefano Beraldo, executive]

We have to double-check. We have to double-check.

[Operator]

The next question is from Domenico Ghilotti with Equita.

[Domenico Ghilotti, analyst]

My first question is on your inventory level. Because clearly, you were commenting on this EUR 10 million increase compared to last year. But clearly, I presume that you had also a lower purchases for the winter season. So I'm trying to understand what is the real, say, GAAP increase in the inventory level for the spring/summer that you will have to manage and to reduce for the next spring/summer 2021?

The second, also because the -- again to this question, when I look at your debt guidance, I struggle to see the kind of cash absorption in Q4 that is embedded in your guidance or, say, close to your guidance if you have this kind of normalized working capital as we are seeing in -- at the end of October. So I'm trying to understand also on the receivables and payables, they are stable but lower sales. So I'm trying to understand if there is some stretch in the receivables, credit and the payables with the clients apart from the rental payment that has been put forward.

And the last question is -- I'm trying to understand -- so the implied guidance in terms of sale for Q4 is minus EUR 30 million, so is a big drop. Clearly, we have a lot of uncertainty. Could you give us a sense of what was the trend in November just to understand in a similar situation with several lockdowns, several restriction, if the trend was similar to the implied for Q4?

And very last, I'm sorry, on the Stefanel. I don't know if they have already have some locations -- international location. Would you be interested in any international presence? You were mentioning just franchising before in your comments. So I want to double-check if you are looking for the rent?

[Stefano Beraldo, executive]

Okay. I start from third question. And I say that the only stretch which is still existing between the balance sheet of -- as of October is on their landlord, on their rent. So basically, other than a stretch, this is still a negotiation aspect. We have not finalized all the negotiation with landlords.

And there is one landlord I avoid to comment, only one, but very important, international landlord, which is still pretending to give us only 1-month discount. And I prefer to go to -- in front of a court other than accepting a discount of 1 month for a store that I couldn't use for more than 3 months. So these kind of discussions are still drawing to a crystallization of some negotiation. And there are about EUR 25 million, EUR 30 million of overdue still in place, only relating to real estate. Nothing is outstanding regarding suppliers of goods or services.

You are right. It is not easy for you to reconcile to understand why we are going to lose cash in the last 3 months. The bridge analysis is not easy even for me, but it is very clear for my team. But you have to consider that we have lost 40%, and this is another part of your question, of sales in November due to lockdown, shopping mall close, et cetera.

And even in November, on the remaining part of the network, so when we have been open, we made plus 2% or 3%, I don't remember, like for like. But the importance of shopping mall and the importance of sales generated during Saturday and Sundays is so bigger that the closure of shopping malls, Sunday, Sunday caused us this minus 40%.

This also tells why we are going to be a bit prudent -- or more prudent, I would say, realistic in being concerned about the next weeks because the visibility is really, really low. But you have to consider, on one side, this EUR 30 million outstanding amount of supplier -- of real estate landlord and the sales reduction.

[Domenico Ghilotti, analyst]

So you are -- just to be clear, you are assuming that, at least in your guidance that you will pay the rent? So you will normalize also the rent payment by year-end?

[Stefano Beraldo, executive]

Yes, yes. yes. Then regarding the first question, how much inventory of spring/summer. I still have to be sold in the next year that we generate a cash in because this amount -- this merchandising has been already paid. I look at my team because I have no answer for now. So we continue looking for this.

[Nicola Perin, executive]

Yes. I have the answer on the July-August...

[Stefano Beraldo, executive]

What is the answer? Too difficult for me. Too difficult. Maybe you'll find another number, but maybe how much?

[Nicola Perin, executive]

EUR 35 million.

[Stefano Beraldo, executive]

EUR 35 million? EUR 35 million. So this will be the amount of spring/summer in excess of what we need, which we have included in our yearly intake that we don't need to buy anymore because this EUR 35 million will be sold next year and are included in the general planning. In other words, EUR 35 million of spring/summer goods will be sold next year being already part of our inventory in excess of the normal buying that we have to do. So basically, there is a EUR 35 million cash-in that you can assume in our cash assumptions. I hope I've been sufficiently clear.

Relating to Stefanel, maybe I've been confusing you with my wording...

[Domenico Ghilotti, analyst]

No, no. Okay. Sorry, I thought you did not understand my question. Okay.

[Stefano Beraldo, executive]

They have no international stores. Better to say, in this moment, Stefanel has 2 growing concern. One is Stefanel with about 30 Italian stores. And one is High. High. H-I-G-H. I don't remember. This second network is of no interest for us. And they have mostly international store, very nice location, very expensive location. And the brand reputation, in my opinion, is nil. So basically, we only have an interest for the Italian activities, perimeter and the Stefanel brand.

When I mentioned about the international expansion, we have at least 6, maybe -- now we have 30 -- 35 partner in Spain, in Germany, in France, in the Balkans, in Cyprus, in Saudi Arabia. And these guys are very happy with the OVS store. Most of them being kids, in some case, being a full format. I never spend much time on full format because as of now, it has been very difficult for OVS being why the inclusive family and not very clear, very, very precise in the positioning, which is indispensable, in my opinion, being so -- sometime I call it a fashion supermarket now after 15 years, when it was really a massive supermarket of garments. Today, maybe I can say that OVS is a fashion supermarket. But basically, it has been not easy to succeed by bringing full-format OVS out of Italy.

But when we open kid store, and in some case, also with the full format -- maybe it's more full format. We are very successful now. We are opening new stores. And all of them are in franchising. And Stefanel might became another opportunity to open Stefanel store out of Italy, and they're franchising with our present partners.

[Operator]

[Operator Instructions]

[Stefano Beraldo, executive]

Okay. In absence of question, I thank you for your attendance. And I wish you also decent Christmas, and hopefully, the better as possible. Thank you to all of you.

[Operator]

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