China, France post weak results in Q1

The SMCP group has announced in its new strategic plan that it wants its international business to take advantage of prevailing global market trends. The group that owns Sandro, Maje, Claudie Pierlot and Fursac will soon open in India, in partnership with local giant Reliance Brands. One of several operations with local partners that are designed to reduce the group’s future dependence on the Chinese market, which has considerably slowed down, and in which SMCP’s brands are expected to close some 40 stores this year. For the time being however, at the end of Q1 2024, the French group led by Isabelle Guichot is suffering from the impact of weak sales in China, Hong Kong, and Macau.

In the Asia-Pacific region, SMCP’s revenue fell by nearly 20% compared to last year’s published data, down to €57 million. The group stated that this downturn has occurred at a time when several markets in the region are growing. “While sales in Greater China continue to be strongly affected by low traffic in malls, the Group delivered a highly satisfactory performance in South-East Asia, with strong double-digit growth in Singapore, Malaysia, Thailand, and Vietnam,” said SMCP in a press release issued on Thursday April 25.

In Q1, closed at the end of March, the group recorded a downturn in sales of nearly 6% (and of 5% in like-for-like terms), down to €287 million. But China isn’t the only problem area for SMCP. In its domestic market, France, where the group operates 473 stores, revenue fell by more than 7% in Q1, down to €98 million, notably as a result of disappointing end-of-season sales and a slump in online sales.

“As anticipated, our first quarter business remained on a trend similar to that observed in the second half of 2023. We are satisfied with our performance in the United States and our resilience in Europe, except in France, where consumer spending remains volatile. In Asia, our business continues to be affected in China by weak in-store traffic, while our sales are buoyant in South-East Asia,” said Guichot in the press release. In the rest of Europe, the group’s business has been stable, notably thanks to its performance in southern Europe. Revenue in the Americas region increased by nearly 8%.

In terms of labels, the group’s flagship brands, Sandro and Maje, both recorded a slump in sales of approximately 4%, down to €140 million and €109 million respectively. The aggregate revenue of the group’s other brands, Claudie Pierlot and Fursac, fell instead by 16%, to less than €36 million. SMCP is planning to improve its performance and especially its profitability by deploying the plan it introduced earlier this year.

Implementing the action plan

“During the first quarter, we continued to implement our medium-term action plan, and over the coming months we expect to fully benefit from our global geographic footprint and accelerating performance in high-potential regions. We are also expecting to tap our latest technological investments (especially in digital technology) to achieve greater efficiency, and to continue to run our business in a rigorous manner, ensuring profitable growth with a solid financial underpinning,” said Guichot.

The group is set to carry out a detailed review of its rental and purchasing contracts, and has also announced it will “tweak the business model” of Claudie Pierlot and Fursac to boost their profitability. For menswear brand Fursac, the plan is to focus on expanding the business in department store chains. Claudie Pierlot is instead set to streamline its retail network, with plans to close some 30 stores. SMCP is aiming to improve its operations in several areas, from the pooling of materials to reducing its brands’ retail footprint, striking agreements with international partners that will boost revenue by 13% in a short time, and developing menswear and new categories. Financially, the goal is for EBIT to grow by €25 million by 2026, and for EBIT margin to reach 12% by 2030.