Yahoo Finance SMCP Details Turnaround Plan as Q1 Sales Fall 5.8%
PARIS — SMCP, the owner of contemporary labels Sandro, Maje and Claudie Pierlot, has reported a 5.8 percent decline in its reported sales for the first quarter of 2024, with France and Asia, especially China, weighing on numbers.
Revenues for the three months to March 31 totaled 286.8 million euros, representing a drop of 5 percent on an organic basis. The Sandro and Maje brands both saw slight organic growth when factoring Chinese business out of the numbers, the company said.
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“As anticipated, our first quarter remained on a similar trend to that seen in the second half of 2023,” chief executive officer Isabelle Guichot said in a statement.
Domestic sales fell 7.4 percent on an organic basis to 98.2 million euros, weighed down by consumers reining in spending. In Asia-Pacific, sales were down 15.7 percent to 57.3 million euros.
Business in the U.S., Canada and Mexico was buoyant — sales for the region were up 8.9 percent organically to 42 million euros. In EMEA outside France, revenues totaled 89.4 million euros, which was roughly flat.
“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 low in-store traffic, while our sales are dynamic in Southeast Asia,” Guichot said.
The company said its network optimization continued in the quarter, with 11 net store closures, and that it has reduced its rate of discounting, mainly in Europe and North America, a move seen as key to bringing the business back on track.
As announced with its 2023 numbers in February, SMCP revealed more details of the turnaround plans it hopes will help it return to profitable growth and market-share gains by 2026. “Over the coming months we expect to fully benefit from our global geographic footprint and accelerating performance in high-potential regions,” Guichot said.
Plans to streamline the store network include the closure of 100 locations over the next two years, mainly in China, where it will reduce its footprint by between 15 and 20 percent this year.
It will also optimize its network in Europe, mainly in Northern Europe and for the Claudie Pierlot brand, which will close 30 doors in the mid-term and capitalize on its strong digital penetration. For the Fursac brand, SMCP said it would focus on development in department stores.
The company plans to accelerate expansion in wholesale through a partnership model, meanwhile, as announced last November for its Indian market entry. Its mid-term target is to open between 40 and 50 points of sale per year through partnerships in markets otherwise difficult to penetrate directly, increasing third-party retail sales to 13 percent of revenues, from 8 percent currently.
To boost growth and gain market share, the firm plans to reinforce each brand’s identity and improve collection architecture and merchandising, as well as reinforcing its offer in categories including men’s and accessories and introducing new product segments including beauty, lifestyle and home products.
It also hopes to generate efficiency gains by becoming more agile and leveraging technology, it said. To do so, it will streamline its purchasing of raw materials and components transversally across brands, it said, while respecting each of its labels’ image. This will also involve mutualized reservation of sustainable raw materials across the portfolio in order to better assess the potential of such materials, it said.
From 2026 onward, once the plan is fully implemented, SMCP hopes to return to midsingle-digit sales increases at a compound annual growth rate and an EBIT margin of 10 percent, it said. It is aiming for an EBIT margin of 12 percent within the next five years. SMCP’s adjusted EBIT margin in 2023 was 6.5 percent.
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