Sandro and Maje drive Q4 improvement for SMCP, but turnaround still a work in progress

Ahead of Thursday’s full-year results release, SMCP had issued a series of reports showing its latest year was a challenging one. But its Q3 release in October has pointed to improvements, as long as China was factored out. So did the trend continue and what did the Q4/full-year figures tell us?

Fortunately, the French premium fashion business had further good news with a sequential improvement in Q4 as sales rose 1.9% on an organic (or constant currency) basis to €334 million, or rose 4.7% excluding China.

This meant the overall annual sales decline was less than might have been expected earlier in the year.  Full-year sales fell 1.5% organic to €1.212 billion but would have risen 2.3% with China taken out of the mix.

Organic growth was seen in all regions except China, “where consumption remains challenging” and while the sequential improvement during the year still meant lots of negative numbers in Q1 through Q3, it ended up as a bona fide return to growth in Q4. This was helped by “a strict full-price strategy with a two-point decrease of average in-season discount rate vs 2023”.

As for profit, the company saw annual adjusted EBIT of €53 million (4.4% of sales), down from €79m in 2023, “impacted by challenging market conditions, in particular in China, and by restructuring costs, partially offset by cost reduction plans”.

The net loss was almost €24 million after net profit of €11.2 million in 2023, with the company seeing €31 million of non-recurring accounting impairment impacts. But there was a “strong improvement” in the net result in the second half (a profit of €4 million) compared to both the same period in 2023 (a loss of €3 million) and compared to 2024’s first half (a loss of €28 million).

Store optimisation

The company is taking action to get back to full profitability and said “continued financial discipline with a strict control of inventories and investments [are] resulting in an important free-cash-flow generation of €49 million and a decrease in net debt of the same amount, to reach €237 million”.

Its mid-term action plan to return to profitable growth includes network optimisation, mainly in China, the implementation of efficiency actions to support profitability, and disciplined cash management.

That network optimisation takes in 68 net store closures, to reach 1,662 points of sale in the world at the end of 2024. This includes a focus on rightsizing the store count in Asia and for Claudie Pierlot in Europe, alongside openings through partnerships in key markets.

Looking at the regional and brand performances specifically, the company said that Q4 sales in France rose 5.2% organic to €117.5 million with an increase of 1.1% to €417.8 million for the full year.

In the rest of the EMEA region, organic sales rose 5.1% to €109.4 million in Q4 and 3.1% to €403.2 million for the year. In America, Q4 was up 4.9% at €53 million and the year was up 5.7% at €182.8 million. But Asia pacific fell 12.1% to €54 million in the final quarter and dropped 17.7% to €207 million in the year.

As for the individual brands, Sandro sales rose 2.4% to €167.5 million in Q4 with organic sales edging up by 0.6% to €605.1 million in the year.

Maje was up 3.3% at €126.4 million during the quarter and down 0.8% at €458.3 million for the full year. The Other brands, which include Claudie Pierlot and Fursac, fell 4.1% organic in Q4 to €40 million and dropped to 11.2% in the year to €148.2 million.

CEO Isabelle Guichot said the improvement in recent months “was achieved thanks to the resilience of Sandro and Maje, which gained market shares, particularly in Europe, the initial benefits of store network optimisation in China, and the continued implementation of a strict discount strategy. While our action plan had a short-term impact on profitability, it is beginning to bear fruit, with stronger effects expected in 2025 and full impact in 2026.”