PARIS — Sandro, Maje, Claudie Pierlot and Fursac parent company SMCP is finally seeing its China sales bounce back.
Sales in China were up 53 percent year-over-year, boosting the company’s overall sales 8.7 percent at constant currency in the second quarter to 305.3 million euros as the region stabilized after successive quarters of pandemic-era constraints.
Second-quarter sales were down in the group’s home country of France by 3 percent, which it chalked up to the “challenging economic and social environment” of ongoing strikes and protests. “Social tension and persistent inflation discouraged consumption and touristic flows,” despite seven net store openings in the period.
North America also slowed, down 4.8 percent in the second quarter at constant currency, particularly dragged by a slow post-pandemic recovery in Canada. The region was also hit by shifting demographics and “the lack of tourism from China,” the company noted in its report.
But China itself boomed, with sales up 53 percent in the second quarter, and boosted Asia, too. Chinese tourists are traveling, they’re just staying more local. The Asia Pacific region was up overall 43 percent in the period, with a strong showing in Hong Kong, Macau, Singapore and Malaysia, which are benefiting from that recovery in regional tourism.
“The group recorded a good performance over the first half, driven by strong momentum in Asia and Europe. After two years of very strong growth, the Americas posted a slight decline,” said SMCP chief executive officer Isabelle Guichot. “Despite a complex economic environment, we were able to capitalize on the desirability of our brands to pursue our growth trajectory and post resilient profitability over the first six months of the year.”
The group said it has been stricter with its inventory flow, long a sore point, and stuck to the full-price strategy it laid out last term. Cost discipline and honing its store balance, as well as investment in new regions including 15 net openings in Spain, Germany and Turkey in the second quarter, also boosted sales.
The regional push is also paying off on the books, with growth in Europe outside of France up 11.6 percent in constant currency in the second quarter.
Sales at accessibly luxury brand Sandro were up 13.4 percent at constant currency in the second quarter, while little sister brand Maje nudged up a smaller 3.4 percent, though the company noted elsewhere that Maje “is the most profitable brand of the group.”
Claudie Pierlot and men’s label Fursac are grouped together as “other brands,” and sales at the combined labels were up 8.2 percent at constant currency in the three months to June 30.
Looking at the first half, sales were up 7.7 percent at constant currency to 609.8 million euros, though net profit was down to from 22 million euros to 14 million euros due to ticks of inflation pressure on rent and wages, and offloading inventory.
During the first half, the group worked to tighten control over its inventories, with holdings down 14 million euros from January through June against the last six months of 2022. After liquidating some old stock in China as the group restarted in the region, the company aims to keep discounts to a minimum moving forward “despite a competitive and promotional environment.”
“For the second half of the year, we have a clear action plan focused on pursuing our full-price strategy, excellent cost control and prioritizing our investments, while continuing to expand our network and improve the productivity of our teams. We are therefore confident in our ability to achieve our objectives for the full year 2023,” Guichet added.
SMCP is looking at China as a “key market, both in terms of sales and profitability” once again, after years of pandemic-era shutdowns had the brands faltering there. Last week, Chinese e-commerce site JD.com launched sales on SMCP’s three core women’s brands, Sandro, Maje and Claudie Pierlot, on their site which reaches 600 million customers.
“Based on these elements and provided the geopolitical situation and macroeconomic/social context do not deteriorate during the rest of the year, SMCP confirms its 2023 full-year guidance,” she added.
The sales news comes as SMCP trustee GLAS is in the process of selling its stake in the company, which it launched back in March. GLAS acquired the shares in 2021 when then-majority shareholder European TopSoho defaulted on 250 million euros in bonds. GLAS holds what was TopSoho’s 37 percent; 29 percent under GLAS with AlixPartners acting as receiver of the remaining 8 percent.
The sale could trigger an automatic takeover bid under French regulations, which would happen if one entity bids more than 30 percent of the shares.