Healthy H1 sales at SMCP but profits hit by finance and investment costs

By

Sandra Halliday

Published
Sep 5, 2019

The owner of the fast-growing Sandro, Maje and Claudie Pierlot labels is continuing to power ahead on the sales front and said on Thursday that it saw a “solid performance” in the first half.

But what was solid for SMCP would actually have been stunning for many other companies in the current extremely difficult trading environment. That said, net profit declined on the back of one-off refinancing costs and the firm’s investment to drive future growth.

The French firm saw H1 2019 sales rising as much as 9.5% on a reported basis to €540.3 million and even though currency-neutral sales rose more slowly, an 8% increase was still impressive. The retailer saw strong international sales with with a 14% currency-neutral rise that was driven by the firm’s brands powering ahead in mainland China. Its sales there rose over 30%. However, its domestic market remained tough with French like-for-like sales down 0.7%.

Over the period, SMCP benefited from “the successful development of its accessories” and “solid progress in digital” with a 50bps rise so that digital now accounts for 14.8% of total sales.

It all meant adjusted EBITDA that was up 3.5% at €86.8 million with the margin reaching 16.1%. But the firm’s net income declined to €27.8 million excluding those one-off refinancing costs, or €17.2 million with them included. If you factor out new accounting standards being applied, overall, its net income was down just short of 27% year-on-year but was only down 1.8% with the refinancing costs taken out of the mix as well.

The group, which is controlled by Topsoho, a company owned by China’s Shandong Ruyi, is undeniably one of the stronger players in the global fashion sector at present. 

CEO Daniel Lalonde in his summing up of the figures said that the group’s H1 results were “in line with our expectations with a solid performance in international, particularly in APAC. Despite challenging market conditions, SMCP’s business model once again demonstrated its resilience while our full-price focus strategy bore fruit.”

During the period, the company launched its acquisition of De Fursac, which was approved by France’s competition body late last month. This should strengthen its position in the menswear sector. 

It all points to a healthy period of growth ahead and on Thursday, the group confirmed its full-year guidance with an expected sales rise between 9% and 11% currency-neutral, and an EBITDA margin comparable to 2018.