SMCP Struggles In Q1 Despite Doubling Of Mainland China Sales

Sales at accessible French fashion group SMCP contracted over the first three months of 2021 as the company’s traditionally largest regions — EMEA and France — struggled to find momentum due to continuing lockdowns and store closures, prompting a lack of tourists.

Revenue at the company, whose four ‘Parisian chic’ brands include Sandro, Maje, Claudie Pierlot, and De Fursac, fell by 2 percent to $270 million (€224 million) as EMEA shrank by one-third and France by 8 percent. During Q1, SMCP closed 44 directly-operated stores globally — 33 of them in France — leaving the group with 1,290 in total.

On the upside, Asia-Pacific soared by more than 60 percent, driven by Mainland China’s 93-percent rise on a constant-currency basis. The Mainland was also up by 26 percent from Q1 2019, underlining its dynamism. This sharp contrast has changed the regional balance for the company from a year ago, now favoring the eastern hemisphere.

In Q1 2020, France accounted for 38 percent of sales and EMEA for 31 percent, giving Europe a market share of two-thirds at the company, which is majority-owned by struggling Chinese textile player Shandong Ruyi. In the current quarter, EMEA has slipped to a share of just 21 percent.

Meanwhile, over the same time frame, Asia-Pacific, which includes Mainland China, Hong Kong, South Korea, Singapore, Thailand, and Australia, has overtaken EMEA to become the second-largest region with 33 percent of sales. That indicates it could topple France later in the year. SMCP expects to add 20 stores per year in Mainland China until 2025.

In a statement, CEO of SMCP Daniel Lalonde said: “In Asia, where the impact of the pandemic is far more limited, the positive trend continued throughout the first quarter, particularly in Mainland China, while the United States showed early signs of a rebound in demand. The perspective of a gradual market reopening in Europe gives us a good reason to be cautiously optimistic about H2 2021, not only in Europe but in all markets.”

Lalonde, a seasoned luxury veteran with long stints at LVMH and most recently Puig, added that the company is focused on a strategic way out of the pandemic through its One Journey plan, announced in October last year. Among other aspects of the strategy, a big focus will be on e-commerce which grew by 39 percent in Q1, led by the Americas at 68 percent. The company wants a quarter of sales to come from digital by 2025.

As of April 27, 45 percent of the SMCP’s directly-operated store network was still temporarily closed worldwide. While the company said it expects to see a continuing rebound in the Americas and market reopenings in Europe, it declined to provide full-year guidance blaming “the high level of uncertainty” still present in the market.

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