Full-price sales boost SMCP's Q2, but UK hit by Brexit caution
today Jul 25, 2019
French premium fashion giant SMCP continues to conquer global markets and said on Thursday that its second quarter saw its sales growth accelerating with an increase of more than 10%.
It’s a strong confirmation of the appeal of its premium brands that target the on-trend middle market without cannibalising each other's sales.
Q2 saw sales rising 10.1% to €265.7 million, or 8.9% currency-neutral, accelerating after a slower Q1. The Q2 rise meant it pulled first-half sales up to an 8% increase at €540.3 million. But like-for-like sales dropped 0.7% in the half, mainly due to tough times in France.
The company saw notable successes in accessories with overall growth for the first half of 23.1%. Digital also progressed in H1 with a 50bps rise to account for 14.8% of total sales.
Back with Q2, its international success could be seen from the 13.7% growth outside of its domestic market, driven by mainland China that was up 30%.
Not that France was such a problem as it has been. After some challenging times at home, the company said the country returned to growth during the quarter. French sales were up 0.5% to €87.5 million in Q2, compared to a 1.8% drop for the first half, driven by Sandro and Maje growth.
EMEA sales rose 8% in the quarter to €79.4 million, although that was down slightly on H1’s 9.2% rise. It was affected by tough market conditions in the UK, which was impacted by Brexit uncertainties, and in Switzerland, which saw a slowdown in tourism. But Spain, Italy and Germany “continued to be very dynamic.”
The Americas rose 19.3% in the quarter to €37 million and 14% in the half, although those percentages were boosted a lot by exchange rates with the currency-neutral rises being a slower 13.3% and 7.2% respectively. The company said the Americas has been challenging due to a tourism slowdown, but it was a good performance nonetheless, helped by new stores.
Meanwhile APAC was up 24.6% in the quarter at €61.8 million, and 28.5% in H1. That was slower than a year ago, yet growth of almost 50% in Q2 last year was always going to be a tough act to follow as the business matures in the region. But while mainland China powered ahead in Q2, the protests in Hong Kong weighed on sales there. Overall in APAC though, the firm said has seen “very strong progress in digital, including promising results on JD.com."
By brand, the biggest gains were made by Sandro and Maje in the second quarter with Claudie Pierlot’s quarterly growth lagging that of the first half.
Sandro sales rose 10% in Q2 to €129.9 million, beating its 8% H1 growth. And SMCP expects further strength from the brand, especially due to its recently-announced Farfetch partnership. Maje continued strong and was up 12% in Q2 to €105.4 million, almost level with H1’s 11.9% and helped by new store openings.
But Claudie Pierlot’s sales rose ‘only’ 4.9% in the quarter to €30.4 million, compared to an 8% H1 rise. It was hurt by “a lack of light summer pieces in its spring/summer collection and a lower exposure to fast-growing international markets.” But it continued to open new stores internationally.
CEO Daniel Lalonde highlighted how the company had spent Q1 and Q2 focusing on full-price sales and “accelerating our digital journey through partnerships with JD.com and Farfetch, which perfectly complement the group’s growing digital presence.”
He also confirmed full-year guidance and expects sales growth of between 9% and 11% at constant currency and a stable adjusted EBITDA margin compared to 2018, excluding the acquisition of De Fursac.
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