French Luxury Fashion Group SMCP Reports Decline in Q1 FY24 Sales, Outlines Mid-term Action Plan for Recovery
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- Published: Monday, 29 April 2024 05:10
SMCP, a renowned French luxury fashion group housing brands like Sandro and Maje, has announced a 5 percent decrease in organic sales for the first quarter of fiscal 2024 (Q1 FY24), amounting to €287 million (approximately $307.2 million). This dip is primarily attributed to challenging year-on-year comparisons. Despite the overall decline, SMCP highlighted strong performances in the American market and resilience across European regions, excluding France. However, subdued consumer spending in China contributed to the overall downturn.
The brands under SMCP, Sandro and Maje, experienced marginal organic growth when excluding the Chinese market. This growth was buoyed by a stringent discount rate policy, resulting in a 2 percent enhancement in the in-season discount rate, particularly in Europe and North America. As part of its ongoing operational optimization efforts, SMCP disclosed the closure of 11 stores, primarily in Asia, reducing its global points of sale to 1,719, as stated in a press release.
Looking forward, SMCP has unveiled a mid-term action plan featuring four key priorities aimed at steering the company towards profitable growth and increasing market share from 2026, post an optimization of its network. These priorities encompass achieving a mid-single-digit compound annual growth rate (CAGR) in sales and targeting an EBIT margin of approximately 10 percent by 2026, with aspirations to elevate it to around 12 percent within the subsequent five years.
Moreover, the company intends to rebalance its geographical footprint by shuttering approximately 100 underperforming stores, predominantly in China, over the next two years. This strategic move will be complemented by an accelerated expansion of its wholesale business through strategic partnerships.
SMCP also aims to fortify its operational agility and harness technological innovations to enhance efficiency and profitability. This involves strengthening its bargaining power over expenses and rolling out an action plan from 2024, projected to contribute €25 million to its EBIT by 2026.
In summary, SMCP's Q1 FY24 results reflect the company's proactive measures in navigating challenging market conditions while laying the groundwork for future growth and resilience. With a strategic roadmap in place, SMCP is poised to capitalize on emerging opportunities, reinforce its market position, and drive sustained value for its stakeholders in the luxury fashion landscape.