China Declines Hit SMCP as Action Plan Leads to 27 Million Euros in Losses
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SMCP, the owner of contemporary labels Sandro, Maje and Claudie Pierlot, swung to a loss in the first half as it struggled in China and started to rework its operations.
Net losses for the first six months of the year tallied 27.7 million euros, compared with earnings of 14 million euro a year earlier. Adjusted earnings before interest, taxes, depreciation and amortization fell 14.9 percent to 98.5 million euros.
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Isabelle Guichot, chief executive officer, said: “At group level, our action plan launched at the beginning of the year — aimed at reviving our profitable growth — is beginning to bear fruit. Nevertheless, our profitability is still affected by one-off effects related to the restructuring of our store network in China and that of Claudie Pierlot, as well as additional costs linked to inflation.”
Organic sales in the Asia Pacific fell 19.9 percent to 106.2 million euros in the half, when 30 stores were closed and the China business looked to find its footing amid what the company described as a “persistent traffic decline.”
Elsewhere, sales were relatively stable or on the rise. Organic sales in France slipped 0.7 percent to 202.5 million euros, while the rest of Europe, the Middle East and Africa was up 0.8 percent to 191.8 million euros and America gained 5.8 percent to 84.8 million euros.
All together, SMCP’s first-half organic sales fell 3.6 percent to 585.3 million euros.
Guichot said: “In the second half of the year, we will continue our efforts to deploy our action plan both in terms of driving our sales in promising markets and optimizing our costs, whose effects should accelerate in 2025 — with the goal of having a positive impact of 25 million euros on our profitability by 2026.”
In April, the company said it would close 100 locations over the next two years, with the cuts mainly taking place in China. That will reduce its store footprint buy 15 to 20 percent this year.
SMCP is looking to ramp up its wholesale business with a partnership model and the Claudie Pierlot brand, which was set to close 30 stores, is focusing on its digital operations.
It’s been a busy summer for the company, which this month also saw the English High Court invalidate the 2021 sale of 15.9 percent of the company for 1 euro to Dynamic Treasure Group, which is owned by Chenran Qiu, daughter of Yafu Qiu, who is chairman of SMCP’s former owner, Shandong Ruyi.
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