SMCP (SMCP) H1 2024 earnings summary

Executive summary

• H1 2024 sales reached €585 million, down 3.6% organically year-over-year, with resilience in Europe and America offsetting a sharp decline in China and APAC; sequential improvement was seen in Q2, especially in France and Europe, and Sandro and Maje performed well outside China.

• Strict financial discipline maintained, with net debt reduced to €293 million and gross margin improving to 74.3% of sales, up over one point year-over-year, driven by a full-price strategy.

• Adjusted EBIT margin at 3.2% of sales, impacted by under-absorption of fixed costs, restructuring, and inflation; net income was -€28 million, mainly due to €30 million in non-cash impairments, with breakeven before these items.

• Inventory reduced by 7% year-over-year, supporting improved working capital trends; free cash flow remained stable at -€8.8 million.

• Action plan to return to profitable growth is ongoing, targeting a €25 million EBIT improvement by 2026.

Financial highlights

• Organic sales declined 3.6% year-over-year; like-for-like sales fell 5.5%.

• Adjusted EBIT was €19 million (3.2% of sales), down from €36 million in H1 2023, impacted by one-offs and macro factors.

• Adjusted EBITDA margin decreased to 16.8% from 19.0% in H1 2023.

• Net debt/adjusted EBITDA at 3.05x, with a waiver at 3.4x granted by banks.

• Free cash flow at -€8.8 million, nearly flat year-over-year.

Outlook and guidance

• H2 expected to benefit from more favorable comps starting August and positive reception of fall-winter collections; outlook remains cautious due to ongoing macroeconomic and political uncertainty.

• Ongoing execution of action plans focused on growth, cost management, and network optimization, including further store closures in China and Claudie Pierlot repositioning.

• Retail partner activity to accelerate, with first openings in India and further expansion in Southeast Asia.

• Cost environment in H2 anticipated to be more favorable, with lower inflation impact and continued benefits from action plans.

• EBIT improvement target of €25 million by 2026 reaffirmed.