SMCP (SMCP) Q3 2024 TU earnings summary

Executive summary

• Nine-month 2024 sales reached €878 million, down 2.7% organically year-over-year, with growth in Europe and America offset by a sharp decline in China; excluding China, sales rose 1.4% and Sandro and Maje performed well.

• Q3 2024 sales were €293 million, down 0.9% organically, with growth in Europe and the US offset by weakness in China and the negative impact of the Olympic Games in Paris.

• Retail network optimization continued, resulting in 35 net store closures in Q3, mainly in China, Asia, and for Claudie Pierlot in Europe.

• Digital sales penetration remained steady at around 20%.

• Full-price strategy was maintained, with a two-point reduction in discount rate across geographies.

Financial highlights

• France sales were stable at €300 million for 9M 2024 (-0.4% organic), with Q3 impacted by the Olympics.

• EMEA sales grew 2.3% organically to €294 million for 9M 2024; America up 6.1% to €130 million; APAC down 19.5% to €154 million.

• Sandro and Maje brands showed resilience outside China, while Claudie Pierlot and Fursac declined double digits.

• Wholesale revenue increased, supporting the strategy to grow with retail partners.

• Foreign exchange impact was marginally negative by €2 million, mainly due to the Chinese yuan.

Outlook and guidance

• Management expects the China action plan to deliver tangible results starting in 2025, with confidence in future growth potential.

• Sequential improvement in organic sales: -5% in Q1, -2% in Q2, and -1% in Q3; positive performance excluding China from Q2 onwards.

• October trends show further improvement in Europe and France, with China becoming less negative; 2025 expected to see marginal closures and stabilization in the US.

• Full-year EBIT margin expected to be higher than H1 2024 but lower than 2023, impacted by restructuring and closure costs.

• Inventory reduction efforts ongoing, with lower levels than last year at September-end and continuing towards year-end.