Tough backdrop dents SMCP sales in Q3

Premium fashion retailer SMCP on Thursday reported “resilient sales in a deteriorating environment” with its Q3 figures being in line with adjusted guidance.

That meant sales for the owner of Sandro, Maje, Claudie Pierlot and Fursac fell 1% to €295m at constant exchange rates and dropped 2% on an organic basis. But the company made clear that the figures were up against strong comparables for the previous year as well as the tough economic backdrop. 

And nine-month 2023 sales of €905m are up 5% at constant exchange rates and 4% on an organic basis.

It’s clear that the French company faced the same challenges seen by most others in the fashion sector at all price levels during the latest quarter. It said it saw a “consumption slowdown throughout the quarter in Europe and America,” plus a “slow and weak recovery of China’s economy,” although there was a “more positive trend in other Asian markets”.

The trend was consistent across all brands, but it maintained its full-price focus and saw “stabilisation of the discount rate despite a competitive environment and after two consecutive years of improvement”.

The company also continued its store opening programme with 46 net openings in Q3 to reach 1,704 points of sale, and it has a cost-savings plan in place. 

Brand performances

By brand, the deterioration in Q3 was very clear. For instance, its largest label Sandro, saw sales down 4.6% on a reported basis and 2.2% organic at €143.3 million. By contrast, sales were up 5.2% reported and 6% organic for the year to date. 

At Maje, Q3 sales rose 6.3% reported and 3.2% organic to €112.4 million compared to a respective 0.9% reported dip and a 0.2% organic rise in the nine months so far. 

At Claudie Pierlot and Fursac, however, Q3 reported sales rose 2.3% and organic sales 2.4% to €39.2 million. But despite that increase, it was well below the figures for the nine months to date which were a 10.6% reported and 10.7% organic increase.

The contrast between the year overall and the latest quarter was very clear regionally too. In France, nine-month sales reached €301m, up 3% organic vs 2022. But the third quarter saw a decline of 2%. The period was “impacted by lower traffic due to persistent inflation”. However, the group said it outperformed market indicators. And digital saw positive like-for-like growth. 

In EMEA, nine-month sales reached €286m, up 5% on an organic basis. But sales in Q3 dropped 2%, impacted by inflation, a consumption slowdown in the UK and Italy and a decrease of tourist flows. However, in the Middle East, the trend remained positive. The network grew by 20 points of sale in Q3 with the opening of a new country, Egypt, through a local partner.

In America, “after an outstanding performance in 2022”, nine-month organic sales dropped 5% to €123m while Q3 was down a worse 7%. Canada was a tough market but sales in the US were more resilient. With positive results in key cities (like Miami and Houston), the group said it’s “well positioned compared to market trends”.

In APAC, nine-month sales surged 13% organic to €195 million but Q3 sales rose only 1%. Sales in Greater China were slightly up in Q3, while Singapore and Malaysia were stronger still. The company continued its sustained expansion with 17 openings, mainly in South Korea, China and Vietnam.

CEO Isabelle Guichot, CEO of SMCP said the company is moving cautiously but isn’t reining-in investments for growth. She said: “As expected, in a deteriorating economic environment, we recorded a slight decline in sales over the quarter. In this context, since several months we have been implementing an action plan based on pursuing our full-price strategy, prioritising our investments, enhancing the quality of our physical and digital networks, and improving the productivity of our teams. This action plan is starting to bear fruit, and we expect to see an increasing impact in the fourth quarter.”