Shares in SMCP dropped after the company posted lower earnings due to inflation and a fall in spending, and said it wouldn't disclose targets for the current year due to low visibility.
Challenging Economic Environment
The French fashion group, owner of the Sandro, Maje, Claudie Pierlot, and Fursac brands, highlighted a complex macroeconomic environment in 2023 that is expected to continue into the current year, especially during the first six months.
Financial Overview
- Sales: The company recorded sales of 1.23 billion euros ($1.33 billion) for the year.
- Net Profit: Net profit dropped to EUR11.2 million compared to EUR51.3 million previously.
- EBIT: Earnings before interest and taxes decreased to EUR76.5 million from EUR104.9 million in 2022.
Strategies for Profitability
SMCP plans to protect profitability through significant savings and an accelerated growth plan, set to take full effect from 2025 onwards. The company will close less contributive points of sales, particularly targeting 15% of its network in China, to enhance retail productivity and manage inventories more efficiently.
Uncertainty Ahead
With uncertainties surrounding the timing of the recovery in consumer demand, SMCP has decided not to provide financial guidance for 2024.
In January, the company issued a profit warning citing headwinds in Europe and China during the fourth quarter of 2023. This announcement came after a previous forecast adjustment due to inflation affecting consumer spending in Europe and slower consumption growth in China.
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