The Maje and Sandro Parent Company Felt the Effects of the Slowdown in China
SMCP, the parent company of contemporary labels Sandro, Maje, Claudie Pierlot, and Fursac, is feeling the effects of China’s economic slowdown, with sales dipping just below one percent on an organic basis during the third quarter due to reduced patronage in China.
The company recorded a 0.9 percent drop in sales for the third quarter, amounting to 292.6 million euros, with the slump largely driven by the Asia-Pacific region. The APAC region’s sales declined by 18.6 percent year-over-year, totaling 47.7 million euros as a result of the ongoing weakness in China.
SMCP believes the persistent dip in sales is due to low consumer confidence in China, which has influenced the company’s decision to close some of its stores. During the third quarter, the company closed 10 outlets.
SMCP’s CEO Isabelle Guichot referred to the situation, stating, “As anticipated, our growth in the third quarter progressively improved but remains impacted by the deteriorated environment in China. We continued to implement our action plan (particularly in China), and notably made significant progress in pursuing the store network optimization plan, as well as in renegotiations with our lessors.”
Declining sales in China this quarter were triggered by a deteriorated environment and a reduction in foot traffic, according to a statement by the company.
However, SMCP has a strategic blueprint in place. Announced earlier this year, the company’s action plan focuses on restructuring its store layout in the region, closing more stores in China while increasing its presence in emerging markets like India, Indonesia, and the Philippines.
In April, the company announced that it would shut down 100 locations over the next two years, predominantly in China. This move would reduce its store footprint by 15 to 20 percent this year. Following these closures, SMCP now operates 1,666 points of sale worldwide.
But the company remains optimistic about the Chinese market, noting that they have plans in place to seize upcoming opportunities whenever demand rebounds.
On a brighter note, sales in the Americas increased by 6.6 percent on an organic basis to 45 million euros in the third quarter, showcasing the strength of SMCP’s Sandro and Maje brands, despite five net closings in the region. They also launched Sandro and Maje outlets in Montreal’s new Royalmount center alongside Louis Vuitton and Gucci.
For Europe, outside of France, the company’s outlook was more positive with organic sales up 5.4 percent in the third quarter to 102 million euros. The company attributed this to its “strict full-price strategy,” a key part of its recovery strategy.
The company highlighted that like-for-like performance remained strong in major retail markets with continued positive trends, particularly in the Middle East.
In France, sales remained flat, increasing by less than half a percent to 97.8 million euros, in spite of the Olympics having a negative impact, particularly in Paris.
The company hopes the fourth quarter will show an upturn with improved footfall since the start of September, buoyed by strong sales of Sandro and Maje brands.
However, in the first nine months of the year, sales were down 2.7 percent on an organic basis, amounting to 878 million euros, yet again dragged down by China sales, which declined 19.5 percent to 153.9 million euros.
Looking ahead, the company will stay resolved on its recovery strategy. “In a macroeconomic environment that remains complex and uncertain, SMCP continues to focus on implementing its action plan to ensure financial strength and support future growth,” the company declared. “The group remains committed to a sound management of cash and debt, through expense optimization and careful inventory management.”