SMCP, the first quarter at -20.4%: the second will be even worse
With 82% of stores currently closed but with “encouraging signs of recovery in China”, SMCP closes the first quarter with a 16.7% drop in sales at current exchange rates and 20.4% on an organic basis. The result is in line with the group’s forecasts. If the first quarter is negative, the second will be even worse, while for the whole year the group controlled by Chinese holding company Shandong Ruyi does not provide forecasts.
First quarter results
SMCP closed the first three months of the year with sales of 228.7 million euros. Looking at the brands in the portfolio, at constant exchange rates Sandro lost 20.9% and Maje 20.5%, while the other brands division lost 18.4%. “Looking ahead, although the pandemic will have a strong impact on our performance in the second quarter – comments CEO Daniel Lalonde -, the first signs of recovery in China are encouraging. I am confident that fundamentals and brands will allow us to emerge from this period in a stronger position”.
The second one will be even worse
To mitigate the impact of the pandemic, SMCP has put in place some strategies to improve the income statement. For example? “A sharp reduction in the purchase of the autumn-winter 2020-2021 collections and some adjustments of the spring-summer 2020 collections”. Not only that: a 40% reduction in expenses for essential investments and operating expenses. The group intends to promote the e-commerce channel, which is performing well: in China, in the first quarter, digital sales rose by 39%. SMCP has enhanced liquidity by drawing on its credit lines.
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