Hello, and welcome to the SMCP quarter one sales call. My name is Judy, and I'll be your coordinator for today's event. Please note that this call is being recorded, and for the duration of the call, your lines will be in listen only. However, you will have the opportunity to ask questions at the end of the call. This can be done by pressing star one on your telephone keypad at any time. If you require technical assistance, please press star zero and you'll be connected to an operator. I would now like to hand you over to your host, Mathilde Magnan, Head of Investor Relations, to begin today's conference. Thank you.
Thank you, Judy. Good morning, everyone. This is Mathilde Magnan, Head of Investor Relations, speaking. Thanks for being with us today for the publication of SMCP's Q1 sales. I'm here with Isabelle Guichot, our CEO, and Patricia Huyghues Despointes, CFO. As usual, we will go through the presentation, and then we'll have the Q&A session. Before I hand it over to Isabelle and Patricia, I invite you to go through our usual disclaimer on page two. I think we can start now.
Thank you, Mathilde. Good morning, everyone. Thank you all for joining us today. I'll begin with a quick overview of Q1 sales and key initiatives, then Patricia will detail out the performance by region. If you turn to slide number four, as you've seen from the press release, we are very happy to announce Q1 sales up 23.7% on an organic basis, driven by Like-for-Like, thanks to a strong local demand. In the first quarter, we achieved reported sales of EUR 283 million, up 26% reported. Let me share with you some of the key messages from this quarter's performance. First, on a global basis, our digital performance results from our brand's desirability and local demand. Tourism flow remaining low, unfortunately, fully driven by Like-for-Like at 23.6%.
Americas and EMEA posted outstanding momentum, relying on high, very high local demand. Despite a good start to the quarter in APAC, with a successful Chinese New Year, our performance was significantly impacted, as everyone knows, by tough COVID restrictions. France outperformed the market with progressive improvement over the quarter. Our teams continue to be fully committed in the execution of our One Journey strategic plan, leading to a new successful step, including notably, first, the continuation of the full price strategy with a discount rate down by 600 basis points in Q1. Second, the finalization of our network optimization in France. Then strong digital penetration reaching 25%, up 1,000 basis points versus 2019 level. SMCP posted a strong first quarter above our expectation in this non-typical context, with notably low tourism and less promotional sales.
If APAC was impacted by very high COVID restrictions, including lockdowns, America and EMEA recorded an outstanding momentum, and France outperformed the market with a progressive improvement over the quarter. Moving on along very quickly to page number 5, we will find here this performance by region, mainly driven by America and EMEA, as just explained, and the breakdown of sales in Q1. Patricia will get back in more detail later in the presentation. Now on page six, let me present you some relevant brand initiatives implemented during Q1. Starting with the first pillar of our One Journey strategy, brand desirability, and how our three brands operating in China celebrated the Lunar New Year. Sandro, Maje, and Claudie Pierlot have created again dedicated New Year capsule collections featuring an exclusive product offer with a strong impact.
Our brands have elevated their signature codes with refined elegance and fashionable allure, showcasing a unique vision of French elegance and style. To celebrate the year of the tiger, as you all know, and promote our capsules, dedicated content, image, video, were produced and displayed across all digital platforms, including social media, e-commerce, and in our flagships in China. To develop these local assets, Maje decided for instance, we chose to collaborate with Estelle Chen, with more than 700K followers on Weibo, and Sandro with a native illustrator to design special tiger family illustrations. This key initiative illustrate our strategy to invest in APAC, and particularly in China, to benefit from our fastest growing region of the group in normal circumstances, obviously. Image-wise, they offer us an opportunity to boost visibility while preserving rarity.
When it comes to figures, they are an enabler for full price conversion and to improve Like-for-Like. Moving on to page seven, where you will see a few innovative and creative collaboration displayed in Q1 by our brands. Let's start with Sandro. For the last three years, Sandro and Smiley have been annually creating cheerful collaborations together. To mark the fiftieth anniversary of this pop culture icon, Sandro has designed a unique iteration of their most iconic products. Smiley's mission has been to spread good news and the founding mantra of "Take the time to smile," which feels more relevant than ever in 2022. The spring/summer 2022 Claudie Pierlot has collaborated with a legendary American cap manufacturer, New Era, known for its iconic N.Y. embroidery for over 100 years.
The collection features four caps embroidered with the Claudie Pierlot logo and a full-size monogram. To accompany them, three sweatshirts, two T-shirts complete the silhouette. The result is very cool outfits, which are elegant at the same time and stand out from the crowd. These initiatives add desirability to our collections and enable us to speak to our audiences in a more intimate way, a more engaging way, giving the opportunity to surprise and seduce our community and to enhance customer experience. The results are promising, boosting sales, driving traffic and new consumers. Now on to page eight, sorry. Let me show you some highlights of our worldwide disruptive communication.
To promote its spring/summer campaign, Maje has decided to deploy a worldwide XXL outdoor plan and be in the streets of key cities, including notably a bus campaign in Berlin, displays in Paris, and a fantastic billboard in New York City. For its spring/summer collection called Fly Away, Sandro has gone big, organizing a 360-degree campaign with a strong social media presence and signaling its entrance into the metaverse, thanks to an immersive augmented reality experience. Now let's speak about Fursac, which took place in Parisian cinemas to propose its new campaign and has launched in its first tram display in Geneva to celebrate the opening of its first store in Switzerland. Gauthier Borsarello, Fursac Creative Director, brought a new take on his first spring/summer collection with the hashtag Fursac Friends, a very innovative campaign.
For the shooting, close friends of the brand mixed pieces from the 1st.cc collection with their own clothes, and the result is outstanding. These are key ways to engage millennials and Gen Z through disruptive communication and also to activate key traffic levels. Page nine, a very important topic, we wanted to highlight our team's key initiative on sustainability. Let's start with Sandro. By looking through its archives, the Sandro design studio wanted to give new life to fabrics from previous collections. Endless Love is a capsule of 100% upcycled pyjamas made using leftover silk and cotton fabric. Available in limited edition and exclusively on sandroparis.com. The brand will donate all the profit to the Sandro Fund, working for charities and causes that reflect the spirit of the Sandro family.
As part of the SMCP's commitment to sustainability and our desire to rethink our stores with respect to the environment in terms of constructions and design, with the use of more eco-responsible materials, we're proud to announce that our Maje Chengdu Taikoo Li store has received the highest certification in LEED, Leadership in Energy and Environmental Design, which is a platinum grade. We're extremely happy about that award. On traceability, as we announced a few months ago, we have signed a partnership with Fairly Made to offer our consumers detailed and transparent information on the traceability of our products. Our teams are fully committed on this very important project, and we are proud to invite you to visit our website and even our stores to see the first references updated with that QR code.
For all our teams, the notion of an environmental and social commitment has become a daily source of inspiration. These key initiatives, which are in line with our brand's commitment, are the first of a series of action that will be unveiled during 2022. Let's now on page ten, let's look at some key openings of the quarter. In EMEA, for instance, Claudie Pierlot had opened a new store in Lisbon with an eco-friendly design approach within a very stunning historic building. As part of Claudie Pierlot international expansion, we are pleased to announce the opening of a Claudie Pierlot in Antwerp, our second store in Belgium after Brussels, opened in June 2021, and Geneva, the store that I just mentioned, where we feel very proud to have opened our first Claudie Pierlot freestanding store in Switzerland.
After our openings within the Globus department store in Geneva and Lausanne, it was natural for Fursac to extend its French wardrobe to a store with a brand own unique architectural concept. We're convinced of the potential of Fursac French style in the Swiss market. Page 11, a few other openings with our partners. Opening of a store of Sandro and also Maje store, which are next to each other in Tallinn, Estonia. It's a new country for the group. Page 12, key openings in APAC. As you can see here in the picture, first an opening in China, a new Sandro store in the famous Nanjing Xinjiekou Golden Eagle Mall, described as Asia's largest shopping mall. In Korea, two new malls in Seoul Lotte Jamsil and Hyundai Daegu. Patricia will go into more detail on this quarter's performance by area. Thank you.
Thank you, Isabelle. Good morning, everyone. Moving on to slide 14, let me highlight some key messages on our sales performance by region. In France, sales at EUR 94 million grew nearly 23% organic. We noted a progressive improvement over the quarter. Since the beginning of the year, SMCP outperformed the market, thanks to a good start of our spring/summer collection. A performance almost exclusively driven by like-for-like growth at 22%, which includes a sharp reduction in discount rates down 10 points and the finalization of our network optimization plan with -13 points of sale, of which seven swap three for one. In EMEA, group sales grew by 73% organic versus 21, exceeding 2019 levels for the first time since the beginning of the pandemic, with a significant acceleration over the quarter driven by local demand.
In addition, this strong sales momentum, supported by an historical like-for-like growth, 2x , includes an impressive seven-point decrease in the discount rate and a rather stable network base. Now let's move on to slide 15. In APAC, despite a good start to the year with a successful Lunar New Year, the intensifying COVID restrictions, first in Hong Kong and later in mainland China with lockdowns impacting mobility and traffic, had a significant impact on sales, leading to a minus 13.9% decrease organic versus 2021. This figure takes into account a high comparison base, especially in mainland China. However, versus 2019, mainland China sales were at plus 4% organic or more, including growth compared to Q1 2021. Q4 2021, sorry. The desirability of our brands is still strong in Asia and especially in China.
Over the quarter, SMCP recorded a growth of the digital penetration, +3 points versus last year, and a stable network base. In the Americas, sales grew by more than 44% organic versus 2021, an outstanding momentum nearly exclusively driven by Like-for-Like growth at +42%. We observed a new sharp reduction in discount rates, down 14 points versus 2021. Network is quite stable. The U.S. and Canada both outperformed, driven by high demand across all our distribution channels. The region also recorded a strong growth versus 2019, +20% organic for the area, of which +25% in the U.S.
Thank you, Patricia. Now looking forward, the outlook. SMCP is closely monitoring the health context in APAC and the impact of the restrictions on the in-store traffic, as well as on its supply chain capabilities, and remains cautious as the situation in mainland China can evolve rapidly and new cities could be impacted. SMCP confirms its financial guidance for 2022, provided that the health context in APAC improves fairly rapidly. As a reminder, for full year 2022, SMCP anticipates solid double-digit sales growth versus 2021 and mid-single digit sales growth versus 2019. Regarding profitability, the group expects an adjusted EBIT margin as a percentage of sales in line with 2021 in the context of significant inflation. SMCP thus anticipates a net debt leverage ratio inferior to below 2x at the end of 2022, instead of end of 2023.
Thank you for all your attention. We're now happy to take your questions.
Thank you, Isabelle. Judy, I think that we have one question.
Yes, we do, and as a reminder, if you would like to ask a question on today's call, it is star one on your telephone keypad. The first question is coming from the line of Geoffroy Michalet from ODDO BHF. Geoffrey, you're unmuted and now go ahead.
Hi. Thank you, and congrats for the good set of results so far. A couple of questions from me. First one, it is the first time that you read so much granularity on the Like-for-Like basis, in a quarterly sales publication. Can we expect it to last, and why such change in the communication? Just to be precise, it is much appreciated. Second question, about China, what is your biggest source of concern? Is it the sales level in China, or is it the sourcing from there? Although we all know that part of your sourcing is from the Mediterranean area. The third question, how is the beginning of Q2 so far? Can we have an update on the current trading? Finally, last question, do we have any update from the shareholder situation since your full year results on the ninth of March? Thank you.
Thank you, Geoffroy. I will take number two, three, four, and I will leave to Patricia the first question on like-for-like. Current trading in China, as you know, we're closely monitoring in Greater China the impact of the tough restriction on the in-store traffic on our supply chain capabilities. As you mentioned, a big part of our sourcing is more in the south of China, but overall, as you know, our logistics is also impacted because our warehouse is in Shanghai. You have also some effects on our ability to resupply stores and to also deliver the online sales. For Shanghai, as you know, there is a full lockdown since the end of March, including our warehouse.
Hong Kong and Macau are also highly impacted in Q1, and as we speak, this morning, we have 40-something, so which is one-fourth of our network which is closed in seven cities. That's my answer. That also, for the other countries, as you wanted to have some update on the current trading, Americas and EMEA are still enjoying a very good momentum. It's also the case of the Middle East, where I was a couple of days ago. France is doing very well, driven by the brick-and-mortar, and helped, as you know, by a lower comparison base.
What's also interesting in Europe, in that we start feeling a return of European and American tourism flow in Europe, which should definitely help for the coming months. That's what I can say on the current trading. On the shareholder situation, the only thing that we can say is, as far as we know, GLAS has not initiated any selling process so far, so that there is not much of an update at this point.
On Like-for-Like, Geoffroy, thank you for your question. As you have seen, Like-for-Like represents nearly all of the growth of the quarter. That's a very good thing. You know, during the COVID period when some stores were closed, Like-for-Like used to not completely reflect the situation. Maybe this is why we have spoken about Like-for-Like a bit less. Now we are all convinced that it's a very important KPI, which is important to reactivate in terms of the communication. It's a good note that you like it and yes, we will continue to communicate on that.
Thank you, Geoffroy. Judy, I think we have another question.
Yes, we do. The next question is coming from the line of Kathryn Parker from Jefferies. Your line is unmuted. You may now go ahead.
Good morning, everyone. Congratulations on the good results. I have three questions for you. My first question is on the reconfirmation of the financial guidance. You say in the press release that you reconfirm, provided that the health context improves fairly rapidly in Asia Pacific. I just wondered what your expectations were for fairly rapidly, whether it's a return to growth in May or in June, and what you're thinking at the moment around that. My second question is a follow-up question on sourcing. I believe that you do some sourcing in mainland China for stores in the rest of world, and I wanted to check that you're not anticipating any missing items or delivery delays going forward. My final question is on Americas.
You're obviously showing very strong growth on a store base that has been fairly stable since 2019. We've heard from other companies in the sector that the growth is much broader-based in Americas, so southern states outperforming. I wondered if you're rethinking your store footprint there, and if you see additional opportunities given your strong performance in the market and also with the reduced discount rates. Thank you.
Okay. Maybe, Patricia, on the
On the first question?
On the first question.
Yeah, on the first question. Yes, we said that we reconfirm our guidance provided that the situation improves fairly rapidly. As you know, it's very difficult to have clear visibility about the situation in China, and it may evolve from one day to another, and it does evolve from one day to another in terms of the number of stores that are closed. I would say that we hope it will improve in the coming weeks and hopefully as soon as possible.
Regarding the sourcing in China, yes, it's true that our supply chain teams are going through big headaches in these days because they really have to anticipate what's going on in China. You know also that we work with kind of a advance of a few months in that industry, so there is no risk of having empty stores. We might have some few delays and some SKU arrivals, but seeing that the size of our collections, this might not be a huge issue, and we are anticipating what can be done to make sure that we mitigate that sourcing risk in China. As far as Americas is concerned, yes, as a lot of our partners and peers and competitors, we see some opportunities in the southern states of the U.S. We are presently looking at opportunity in those cities that are really seeing a boom in their vitality. That might anyway more impact 2023 than the present fiscal year.
Thank you.
Thank you. Thank you, Kathryn. Judy, I think this was the last question.
The person has removed their questions from the queue. I'm just gonna remind everyone, it is star one to ask a question on today's call. Okay. The next question is coming from the line of Marie-Line Fort from SG. Your line is unmuted. Now go ahead.
Good morning. My line is not very good, so I hope she will listen clearly my question. I just would like to know, in EUR million or in percentage of sales, can we have a measure of the COVID impact in Asia in Q1 2022? Second question is,
I'm sorry that we.
-closing-
We hear one word out of two. Is there a way that? Hello?
Yeah. Hello. Can we have an idea of the COVID impact in Asia?
Yes. This one I have. We got it.
Percentage of sales.
Yeah. We just didn't hear your second question, Marie.
The tourist flow in Europe and in Americas, is it improving? Can we see impact as soon as Q2?
This one I mentioned. Yes, we see some tourism flow, intra-European tourism flow coming back in Europe and even American tourism coming back in Europe. This is something that we expect with the spring and summer season to improve, yes.
Regarding your first question, in China, the number of days of closing that were very diverse in terms of which stores, because it changed many times during the quarter. The percentage of stores closed over the quarter was very in line with the decrease of the organic decrease of sales versus 2021. This is clearly a direct mechanical link between store closures and sales.
Opening our presentation too, because you have some closures and also some stores.
Absolutely.
Which are affected by.
Yeah.
Opening our prediction.
Let's say store restrictions.
Store restrictions.
Thank you, Marie-Line. Judy, I think it was the latest question.
That is correct. That was the last question in the queue. Final reminder, it is star one on your telephone keypad if you would like to ask a question on today's call.
I think we are done with the questions. Thank you very much, and we wish you a nice day.
Thank you, everyone.
Thank you.
Thank you.
Thank you, everyone, for joining us on today's call. You may now disconnect your handsets. Hosts, please stay connected.