Hello, and welcome to the SMCP 2024 Q3 Sales. My name is Laura, and I will be your coordinator for today's event. Please note, this call is being recorded, and for the duration of the call, your lines will be on listen-only mode. 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 to register your question. If you require assistance at any point, please press star zero, and you will be connected to an operator. I will now hand you over to your host, Amélie Dernis, Head of Investor Relations, to begin today's conference. Thank you.
Thank you. Good morning, everyone. Thanks for being with us today for the publication of SMCP Q3 sales. I'm here with our CEO, Isabelle Guichot, and our CFO, Patricia Huyghues Despointes. You can listen to the publication via the usual conference call, or you can connect to the webcast to have the presentation displayed. As usual, we'll go through the presentation, and then we'll have the Q&A session. Before I hand it over to Patricia and Isabelle, I invite you to go through our usual disclaimer on page two. I think we can start now.
Okay. Thank you, Amélie. Good morning, everyone. Thank you all for joining us today to talk about Q3 sales, then key highlights on figures and business initiatives. Then Patricia will detail our performance by region. Let's move on to page four. As you can see, our nine-month sales came at EUR 878 million, decreased by 2.7% at constant exchange rate versus last year, and -4.8% like-for-like. Excluding China, sales increased by 1.4% during the first nine months of the year, with a good performance in all areas for Sandro and Maje, which is a key highlight from this publication. As anticipated, the commercial environment of the quarter remained challenging with the organization of the Olympics in France, the election mood in the US, and the environment, which remains obviously challenging in China.
However, we can see a sequential improvement quarter after quarter, with - 5 organic in Q1, - 2 in Q2, and then - 1% in Q3. This comes especially from Europe and America and leads to a positive performance, excluding China, starting Q2, with a + 2% and improving in Q3 with 3%. Other points worth mentioning are the following: The pursuit of full price strategy with a two-point decrease of discount rate in season, and this is across geography, despite good comps and a challenging environment. Our digital share remains at a satisfactory level, circa 20%. The network decreased by 35 POS during the quarter, and that's leading to China network optimization, including closures in Europe and a few small corners in department store. This is a strategy that we presented early on this year. Page five.
As you can see, it's a detailed bridge of the sales evolution versus over the first nine months of the year versus 2023. The decrease comes from the like-for-like network, as you can see, and the vast majority of this decrease comes from Greater China. The network optimization in China and for Claudie Pierlot accounts for a loss of EUR 10 million in sales compared to last year. Apart from this optimization, the evolution of the rest of the network is positive, coming from the effect of 2023 and 2024 openings, especially in America. Wholesale revenue also increased in line with our strategy to further develop what we call our retail partners. Finally, foreign exchange is marginally negative by EUR 2 million, representing 0.2 points, mainly from Chinese yuan. Page six.
You will find here the performance by region. Patricia will get back in depth later in the presentation. A few highlights to start with. By region, France, Europe and America gained one point each versus last year, resulting from resilient performance in this region, and this in France, in spite of the Olympic Games impact. Symmetrically, APAC decreases by three points versus last year from a very challenging economic environment. By brand, positive performance for Sandro and Maje, excluding China. Other brands, trend in Q3 is in line with the first semester, with Fursac slightly positive and Claudie Pierlot negative. Obviously, those two brands, they were more impacted by the Olympics, more than Sandro and Maje because of their large exposure to the French market.
By channel, wholesale increases by 1 point versus last year, in line with the strategy. Retail network remains the largest part of our business, as you know, as we are a retail pure player with 91% contribution. Moving on to brand initiatives. We wanted this time to start with a sustainability initiatives, on the, you know, famous three pillars, of our CSR strategy. First, on product and secondhand, Sandro launched its secondhand program three years ago in France, then expanded it across Europe. This year, Sandro started the collection in store of secondhand pieces in approximately 15 stores in France. The service allows customers to authenticate and trade their pieces in exchange for a voucher that can be redeemed online or in, or in-store immediately. Sandro has also recently extended the program to 27 more stores across France and Europe.
Our dedication to sustainability ensures that our collections continue to live beyond each season. Through this program, over 40,000 pieces have been given a second life, a second chance, helping to build a more circular fashion model. On the second P, planet. SMCP is partnering with Vela Sail for Goods to transport Sandro and Maje products from France to the United States through a sailboat. With 100% wind powered propulsion, Vela has succeeded in adapting technology from ocean racing boats to the modern needs of freight transport. One of the greatest French sailor, François Gabart, holder of the solo round-the-world record, and the winner of the Vendée Globe, is the co-founder of Vela. The construction of the trimaran has already begun, and the first transatlantic crossing is scheduled for 2026 under the French flag.
Participating in this initiative enables us, enables this project to come to life, as the commitment of Brand was needed to secure the financing of the construction of the boat. At SMCP, we believe that innovation will be key to rethink and vary until models, and we are proud to participate in such an initiative. Finally, people. Promoting equal opportunities and transmission of know-how in the fashion industry are of paramount importance for Sandro. For instance, this commitment is deeply rooted in the personal history of Evelyne Chetrite, our founder and artistic director of Sandro. To celebrate European Heritage Day, Sandro donated EUR 1 for each item sold in Europe, online and in-store, to promote equal opportunities and preserve young creative talents.
Let's talk about brand durability initiatives and especially product initiatives, and we wanted to, during this publication, to do a little focus on accessories. As announced in the previous publication, accessories is and will be a key driver for the group to maximize product offer and gain market share. The three women's brand launched new bags during the quarter, and new options for the Fall/Winter collection. Sandro launches a new bag called the Tangoso, which enjoys a very good commercial start. It, with its minimalist style, combines design and functionality. Maje keeps on animating the M line, which is really a very important line for the brand. And the Miss M bag has been edited in an XL version.
Designed for the boho-urban woman, it combines the classic elegance of the M Line with a modern versatility, featuring a double strap and signature leather-wrapped handle. This very chic accessory is the perfect at any moment, and we are very satisfied with the sales results. You can also unveil its new revisited Anouk bag. The studio teams have reinvented the design, redefining both the pattern and proportion, adding a very elegant metallic chain, which adds a little sophisticated touch to this bag. Moving on, sorry, to page nine. A few pictures of recent openings, especially with our retail partners. As I mentioned, they're really contributing to our growth in countries where we don't operate directly.
You can see a very nice Sandro store in Turkey, and a Sandro and Maje new stores in Egypt, in a mall called Cairo Festival City. Two countries where we recently opened and where we are really happy with the progress made. Next page, and in line with our strategy, we opened in to three, in key countries in Southeast Asia, Indonesia, with a nice Sandro store in Jakarta, and also two new stores opening for Maje and Sandro in Mexico, Antara , a country which is very fastly growing for our group. And as previously announced, the first two store in India will open in the coming days. So that will be. You will get the picture at next publication. I will now leave it to Patricia to give you more details about nine-month sales.
Thank you, Isabelle. Good morning, everyone. Some more details on sales on slide 12. With France first, with sales at EUR 300 million in the first nine months of the year, flattish versus last year. Q3 was impacted by the organization of the Olympic Games in July and August, particularly in Paris, with a touristic traffic concentrated on just a few weeks, coupled with a decline in visits from local consumers. However, consumption trend and the traffic increased in September, as the fall/winter collection started well, especially for Sandro and Maje. Both brands keep on gaining market shares on their historic markets. The network recorded seven net closings during the quarter, mainly due to Claudie Pierlot network optimization as planned. EMEA now, with revenue at EUR 294 million, progressing 2.3% organic YTD and +5% in Q3.
Q3, which records consistent growth in the north and in the south of Europe, and benefits from the strict full price strategy. The consumption environment, which was quite low in Q3 2023, is getting better. Like-for-like performance is positive in the biggest retail markets, and as far as retail partners trend is concerned, it remains positive as well, notably in the Middle East. The network recorded a decrease of 15 units during the quarter, in particular at Claudie Pierlot, and also with some relocations underway. In America, on page 13, revenue at EUR 130 million YTD is growing +6% organic versus last year. This performance is supported by resilient Q3 sales, despite a volatile and challenging environment.
In the US, both brands, Sandro and Maje, showed a consistent positive trend, notably with the good start of fall/winter collection, leading to a solid performance in Q3. Mexico has recorded a strong performance during the quarter as well. The network is slightly decreasing by five net units during the quarter, mostly some small corners. In Asia, sales stood at EUR 154 million for the first nine months, i.e. minus 19.5% organic, coming mostly from Greater China.
In China, Q3 sales trend remains in line with H1 trends, impacted by weakened consumption and the persistent decline in traffic. In this context of low consumer confidence, the group continues to optimize the network, and in the meantime, it also implements initiatives to capitalize on future opportunities of growth when demand recovers. In other Asian markets, sales remain resilient with a positive trend, notably in Malaysia and Thailand, and which is getting better in South Korea. The network is decreasing by eight units during the quarter, entirely due to the closings in China.
Thank you, Patricia. Let's move on to page 14. On this slide, we wanted to give you a little bit of an update on our strategy to address the challenging context in China and strengthen our positioning looking forward. First, we made good progress on immediate actions to address the current situation with the closing of 40 stores over the circa 70 plan in 2024 or early 2025. The goal is very clear: be more focused in order to ensure the best experience for our customers. With this reshaping of the network, we will concentrate on the more profitable stores in more than 60 with highest potential.
This is the reason why we have discussed with landlords those last few months to strengthen our business relationship, to think about marketing initiatives in order to see the future opportunities of growth whenever the country will rebound. We have also started optimizing the organization in our HQs. On the right part of the slide, beyond short-term actions, we are fully confident in China's future and the growth potential attached to it for the mid, long term.
This is why we work on key priorities to stimulate further top line. This takes some time, but we believe that the actions we are working on, and which will be rolled out early mid-2025, will bear full fruits in 2026 and beyond. We work on more localized marketing strategy, on more relevant product initiatives to be more carefully exchanging with our customers throughout all the touch points. We also improve our CRM strategy, and we will review our local discount.
We also have currently a strong initiative on products by being more agile on the buying and also on the physical flows to reduce carbon footprint and cost. The current period in China is not an easy one, obviously, but we believe that this shaken environment is also an opportunity for our brands to stand out and differentiate themselves.
As a conclusion, page fifteen, I would like just to summarize the key takeaways of this publication before we move on to the Q&A session. First, the strength of our two big brands, Sandro and Maje, in this challenging environment, is really a key asset for the group. The resilience of our team, that I would like to highlight and thank for that, they are completely committed to executing the action plan everywhere in the world, in particular in China, and they do really a very good job.
After a complex summer, especially in July and August, because of the Olympics, the trend improved significantly in September, and this is confirmed in October, with a good start of Fall/W inter collections across the board. We will continue to roll out action plan and initiatives to maximize the impact in 2025 and 2026.
I thank you for your attention, and we will now take your questions. Thank you.
Thanks, Isabelle.
Thank you. Ladies and gentlemen, as a reminder, if you would like to ask a question, please press star one on your telephone keypad. Thank you. We will now take our first question from David Da Maia of CIC. Your line is open. Please go ahead.
Hello, good morning. Thank you for taking my questions. I have two, actually. The first one on current trading, you mentioned improving trends in Europe in September and in October as well. So can you give us some color on October trends by region, and particularly if you still have positive organic growth excluding mainland China? So that's the first question, and the second one on your network optimization. What are your plans in terms of store closures in Q4 and for next year? And should we expect a much bigger negative impact on your top line for the current quarter and for 2025? Thank you.
Thank you for the, for your question, David. First of all, on the current trading, October, as you mentioned, is trading better. What we saw in France and in Europe in September is an improvement of the trend, and this continues in October so far. Also, it's still tough. The trend in China is less negative in October, which is a good news. The measures implemented in China and are of a significant magnitude. We also saw yesterday some new measures about family planning and other initiatives.
We hope they will bear fruit in the coming quarters, but it's too early to assess the impact on the consumption of discretionary goods for the moment, I would say. In America, the market continues to be very volatile. The context with the coming presidential election is not very supportive currently, but remain confident in America. Closure plans. In H1, we did, like, 30 store closures in Q3, 10. In Q4, we expect circa 30 closures. We might have mostly at the end of the quarter, so they will not have a big impact on 2024. Maybe some will extend in early January. So the impact on sales in H2 may mechanically be a bit higher than it is in H1. And for 2025, Patricia, can you...
Well, as far as 2025 is concerned, we will probably have marginally some closures in China from the rest of what will not have been done in 2024, but it will be much more marginal, and for the rest of the network, we anticipate an increase in the retail partners and, let's say, stabilization in the US.
Thank you. Do we have another question?
Thank you. We'll now take our next question from Geoffroy Michalet of Oddo BHF. Your line is open. Please go ahead.
Yes, thank you. Three questions for me. First one, on France, maybe could you help us see the magnitude of the Olympics impact negatively, and maybe to compensate the exit rate you had in September? Second question is on accessories. Could you help us, maybe see the impact of the growth on accessories? How much is it overperforming? And then the third question, actually I had four. The third question on China. In your view, when you think you could go to zero like-for-like in your assessment? I know it's very early to tell, to say. And fourth question, any update on the shareholding situation so far? Thank you.
Thank you. Let's start with the impact of the Olympics, the magnitude of the impact. I mean, you all know that there is nothing. I will not add anything new. Lower touristic flows, with tourists coming only for the period of the Olympics. The flow of tourists was low in July before, and then in the second half of August also. It has an impact on local consumption with a lot of local people that have left Paris, and even France for the summer. As Paris is circa half of our French business, so the impact was significant. I would say that it probably cost the group approximately one point of growth this quarter.
And for the other brands, I mean, as for the other brands, the smaller brands, obviously it's been a bigger impact because of their exposure to the French market. Your second question was on accessories. Accessories, I would say, as I mentioned, we deliberately put a slide on the accessory and all the initiatives that we're developing in that field. I would say that it's an important milestone on our roadmap to keep on developing accessories. But I would say that for the time being, it's a marginal impact on the growth, and then they grow at as with the same trend than the other markets.
And, as you know, accessory share is more important in France and Europe. So obviously, it's with the good shape of those countries, it helps to gain traction in accessories. Third one was on China. When are we going to go back to 0% like for like? Too early to say. We are going to see next year the impact of the 70 closures that we are about to finalize. So we'll see how much of this we can recoup in the stores that are still part of the network, but it's too early to say. I think it's something that we could be a bit more granular about at the year-end publication. And the last one on the process holding, maybe, Patricia, you-
No.
Go, go ahead.
Okay. Well, nothing special to say at that stage. You know, that the English courts issued in July an order with a view to repatriate the 16% at ETS. It was an important step. Now the bondholders are in the process of working on the enforcement of this decision to have it executed. This will take a few weeks or months, actually, we cannot tell you how many. And then the decision of relaunching the process after the repatriate those shares from Singapore will be in the hands of GLAS.
Thank you very much.
Thank you.
Thank you.
I think another question.
Yes, we will take our next question from Marie-Line Fort of Bernstein. Your line is open. Please go ahead.
Good morning. Thank you very much. My first question is about the slide you presented, page five, mentioning a network optimization plan of EUR 10 million on nine-month sales. Would it be possible to tell us if what part is coming from China? And should we extrapolate over 2025 the same amount or something bigger, just to better project our 2025 impact? Also, I just want... would like to come back on China. So about the stimulus plan, you said that you it's too early to say nothing, but just to what is your first thinking about the stimulus plan? And the last question is about Japan. Do you project to create a partnership there or to open some stores?
As you've seen, obviously, the vast majority of the EUR 10 million loss, circa 90%, I would say, would come out of China. It's no surprise to anybody. Obviously, for next year, since those millions are a computation of closings that have been done along the year. Obviously, when they take full year effect, the amount will be a little higher. Obviously, also, the stores that we've closed are the stores that were marginally contributing to the overall performance, and that were also very highly dilutive. You have to compute that to take this in your algorithm, I would say.
Stimulus of the economy, the only thing it's very, you know, we've seen some measures targeting to the real estate and the real estate sector. Then we see some targeted at family and family support and family planning. How much this will have an impact on the mood of the consumer? We don't know. We also think that we still remain confident midterm about China. How fast this will impact the consumer mood, it's too early to say. We're also carefully looking at, you know, you have a convention of the National Party from the fourth to eighth November. Definitely, we think that will trigger some additional measures. How much then will it impact the overall confidence of the consumer?
It's too early to say, but we'll be carefully watching at what's going to happen early November in China. The only sign which is interesting is that for the end of October, as we mentioned during the publication, is less negative than the previous month. Last one, Japan. Japan is a country that we're carefully monitoring. We know that there are. It's a country where our segment, the accessible luxury, is not very easy to position because the distribution is mainly department store. The department store ground floors and first floor are absolutely monopolized by the luxury industry, and the street retail is not an easy configuration to operate.
But it's definitely a country that we're watching, and we try to find a recipe to enter Japan, probably with a partner. That's something that we're working on, obviously.
Thank you, Isabelle. We have another question from the webcast, so I will read it to you. On the Q3 sales in Asia Pac of EUR 47.7 million, how much exactly is China sales? And how many stores exactly at the end of the quarter, Q3? Thank you.
In Q3, the sales of EUR 48 million , we traditionally don't disclose the split by country. But we can say that, despite the decrease in Greater China, Greater China still remains the biggest market of Asia Pacific. In terms of network, you have the details in the press release. It's 451 points of sale, out of which are 270 directly operated stores. Among those 451 points of sale, Greater China accounts for circa 230, including digital, and including Hong Kong, Macau, Taiwan, of course.
The reduction is circa minus 40, compared to last year.
Thank you, Patricia. We have another one.
Yes.
What is the impact on sales of the new openings with your distribution partner? And what are the opening plans for Q3 and for 2025?
It's for Q4.
Sorry.
I mentioned in the presentation, the sales to our partners have grown by EUR 3 million during the first nine months of the year. First opening in India on their way, and developments are ongoing in Southeast Asia. But you know, I think record it as a wholesale sale. The phasing between the wholesale invoicing and the sellout. I mean, we don't record the sellout, but so it's a wholesale for us with the phasing that might be different from the present reality. But you're very familiar to that. The other question was, Amélie?
No, it's
It's okay.
It's okay.
Okay.
Yeah. So I have another one. It's two, actually. So what do you expect in term of EBIT at year-end? And what do you expect in term of inventories also?
Okay. So, well, we'll not elaborate that much because it's a sales presentation. What we can specify is that in terms of EBIT, I would say that we can expect a full-year EBIT margin higher than H1 2024. But actually, lower than 2023 EBIT margin, notably impacted by some restructuring and closure costs, which are accounted for in EBIT. And the second one was,
Uh, inventory.
In terms of inventories, we know that we try to reduce our inventories compared to last year. This was already the case at the end of September, and we continue so far. So, we aim at continuing at year-end.
Thank you, Patricia. We have a last one about discount rates. So in the presentation, you presented a minus two reduction of discount rate. Can you give us the evolution by area?
I can take this one. Actually, this minus two points is quite homogeneous across the areas, at least in France, the rest of EMEA and America. It's very consistent. There is also a decrease in Asia Pacific, which is a bit lower, but all areas have a positive trend in terms of discount rates.
Thank you. We have another one on partner. What is the weight of your partner in sales? And in every partnership, always more profitable than sales via your own network?
As we mentioned in the presentation, the partner's contribution, I mean, the wholesale, what we record as wholesale sales, is 9% of our total sales. Partnership are homogeneous in terms of overall, I mean, in terms of EBIT, I would say that they are contributing equally to the performance.
Thank you. So I think we don't have any more questions. So we thank you for your attention, and we wish you a good day.
Thank you very much.
Thank you.
Thank you.
Thank you. This concludes today's call. Thank you for your participation. You may now disconnect.