Hello, and welcome to the SMCP 2021 Q1 Sales Call. My name is Jess, and I'll be your coordinator for today's event. For the duration of the call, your lines will be on listen only. However, there will be the opportunity to ask questions. This can be done by pressing star one to register your question at any time. If at any point you require assistance, please press star zero on your telephone keypad, and you will be connected to an operator. I will now hand you over to your host. Mathilde Magnan begins today's call. Thank you.
Thank you, Jess. Good morning, everyone. This is Mathilde Magnan, Head of Investor Relations speaking. Thanks for being with us today for SMCP Q1 sales. I'm here with CEO, Daniel Lalonde, and CFO, Patricia Huyghues Despointes. As usual, we will go through the presentation, and then we'll have the Q&A session. Before I hand it over to Daniel and Patricia, I invite you to go through our usual disclaimer on page two. I think we can start now.
All right. Thank you, Mathilde, and good morning, everyone, and thanks for joining us this morning. I'll begin with a quick overview of Q1 2021 sales. Patricia will detail our sales performance by region, and I will briefly conclude. If you turn over to the first slide, as you've seen from the press release this morning, in the first quarter we achieved EUR 223.9 million sales, down 0.6% on an organic basis and -18% versus 2019. Let me share with you some key messages on the quarter. First, in APAC, a very good momentum driven by a strong performance in mainland China at +92.6% versus LY. A performance not only versus last year, but also versus Q1 2019 at a growth of 26%. This thanks primarily to an excellent performance on our brick-and-mortar channel.
There are early signs of consumption and traffic rebound in the Americas while Europe was still impacted in Q1 by lockdown. On digital, the group achieved a strong digital growth in Q1 at 38.9%, representing 30% of total sales. This includes a positive like-for-like growth in all regions, in particular the Americas, France, and EMEA. APAC had also a positive like-for-like growth despite a high base of comps. As planned, in Q1, we made solid progress on our brick-and-mortar network optimization plan, primarily in France. On a global level, we had 33 net closing, all of them being in France. Mainly very small stores locating in small cities and not reflecting our new concept. This includes 13 closures of Suite 341 stores, which as you know, are no longer strategic for the company.
Finally, over the quarter, our teams continued to be fully committed to maintain a strong focus on tight cost and cash management, just like we did in 2020. Slide five, a few highlights. We've recently presented our strategic plan, as you know, at our investor day in October 2020. A new chapter for SMCP called One Journey. Today, I'd like to share some highlights of the first pillar of our plan, enhanced brand desirability. Here you will see a few innovative and creative collaborations done in Q1 by our brands. Sandro with Jason Glasser, an American artist and musician, and also with Yuko Nishikawa, a Japanese artist based in New York. Maje times Cobalto Studio, who designed a capsule, and also with Jing Tian, a Chinese actress in China who adapted Maje's campaign to the Chinese market. She has over 300,000 followers on Instagram.
The idea is to give an opportunity to artists from the new generation whose style and value resonates with our brands. These type of initiatives add desirability to the collections and enable us to speak to our audience in a more intimate way, giving the opportunity to surprise and seduce our community and to enhance customer experience. Image wise, they offer us an opportunity to boost visibility while preserving rarity. When it comes to figures, these are key enablers for full price conversion to improve like-for-like performance. On slide six, in Q1, Claudie Pierlot launched its new and exciting brand platform, reflecting a younger brand committed with a stronger offer, more digital and a new marketing strategy. Back to the founder's DNA of free spirit, travel memories and folie douce. De Fursac, in January, we announced the appointment of Gauthier Borsarello as brand creative director.
The appointment of Gauthier, a leading expert in vintage clothing, marks the start of a new chapter at De Fursac. A mainstay in French style, the brand will now be developing its range further under the watchful eye of its new creative director. Our ambition is for De Fursac to become a truly international brand that offers a unique French style and identity that pays tribute to what has made so successful in France for almost 40 years. We are confident that Gauthier's creative vision, profound knowledge of menswear and retail will help us achieve this. Gauthier will be presenting his first collection for spring summer 2022. On slide seven, we show a few examples of how we reached our Chinese customers as well as the new generations globally. These include marketing specific capsule products for local events and celebrations.
As for the Chinese New Year, here you see a capsule of 10 products from Maje. We also have exclusive product offered to our Chinese customers which are more impactful and more focused, as well as casting Asian models using Asian key opinion leaders or influencers like Jean Chen, almost 12 million followers on WeChat, Laurinda Ho and Grace Chan, who each have more than 600,000 followers on Instagram each. Sandro and Maje have also joined the gamification marketing platform, ADA, a luxury fashion game in China.
Launched in February, the successful game displays a Sandro and Maje wardrobe of ready-to-wear and accessories with 27 products by brand, including fall/winter and spring/summer references. This is a new way of engaging millennials and Gen Z by socially connected fun game, and a new traffic lever for us as well. No w I will turn it over to Patricia, who will take you through the Q1 performance by geography in greater detail.
Thank you, Daniel. Good morning, everyone. Moving on to the regional breakdown on page nine. In France, sales were down -8.3% on an organic basis, impacted by restrictive measures from January, curfew at 6:00 P.M. and shopping centers closures, low traffic and weak tourism. In March, the country faced new lockdowns in key regions like Paris. Overall, we consider that the impact of restrictive measures on revenue is meaningful, more than twice stronger than last year. With an excellent performance of online, we managed to compensate a significant portion of the loss in brick and mortar, leading to a decrease of sales at a limited -8%. Digital sales indeed displayed a strong double-digit growth at +55.5%, driven by our strategic plan and the execution of our One Journey. Over the quarter, we finalized the ship-from-store rollout in France.
As Daniel presented earlier, in Q1, we made solid progress on our brick and mortar network optimization plan. Q1 network is not representative of the year. We have a phasing effect. All in all, we can say that we are in line with our 2021 plan. In EMEA, sales were down -32.5% on an organic basis, in line with the trends observed at the end of last year. The region has been impacted by longer store closures and lockdowns in key countries from January, including a total lockdown in the U.K. and in Ireland over the period. Long-lasting closures in countries such as Germany, the Netherlands, Portugal and Switzerland, as well as a continued sharp drop in tourism. The impact of store restrictions in Q1 2021 compared to Q1 2020 follows the same trends as in France, more than twice stronger than last year.
In the meantime, the group recorded a strong double-digit sales growth in e-com at +30.5%. On slide 10, our other markets are notably the most dynamic, APAC. Sales were up +64.6% on an organic basis. This very good performance was mainly driven by mainland China at +92.6%, including a solid like-for-like growth. For sure, this high figure is partly due to an easier base of comparison in February and March. Compared to Q1 2019, a substantial growth has also been recorded at +26%. This APAC performance was mostly driven by brick and mortar channel. Mainland China was the most dynamic region, despite north cities have experienced some COVID-19 outbreaks, including temporary transportation restrictions and weaker traffic in these regions. Our brand initiatives on new generations and Chinese customers, as presented by Daniel earlier, combined with the global traffic rise, have resulted in this great performance over the quarter.
Meanwhile, digital sales were stable, reflecting a high base of comparison in Q1 2020. We also saw a strong performance in markets such as Taiwan, Macau and South Korea. Finally, this performance is combined with a tight control of in-season discount rates, which is slightly lower than last year, both in digital and brick and mortar. In the Americas, sales were stable with a slight growth of 0.4% on an organic basis, still impacted by some restrictive store measures, mainly in Canada. The performance gradually improved from February, supported by the rebound in U.S. consumer spending due to the U.S. fast vaccine rollout. This quarter trend was also driven by a constant rise in brick and mortar traffic from January, which is very positive. In the meantime, e-commerce displayed a very strong double-digit growth at +62.8%. I now hand over to Daniel for the conclusion.
All right. In conclusion, our global teams are focused on the execution of our One Journey strategic plan, presented again in October 2020, supported by strong and global desirable brands. APAC continues to perform very well, particularly in mainland China, while the Americas is showing early signs of rebound. Our European teams are fully mobilized to prepare the post-lockdown period and to emerge stronger from this crisis. The perspective of a gradual market reopening in Europe, particularly in France, gives us good reason to be cautiously optimistic about H2 2021, not only in Europe, but in all markets. Thank you for your attention. We will now turn it over to questions- and- answers.
The first question comes from the line of David da Maia from CIC. Please go ahead.
Good morning. Question for me, please. The first one on the U.S. You observed early signs of recovery in traffic and demand in this market from February, if I understood correctly. Is this gradual improvement still ongoing or even accelerating in April, thanks to, I would say, better trading conditions in the U.S.? My first question on the outlook. I understand that you don't provide a full-year guidance at this stage, given the lack of visibility, but can you maybe share your thoughts on the current consensus? Do you think a full-year 2021 sales likely above EUR 1 billion, is a realistic assumption given your cautiously optimistic view on H2? Thank you.
Yes. Well, thank you, David da Maia. Listen, I'll take the first question on a little bit outlook, and maybe Patricia Huyghues Despointes can give some comments about, I believe, your question on the U.S. traffic, if it's improving sequentially in April or if the market is in general? Listen, the outlook, as we said, there's still too much uncertainty today to provide a specific outlook and guidance. I won't necessarily comment on your, is it a billion or more. Simply just remain cautiously optimistic given the recovery that we're expected to see. What I can say is a few things, though, a little bit what we're seeing today in current trading. Yeah. I can tell you that APAC and particularly China continues on trend.
The trends we've seen in Q1. We've seen that through April so far. Very strong. The markets are super strong. We're very excited about that. France, as you know, the stores are still closed. We have over 470 stores closed. I don't know when they'll open. I expect from my involvement in the French community, sometime around mid-May. This is all we know at this point in time. We're very excited for the reopening of the stores, in France, which should happen in the next three weeks, we believe. North America, as you posed the question, the recovery continues, sequentially, even in April. Canada That's the U.S. Canada is still a more difficult market, as you probably know.
The stores are all closed in Ontario, which is where the biggest stores are involved. Canada is still more than half the stores are closed. Listen, in Europe, there's been a gradual recovery we've seen. It's very recent in the markets like the U.K. and Spain. All I can say at this point in time is that the recovery, which is again, a few weeks, is slightly ahead of our plan, or objectives. Italy is still a very, very tough market. Last, the digital trend also continues from Q1. I'd rather provide a little bit of current trading trends. I think that's more prudent, than comment necessarily about the full-year at this time. Patricia, I think we're fine. I think I captured both questions.
Thank you, Daniel. Operator, do we have another question?
Yes. The next question comes from the line of Marie- Line Fort from Societe Generale. Please go ahead.
Yes, good morning. I would like to come back on your store closures in France. Could you give us more granularities? Are they located in department stores or in city centers? Do you think you will record any penalties on your P&L? Also, could you help us to modelize the impact on your sales over the full-years and what kind of sales that they do represent? That's my first question. My second question is about China, mainland China.
Are you able to measure the impact of your collaborations or your capsule on your Q1 2021? Also, do you see different momentum between your two main brands, between Maje and Claudie Pierlot? Lastly, how do you explain that your other brands are still down much more than Maje and Sandro? Have you any explanation? Is it more De Fursac or Claudie? If you can also give us more granularity on that topic. Thank you very much.
Marie- Line, thank you. I think I can take your three questions. The first one about the French network. A couple of things. We closed on a net basis 33 stores in Q1. There's a small phasing to store closures this year. The important point to retain is this is all part of a plan that I put in place two years ago. We called it the French Optimization Plan, simply because we realized as a group that our distribution in France was too dense. It was a result of a historical distribution, where we had some very small, now I'm talking 30 sq m to 40 sq m, stores in very small cities in France. It's not something we would do today. We've begun a path to optimize our store network. It will finish this year in France.
We're closing essentially very small stores, again, 30-40 sq m, in very small cities, which we can serve much better through online today, through digital sales, and through bigger, more in-concept stores, very close to these small villages in France. That's the first thing. It's a very deliberate plan. Number two, there's also been some other factors like Printemps has closed some, I think, five stores in France recently, and we were part of some of those stores as well, that goes away. In many of those cities where Printemps closed their department store, we had freestanding stores there too. We're able to capture the demand.
Listen, I think in terms of the impact on sales, for me, it's going to be a positive impact on sales simply because that demand from those stores, we will pick it up, either online or through a proximity store, which is at concept. Overall, we believe it contributes to like-for-like growth, because we'll have less stores in France, but bigger stores, and probably a positive impact on profits. I think it's a profit-accretive exercise that we're doing. This plan, the French plan, was put in place two years ago, and it will essentially be completed this year, probably in the first nine months of this year. Second question on China. I didn't really understand the question on capsule, but Maje, you asked mainly the performance by brand. I would say it depends on the season. Both brands, Sandro and Maje, are market leaders in China.
We get the results of the performance vis-à-vis a peer group in almost all the malls in China on a monthly basis. I can tell you, in the accessible luxury category, Sandro and Maje are the market leaders in China today. The performance depends by season. Some seasons Sandro is stronger, some seasons Maje is stronger. I think more recently, in the Q1 season, we saw a slight over-performance of Maje versus Sandro. I've had the question a year ago, why is Sandro stronger than Maje? They're very close. If you look at an average over the last two years, the performance is fairly identical. They're both market leaders in France. Claudie Pierlot has a smaller distribution in China. Again, we're just selecting key stores in key cities.
Things are going very well, but again, we haven't scaled up Claudie Pierlot yet, but we're in the process of building that plan. The last question on other brands. Other brands in Q1. The key and explanation is simply put, is Claudie Pierlot and in particular, De Fursac, have a strong % of their sales based in France. De Fursac is almost 95% of their sales are in France. Clearly, they don't benefit from the very positive momentum as we've seen in China. As Patricia mentioned earlier, China had a +90% growth versus the same quarter last year. De Fursac doesn't benefit from that. Neither does Claudie Pierlot because it's very small in the region. That's the main reason. Those two brands are, De Fursac is mainly French, and Claudie Pierlot has a high proportion of their sales in France. We should see a nice rebound when the markets open.
Thank you, Daniel. Operator, I think we have another question.
Yes. The next question comes from the line of Kathryn Parker from Jefferies. Please go ahead.
Good morning, and thank you for taking my questions. My first question is on accessories, and whether you could give an update on the penetration within your sales, and the growth rate, and maybe a comment on bags versus shoes. My second question is on the collaborations or capsule collections that you're doing. I wondered, the frequency that you're targeting for these going forward, maybe a contribution to sales. Also, if the average selling price, of items within the capsule is higher than the mainline collection. Lastly, I was interested on your point that you're doing well versus your peers in China, and I just wondered if you could give some names of other brands that you think you're competing against within the Chinese market. If these are the that you would compete against in, say, France, Europe, and the U.S. Thank you.
Thank you, Kathryn. Those are very specific questions, but let me do my best, and I'll see if Patricia Huyghues Despointes can add anything to it. Listen, on the accessories side, it's only a quarter, so it's hard to give you more data, but if I look at Q1, our penetration is roughly the same as it was last year. It's around 9% overall, just above 9%. The brands have done some very good accessory ranges. The Sandro, the M bag I'm sorry, the Maje M bag continues to do very well. Sandro is very strong also in foot, in shoes. Claudie Pierlot is a little bit more successful in different categories. We continue our development of accessories, but it's been roughly at the same, slightly above last year in terms of penetration, but just over 9%. In the collaborations, they're small.
I don't have specific numbers to give you, but I can give you some feelings. They're small collaborations, in terms of number of products involved. In terms of price points, they're roughly in line with the average price points that we have of the ranges. Some of these collaborations, we also try to do them in an ephemeral basis, i.e., we want to make them fairly limited. There's a big boost primarily to image. It's another reason for us to communicate with our customers to impact on brand desirability. That's really the objective in mind of the collaborations we've done in Q1. It's not always the case. Sometimes they're more based on volume and a meaningful part of sales. The ones we described earlier are more a contribution to image, reason to talk, and to surprise our customers, I'd say, in a good way.
The last question, well, I don't know if I'm going to name any names, but our peer group in China that I've been following for six years. I used to go to China every month and a half. It's a very important market for us, as you know. I can say that the peer group that we benchmark ourselves against in China are twofold. First of all, let's call more Western brands. Here we see some American brands, Theory might be one, for example, that does pretty well in the region. There are very few European brands in our space, in accessible luxury space, that are present in China or in a meaningful way or have a meaningful footprint. Much less the European accessible luxury players.
What I see more and more are some local brands as well, some local Chinese brand, which are merchandised in a different wing of malls, actually. They'll have Western brands in one wing and Chinese ones in another ones. There's more and more over the past years that we've seen. The space in China is still more fragmented with a stronger representation, in conclusion, I'd say, from American brands, to a lesser extent, European brands, maybe Max Mara Group is one that I would cite. Then more Chinese brands. However, we are the market leaders in this market. The Chinese consumer loves our brands. You can see by the results as well. Our strategic plan, we talked about One Journey. We are investing meaningfully in this region as well, not only from CapEx but OpEx, to continue to develop our market leadership.
Thank you, Daniel. I think we have another question.
The next question comes from the line of Gilles Cregel from Allied. Please go ahead.
Good morning. Thanks for taking my question. I had actually one coming back to the temporary closures in Q1. I understand that those have been rather heterogeneous worldwide. Could you give us an idea of the average temporary closure you had of your stores or some indication per region or on the major countries such as U.K. and Germany?
Yes. Thank you, Gilles, for your question. As you mentioned, it's quite a heterogeneous area by area, and it's not easy to give you a straight answer because the closures take many forms. It can be a full closure, it can be two hours per day, it can be open with a restrictive attendance in the store. It's very difficult to give you a precise figure. Let's say that we estimate that the main impact, of course, is in France and Europe, and it's basically the same, be it in France and Europe.
We can estimate that roughly half of our sales were impacted by store restrictive measures in Q1 2021. In Asia, it was open all quarter long. In America it was a bit in the middle, with Canada sometimes open, sometimes closed. Currently, a significant portion of our stores in Canada are closed. In the U.S., it was mostly open, but with still a few restrictions in terms of number of people to stores.
Thank you, Patricia. I think we have another question.
The next question comes from the line of Geoffroy Michalet from ODDO BHF. Please go ahead.
Hello. Good morning, everyone. Thank you for taking the question. I have two. The first one is, could you give us some color on the discount or promotional rate of Q1, maybe against Q4 last year? The second question is on the cost base. Could you remind us, what is still embedded from the savings that you have done last year, and what can be expected for this year? Thank you.
Well, I think I will take this question. Thank you, Geoffroy. In terms of discount, I would say that we are in a normalization and stabilization phase of our discount rates, let's say it's in the mid-30s. We see some improvement, especially in Asia, which is a very good news. In terms of the cost base, as you remember, when we commenced the yearly results, we insisted on the fact that most of the savings were temporary negotiations or temporary measures such as partial unemployment or rent relief during closures. Basically, we are still running the same actions to variabilize as much as possible our costs. We continue negotiating our rents. We continue optimizing our staff costs, just like we did in 2020. Of course, it's more centered on France and Europe, currently since the stores were closed are mainly in those areas.
Thank you, Patricia. Operator, we will take the last question, please.
The next question comes from the line of Chiara Battistini from JP Morgan. Please go ahead.
Hi. Thank you very much for taking my questions. I have two quick ones. First one, I was wondering, and given your comments on current trading, I guess you might not be seeing this, but I was wondering whether you could give any color of what you're seeing in terms of potential retaliation against the Western brands around the Xinjiang cotton. Are you seeing anything yourself or for your peers, your Western peers in China at the moment, please? Finally, if you could give us any color or update on the current situation with Shandong Ruyi at the moment, please. Thank you very much.
Sure. Hi, Chiara. It's nice to hear you. On your first question, I don't have enough specific details. I know there's a lot of light on the subject, on the Xinjiang region. We've made our position very clear. We have very strong supplier code of conduct that respects all the human rights throughout the world. We do audits, et cetera. We're very sensitive on our sourcing strategy. We don't produce in this region, et cetera. It's a sensitive subject. I agree with you. I haven't seen any major retaliation in either region at this point in time.
We'll just follow it. I agree. It's an interesting subject to put the light on, and we're all trying to do the best job and source responsibly, as we have anyways for many years. On the Shandong Ruyi situation, I don't think there's that many updates. I don't have any very specific updates. They're still our majority shareholder. I don't know if you had any more specific question, Chiara, around Shandong Ruyi. Maybe I'll ask you if you have a more specific question on Shandong Ruyi that I can help answer.
No, I was just wondering whether there has been any update on the bond situation and anything, from a shareholding point of view.
Yeah, no, I'd say none at this time, Chiara. I think factually on, you all know this, there's an exchangeable bond from Shandong Ruyi that's due in September. I think that's probably the only fact, and I think they're in a mindset to reimburse this in September. Other than that, I don't have any very specific update.
Thank you, Daniel. I think we are done with the questions. I wish you a nice day. The next communication will happen at the end of July for H1 data. Thank you very much.
All right, thank you everyone.
Thank you.
Just wish you a nice day to all.
Thank you for joining today's call. You may now disconnect your lines.