SMCP (SMCP) H1 2024 earnings summary

Executive summary

• H1 2024 sales reached €585m, down 3.6% organically and 4.0% year-over-year, with resilience in Europe and America offset by a 20% organic decline in APAC, mainly due to China; Sandro and Maje performed well outside China.

• Adjusted EBIT margin fell to 3.2% of sales, impacted by restructuring, inflation, and non-cash impairments; net income was -€27.7m to -€28m, break-even before non-recurring items.

• Network optimization led to 29 store closures in H1, mainly in China and Asia, with further closures planned; Claudie Pierlot repositioning and discontinuation in Asia ongoing.

• Digital sales remained above 20% of total; new digital platforms launched and expansion into India and Southeast Asia planned.

• Sustainability initiatives led to a 15% CO2 emissions reduction from 2022 to 2023 and new Diversity & Inclusion policies.

Financial highlights

• Gross margin improved to 74.3% of sales, up over one point year-over-year, driven by a strict full-price strategy and reduced discounting.

• Adjusted EBITDA was €98.5m (17% margin), down from 19% in H1 2023; adjusted EBIT was €18.8m–€19m (3.2% margin), down from €36m (6%).

• Free cash flow was -€8.8m to -€9m, stable year-over-year, supported by inventory and CapEx control.

• Net debt at €293m, down €13m year-over-year, with a net debt/EBITDA ratio of 3.05x; covenant waiver granted up to 3.4x.

• Inventory reduced by 7% year-over-year, supporting improved working capital.

Outlook and guidance

• H2 expected to benefit from more favorable comps starting August and positive reception of fall-winter collections; cautious outlook due to ongoing macroeconomic and political uncertainty.

• Ongoing execution of action plans focused on growth, cost management, and further network optimization, especially in China.

• Mid-term plan targets €25m positive EBIT impact by 2026, with digital, retail, and wholesale initiatives.