French fashion group SMCP experienced a substantial decline in its first-half results, primarily due to the global pandemic’s impact on consumer interest in fashion. The company’s sales plummeted, resulting in a net loss, although it did manage to generate a profit on an EBITDA basis. Sales declined by 31% to €372.8 million, or 33.5% on an organic basis.

Despite the challenging circumstances, there were some positive developments for SMCP. Sales in Mainland China started to recover gradually during Q2, with sales growth returning in June. Additionally, the company’s effective execution of its Covid-19 action plan helped mitigate the crisis’s impact, leading to cost savings of over €60 million. Furthermore, SMCP has a healthy cash reserve, with €219 million in the bank by the end of June.

However, SMCP’s financial figures remained weak. Adjusted EBITDA for the first six months of the year dropped to €55.1 million from €141 million in the previous year. Adjusted EBIT also experienced a significant decrease, turning into a loss of €29.7 million compared to a profit of €66.5 million in the same period of 2019. SMCP reported a net loss of €88.5 million, compared to a profit of €17.2 million a year ago. The loss included an impairment of €42.6 million on the goodwill of its Other Brands, Claudie Pierlot and De Fursac, due to the pandemic’s impact on these brands.

Although SMCP did not provide separate performance figures for its four brands or a regional breakdown, CEO Daniel Lalonde acknowledged that the pandemic had a significant effect on the results. However, Lalonde expressed confidence in the company’s ability to navigate these challenging times, emphasizing its geographically diverse brand portfolio, strong e-commerce position, and adaptable organization. Lalonde affirmed that SMCP would continue implementing its Covid-19 action plan in the second half of the year, while also focusing on enhancing brand desirability, creating a seamless experience for customers across online and physical stores, and accelerating sustainable fashion initiatives.

During the first half, SMCP faced severe setbacks due to lockdown measures in different countries. The company noted weak foot traffic in stores but highlighted solid conversion rates, indicating that customers who did enter the stores were more likely to make purchases. Furthermore, SMCP experienced a 15% increase in e-commerce sales.

Overall, despite the significant challenges faced in the first half, SMCP remains committed to overcoming the obstacles and capitalizing on growth and innovation opportunities in the fashion industry.

Useful links:
SMCP Investor Relations
SMCP Official Website