French premium fashion group SMCP surpassed expectations in 2020 by reporting higher core annual profits despite the challenging circumstances brought on by the pandemic. The company, which owns popular brands such as Sandro, Maje, Claudie Pierlot, and De Fursac, implemented cost-cutting measures that resulted in savings of over €100 million. Additionally, SMCP experienced a boost in digital sales, which helped offset the negative impact of lockdowns and store closures.

Although SMCP saw a nearly 40% decrease in adjusted annual earnings before interest, taxes, depreciation, and amortization (EBITDA), the company still managed to achieve a profit of €179 million, surpassing the predicted €128 million. However, the company’s results were affected by a significant decline in sales and a reduction in the management gross margin by 3.8 percentage points. This decline was mainly due to increased promotional activities and off-price sales operations aimed at reducing inventory levels. The net income dropped from a €43.7 million profit to a loss of €102.2 million. Excluding certain one-time items, the net loss stood at €39.6 million.

SMCP’s reported sales dropped by 22.9% to €873 million, with an organic sales decline of 23.9%. However, the company experienced a notable recovery in mainland China during the second half of the year, resulting in a 3.5% sales increase for the full year and a 24.5% rise in the second half alone. The digital sector also performed strongly, with a sales growth of 27.6%.

Analyzing the performances of the individual brands, Sandro achieved an adjusted EBITDA of €91.8 million, down from €141 million the previous year. Maje recorded a figure of €75.2 million, compared to €119.9 million in the previous year. The other brands reported €12.6 million, down from €25.4 million.

While specific details regarding the performance of each brand were not disclosed, it is clear from the EBITDA figures that Sandro and Maje continue to be the driving forces behind SMCP’s operations. The overall adjusted EBITDA margin was 20.6%, with Sandro and Maje reporting margins of 22.2% and 22.3% respectively. The other brands had a lower margin of 10.3%.

Due to the ongoing uncertainty caused by the pandemic and the recent surge in coronavirus infections in Europe, SMCP did not provide any guidance for the current year. However, CEO Daniel Lalonde expressed confidence in the company’s ability to navigate the challenging landscape. He highlighted the implementation of cost-cutting measures and the prioritization of e-commerce as strategies that position SMCP to capture growth opportunities and solidify its position as a global leader in the accessible luxury market.

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