France's SMCP sees inflation, demand slowdown still weighing in first half (updated)
28/02/2024 17:56
(Adds CEO quotes, details, outlook in China, context)
By Gaelle Sheehan
Feb 28 (Reuters) - French fashion group SMCP SMCP.PA
said on Wednesday its annual earnings and net income had
suffered from the inflationary environment and a slowdown in
demand, trends it expects to continue in the first half of 2024.
"Given the lack of visibility on the timing of the
turnaround in consumer demand, the Group will not provide
financial guidance for 2024", it said.
The owner of labels such as Sandro and Maje still detailed a
plan to "foster growth", with benefits expected as early as 2024
and fully effective from 2025 onwards.
It will work on reigniting "growth and gain market share
by working on brand desirability", and "mitigate risk across
geographies" by closing some stores. In particular, it plans on
closing 15% of its Chinese network.
SMCP CEO Isabelle Guichot said during a call with
journalists that shops or geographical closures could lead to
"changes in the workforce", but "giving figures would be
dangerous in my opinion".
Though China's economy
grew
5.2% in 2023, the country's recovery was far shakier than
expected, with mounting deflationary risks and tepid demand
casting a pall over the outlook for this year. The International
Monetary Fund on Friday projects the country's GDP to slow to
4.6% in 2024 and decline further in the medium term.
SMCP said annual earnings before interest, taxes,
depreciation and amortisation fell 11.3% to 236.4 million euros
($256.30 million) in 2023, even as sales edged up 2.1% to 1.23
billion euros. Net income fell 78.2% to 11.2 million euros.
Excluding the non-cash impairment effect, the group's net
income stands at 37 million euros, it added.
"Our results come as expected, following a year that was
complicated and rather mixed, between a rather satisfactory H1
in terms of sales and an H2(showing) a slowdown in European and
particularly French growth, that was somewhat unexpected",
Guichot said.
During the fourth quarter, sales in the Asia-Pacific region,
which represented around one-fifth of the total, rose 11.3% on
an organic basis. On the other hand, sales in the French
business, accounting for around a third of sales, fell 6.7% as
demand slowed.
For the final three months of 2023, total sales dropped 1%
on organic basis.
($1 = 0.9223 euros)
(Reporting by Gaëlle Sheehan, Editing by Alexandra Hudson)
((gaelle.sheehan@thomsonreuters.com; +48 58 7785110;))