SMCP outlines plan to ‘safeguard profitability”: The 2023 year was a mixed bag for the French luxury group SMCP, which is known for its affordable luxury. The company’s reported revenues increased by more than 2% to €1.23 billion, for one thing. Impressive results include a 3% increase in Sandro’s revenue, which surpassed €600 million, and a strong showing in the French market, which generated €413 million despite lower consumer spending in the second half of the year. China showed growth, though it was not as strong as expected, and the Asia-Pacific area as a whole recovered roughly 11% to €255 million. Maje, on the other hand, saw a pitiful 1.1% growth to €462 million, which was caused by two collections that didn’t connect with customers and a serious decline in profits caused by increasing finance costs and non-recurring charges.

Annual results were presented by SMCP by CEO Isabelle Guichot, who highlighted the company’s continued attempts to improve its environmental and social responsibility programs. Among these initiatives is the introduction of an inclusive strategy on a worldwide scale and the use of “more responsible” items or materials in 59% of the Fall/Winter 2023 collections.

Additionally, Guichot brought attention to the new Sandro and Maje flagship stores in NYC and LA, and the fact that online sales now account for 22% of the group’s overall revenue. This figure is distributed evenly among the group’s own brand websites and partnerships with third-party platforms like Zalando, El Corte Inglès, and 24S.

Additionally, despite the difficult consumer landscape in Europe during the second half of the year, SMCP’s management reported maintaining a constant share of full-price product sales. By implementing cost optimization strategies in late 2023 and maintaining careful cost management and store cost increase control in the face of inflationary challenges, we were able to boost our gross margins.

“2023 is now behind us,” Guichot remarked on a conference call. A thorough modernization strategy has been initiated. During the presentation of first-quarter results at the end of April, we will offer comprehensive insights into our measures. Despite the difficulties, we intend to maintain a healthy profit margin, encourage expansion, and even increase our market share.

Maje – Spring/Summer 2024 – Maje

The plan put out by the organization rests on four main points. Improving the quality of collections’ materials, honing product details, and improving brand perception are all crucial to increasing market share. The presentation of Maje’s Fall/Winter 2024-25 collection in Paris last week confirmed this approach with its display of beautiful knits, elaborate detailing, evening attire, and unique cuts. The goals of SMCP’s operations adaptation, new service introduction, and stakeholder partnership enhancement are to satisfy regional expectations.

It further plans to increase its footprint in underserved markets by declaring, “We will strengthen our accessory offerings, noting significant momentum in menswear.”

SMCP outlines plan to ‘safeguard profitability”

The retail network is still useful, but it comes with a hefty price tag for running the business. With 1,373 outlets globally, including 472 in France, SMCP plans to assess the scope of its retail network.

“The most visible decision will be to close approximately 15% of the Chinese network in around 30 cities where activity has not rebounded,” Guichot said.

We can prioritize the stores that provide the maximum revenue with two- or three-year agreements. In order to find areas where we may change our approach, we are doing a thorough analysis of our operations. Spending cuts to less promising areas, especially in the US, are also part of the plan. Our initial stores will open in the second half of 2024 in the Middle East and India, where we also see prospects with our partners.

This strategy may allow the business to expand into new regions like South America or travel retail while sharing risks with other stakeholders, even if it only accounts for 8% of revenue contribution at the moment. Also, because they are more efficient per square meter, the group will put their money into corners and pop-ups.

The group’s goal is to increase profits, therefore it is pledging process synergies across brands, better product commercial performance, and a steady decrease in the number of stock-keeping units (SKUs) in each collection. The statement from Guichot was interpreted as follows: “staff reductions may involve geographical rebalancing but will only marginally affect brand headquarters operations.”

The team is not going to reveal any concrete numerical goals just yet, but they do want to accomplish significant cost savings and keep an eye out for growth prospects by executing these steps.

Developments in its capital structure are another factor that may reveal its status. This is an ongoing saga, and that is all the comment we have. An article detailing this shareholder drama was recently published, and we took note of it.

By acquiring 28.8% of the group’s shares, the creditors of Shandong Ruyi—BlackRock, Carlyle, Anchorage, Boussard et Gavaudan—under the trustee Glas were able to prevent a takeover attempt after the company defaulted on its debt in 2021. Qiu Yafu’s daughter, the creator of Shandong Ruyi, holds 15.9% of the shares through a structure in the British Virgin Islands, while European Topsoho, a Luxembourg subsidiary of Shandong Ruyi, keeps 8%. Creditors may be able to seize these shares if a British court rules in favor of the French business, which may open the door for further activities, according to Les Echos.