French premium fashion group SMCP surpassed expectations in 2020, reporting better-than-anticipated core annual profit despite the challenges posed by lockdowns and store closures. Through implementing cost-cutting initiatives, the company saved over €100 million and witnessed stronger digital sales. Despite a nearly 40% decline in adjusted annual earnings before interest, taxes, depreciation, and amortization (EBITDA), SMCP still achieved a profit of €179 million, exceeding analysts’ predictions.
However, the company faced a significant decline in sales, leading to a 3.8 percentage point reduction in the management gross margin (70.8%). Net income also suffered, recording a loss of €102.2 million compared to a profit of €43.7 million in the previous year. Excluding certain one-off factors, the net loss was slightly smaller at €39.6 million. Reported sales dropped by 22.9% to €873 million, with an overall currency impact of -0.4% and a positive contribution of +1.5% from De Fursac. Organically, sales declined by 23.9%. However, mainland China experienced a significant recovery in the second half of the year, with sales increasing by 3.5% for the full year and 24.5% in the second half alone. The company also witnessed a notable growth in digital sales, which rose by 27.6%.
When analyzing the individual brands, Sandro’s adjusted EBITDA stood at €91.8 million, down from €141 million in the previous year. Maje achieved €75.2 million, a decrease from €119.9 million, while the other brands generated €12.6 million, down from €25.4 million. Although specific details about each brand’s performance were not disclosed, it is evident from the EBITDA figures that Sandro and Maje remained the dominant brands within SMCP. The overall adjusted EBITDA margin was 20.6%, with Sandro and Maje achieving margins of 22.2% and 22.3% respectively, while the other brands had a significantly lower margin of 10.3%.
Due to the ongoing uncertainty and the resurgence of COVID-19 cases in Europe, SMCP did not provide any guidance for the current year. However, CEO Daniel Lalonde expressed confidence in the company’s ability to overcome these challenges, asserting that SMCP is positioned well to capitalize on growth opportunities and become a global leader in the accessible luxury market. The company’s swift response to the pandemic, including cost-saving measures and an emphasis on e-commerce, has positioned it for success in the ever-evolving fashion industry.
Useful links:
1. SMCP Official Website
2. Reuters Article on SMCP’s 2020 Results
