Maisons du Monde S.A. (ZMM.F) Earnings Call Transcript & Summary

Good morning to all of you, and thank you very much for joining this call to present Maisons du Monde S.A. Q1 2024 sales. I am with our CEO, Francois-Melchior De Polignac; Denis Lamoureux, our CFO; and Gilles Lemaire, Deputy CFO who will be making today's presentation. It will be followed by a Q&A session. You have no doubt in the press release we issued this morning. The conference call slides are available on our website. This call is also being audio webcast, and a replay will be available on our website later today. All listeners are reminded to read the forward-looking disclaimer on Slide 2. I will now turn the call over to Francois Melchior De Polignac.

Thank you, Carole. Good morning, everyone. I hope you're all doing well. Today, we'll be sharing our Q1 2024 sales report. I will make a brief introduction, and then Dennis and Gilles will present the detailed Q1 numbers. And following that, I will provide more insights into the Inspire Everyday action plans that we have been launching. And last, of course, we will open the floor for a Q&A session. So first of all, of course, you see that Q1 '24 sales figures are down 8.1% on a comparable basis, and this is exactly what we had been expecting. These results match the assumptions of our 3-year transformation plan, Inspire Everyday. You do remember that '24 is a pivotal year for transforming our promotion model and setting the stage for future growth. We expect to gradually return to growth in '25 with significant acceleration in '26. This is why for me, the important thing today is to go over the action plan that Maisons du Monde is implementing to achieve better success. All streams have been launched, and our teams are fully onboarded to deliver on Inspire Everyday '24-'26 road map. I will now hand over to Denis to go through the details of Q1 sales.

So next slide. Thank you very much, Francois Melchior. And good morning to everyone. As already mentioned by Francois Melchior, with Q1 sales 2024 are translated as it's shown in the bridge. So we can see that our sales amount to EUR 247.7 million this year, and we are down 9.5% versus last -- last year quarter. So we can see it's a decrease of 8.5% and it includes EUR 4.7 million of non -- I mean, discontinued stock and during this quarter. If we go on Slide 6, we can see the impact of the store network. Basically through the quarter, we considered our retailer restore network optimization in line with our 3-year transformation plan outlined last March. It's important to note that our 2026 objective of expanding our network to approximately 400 stores with around 30% running under affiliation of franchise. At the end of March 2024, Maisons du Monde operated 342 stores, including 4 under affiliation compared to 352 old store at the end of March 2023. During this period, we opened 3 new stores, featuring a renewed concept, 2 relocation in Rouen Barentin and Pau, and 1 in Hognoul in Belgium. Francois Melchior will provide further insight on this later.

So let's move now to the details of our sales performance by channel, category and country. I'm not going to go through this line by line, but let me just share a few high-level observations. First, that serves into sales by category. There is a notable discrepancy between decoration, which experienced an 11.4% decrease primarily attributed to reduced impulse buying. In contrast, furniture saw a 7.1% decline, reflecting a more project-oriented purchasing behaviors supported by our renowned decor service. However, Furniture benefited from improved product availability, promotional initiatives and flexible payment options. Second, looking at sales by channel, both in-store and online sales saw a decline with Easter sales down by 8.4% and online sales down by 6.4% on a comparable basis. This drop was mainly due to slow consumer spending. Marketplace sales saw growth with Spain, Italy and Germany showcasing local brands. Third, sales by geography highlights contrasting performance between the relative resilience in France, down by minus 5% on a comparable basis, thanks to its market place and international sales down a minus 8.8% on a comparable basis. On the other hand, Italy performed better notably thanks to its marketplace growth. And sales underperformance in Switzerland relative to the rest of the group has been effectively tackled through pricing adjustments. This concludes the key points of our quarterly sales. I will now hand over to Francois Melchior to present the Inspire Everyday action plan launch.

So as explained at the beginning of the presentation, our teams are fully onboarded to deliver the Inspire Everyday journey that we shared with you 2 months ago and all action plans are really launched. I will not go, of course, through the full update of all the action plans, but just focus on a few key topics that really have to do with our customers. So in terms of the offer, we have spoken about the necessity to enhance accessibility. We have implemented price reductions on approximately 2,200 targeted products, resulting in the expected sales uplift of about 20% in quantity. This initiative is just one aspect of our commitment to accessibility. Our Inspire Everyday transformation will progressively, as you know, emphasize less on classical promotions and more on fair pricing and loyalty. Therefore, also, by the end of the year, we will introduce a loyalty program to enhance accessibility for our loyal customers. This program will offer rewards, exclusive events and strengthen brand attachments, and we have been testing this broadly this term already. Second, we spoke a lot about the necessity and the value to empower our retail store network locally. While we have implemented a store performance tool, which provides real-time commercial performance analytics on the sales floor, enabling us to drive business more effectively. By leveraging the resources of hundreds of managers and associates while in close proximity to our customers rather than relying solely on remote processes from head office, we can and we are enhancing operations significantly. This action plan aligns with our think global, act local approach, representing another layer of efficiency by better leveraging local initiatives and responsibilities. In terms of sustainability also, we are taking our first step into the circular economy with our second chance offering, which has already now been rolled out in all our retail stores. The initiative further bolsters Maisons du Monde's brand attractiveness. Additionally, by the end of the year, we will launch a dedicated online platform to sell slightly damaged or previously used Maisons du Monde products at a reduced price and to offer repair options. We have also launched the action plans to elevate in-store experience and streamline the customer journey to provide greater inspiration. You may remember from what we said when we presented the plan that the key insight from our customers was that our offer is great, our store staff is great as well. But definitely, there would be value in delivering a simpler, clearer, more inspirational experience in the stores. So already, at the moment we're speaking, we have opened 3 new pilot stores, [indiscernible] in the South of France and Hognoul in Belgium, close to the town of Liege. These stores showcase a profoundly revitalized concept and a significant reduction in the assortment. The response from our customers has been overwhelming positive as a result of this initiative. So you should be seeing on your screen a couple of images that have clear to share with you the renewed inspiration of the products, the capacity to showcase better the products and innovation and inspiration of Maisons du Monde collections. On the left. In the middle, you will have seen that we are also regrouping some universes rather by lifestyle. And on the right side, you will see an increased functionality in some universes. You can see just as one example, the lights that are regrouped as opposed to being spread all over the stores in the standard concept. And this is proving very effective to combine for our customers, reduce more specific assortment, inspiration at its best and yet more functionality for their shopping. And again, this is, of course, an early stage, but all signals customer feedbacks and of course, another are proving to be extremely promising at this stage. This will be a key milestone, of course, of the evolution of our store concept and our relations to our customers. That's a key milestones. We will further improve some tiny bits of the concept and then go it out, of course, to gain a full benefit and full speed of this huge step forward. Now before we move to the questions and answers, I would just like to remind you of the financial trajectory that we shared with you and that we, of course, stick to. Inspire Everyday translates into a progressive return to growth and into cash flow generation. We committed last March to achieving over EUR 100 million of cumulative free cash flow over 3 years, with each year contributing positively to the total including, of course, 2024. For those who may have concerns about our financial situation, you can be confident that we are generating cash and that we will certainly continue to do so as explained. I suggest now with this overall brief introduction and remind you of the key figures that we can open the Q&A session. Thank you all.

[Operator Instructions] The first question comes from the line of Marie-Line Fort from Bernstein.

My first question is about the impact of the store closing all over the year. So you published roughly minus EUR 4 million to EUR 5 million for Q1. And does it mean that for the full year, we can multiply by 4 these figures. This is my first question. The second question is about the marketplace. Would it be possible to have an idea about the market place GMV during the Q1. And last question is about the stores that have been refurbished. Barentin and also Pau and one in Belgium. Would it be possible to have some ideas of how the sales per square meter are performing after the renovation.

Thank you for your questions. I will take the last one on the renewed stores. Of course, that is very early stage, I'm remaining very careful. But I can tell you, I'm pleased to take that as initial figures that we have a gap between 15% and 30% in terms of sales growth and store sales by square meter compared to comparable stores. And again, I'm sharing this with you at a very, very early stage. I would not necessarily advise to take that into a P&L forecast.

Regarding the evolution of the GMV of the marketplace, there is a growth of the marketplace Q1 2024 compared to Q1 2023 of 13% -- 14.6% of the GMV. So this is growing -- this growth comes both topic, mainly from Italy and Spain, and it's also linked to more local vendors in this market, which is partly -- which is part of the Inspire Everyday plan. Regarding...

You mentioned 15%.

13.6%. And regarding the store closure, can you elaborate a little bit more so that we can be more precise?

Looking to the slide, Page 5. In Q1, we've got minus -- roughly EUR 4 million to EUR 5 million impact on your Q1 sales store closures. I just try to anticipate what could be the impact over the full year, assuming that I don't have your closure calendar. So on simple math, can we just multiply your -- this figures by 4? Or do you see an increasing or decreasing impact all over the year?

Basically, we can -- it's not so easy to anticipate because for sure, store closure are between what is forecasted and what is really the reality. There might be some impact. But yes -- so you can do this kind of simplify mathematics, maybe a little bit higher, maybe around more [ 15 ] than the 12 that you will arrive to. 16 is yes, multiply by 4 is good.