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

Good morning, everyone, and thank you for joining us today for Maisons du Monde's Fourth Quarter and Full Year 2025 sales results. So let me start directly with the top line on the right side of the slide. In the fourth quarter, sales reached EUR 278 million, down 5.9% on a reported basis, and 5.4% on a like-for-like basis. This brings the full year to minus 5.4% and minus 4.7% on a like-for-like basis. And in terms of the second semester, which reflects our autumn/winter collection, we are nearly stable at minus 1.3% reported or minus 0.7% like-for-like. And indeed, as you can see, this indicates a very strong difference of dynamics between the minus 8.9% of H1 in like-for-like compared to this minus 0.7% in H2. Of course, Denis will go into more detail on the figures in a minute, but so much for the figures at this stage. Moving now to the left part of the slide. No, we keep on the same slide. Go back to the same slide. Thank you. On the first -- on the left side, sorry, you see first the positive elements that we would like to highlight. First, as you can see, traffic continued to increase with now 6 consecutive months of growth. The brand awareness was further strengthened, I will come back to that later on. It's a key point for us, of course. Customer satisfaction continues to improve as reflected in a growing NPS. And retail activity proved resilient with growth in Southern Europe. So those elements clearly reflect the transformation journey that we have been executing over the past years and of course, our continued focus, which we'll come back to in a minute. However, on the other hand, of course, Q4 remained negative, and we cannot be satisfied with this level of performance. And indeed, we did face two key challenges, or ongoing challenges, I would say, because they have been here for a while now. First, let me address the weak macroeconomic environment that we do see remain fragile, particularly in France, and that continues to be quite challenging for retailers. To give you some reference points on that, we do follow retail in panel, a key benchmark for tracking French retail trends. It's a very large panel of a diversity of nonfood retail businesses, which has reported a traffic decline of close to 3% in the, let's say, home segment, both for the full year and for Q4. And in parallel, according to IPEA, the French furniture market, excluding kitchen equipment, will probably have declined by around 3% in 2025. And I'm saying probably here because the official figures are still about to be issued probably sometime in a couple of weeks, or next week. So indeed we do see, and we do further anticipate, weak consumption dynamics, particularly in France, our key core domestic market. This has been the case for quite a long time now, and we see no clear improvement signal, which is why, as you saw, we decided to withhold our EUR 100 million cumulative free cash flow guidance in the press release that you saw. The second challenge is our online activity underperformance. That said, performance improved markedly over the year. You might remember the sales, we were down around 15% online in H1, and now it's minus 5% in H2. And the weakness is mainly concentrated in our Northern European countries where we invested less than in our core markets. Excluding those countries, online sales were indeed close to flat in H2, highlighting a greater resilience of our core markets. But again, this, by definition, is not satisfactory, remains a challenge. So we do see here a key improvement to be organized and to be got in conversion rate, which is why we changed the organization in January, and note that we appointed a new Head of e-commerce at Comex level to accelerate our transformation. If we move on to the store network slide. So this remains, of course, a key pillar of our transformation, and it was our most resilient channel throughout the year with like-for-like retail sales down 2% in Q4, and 1% for the full year 2025. The resilience is notably driven by our affiliation model, which continues to prove its relevance. It's an efficient and resilient way to operate, notably smaller stores, which combines, as you know, strong local execution with disciplined economics. At the same time, we continue investment in our physical network, which is delivering tangible results. We have now about 70 renewed stores that show more resilient performance than the rest of the network, while also significantly enhancing the customer experience. If we move to the next page, indeed, you will see some illustrations of the latest reopening. This is a ZAC store, so in commercial activity outside from the main city centers or shopping malls, where we have been improving further and inputting all the learnings from our recent, and not so recent, remodeling. Basically, it does continue to elaborate on all the learnings from what we have been doing. And you can see, in particular, a sub-service area with high stock density for decoration items and small furniture, which is, in fact, very much inspired by the success of such equipment and merchandising in our shopping mall stores. But of course, because this is ZAC stores, a furniture destination zone designed like a showroom and offering a fully immersive experience. We also here had the launch of a takeaway offer for selected pieces of furniture, which improves responsiveness and customer satisfaction. You have a central advisory hub for both private customers and professionals, where we are also testing an interior design tool developed by our subsidiary, Rhinov, to further empower our sales staff. And then a new signature approach to better highlight the value and differentiation of our unique products. So basically, as you can see, we keep on investing and improving our stores, which are, again, a key component, both of our customer experience and brand recognition. Indeed, speaking about experience and recognition, if we move to the next slide, this one, lovely. We do see here a couple of key events of Q4. So on the left, you can see we mentioned Black Friday. As you probably know, Black Friday has become -- is becoming an even more major commercial moment where visibility and differentiation are really essential. We do see a growing importance of this month of November in our sales and of course, of Black Friday in particular. Thus, we made a deliberate choice to stand out. And as a result, we delivered our historic sales week, the best, in fact, in the last past 3 years. Then if you look at Christmas, on the other hand, this has been for us an opportunity to strongly reaffirm a key part of our DNA, which is the opening to the world as Maisons [ Plurielle ] du Monde, of course, with warm emotional collections offering our customers an opportunity to celebrate Christmas by traveling through our products across a variety of inspiring places, ranging from Paris to London, Canada or Mexico. And you can also see in the middle an illustration of the change in the marketing mix that we initiated 1.5 years ago, moving away, I would say, from the nearly 100% SEA-only investments, to a more balanced online and offline approach. You will have recognized the underground in Paris for some of you, and maybe even for some of you, Lena Situations, who's one of those influential creators and influencers in France with around 5 million followers on Instagram. So these initiatives significantly increased our visibility, especially among younger audiences. And as I mentioned before, the results achieved are more than encouraging as we see increase in traffic, both in-store and online, customer satisfaction improving, and globally brand awareness also showing some progress. With that, I will leave Denis go into more granularity on the figures themselves.

Thank you, Francois-Melchior, and hello, everybody. As you will see that we are in the same kind of dynamics that we have seen in the last quarter. Of course, the figures are a little bit disappointing for this Q4, namely that the Q3 was positive with the same size of around plus 5%, which is important. And I will elaborate a little bit also on H2. So the various dynamic we have on retail, France and international, as you see in the figures. Retail like-for-like international is flat. France -- Retail France like-for-like is declining by around minus 4% Other is like opening and closing figures. And non-like-for-like is mainly the loyalty program because you know that we have launched a loyalty program, and there is an IFRS way of booking as a decrease of sales, and it has been booked at the end of the year. Of course, the main disappointing channel is e-commerce and web and digital. And as mentioned by Francois-Melchior, decision has been taken in order to put more -- much more emphasis on that channel. If we look on the H2, H2 is, because again, we -- in October, we have a collection effect because this year, we have decided to accelerate the delivery of the winter collection, and it's why we have so much inventory at the end of June, and it was part of the success of the Q3 2025. As a result, we have a negative effect mainly on October, while at that moment, the collection were delivered. And also, as we have -- I guess you have seen with others, December was not the best month for the consumption, namely in France. If we have a broader view on the H2, because H2 show a stabilization of the sales, but again, with strong dynamics, namely international. If we look at the retail on H2, we are growing by plus 1% compared to last year. And it is even more on international, where we are at plus 6.6%. France is minus 2.4% on retail like-for-like, and digital is minus 4.6%. At the end, we are at minus 0.7% on the H2, which is a stabilization after a long, long period of semester of negative semester. So it is very important to have in mind. And globally, on a full year basis, Spain, Italy, Belgium, Switzerland show a positive like-for-like in retail, which is quite important because we are putting more emphasis in these countries, namely Spain and Italy. Of course, France will remain our biggest market with almost 50% -- more than 50% of the business, but clearly very encouraging and showing that the strategy on local action are profitable. On the last point, as mentioned by Francois-Melchior, traffic is positive every month both on web and on retail, which is also very important in terms of brand desirability. If we go on the next slide, and basically, it's some figures that shows exactly what I just mentioned is the -- I will not elaborate so much on the category side, but by channel, for sure, you have the decline of the online and the resilience of retail. So for sure, the share of digital is decreasing. And by geography, you are seeing the various effects on showing a share of international bigger than before. Thank you very much, and I hand over to Francois-Melchior.

Thank you, Denis. So a few words on our 2026 key priorities. First, we'll accelerate what is already working. Over the past 2 years, we have rebuilt strong foundations. And in many areas, our actions are now delivering tangible results. So in 2026, of course, the objective is to go faster and extract more value from those proven initiatives. So first, brand and marketing. I already mentioned it, but it's clear that our brand awareness has been increasing, and we believe that the change in marketing mix we've been operating is a relevant one. So we're going to push further in this direction to improve our visibility both online and offline. We have many stories to tell, but obviously for our products with a broader offer, more frequent newness and impactful collaboration designed to reinforce desirability and relevance. Second, the store network. Over the past months, we have learned a lot about our network, and we are excited to push this further in 2026. Our ambition is to have stores that increasingly reflect and honor the Maisons Monde brand delivering, of course, stronger experiences and more consistent performance across formats and locations. And of course, cash and cost discipline. So we will continue to reduce our cost basis. It's true that a significant amount of work has already been achieved over the past 2 years, but we remain fully committed to maintaining this discipline and to go further in 2026, while, of course, supporting growth initiatives. At the same time, we are clear eyed, as I mentioned, about the fact that our online performance has not yet met our expectations. While some progress, as we mentioned, has been made in H2 compared to H1, the sales remain disappointing relative to the potential of the channel. So in 2026, our ambition is, therefore, to reset and rebuild our online model with a clear objective, to deliver a best-in-class digital experience fully aligned with the Maisons du Monde brand. This means notably simplifying the customer journey, significantly improving the mobile experience and reinforcing the perception of quality, design and value across all our digital touch points. And as I mentioned, to support this ambition, we have adapted the organization, strengthened our leadership and already ensured the beginning of those changes. So together, these priorities reflect a balanced approach, accelerating proven levers while decisively addressing our key area of underperformance at the moment, and put Maisons du Monde on a sustainable path back to growth. Now let me finish on the next slide, just to give you a hint of the Spring/Summer 2026 collection that you can now find in our stores. The season is built around three key themes that you can see. The Indoor garden, Dolce Vita and Exotic Touch. And of course, our ambition is to surprise and inspire customers throughout the season by bringing fresh creative touches on a regular basis. What's important here for you to keep in mind is that the variety of the styles that we offer is really our DNA and is the reason why we are consistently recognized as a leader in inspiration within our sector by consumers. As part of this approach, we will also launch two special collaborations during the quarter, which illustrate both our creative ambitions. And one of them, as you can see, is targeting the growing pet environment that we have been developing over the last year. And then just to tell you that the very first media reception has been very good on those new launches. We had a record number of journalists with us and with the teams to share those new products, and those new expressions of our inspiring products, and we are quite happy with that. So we expect to have a positive output commercially with the Spring/Summer 2026 collection. So that's in a nutshell, what we wanted to share upfront. And of course, we are now happy to take questions. And I believe there are already some questions. So we will immediately open the Q&A sessions.

So I will leave to Denis first financial question, but I will move on to the other one. So the financial question that Denis will tackle in a second is with the cost reduction of EUR 120 million by 2026, how much total revenue will you need to have in '26, to have a small positive net financial result? But I will address first the second question I can see already, which is what is the trend of sales in January? Is there any impact of the weather conditions in France? So for January, to put it short, we expect to be slightly negative, and the slight negative indeed does include a circa EUR 1 million effect from the snow events. We had notably 3 days that were very, very harmful for the French business. We did have a number of stores that had to close, and we did have a number of stores with traffic down by more than 40%. So very slight negative in January, including positive global retail sales and a circa EUR 1 million impact due to the weather conditions in France. I see a third question, and then will let Denis go back to the first one. We were targeting 30% affiliated stores. We are far from that at this moment. Can you please explain the reason? Yes. Clearly, what we do not have issues with is number of candidates and eagerness of candidates, to be honest. And I can share with you, I think it's [indiscernible] was a question. I was, not many weeks ago, together with all our affiliate partners of France and they were quite happy with the progress we are making and quite happy with the concept. And yet, clearly, the business environment in nonfood retail in France is quite difficult at the moment. So it does reduce also sometimes the possibility of our partners to further expand their investments and CapEx. So no problem on the topic itself, no issue of potential candidates, but certainly a difficult momentum in terms of retail, nonfood enthusiasm in France at the moment.

So basically, on the question, with the cost reduction of EUR 120 million by 2026, how much total revenue will you need in 2026 to have a small positive net result financially? Of course, we will come back in the last -- the next publication with the final results of 2025. But you can imagine that even with this cost reduction, you have to take inflation because we are speaking of gross cost reduction, we will probably need a slight increase of sales to be in a position to deliver a positive net result. If we go on the other financial question. Can you please elaborate more on the agreement to amend the financial documentation regarding covenant ratio for 2025? And do you need some refinancing? Obviously, we have mentioned that the group is holding discussion with its financial partners to secure the financing of the business plan. In that context, we continue to benefit from the support of our banking partner who have unanimously agreed to amend the financial documentation regarding our covenant ratio for December 2025. On that topic, obviously, you can imagine that in view of the top line, the EBITDA is not sufficient enough to be able to pass the ratio. So we have a covenant waiver on that topic. And we will communicate in due course on the outcome of these discussions.