SMCP S.A. (SMCP) Earnings Call Transcript & Summary

Welcome to the SMCP 2026 First Quarter Sales Presentation. [Operator Instructions] Now I will hand the conference over to the speakers to begin today's conference. Please go ahead.

Good morning, everyone. Thanks for being with us today for the publication of SMCP Q1 sales. I'm here with our CEO, Isabelle Guichot; and our CFO, Patricia Despointes. You can listen to the publication via the usual conference call and you can connect to the webcast to have the presentation display. As usual, we will go through the presentation, and then we'll have the Q&A session. Before I hand it over to Isabelle and Patricia, I invite you to go through our usual disclaimer on Page 2. And I think we can start now.

Thank you, Amelie. Good morning, everyone. Thank you all for joining us today to talk about our Q1 2026 sales with first, the key highlights on figures and business initiatives, and then Patricia, as usual, will detail with more granularity our performance by region. On Page 4, you can see that our 3-month sales reached EUR 287 million, representing an organic evolution of minus 0.8% versus last year and minus 0.9% on a like-for-like basis in a particularly challenging global environment. The first quarter performance was supported by positive organic trends in America, EMEA and APAC, while France was impacted by a more difficult macroeconomic context, a negative perimeter effect, a deliberately reduced promotional activity and a high comparison base, especially for Sandro. Patricia will be more granular later in the presentation on this. The network decreased encompassing several factors across the world, which are mostly technical. In retail network decreased by 24 points of sales. The main impact stems from the closure of Saks Corner in the U.S. and also their Internet sites in relation with the ongoing bankruptcy process. In partners network, the decrease of 19 point of sales is mainly linked to the takeover of South Korea by our new partner, Samsung early March. Finally, our full price strategy continues to deliver with a further 2-point improvement in discount rate across all regions and brands and particularly in APAC. Our digital share remains at a satisfactory level of circa 22%. Page 5, you can see the bridge explaining the evolution of sales between the first quarter of '25 and the first quarter of '26. Starting with the like-for-like network, sales are slightly down by EUR 0.7 million or EUR 0.9 million, reflecting a negative contribution from France, while America, EMEA and APAC all recorded positive underlying trends. The network evolution impact mainly -- the network evolution impact mainly comes from the closure of Saks corners in the U.S. as well as the effect of the BHV-SGM corners in France that occurred in the Q4 of '25. As mentioned earlier, foreign exchange had a strong negative impact this quarter of minus EUR 6.8 million. Finally, retail partners activity continued to contribute positively to growth in the first quarter, in line with our strategic road map. Moving on to Page 6, you will find the performance by region. These slides illustrate the group ability to rely on a diversified geographical footprint and to navigate ongoing macroeconomic uncertainties. Patricia will come back to this later in the presentation. So I will just highlight a few key elements on the sales breakdown. First, by region, as mentioned earlier, France this quarter lost 3 points in the sales mix compared to last year, while EMEA gained 3 points, America and APAC remained broadly stable and kept their position in the mix. Then by brand, reflecting Maje resilience and the stronger exposure of other brands in the French market, other brands lost 2 points, while Maje gained 2 points year-on-year. Finally, by channel, wholesale increased by 2 points compared to last year, fully in line with our strategy, as explained earlier, while the retail network continues to represent the largest share of the group sales. I will now present you the most recent key initiatives illustrating our brand's desirability on Page 7. Sandro and Maje celebrated the Lunar New Year with dedicated capsule collections, marking the beginning of '26 with a strong creative momentum. As you know, it's the year of the horse, a symbol of energy, freedom and movement. The 2 brands explored the contemporary reinterpretation of Lunar New Year codes. Page 8. Now as on the previous slides, brands are developing local product activations to enhance brand desirability in the different markets, and that's an important strategic move for our brands. In the Middle East, Sandro and Maje introduced a dedicated capsule collection for Ramadan, designed to accompany key moments of the season with elegance and sobriety. These capsules reflect the brand's ability to adapt their creative expression to cultural moment to cultural local moment, combining fluid silhouettes, refined materials and subtle details. Page 9 now. The first quarter is always the occasion of the presentation of new collections and to press, influencers, department store clients. Let's start with Sandro, which unveiled its autumn, winter '26 collection in the heart of the iconic Opéra Comique in Paris. Live dance performance brought the silhouette to life, creating a sharp dialogue between fashion and art. The collection explores a multifaceted femininity and a bold German masculinity. I think we have a very nice picture to illustrate this presentation. Different ambience at Maje, but as striking as the one at Sandro, Maje presented its upcoming Fall winter collection in Paris during Paris Fashion Week and titled The Living Suite. The concept draws inspiration from iconic Parisian private mansions and unfolds through an immersive scenography organized around 3 main states, a welcoming lobby, presentation group showcasing the collection silhouettes and a lounge bar designed as a place for guests to meet and enjoy conviviality. On Page 11, a few picture of the Claudie Pierlot Fall presentation and Claudie envisions the auditorium, a creative space where each silhouette forms its own harmony. The studio explored a subtle balance between everyday use and refinement. That was a very nice event. And on the right side, the Fursac activation, we choose deliberately this quarter to show a KOL strategy of Fursac with selected personalities such as the actor Pierre Lottin at the 26th Cesar ceremony and the influencer Lucas Drag feature in a more distinctive and contemporary setting, Kite surfing with -- while wearing the Fursac suit. On Page 12, you can see some examples of our partner openings, as we mentioned earlier, an important pillar of our strategy. The recent openings during the quarter, notably in Chile and Thailand, illustrating our selective and disciplined expansion strategy through partners in key markets. I will now hand over to Patricia to walk through the regional performance in more detail.

Thank you, Isabelle. Good morning, everyone. In France, sales amounted to EUR 89 million, representing an organic decrease of 13% compared to Q1 '25, which represented a relatively high comparison base with an increase of 4% versus Q1 '24, especially at Sandro. During this quarter, we faced a series of effects explaining this double-digit decrease. Some are exogenous, in particular, a weak consumption environment associated with economic and geopolitical uncertainty and reflected in market indices, retailing, et cetera, which are all negative. Others are more specific to SMCP, and we can mention the following ones. First, a negative scope effect, notably related to the closure of 25 BHV-SGM corners in November '25. We are working on identifying new locations to replace, but it takes some time. Still about scope, we also have big renovations ongoing, especially at Sandro in Paris flagships such as Francs-Bourgeois and Vieille du Temple. We also had weaker performance of promotions at large, first at the beginning of the year with a less meaningful role of January official sales from the deliberate group strategy to reduce reliance upon promotional periods as a result of tighter inventory management. The volumes made available during the sales are more limited, meaning that official sales now represent less of a structural peak in the year than they used to. Second factor about promotions, smaller brands reduced clearance of old collections, notably Claudie Pierlot , in line with its ambition to durably strengthen brand desirability. While this factor stands out when we look at Q1, it will become less meaningful in full year. Finally, we have a technical reduction of revenue in digital pure players, for example, Farfetch, for which all export sales used to be accrued for in France. Now the fulfillment for the U.S. has been implemented locally because of tariffs. In EMEA, sales amounted to EUR 103 million in the first quarter, representing organic growth of 5% compared to Q1 '25 despite very high comps. On a 2-year stack, we are at circa plus 15% organic. The region benefited from generally resilient consumption trends across the main directly operated markets, notably Southern Europe and Germany. Activities through partners continue to show positive dynamics, particularly in Turkey and in the Balkans. Same as in France, the group improved the average discount rate by circa 2 points. In the Middle East, at that stage, revenue has not been impacted yet by the conflict as the stores are operated by a local partner. Our deliveries of the Spring/Summer '26 collections were largely completed prior to the onset of the conflict. The group, nevertheless, monitors very closely the evolution of the situation in order to assess future impacts. On Page 15, America at current rates, sales are flat due to a very strong negative FX impact. But on an organic basis, we recorded an excellent trend of plus 12% and plus 7% like-for-like. We continue to be supported by the price increase passed last year in April. All markets are positive, U.S.A. and Canada in retail, Mexico and South America with our partners. As far as the network is concerned, we have a 7 unit decrease explained by the bankruptcy of Saks. Finally, Asia records a slightly positive organic growth of 3%, which is the first time since we launched our action plan in the region 2 years ago. So things evolve as expected, supported by a sharper retail execution, which results in elevated desirability of our brands, a positive like-for-like and a much better quality of revenue. We gained 5 points of average discount, which is the strongest improvement of the group, the 2-point-something improvement at worldwide level being nearly 2 points in America, France and EMEA and 5 points in Asia. About the apparently important decrease of the network in Asia, as mentioned by Isabelle earlier, this is due to the change of partner who wants to roll out a full price strategy, resulting in the closure of 24 POS, notably outlets out of 150 stores. That being said, the beginning of this partnership is completely smooth, and we are very satisfied about this new chapter in this important country.

Thank you, Patricia. To conclude, Q1 '26 reflects a resilient sales performance achieved in a complex and volatile macroeconomic and geopolitical environment. We saw contrasted regional trends over the quarter, which -- with solid momentum in America, EMEA and APAC, while consumption in France remains under pressure before a normalization that we expect in Q2. At the same time, we have maintained a strict full price strategy across all regions, which continue to drive an improvement in discount rates and margins and to reinforce the desirability of our brands. Looking ahead, we'll continue -- we will, of course, monitor very closely the aftermath of the conflict in the Middle East, depending on how long it lasts. There may be impacts on inflation, consumption and tourism, one reason more to continue our prudence on cost management and deleveraging. Today is not a full P&L disclosure, as you know, but we continue to manage our operations to reach '26 targets. circa 10% adjusted EBIT margin in H2 and EUR 50 million free cash flow generation in full year. Before we move on to the Q&A, there is no specific update on the sales process of 51% of the share capital of SMCP. As you know, it has been announced at the end of November that it would take several months, and this process is still ongoing. So we won't be able to comment and we'll communicate to the market when appropriate. Thank you, everyone. Now we open for your questions.

[Operator Instructions] The next question comes from Marie-Line Fort from Bernstein.

I would like to come back on the performance in France. Just wanting to know, do you see any difference between high street stores and department stores? And any difference between the regions and Paris, for instance? Second question is about China. You are returning to positive like-for-like, which is a great news. Is it an increase in traffic stores? Or is it an increase in conversion rate? And finally, regarding the other brands, the decline is very noticeable. How is it split between Claudie and Fursac?? And what is your view on the performance of this 2 brands in the first quarter?

Thank you, Marie-Line. So let's start with France. I would say that there is a general, I would say, a sluggish consumption mood in France. So no new -- it's not new to anyone around this call. What we can monitor, we don't see any major difference between department stores and high street stores. We can say one thing is that we see a difference between Paris and the provincial stores. That usually is pretty -- we feel it more acutely at the beginning of the year. Usually, it smooths down whenever we come to a tourism season and sunny days where the Riviera, for instance, takes a little bit more -- is a little bit more alive. But Paris is definitely a much better trend for sure. And then now it will rely on the tourism flows that we expect are going to be fine in the coming months and the weather will help also. So that's the kind of granularity I can give you on France. On China, it's not so much traffic. It's a lot of our ability to treat the good clients to be able to have more loyalty programs that are working to increase the level of service to clients, to be able to increase the UPT and also the fact that we've been fighting against discounts. So the quality of our sales transactions are improving, and that translates obviously into the revenues. The conversion, obviously, in this sense is now much better. The traffic remains what it is what we all know in China, which is an average. But the qualitative part of our work is now paying off and it clearly shows in the numbers. On the 2 brands, I would say there is a technical effect on Claudie Pierlot last year, Q1 '25, Claudie Pierlot recorded quite a lot of liquidation sales to clear the inventory and to make space for the new collections. So it's true that the historical numbers for Claudie Pierlot are incorporating those liquidations. So obviously, the sales are not fully comparable. What we can say is that -- so on Claudie, that's my explanation. And on Fursac, I would say that we see a nice progress on Fursac. We start -- we think we are on a better track.

[Operator Instructions] The next question comes from Gilles Crespel from Alizés.

I had only one regarding the network. Would you consider it now as stabilized? Or is the reduction, which we saw in Q1 something to be sustained? Or do you even consider some bounce back in some regions? And I'm talking about '26 and possibly the -- well, '27 too.