What's Happening?
French fashion conglomerate SMCP reported a decline in fourth-quarter sales, primarily due to its exit from BHV department stores in France. This decision followed a strategic disagreement and unpaid invoices with BHV's parent company, Société des Grands
Magasins, which recently partnered with Shein. As a result, SMCP closed 26 points of sale across its brands, including Sandro, Maje, Claudie Pierlot, and Fursac. The company's sales in France fell by 8.7% to 107.3 million euros, while the Asia-Pacific region also saw a similar decline. Despite these setbacks, SMCP's CEO Isabelle Guichot emphasized the company's focus on redeploying its presence in affected cities through various solutions, including digital channels. Meanwhile, sales in Europe outside of France increased by 6.9%, and the Americas showed mixed results with an 8.7% organic growth.
Why It's Important?
The decline in SMCP's sales highlights the challenges faced by fashion retailers in adapting to changing market dynamics and strategic partnerships. The exit from BHV, influenced by Shein's entry, underscores the competitive pressures from fast-fashion giants. This situation reflects broader industry trends where traditional retailers must navigate partnerships and market positioning carefully. SMCP's focus on a full-price strategy and brand perception improvement is crucial for maintaining profitability and market relevance. The company's performance in Europe and the Americas suggests potential growth areas, but the need for strategic realignment in France and Asia-Pacific remains critical. The outcome of these efforts will impact SMCP's financial health and its ability to compete globally.
What's Next?
SMCP plans to enhance its adjusted EBIT margin to around 10% in the latter half of 2026 and aims to generate 50 million euros in free cash flow. The company is exploring expansion opportunities in South America, the Balkans, Eastern Europe, and India, while stabilizing its presence in China. SMCP's strategic reshaping involves selective store closures and new market entries, aiming to improve its global footprint and profitability. The company's ability to execute these plans will be pivotal in overcoming current challenges and achieving its financial targets.
