PARIS — SMCP, the group behind contemporary French labels Sandro, Maje, Claudie Pierlot and De Fursac, continues to perform strongly in China, even as the coronavirus crisis weighs on its performance elsewhere in the world, notably in Europe and North America, the company said Wednesday.
“China and Asia is continuing on an incredible trend,” said chief executive officer Daniel Lalonde, noting second-half sales in China grew at a pace of nearly 25 percent.
Business will likely continue to be challenging elsewhere in the first half of this year, he noted, adding that he is optimistic that a recovery could start shaping up this summer, depending on vaccination rates.
Plans are to continue investing in both retail expansion and digital marketing in mainland China.
“We’re basically investing on all levers, I’d say, in that part of the world,” Lalonde said. The group has been active on Tmall, holding events every month, as well as working with social media and celebrities in China, and recently entered the realm of gamification, around a month ago. Consumers can dress avatars of themselves with styles from Sandro and Maje — and then buy the clothing in real life.
Chinese consumers will likely account for 50 percent of the global market for accessible luxury and fast fashion, said the executive.
“It’s very important for us and it’s working super well,” he said.
Asked about recent examples of some apparel brands retreating from that market, Lalonde noted that some executives of other brands have called him for advice about things like what distributors to partner with there.
“A lot of brands, though, have not had the traction that you would expect of them to have in China,” he said.
Some might not have figured it out, but for SMCP, it’s “quite the opposite,” he said, noting the group posted positive sales growth there for the year.
The executive pointed out that the the group has, over the last six years, grown its business in the Asia Pacific region to reach the same level as Europe — around 27 percent of group sales.
“I’m quite happy and quite optimistic,” he added, referring to the region’s growth. He highlighted work on social networks as a strength.
“I’m very proud of our brands because they’ve been very nimble and they’re working with a lot of new social media,” he said, ticking off examples including Bilibili and Little Red Book.
“It’s moving very quickly — it’s an exciting market,” he said.
“I guess some brands have had a hard time, launching their brands there, for us it’s all green lights, full speed ahead,” he added.
The group has set up local teams for the past seven years, and over the last year and a half shifted main business teams from Hong Kong to Shanghai, where there are over 70 people in the headquarters, according to the executive.
The brands resonate strongly with Chinese consumers, he added.
“We’ve had the fortunate good experience that the Chinese consumer — we’re one of their favorite brands,” he said, noting that Sandro and Maje generally rank in the top two or three spots in brand surveys.
“We capture the trends of the Parisian women or man — it’s a dream for the Chinese consumer,” he said.
The group also hires tech and social media experts, “to make sure we’re finding our Gen Zs, our Millennial customers where they are, constantly,” he said.
The group reported annual adjusted earnings before interest, tax, depreciation and amortization of 179.6 million euros, a 37.3 percent decline, as discounts reduced gross margins by 3.8 points. In January, SMCP said annual sales were down 22.9 percent to 873 million euros, hit by coronavirus lockdowns in key regions across Europe and North America.
The group pushed further into e-commerce, with online sales growth hitting nearly 30 percent for the year.
SMCP has expanded its retail network abroad rapidly in recent years, improving the performance of its stores and beefing up its omnichannel services.
Cost savings have been a focus since the crisis hit, and inventories were down 10 percent compared to the previous year, thanks to tight management, Lalonde said.
Chinese textile group Ruyi Group owns around 54 percent of SMCP, but the company, which is listed on the Paris stock market, does not source textiles through its owner.