Sandro Men's Fall 2018

PARIS — SMCP announced core profits for 2017 and guidance for 2018 that trumped analysts’ forecasts.

The parent company of Sandro, Maje and Claudie Pierlot said on Wednesday that its earnings before interest, tax, debt and amortization last year reached 153.7 million euros, up 18.6 percent versus 2016, buoyed by its Asian and digital businesses. Adjusted EBITDA margin gained 3 percentage points to hit 16.8 percent.

SMCP’s mantra is to grow not too fast, not too slow. By doing so, SMCP is de-risking its activity, allowing it to scale up in a timely manner and so maintain the ‘scarcity effect’ on its product offering that is supporting organic growth,” Laurent Gélébart, analyst at Exane BNP Paribas, said in a research note.

In the 12-month period, SMCP’s net profits declined 88.3 percent to 6.3 million euros, due to costs associated with its initial public offering last year. Excluding one-off items, net income was down 16.4 percent to 44.9 million euros.

As reported, the company’s full-year sales grew 16 percent to 921.4 million euros, lifted by fast growth in Asia. On a constant-currency basis, revenues were up 17.5 percent. Sales generated outside of France, which made 59 percent of total revenues, rose 27.1 percent.

“It was a superb year,” Daniel Lalonde, SMCP’s chief executive officer, said during a call with journalists.

“The performance has been very dynamic across all brands and regions as the group registered further market share gains in France and internationally,” SMCP said in a statement.

SMCP opened 109 sales points in 2017, bringing its number to 1,332 in 38 countries. The company’s digital sales, meanwhile, advanced 46 percent to represent 12.1 percent of overall revenues.

For 2018, SMCP expects sales to increase 11 to 13 percent on a constant-currency basis, and for adjusted EBITDA margin to be around 17 percent.

The company further confirmed its midterm objectives for 2020, which include sales growth of more than 11 percent to 13 percent per year in constant-currency terms, and an expansion of around 100 basis points of its adjusted EBITDA margin by 2020 versus 2016.

Gélébart viewed the guidance as “robust,” given that SMCP is generally conservative, and that European weather conditions have been especially inclement in the first quarter of 2018.

During the question-and-answer session, Lalonde said there are two main levers for growth. First are the investments the company makes to spur internal development, in fashion collections, client service in boutiques, digital, men’s wear and accessories.

Second are investments aimed at expanding retail reach in markets where SMCP is underrepresented but there’s strong potential. That includes mainland China, where it has 130 stores, and North America, where bricks-and-mortar store development will be implemented selectively and large investment will be funneled into digital.

“Then in Europe, we have targeted and identified four countries with still very strong potential where we have limited presence, and that’s Spain, the U.K., Germany and Italy,” the executive said. “We have enormous — but enormous — potential to develop our three brands in the world…we are in the first chapters of the story of each of our brands.”

When asked, Lalonde said it is possible men’s wear could be added to the collections of Maje and Claudie Pierlot at some point, but that organic growth is currently SMCP’s priority. Still, it is feasible that the company could make acquisitions to complement its portfolio, which today rings up about 92 percent of its sales from ready-to-wear.

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