By Mimosa Spencer
with contributions from Tianwei Zhang
 on October 29, 2019
Claudie Pierlot store in Paris

PARIS — SMCP, the group behind contemporary French fashion labels Sandro, Maje and Claudie Pierlot, posted a 10.8 percent increase in third-quarter sales as it continued to expand its store network across Asia and the Middle East at a vigorous pace.

Sales for the three months came to 274.5 million euros, with the group flagging market share gains in France, its slower market, and a good start abroad for its fall collections.

“We are confident that this good momentum will continue in the next quarter,” said Daniel Lalonde, chief executive officer of SMCP.

Sales at constant currency rose 9 percent over the three months, spurred by brisk growth in Asia, up 21.5 percent.

The group has been expanding its store network abroad rapidly, with 55 more points of sale in the Europe and Middle East area and 66 in Asia compared with the same period last year. Meanwhile, it has been downsizing its network in France, where it closed six stores over the period, while recently opening a new store on the Avenue des Champs-Élysées for its Claudie Pierlot brand, with an eye to grabbing the attention of tourists with a new, sleeker store format. 

The group is focusing on accessories, and said sales for the category grew at a double-digit pace.

SMCP, which was listed on the Paris stock exchange in 2017 and is controlled by Chinese textile conglomerate Ruyi Group, confirmed full-year guidance of stable adjusted EBITDA margin, excluding its recent acquisition of men’s wear label De Fursac, which was finalized Sept. 5. 

It was also announced Wednesday that parent company Ruyi Group has received a 3.5 billion renminbi, or $495 million at current exchange, investment from Jining City Urban Construction Investment Co. Ltd.

Jining City Urban Construction Investment has become the second-largest shareholder of the company, owning 26 percent. Yafu Qiu, chairman of the company, remains as the single controlling shareholder of Ruyi.

The new investor is a state-owned enterprise directly managed by the State-owned Assets Supervision and Administration Commission of Jining. Jining is a prefecture-level city in southwestern Shandong province.

The investment provided a much-needed cash injection as Ruyi is facing serious debt issues, and Moody’s downgraded Ruyi Group earlier this month. It’s estimated that Ruyi needs to pay off near 10 billion renminbi in debt by 2020.

“The downgrade of the ratings reflects our expectation that Shandong Ruyi’s liquidity will remain weak and debt leverage will stay elevated,” says Chenyi Lu,  vice president and senior credit officer at Moody’s.

According to Ruyi, the capital contribution represented an endorsement by the local government.

Qiu said that “Amidst current macroeconomic conditions, the cooperation between state-owned enterprises and privately-owned companies is becoming increasingly important to the market, with the aim to achieve mutual benefits, enhance overall functionality and efficiency of the economy and optimize the allocation of capital.”


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