Earnings call transcript: Maisons du Monde Q1 2025 sales decline impacts stock

Maisons du Monde reported a decline in Q1 2025 sales, which reached €214 million, marking a 9.9% drop on a like-for-like basis. Online sales decreased by 17.6%, while retail performance showed slight improvement. The company’s stock fell 6.61% pre-market following these results, reflecting investor concerns over the sales decline and challenging market conditions, particularly in France. According to InvestingPro data, the company trades at a relatively low Price/Book multiple of 1.17x, suggesting potential value despite recent challenges.

Key Takeaways

• Q1 2025 sales totaled €214 million, a 9.9% like-for-like decline.
• Online sales decreased by 17.6%, while retail performance improved slightly.
• Stock price dropped 6.61% pre-market after earnings release.
• Positive performance in Spain and Italy, nearing breakeven.
• New product lines and loyalty program launched to boost growth.

Company Performance

Maisons du Monde faced a challenging first quarter in 2025, with overall sales declining by 9.9% on a like-for-like basis. The company experienced a significant drop in online sales, which fell by 17.6%. However, retail performance showed some resilience with a 0.7% decline, marking the best performance in 24 months. The French market saw an 11.8% decrease, highlighting the ongoing challenges in the region. InvestingPro analysis reveals the company maintains a strong current ratio of 7.51, indicating robust short-term liquidity despite operational headwinds.

Financial Highlights

• Revenue: €214 million, down 9.9% from the previous year.
• Online sales: Decreased by 17.6%.
• Retail like-for-like performance: Declined by 0.7%.

Market Reaction

Maisons du Monde’s stock price fell by 6.61% in pre-market trading, reflecting investor concerns over the company’s declining sales and challenging market conditions. The stock’s last close was at €2.80, with a 52-week high of €5.56 and a low of €2.27, indicating significant volatility in recent months.

Outlook & Guidance

The company is focusing on strengthening its brand and revitalizing online sales. With plans to continue its store network transformation and expand its affiliate model internationally, Maisons du Monde aims to improve online traffic balance and enhance customer loyalty through its new program.

Executive Commentary

Francois Merlquier de Polignac, CEO, emphasized the company’s commitment to transformation, stating, "We remain focused on transforming our business to build a stronger foundation for the future." He also highlighted the importance of customer loyalty, saying, "Our goal is to cherish our customers, especially our most loyal ones."

Risks and Challenges

• Market conditions in France remain challenging due to political instability affecting consumer spending.
• The decline in online sales poses a risk to growth, requiring strategic revitalization efforts.
• Macroeconomic challenges may impact the company’s extended free cash flow timeline.

Q&A

During the earnings call, analysts questioned the temporary nature of the online sales decline and the performance of renovated stores, which are performing 7% above comparable stores. The company targets 100 store renovations by the end of 2025, reflecting its commitment to enhancing its retail footprint.

Full transcript - Maisons du Monde SAS (MDM) Q1 2025:

Moderator/Operator: Dear all, welcome to the First Quarter twenty twenty five Results of Maisons du Monde. Francois Merlquier de Polignac, CEO and Denis Lemarieux, CFO, will be your speakers today. I’ll now hand over to Francois Merlquier de Polignac. Sir, please go ahead. Good morning to all, and

Francois Merlquier de Polignac, CEO, Maisons du Monde: thank you for being with us today. So one of the key highlights for this term. This term reflects a contrasting picture for us. On the one hand, we’ve made solid progress in our transformation efforts, advancing even as we navigate in a persistently challenging market environment. On the other hand, sales reached 2 and €21,400,000 down 9.9% on a like for like basis.

Such results highlighting both encouraging trends and areas where we can and shall improve. Regarding our strategic plan, Inspire Every Day, we have made steady progress. Among our recent initiatives, I’d like to emphasize a few key highlights. A wider offering with the introduction of a new bathroom range and extensions in pet accessories and culinary products, among others. Enhanced brand visibility, driving greater customer awareness and engagement improved performance of our renewed store concepts and a cost saving plan that remains fully on track and supports our long term objectives.

These efforts are starting to pay off and deliver encouraging results. Stores showed their best like for like performance in the last twenty four months at minus 5.7%. Spain and Italy, our largest international markets, are close to breakeven on a like for like basis and positive in March. Yet, we are not fully satisfied, of course. Activity in France, which is our biggest market, is down by 11.8% in a consumer context that remains very challenging.

Online activity decreased by 17.6, mainly due to drop in paid traffic following reallocation of market investments, SEA, towards brand strengthening actions. Our SEO is progressing, but not fast and strong enough to compensate for such level of reduced SEA. We are obviously progressively fixing the balance of SEA and SEO by markets to better manage our website traffic. As you saw, we are now targeting our cumulative free cash flow objective of over €100,000,000 over a four year period instead of three, so for the twenty twenty four-twenty twenty seven period instead of twenty twenty four-twenty twenty six. This adjustment reflects two key parameters.

First, of course, difficult market conditions that reflect in our current trading, notably in our core market trends, where as you know political instability persists in a context of challenging public deficits not aligned for positive consumption dynamics in our view. Second, we remain committed to seize opportunities to accelerate. Typically, our commercial center stores as well as our most recent ZAC or commercial average zone store that we opened two months ago, leveraging CCR learnings are proving so successful that we want to keep open the opportunity to accelerate. In this context, I want to underline that we remain focused on transforming our business to build a stronger foundation for the future. So store network.

2024 was a year of significant transformation for our retail network and we are now drawing some lessons. The application model has proven to be a resilient and effective alternative for operating smaller stores, successfully implemented in France today and with plans to expand abroad as illustrated by the recent opening of our first store in Manila. This opening abroad represents a key step for us. Investing in our retail network has shown clear value even though it requires both time and financial resources. Our 65 revamped concept stores have not only enhanced the customer experience, but also demonstrated a more resilient dynamic compared to other stores.

Among these, as mentioned, shopping center locations has seen the most significant positive impact. As we continue to refine our approach, we adapt and improve with each step. In this respect, as I mentioned, the recent revamp of our store in Labourne in France there is an impressive performance confirming that we are gradually finding the right formula. To better meet the needs of our old customers, including B2B clientele, we have expanded the in store B2B offering, upgraded our services and added 15 new B2B corners, bringing the total to 40 across our network, which has created additional traction for these customers. Now, brand activity.

A key pillar of Inspire every day is to nurture our brand and use it to deepen the connection with our customers. As many of you know, we launched our first loyalty program, Maisons du Monde, on October 24. The program has already rewarded thousands of customers and the initial results are highly encouraging with a noticeable increase in customer frequency. Our goal is to cherish our customers, especially our most loyal ones. That’s why we organize exclusive in store events for addicts and lover members.

Another key initiative has been the return of our printed catalog since 2023, which has become an essential tool for furthering our products. It has reached this spring an all time high of over 1,000,000 copies printed. In addition to being available in store, the catalog was distributed as an insert in leading fashion magazines, giving it significantly broader reach and impact. We’ve also strengthened our communication efforts through out of home and radio campaigns, all of which have contributed to a notable increase in brand awareness, which as you can read, has been validated by the YouGov study. Finally, to connect this point to the next point, we are pleased to share that customer satisfaction, as measured by the Net Promoter Score NPS, increased by two points over the past quarter.

Now our goal, as you know, is to better support and inspire our customers. That’s why we’ve enhanced our range with new additions such as bathroom essentials and outdoor lighting, while also expanding our selection of pet and culinary accessories to better meet their needs. Some of you may remember that was an explicit request by our customers when we surveyed them in-depth two years ago. We are also proud to inspire our clients. Three of our creations were feathered in the renowned French magazine, Mariclee.

Innovation is key and the Tourgearin capsule collection featuring iconic mezzanine products is a perfect example of how our teams drive creativity and innovation. Better serving our customers means streamlining all aspects of our operations from implementation timelines to product availability, in store stock management and delivery efficiency, ensuring a seamless experience at every step. I will pass on to Denis for the financial results. Thank you, Francois Henckel, and hello, everybody. So we

Denis Lemarieux, CFO, Maisons du Monde: will go here a little bit deeply in details of the sales of the Q1 twenty twenty five. A lot of has been already said by Francois Hencot, but let’s see more in detail. So what we can see here, of course, is a decline of the sales of 10.9% over the Q1, and it’s strongly linked to France and Online because we can see some positive effect. First of all, the like for like is only minus 9.9, but also the retail like for like is only minus I mean, they’re only, of course, in view of the current situation, only minus 0.7%, which is one of the best performance since some quarters. So good evolution.

And this evolution has been a little bit contrasted over Europe because if you look at like for like international, so in retail store, like for like international, then there is almost no decline. And we have some positive months on in Spain and Italy, which are our two biggest markets outside France. Besides, remember that we had one day left in February, which counts for 3% of February performance. And on top of that, in terms of G and dynamic, March was the best month of this quarter. On top of that, on the online sales, we have a sharp decline of the sales, as mentioned by Francois Henriquez.

The more the main reason is the effect on the paid traffic because we want to find the right balance between paid traffic and free traffic. We the decline on paid traffic has been sharper than anticipated. And of course, it is not the target for the full year. And we as mentioned by Francois Leclerc, and he will also elaborate a little bit more after, this is not the trend that we want to see on the online for the other quarter, and we are working to compensate with additional paid traffic to have a soft landing on this topic. Regarding the affiliation, there is no mention here on the affiliation.

But as mentioned, we are on the same number of affiliation at the end of the quarter. But the path is not changed, and we will continue to open. As mentioned by Francois Mecler, we have opened international affiliation in Melilla in Spain, and we will continue both in Spain and Italy, but also in France, both and namely, of new stores. So no change on that target. If we go on the next page, we can see the evolution of the mix, which is a standard also slide that you have.

You can see the evolution by category, decoration and furniture, taking into account the fact that there is a mix effect, of course, on Furniture because the Furniture is more driven by web rather than by store. So the evolution of the channel mix has an effect on the channel category, as you can imagine. On top of that, we did not elaborate too much on that, but on the you have seen on the store network, the B2B corner that also showed strong results. And if we go on geography, I always spoke about Spain and Italy, but also we have to mention Switzerland, where we adjust locally some pricing strategy and shows a strong performance in terms of like for like and an increase in traffic with an increase in the basket size. So we are finding the recipe for the rebound.

And again, on the new concepts, which is not presented let us March. Once said, I leave the

Francois Merlquier de Polignac, CEO, Maisons du Monde: floor to Francois Meteur. Thank you, Denis. So looking ahead, in 2025, our focus is twofold, basically. Of course, addressing immediate challenges to reinvigorate our top line while continuing the in-depth transformation of our business model for the future. We are putting strong emphasis on strengthening our brand through new designer collaborations, impactful marketing and an enriched product offering.

At the same time, revitalizing online sales is a priority. We are launching initiatives to improve the website and the omnichannel experience, fostering better synergies between online and in store sales and fine tuning, as we mentioned with Elise, our SEI strategy based, of course, on the learnings from earlier this year. Our store network transformation is also progressing well. We are continuing renovation, rolling out new concepts in key shopping mall locations and expanding our affiliation model abroad. Finally, we are driving greater efficiencies across the organization with an additional €10,000,000 in cost savings, bringing our three year target to €110,000,000 with streamlining operations, optimizing our supply chain and simplifying our structure to ensure we execute with even more precision.

On that brief complete update of the quarter, we’ll open the way, of course, for the Q and A, which I don’t see any question at the moment, but we are, of course, waiting and allow you to type a few questions if necessary. So there seems to be no question. If so, of course, we remain, Dennis and myself, open to direct the calls. And well, I’m just speaking slowly to leave a large chance for the system to place itself, but I don’t see any questions coming up. So thank you.

Ah, one question. Just a second. All right. So question is what non macroeconomic factors motivated the extension of the cumulative free cash flow target time line? Will this affect the pace of store renovations?

And the second question is, is the decline in online sales temporary? Or should we expect it to remain at this level throughout the year? Was it planned to have such a backdrop in online sales? So thank you for your questions, Daniel. On the first part, really what we see is macroeconomic is not satisfying, optimistic, certainly in France.

And as I mentioned, our French people around the table, we know that the government has announced looking for €40,000,000,000 of savings without having any majority, a strong majority in parliament and a potential forecast of a new election coming in a few months. So all of this for our core market of France is clearly putting some pressure on the consumption patterns to come. So that’s the macroeconomic. And it does reflect in our current trading, which was not which is not where it should be, which is why we are extending this horizon to get our over €100,000,000 free cash flow generation. Will this affect the pace of store renovation?

I would say no, basically. As mentioned, what will affect the pace of store renovation will rather be the pace at which we are 100% confident that we have the perfect balance of the different elements we are putting in our renewal store. And as we mentioned, we keep on the contrary the option to accelerate at the moment. It will appear to be the best one for us in terms of timing. And yet, of course, we could adapt by country, by market depending on the potential of the speed of the store renovation program.

And on your second question, so decisively, we do not see that as a long term trend for the online sales. We did have the impact, as mentioned by Denis and myself, of the reduced level of SCA. It is for us a key objective to be less dependent on SCA, which is basically giving out money for onetime stop and traffic on our website and to increase the share of traffic that is coming from the power of our own brand and its capacity to be visible by customers. So SEO is progressing well. This is satisfaction for us.

But yes, we did not anticipate so much impact on the SCA reduction. This is why we are rebalancing the mix progressively to get this objective of less dependence on SCA, but also, of course, to better manage the sales online. And during my long answer, sorry for that, we saw no upcoming additional questions.

Denis Lemarieux, CFO, Maisons du Monde: So

Francois Merlquier de Polignac, CEO, Maisons du Monde: in that case, for this one question. And, Denise and I remain open to any other questions you might have after this meeting.

Denis Lemarieux, CFO, Maisons du Monde: Under the big question we have is on the renovation and the extra sales mentioned on the revolution, what we have put, and it’s something that we not sharing the full value, of course, of that because it’s quite confidential in view of the changing market. But of course, what we have mentioned in the press release is that on March, the renovated stores were 7% above the comparable stores, meaning the store that should be in the same position in order to isolate the renovation impact. And that’s something that is underway. And just remind you that we are supposed to have 100 stores renovated at the end of twenty twenty five.

Francois Merlquier de Polignac, CEO, Maisons du Monde: So refreshment shows no question. So thank you very much for your attendance. And yet again, we remain open to any questions that you would have to have after this call. Thank you. Perfect.

Thank you.

Denis Lemarieux, CFO, Maisons du Monde: Have a good day. Bye bye.

Moderator/Operator: This concludes today’s presentation. Thank you for participating. You may now disconnect. Speakers, please stand by.

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