Earnings call transcript: SMCP sees positive Q2 2025 with revenue growth

SMCP, with a market capitalization of €453 million, reported a promising second quarter of 2025, with revenue reaching €61 million, marking a 3% growth at constant foreign exchange rates. The company also achieved a positive net profit of €11 million and saw its adjusted EBIT margin more than double to 7.1%. Despite these gains, SMCP’s stock saw a slight decline of 1.55%, closing at €5.16, though InvestingPro data shows an impressive year-to-date return of 38.42%.

Key Takeaways

• SMCP’s revenue grew by 3% at constant FX rates in H1 2025.
• The adjusted EBIT margin more than doubled to 7.1%.
• The company reduced its net debt by €32 million in the first semester.
• The stock price declined by 1.55% after the earnings release.

Company Performance

During the first half of 2025, SMCP demonstrated resilience in a challenging market environment, achieving €61 million in revenue and a return to positive net profit. The company’s focus on cost management and strategic market expansion helped bolster its financial performance. Notably, SMCP gained market share in Europe, with strong performances in Spain, Portugal, Benelux, Germany, and the UK. However, the company faced challenges in the Nordics and Switzerland.

Financial Highlights

• Revenue: €61 million, up 3% at constant FX rates.
• Adjusted EBIT Margin: 7.1%, more than doubled from the previous period.
• Net Profit: €11 million, marking a return to positive territory.
• Free Cash Flow: €33 million, the highest level ever in H1.
• Net Debt Reduction: €32 million in the first semester.

Outlook & Guidance

Looking forward, SMCP aims to achieve a ~10% adjusted EBIT margin by the second half of 2026. The company remains focused on top-line growth and cost management while being cautious about Q3 comparables. SMCP plans to continue its partner-based expansion strategy, having recently entered six new countries, including India and the Philippines. According to InvestingPro’s Fair Value analysis, the stock appears to be fairly valued at current levels, with analysts maintaining a positive outlook on the company’s growth trajectory.

Executive Commentary

Isabelle Guichaud, SMCP’s CEO, stated, "H1 2025 is the demonstration that those actions were the right choices, translating in a significant recovery." She also highlighted the company’s market share gains in Europe, emphasizing the strategic importance of the region.

Risks and Challenges

• Market Saturation: Potential market saturation in key regions could limit growth.
• Economic Uncertainty: Macroeconomic pressures could impact consumer spending.
• Supply Chain Issues: Ongoing supply chain disruptions could affect operations.
• Competitive Pressure: Intense competition in the fashion industry may challenge market share gains.
• Currency Fluctuations: Exchange rate volatility could impact financial performance.

SMCP’s strategic initiatives and financial discipline have positioned the company for continued growth, though it must navigate several challenges in the coming quarters. InvestingPro subscribers can access 12 additional investment tips and a comprehensive analysis of SMCP’s financial health, which currently rates as GOOD with a score of 2.53. The Pro Research Report provides detailed insights into what really matters for making informed investment decisions about SMCP and 1,400+ other stocks.

Full transcript - Smcp SAS (SMCP) Q2 2025:

Alan, Conference Coordinator: Welcome to the SMCP two thousand twenty five half year results conference call. My name is Alan, and I will be your coordinator for today’s event. Please note this call is being recorded. And for the duration, your lines will be on listen only. However, you have the opportunity to ask questions at the end.

This can be done by pressing star one on your telephone keypad. If you require assistance at any time, I will now hand you over to your host, Emily Durnis, Head of IR, to begin today’s conference. Thank you.

Emily Durnis, Head of IR, SMCP: Thank you. Good evening, everyone. Thanks for being with us today for the publication of SMTP Half Year results. I’m here with our CEO, Isabelle Guichaud, and our CFO, Patricia Hugues de Pointe. You can listen to the publication via the usual conference call or you can connect to the webcast to have the presentation displayed.

As usual, we will go through the presentation, and then we’ll have the Q and A session. Before I hand it over to Isabelle and Patricia, I invite you to go through our usual disclaimer on Page two. And I think we can start now.

Isabelle Guichaud, CEO, SMCP: Thank you, Amelie. Good evening, everyone. Thank you all for joining us today to talk about H1 twenty five results. Last time we talked about results for last year annual figures, we told you how much ’24 has been a challenging year, but we also told you mostly about strong action that we’ve taken to navigate this tough environment. First semester ’25 is, I think, the demonstration that those actions were the right choices, translating in a significant recovery.

While there

Emily Durnis, Head of IR, SMCP: is still a way to

Isabelle Guichaud, CEO, SMCP: go to reach our target, the recent months make me think that the path we took is the right one, and I I will show you why. And in that shell, I think that h one performance is quite healthy, especially if we compare to the market and healthy because all KPIs are green. Top line is solid, 3% growth for h one despite network pressure rationalization, especially in China and marginally in other geographies. Profitability is recovering in a very healthy way. It’s true that ’24 was a low point for sure, and we have the objective to recover as quick as possible.

In h one twenty five, adjusted EBIT margin in percentage of sales more than doubled, and net profit turns back to positive. And finally, cash indicators are also excellent with a record free cash flow generation for our first semester, which is traditionally not the best one in the seasonality of our cash. Let’s move on to page five where I will focus on key figures about sales performance. You can see that our half year revenue came at $6.00 €1,000,000, an increase of 3% at constant FX versus last year and 2.8 like for like. Here are the main takeouts of the h one sales.

Sales was supported by growth in all regions except China, still impacted as anticipated by the full year effect of the network optimization we initiated in ’24. Second quarter sound performance was led by a very robust growth in America. Q2 positive trend is in line with Q1, even slightly better, despite the higher base of comparison that it was in Q1. We definitely stick to our full price strategy with once again a three point decrease of average discount rate in season despite good comps. This was especially the case for MAG in Europe throughout the semester and in China, especially in the second quarter.

Our digital share remains at a satisfactory level above 20%. And we also have taken into account that the network decreased by 20 POS in the first semester. This is coming from q one. In q two, the network was pretty stable. To be noted that during the semester, we continue to progress in our development through partners with the opening of six new countries, India and three countries in the Balkan, Croatia, Montenegro, and Serbia, Jordan, and The Philippines in q two.

Emily Durnis, Head of IR, SMCP: Page six.

Isabelle Guichaud, CEO, SMCP: Let’s go a bit more granular about revenue evolution. Here’s the bridge between h one twenty four and h one twenty five. It’s mostly green with only one significant red box, but which which is pretty much anticipated and logical, which is the network optimization that I mentioned before. The increase of sales is driven mostly by comparable stores and wholesale development. The like for like network is increasing by 2.8% and brings 14,000,000 additional sales coming mostly from Europe and America.

Other network evolution growth come from a few openings in ’24, especially in The US. And reflecting our strategy of agile development with retail partners, wholesale revenue are increasing by €12,000,000 coming at the same time from like for like stores, new addition in countries already opened and new countries. Network optimization in China and for XLOD PLO accounts for a decrease of €11,000,000 of sales compared to last year. And finally, foreign exchange effect was negative by a small amount of 2,000,000, representing o point o point three points, but with a very different profile between q ’1 and q two, nearly neutral for the total of the semester.

Emily Durnis, Head of IR, SMCP: Moving on to page seven now, you

Isabelle Guichaud, CEO, SMCP: will find the performance by region. Patricia will get back into more detail later in the presentation, but a few highlights highlights. By region, Europe gains one point versus last year and now represent the same share as France. America gained two point and reached 16, the highest share ever for SMCP. By brand, no big variances compared to 2024 split.

And by channel, Q2 confirms q one trend and also increases by two points versus last year, in line with our strategy. On page eight, you will find some key figures on p and l and cash. Additional details and bridges will be also given by Patricia later on. I will just highlight the following messages. Gross margin ratio remains at a high level above 74% in line with last year.

The impact of wholesale activity on gross margin is compensated by the strong retail margin, supported by the strict full price strategy. Adjusted EBIT improved strongly from sales increase and cost optimization action plan. This results in the net income back to positive territory at EUR 11,000,000. And a strong free cash flow generation of EUR 33,000,000, the highest level ever in H1 leading to continued deleveraging with a net debt reduction of 32,000,000 in the semester and 87,000,000 over the last twelve months. So this was for the big picture in terms of figures.

Before Patricia, let’s move on to to page nine. Before Patricia goes more in detail the figures, as you saw, I will present you our main initiative and achievement of the semester. I will start with Clodipiello with a very an achievement we’re really proud of, which is the b corp certification for the brand. As I mentioned in April, we are very proud that the Clovisia Lois team is for achieving this certification with a score of nine outstanding score of 96.7 points, well above the required 80. We are honored to join a community of conscious and committed companies.

The score is based on five key pillars, environment, employees, communities, governance, and customers. This application is not an end by itself, but a long term commitment to continuous improvement.

Emily Durnis, Head of IR, SMCP: Key initiative now in terms

Isabelle Guichaud, CEO, SMCP: of brand desirability over the last quarters, spring semester twenty five, Saint Gault pays tribute to the Franco American artist Louis Bourgeois, a key figure of the twentieth century art art scene. Evelyn Sheffield draws inspiration from Bourgeois iconic spirals to create an and and spider webs to create an exclusive capsule of fluid natural material pieces. To bring this capsule to life, Sandra will launch pop ups in everywhere in the world from Dubai Mall, Shanghai, Galleria Lafayette creating dynamic spaces that celebrate both art and craftsmanship. And we have some illustration of of a key windows that were implemented over the world. For the summer at March on page 11, Maj is more committed than ever to craftsmanship, partnered with the iconic Cote D’Azur and Saint Tropez shoemaker, Kajak.

Together, they have designed two exclusive pairs of sandals made in Saint Tropez to accompany women with a distinctive French elegance. The collaboration came to life both through content shop on the and in workshop as well as through a pop up at the and customer events on the. Page 12, some illustration of very limited keyword strategy, which is visible on the slide. Saint Laurent made numerous numerous elegant appearances during events among with along among which the Cannes Festival or Roland Garros with influential influential opinion leaders and celebrities boosting brand visibility. You have, for instance, Eva Longoria there, or Virginie.

Then shown on the red carpet with looks worn by Diane Kruger in the black tulle dress from the full winter collection and Iris Lowe in a custom made outfit at the cartoon during the festival. Meanwhile, Belais was put in London wearing mesh double buckle slingback heels for the launch of her new fragrance for Raybelle. And then Prospect is regularly featured by key opinion leaders who appreciate its mix of timeless, tailoring, and modern style. You have here as Julien de Saint Jean or Renan Pacheco. These organic mentions help strengthen the brand visibility and appeal them on a wider fashion aware audience.

Emily Durnis, Head of IR, SMCP: On page 13, moving to the commercial strategy.

Isabelle Guichaud, CEO, SMCP: In line with our target of reinforcing our network with partners, we opened some stores in very interesting stores in new countries in Philippines for our two brands, Saint Louis and Maj in Greenbelt, Makati and also Jordan, as I mentioned earlier, Saint Louis and Maj. Maj opened this quarter, and Saint Louis will follow in the coming months in the in the Taj Mahal Mall in the Taj Mahal in Amman. With with the these two new countries, we are strongly reaffirm our extension strategy with retail partners. Page 14 now, we have reinforced our presence in Thailand,

Emily Durnis, Head of IR, SMCP: in Phuket, and in Egypt,

Isabelle Guichaud, CEO, SMCP: for example, at Almaza City Center in Cairo. I will now leave it to Patricia to give more details on h one three. Thank you.

Emily Durnis, Head of IR, SMCP: Thank you, Isabelle. Good evening, everyone. So let’s start with sales on Slide 16. France revenue stands at $2.00 €7,000,000 for the first semester, progressing 2.3% versus last year. Like for like network growth, both in brick and mortar and in digital, reflecting a good dynamism across all channels.

The trends of decrease of discount rate has continued, especially for MAGE and Credit Perlot. Q2 sales amount to 105,000,000 stable compared to Q two twenty four, which was a relatively high basis of comparison with a plus 6.5% versus prior year. The network decreased by 16 net units during H1, of which seven in Q two, notably due to the network optimization at Crusader Piano. In EMEA, H1 sales at two zero four million euros progressed 6% organic, driven by like for like growth in retail, which is positive in nearly all markets and very homogeneous in q one and q two, and by wholesale performance, which is dynamic, but with some timing effects between q one and q two on deliveries to partners. The network grew by 19 net openings during the semester, of which 14 in q two coming mainly from the openings of new countries through partners as Isabelle just explained.

On page 17 now. In America, sales at €94,000,000 in h one grew by 12% organic versus last year and by 22% in the second quarter, driven both by price increases in The US and also mainly by higher volumes. All three markets of the region grow in retail with a positive like for like in both The US and Canada and in our partner activity with a particularly robust growth in Mexico. And all this, despite the network down by 25 net closures over the semester, including five in q two, mostly from the closure of the Sun Bay Corners in in Canada, which should be replaced by a new partnership soon. So a very strong q two in America indeed.

Now let’s be clear. We are, of course, very happy about this performance, but it’s wise to anticipate that it will be difficult to replicate in q three with a relatively high comp. Finally, in Asia, sales stood at €97,000,000 in h one, minus 8% organic. Just like in q one, the decline in sales is linked to the full year effect in ’25 of the network optimization that we performed in ’24. Especially in China, you may remember that we had closed 65 stores.

However, like for like sales are stabilizing in brick and mortar in the first half of the year despite a very strict approach on discount, especially in the second quarter. In the rest of the region, several markets have shown good resilience, Singapore, Vietnam, Malaysia, Thailand, and new markets such as India, Indonesia, and Philippines has an encouraging start. No significant evolution of the network this year. On page 18, let’s have a look at the bridge of adjusted EBIT between h one twenty four and h one twenty five.

Isabelle Guichaud, CEO, SMCP: If you

Emily Durnis, Head of IR, SMCP: look at the full P and L in appendix, you will see that all major P and L lines contribute to the positive evolution of EBIT, including gross margin, store cost, SG and A and MD and A. If we analyze where it comes from, you can see from the graph that we benefit from the following factors, positive volume effect, bringing additional gross margin in retail in The US, for example, and also thanks to our developments to partners. In the middle, the impact of cost optimization plans, which start to bear fruit from network rationalization, product process production process optimization, and also renegotiations of indirect purchases. And finally, some one off impact from 2024 in connection with the store network optimization do not happen anymore in 2025. What’s particularly important to highlight in this slide is that the entire incremental revenue, plus EUR 16,000,000 between H1 twenty twenty four and H1 twenty twenty five, and even more translates into EBIT, which increases by more than EUR 23,000,000.

As far as adjusted EBIT margin in percentage of sales is concerned, at 7.1% of revenue, the increase enables us to more than offset the fall of profitability that has taken place in H1 twenty twenty four, and it also underpins our target of getting back to circa 10% adjusted EBIT margin in h two twenty six. On page 19, you can see the evolution of the net results versus ’24. Apart from adjusted EBIT explained in the previous slides, the main change is on nonrecurring expenses with much lower effects from impairments this year. Maybe not significant but encouraging, we have also a positive trend in financial expenses, mostly explained by explained by the reduction of our debt. In contracts, obviously, it gets back to an expense from a positive pretax income.

And in the end, we are back to positive net results of €11,000,000 On Page 20, you will see our usual KPIs about balance sheet and cash. We are very happy with the free cash flow generation in H1 at €33,000,000 more than €40,000,000 above last year, supported by better operational performance, efficient cost management and continued control of CapEx and inventories. Inventories continued to decrease by 13% compared to the same period last year. Logically, Page 21, it’s the mirror of the previous page and free cash flow generation enables us to decrease net debt by comparable amounts versus ’24 from €237,000,000 to $2.00 €6,000,000 This deleveraging is also quite spectacular compared to same period last year with net debt down by CHF 87,000,000 versus H1 twenty four and debt to EBITDA ratio down from slightly above three to 1.9 in twelve months. During the semester, we have also regained maturity in our financing, thanks to an extension of our main facility, which is the term loan plus the revolving credit facility.

Our contract enabled us to ask lenders a one year extension, each bank being free to to accept. A vast majority accepted, and a significant portion of this facility is now extended to 2027. Thank you, Patricia.

Isabelle Guichaud, CEO, SMCP: Now a few words of conclusion. As you’ve seen, we’ve delivered a strong sales performance in H1. This growth, particularly on a like for like basis, has played a key role in improving our cost absorption, strengthening our operating leverage and supporting the resilience of our business model. I’m also glad to say that our strategic action plan are starting to bear fruits. Thanks to disciplined execution and clear priorities, we’ve seen a tangible improvement in our EBIT margin, putting us firmly on track to achieve our H2 twenty twenty

Emily Durnis, Head of IR, SMCP: six guidance. In terms of

Isabelle Guichaud, CEO, SMCP: cash generation, the performance has been equally solid. Free cash flow generation was strong, enabling us to make take further step in optimizing our financial structure. As a result, we’ve seen a notable reduction in net debt and a clear improvement in our leverage ratio, which reinforces our financial flexibility moving ahead. Looking forward, we remain fully focused on executing our action plan, both on top line growth and cost management. And I take also the opportunity to thank the whole team at SMCP, all our managers, all comics, our management committees, and all the teams in all stores in the world for their incredible dedication and fighting experience for for the brand they

Emily Durnis, Head of IR, SMCP: work for. In H2,

Isabelle Guichaud, CEO, SMCP: we will also gradually fight against stronger comps. But while the external environment remains uncertain and challenging, our objective is clear, to confirm in the second half the positive momentum demonstrated by our brand in the first half of the year. And now before I I preempt a question that I know will obviously come on the plate, a few words about our legal proceedings. As you remember, the Singapore High Court decided on July 4 to order dynamic DTG to return to European Topso ETS, the 15.5% stake of SMCP, which had been transferred in 02/2021. DTG had to comply had to comply with this order within one week following notification performed on July 8.

We understand that DTG did not comply with this order in the required time frame and that GLASS has therefore initiated forced transfer procedures. We’ll obviously keep the market informed about the next update. Thank you.

Emily Durnis, Head of IR, SMCP: Thank you, Isabelle. Operator, we can take the question now.

Alan, Conference Coordinator: Thank you. If you like to ask a question or make a contribution on today’s call, please press 1 on your telephone keypad. To withdraw your question, please press star 2. You will be advised when to ask your questions. We will take our first question from Mary Langford Bernstein.

Your line is open. Please go ahead.

Isabelle Guichaud, CEO, SMCP: Congratulations

Emily Durnis, Head of IR, SMCP: on this very good set of questions. Thank you. Of course, I’ve got some questions about US Americas. I’m just wondering if there is extra profit in h one due to the fact that you passed some price increase without having immediately the impact of tariffs. So just try to measure what could be a balance on the second half.

And also, do you think that the price increase you passed during the first the second quarter would be enough to mitigate the increase in tariffs on the second half? That’s my first set of questions about U. S. The second part of the question is about trading, current trading. I remember that last year, q three was under pressure, particularly in France due to the LLP OMP gains.

Just wondering if you see some sign of improving. And also in China, we are we are hearing that there is some recovery there. Are you perceiving some signs of improvement or so? Thank you.

Isabelle Guichaud, CEO, SMCP: First on The U. S, I would say that part of the very good performance in H1 in Q2 is linked to the increase of prices, but it’s not explaining the whole it’s explaining it’s mostly volumes. And on top of it, the price increase was another positive factors, but it’s mainly volumes. So and and then on your question about the the way we we model we in our modernization of the price increases, we took the assumption of 20% as we thought could be a a a tariff. The tariffs applied to to European merchandise.

So somehow, we we we we pretty much within the range of our modernization. So we don’t forecast any other additional step of increases to be done if the situation remain what what it’s what it’s today.

Emily Durnis, Head of IR, SMCP: Okay. And then How then on on the

Isabelle Guichaud, CEO, SMCP: current trading, for the time being, it’s a little bit too early to say through that we will we will we will have comps in especially in France that were the the comps of the Olympic Games. Would say that for the time being, there is no big difference for the time being versus h one on the whole. So we are we’re monitoring the situation, and we are pretty much where we want it to be.

Emily Durnis, Head of IR, SMCP: Even in China.

Isabelle Guichaud, CEO, SMCP: Oh, China. And then last question on China. China, what are we seeing? You know, there is a a combined effect. Maybe I need elaborate to a bit more on that.

You know that we changed our management in China at the at the beginning of the quarter in April 1. And so it’s that that new manager now comes after the, you know, the optimization and the contraction of the the network. So it’s more into a rebound phase. So it’s been working a lot on on the like for like, but with a very strong point of view on the that we absolutely are backing up on reducing the the level of discount to really trigger the brand’s viability and the brand and and and keeping the brand very aspirational in China, and it’s a key move that so it means that we’ve cut a lot of of promotional activities, sacrificing some of the top line, but we see that that that is paying off. And we see weeks after weeks, like for like in brick and mortar coming back to a positive level, so we’re happy.

Digital is still work in progress. That’s a digital, as you know, is extremely is extremely driven by promotion in in China. The whole model is about those big events, the six eighteen and so on, eleven eleven, twelve twelve and others. So I think it’s something that is challenged by everyone today because it’s it’s mobilizing. It’s freezing a lot of inventory amount, and it’s not very productive, very high consolidation rate.

So now the strategy is really moving most of the brands are moving to something that is more elevated, more curated, more personalized by the brands. And so the strategy in digital is changing, and I would say that we it will be further down the road at during the h two that we we think we come back to to to better better levels in digital. So the the overall, it’s work in progress, but we are absolutely confident to be heading in the right direction in China. And we’re extremely happy to have been among the pioneers to start reducing the network as early as last spring in ’24.

Emily Durnis, Head of IR, SMCP: Thank you. Thank you very much, We have received a question on on the the recent channel. So I will read it. It’s about EMEA

Alan, Conference Coordinator: Yeah.

Emily Durnis, Head of IR, SMCP: And the fact that this region keeps performing quite well. So can you please elaborate on your strategy, the reason

Isabelle Guichaud, CEO, SMCP: why this area I think the the work that has been done by, you know, Sandal and Maj on really elevating their brands, they’re working on the curation of their expression, on the alignment of at three sixty of all the signals on the collection is paying off. It’s also true that we’re seeing kind of a I mean, we cannot be pleased about it, but it’s a fact a little of weakness of our competition landscape. And I would say that we’re gaining market share in Europe in these days, and we see good traction in Spain, in Portugal, in Benelux, in Germany, in The UK, in the countries where we operate with partners, The Middle East, Turkey is flying, Eastern Europe, good growth. And so I would say that except maybe for you know, we have to find one or two countries that are still a bit of a headache. I would say that the Nordics are a bit of a headache and Switzerland.

But I would say that for the rest, we’re really happy with the the European performance.

Emily Durnis, Head of IR, SMCP: And we have another question we’ve received on the chat, which is about wholesale. You accelerated your openings with the retail partners. What is the next step, and what is the potential for this activity? Is this your new growth driver? Just to

Isabelle Guichaud, CEO, SMCP: to start with, it it remains you know, we are we are, by essence, a retail pure player. I mean, it’s there is no discussion about it. Wholesale activity remains marginal and the way we operate wholesale, it’s it’s a very curated wholesale activity. It’s almost a partner retail, if if we call it. It’s slightly above 10% of our sales.

So it’s not a revolution in our business model. But we definitely think that it’s an untapped potential for us in a lot of geographies where we cannot operate ourselves and partners would do a better job than would do themselves a better job with our help, definitely. This allows us to operate in markets that are difficult to access or too complicated to operate directly. It’s a good way to continue to foster the pioneer approach, which always been a pillar in the field of the fulfillment of this group with with a limited investment. And we’re really happy about the success of the the partners we’ve chosen.

We usually choose the the most active and the most prominent partners in the country we operate. And and we still we

Emily Durnis, Head of IR, SMCP: we have a we have

Isabelle Guichaud, CEO, SMCP: a good pipe of the of opening on h two and for next year. So that that’s an interesting business model for us that we keep keep on the nurture.

Emily Durnis, Head of IR, SMCP: Thank you, Isabelle. Thank you, everyone, and we wish you a good evening. Bye bye.

Alan, Conference Coordinator: Thank you for joining today’s call. You may now disconnect.

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