(News Bulletin 247) – The textile group is revising downwards its growth and margin objectives for 2023, noting a clear deterioration in the clothing market in France and Europe. SMCP shows the biggest drop on the Paris market on Tuesday.

The market is dressing up SMCP for the winter. The owner of the Sandro, Maje, Claudie Pierlot and Fursac brands is down another 27% towards its historic lows, the day after its profit warning.

With purchasing power eroded by inflation, households are focusing on purchasing essential products. And therefore ignore so-called discretionary consumer goods like clothing. A context which does not suit SMCP’s business, although it had resisted the crisis in the clothing sector rather well.

The deterioration of this market environment forced the company to lower some of its financial objectives for the current year. SMCP is now targeting mid-single-digit revenue growth in 2023, compared to mid-to-high single-digit revenue growth (i.e. between 5% and 9%) until then.

SMCP’s profitability will also suffer. The adjusted operating profit (EBIT) margin is expected between 7% and 9%, a decrease compared to the 9.2% posted in 2022. SMCP previously hoped for an improvement in this indicator.

But market conditions have generally deteriorated since the group’s last publication at the end of July, explains SMCP. The specialist in “accessible luxury” suggests “a slowdown in growth in Europe in a lasting inflationary environment, as in France where the entire market has recorded sluggish consumption since the beginning of August”.

For the second half of the year, SMCP “anticipates moderate growth in sales compared to 2022”, “with a stable or slightly declining third quarter”. The owner of the Sandro, Maje, Claudie Pierlot and Fursac brands hopes to limit the damage with a “fourth quarter more in line with the trend of the first half, benefiting in particular from a favorable base effect in China”.

For Oddo BHF cited by AFP, “the public takeover offer scenario is moving even further away”. Speculation about a change of shareholder resurfaced last March after the creditors of European TopSoho, united under the “trustee” Glas, indicated that they were initiating a process to sell 37% of SMCP’s capital. The operation was then received “favorably” by the board of directors, which saw it as an opportunity to “find a clarified shareholder base”, on which the company could rely in order to pursue its development strategy. And for the moment, this is the only upward catalyst for the file given the deterioration of the market situation for SMCP.

Fears for other players listed on the stock exchange

The profit warning launched by SMCP on Monday evening therefore casts a chill and illustrates the difficulties of distribution players in evolving in a context marked by a serious consumer crisis. The textile group’s announcement calls for caution, notes TP ICAP Midcap on upcoming publications from physical distribution players, and cites Maisons du Monde.

“If Maisons du Monde obviously operates in a very different market, we think that the trend should be the same, furniture not being part of the consumption priorities, just like fashion,” recalls Florent Thy-tine, the analyst in charge of coverage of Maisons du Monde at TP ICAP Midcap.

The specialist reports the publication of figures from the Banque de France on furniture activity this Thursday, and is already expecting “poorly oriented figures”, which would confirm his fears about a possible disappointment during the next publication of Maisons du Monde on October 26. “New pressure on the stock in the short term” cannot be ruled out, indicates Florent Thy-tine, who maintains his recommendation to keep as well as his price target at 9 euros on Maisons du Monde.