The Mainland Is Still Strong, But SMCP Has Seen Its First Single Digit Slowdown.

The fourth quarter sales growth of France light luxury fashion group SMCP SAS (SMCP.PA) has dropped to a single digit for the first time since listing in October 2017, and the growth of market and brand in all regions has slowed down to varying degrees.

SMCP SAS (SMCP.PA) swiftly turned downward after hitting 4.69% to 17.20 euros on Monday opening, and dropped at noon up to 6.09% to 15.43 euros.

In the fourth quarter, the Group recorded sales of 276 million 100 thousand euros, up 7.8% from 255 million 800 thousand euros in the same period in 2017, and the fixed exchange rate rose by 8.1%, which was in line with market expectations, but narrowed sharply compared with 14% in the three quarter and 17% in the same period last year.

Management pointed out that the yellow vest campaign, which started in mid November, caused Paris stores to fail to operate normally and the passenger flow dropped sharply. French sales therefore lost 4 million euros. Even with strong e-commerce offset, sales in the fourth quarter of the local market continued to expand from 1.9% in the three quarter to 1.9%, but the decline was lower than expected in the market.

Other European markets also grew by only 7.2% of the fixed exchange rate because of the warmer weather in most parts of the world and the demand for autumn and winter wear, far below the 13.5% in the three quarter and 20% in the previous year.

France and Europe account for 65.4% of the total sales of the group.

In the Americas, sales increased by 25.7% over the past year driven by digital strategy and renovation and new stores. The management said its performance had exceeded expectations.

The third largest market in the Asia Pacific region increased sales by 18.2% on the basis of high contrast base, while the growth rate in the three quarter and the same period in the previous year reached 31% and 51% respectively.

The management stressed that 20%+ growth will continue in mainland China. This year, the group will continue to invest more in e-commerce and store networks in the mainland, hoping to maintain strong growth.

From our point of view, everything remains unchanged.

Any slowdown in our business is related to the cardinal number. "

"We still expect the market to grow by more than 20% in 2019," Daniel Lalonde, chief executive of SMCP SAS, said at a conference call today.

Our confidence in the region remains unchanged. "

The market is worried about the tense trade relations between China and the United States and the impact of China's economic slowdown on high-end brand businesses in Hongkong.

Daniel Lalonde has revealed that local sales have slowed due to soft currency.

In the four quarter, sales in the 20% quarter dropped from 6.1% a year ago to 6.1%, while Maje and Claudie Pierlot recorded 10.9% and 7.9% growth respectively.

By category, accessories and men's clothing increased by 16.8% and 13.8% by real exchange rate.

In the 2018 fiscal year, sales of SMCP SAS broke through 1 billion euros for the first time, doubled over the past four years, and sales of 1 billion 17 million 100 thousand euros rose 11.5% compared with 912 million 400 thousand euros in the 2017 fiscal year. The fixed exchange rate rose by 13%, while the average annual compound growth rate in 2014-2017 years was 21%.

Year-on-year sales increased by 3.1% year-on-year, less than half of 7.8% in fiscal year 2017.

During the period, the group opened 134 sales outlets, of which 102 were direct stores, exceeding the annual expectations.

Digital sales surged 35.5% to 149 million euros, up to 14.9%.

SMCP SAS, which controls 53.7 of Shandong's Ruyi group (002193), will announce its full year earnings in late March.

Management has now maintained the adjusted EBITDA profit margin of the whole year from 16.8% in fiscal year 2017 to 17%.