H1 2023 Results
Press release -
Good sales performance driven by APAC and
Resilient profitability in a challenging environment
Extension of financing successfully secured
- H1 2023 Sales at €610m, a progression of +8% on an organic0F0F1 basis (+9% at constant exchange rates) vs. H1 2022, despite a high comparison basis. The performance comes from both like-for-like (+5%) and from network expansion;
- Good performance in
Europe despite a challenging environment inFrance and a high basis of comparison. After two years with an outstanding performance, slight decline in America in the first semester, particularly inCanada , offset by US resilience. Asia Pacific’s strong improvement of trend during the semester with Mainland China back to growth and a good performance in the rest of the region; - Store network is increasing in the second quarter (23 net openings) to reach 1,658 POS;
- Adjusted EBIT at €36m (6% of sales) from €45m in H1 2022 (8% of sales) impacted by inflation and old seasons liquidation plan;
- Net profit at €14m from €21m in H1 2022;
- Sound balance sheet structure and financial flexibility secured in the mid-term;
- Confirmation of 2023 objectives.
Commenting on those results,
€m except % | Q2 2022 | Q2 2023 | Organic change | Reported change | H1 2022 | H1 2023 | Organic change | Reported change | |
Sales by region | |||||||||
101.0 | 98.0 | -3.0% | -3.0% | 194.7 | 203.9 | +4.7% | +4.7% | ||
EMEA ex. | 90.3 | 100.6 | +11.6% | +11.4% | 173.4 | 189.1 | +9.4% | +9.1% | |
America | 44.5 | 41.3 | -4.8% | -7.2% | 83.1 | 80.3 | -3.7% | -3.4% | |
46.6 | 65.5 | +43.1% | +40.4% | 114.2 | 136.5 | +19.0% | +19.5% | ||
Sales by brand | |||||||||
Sandro | 132.7 | 149.5 | +13.4% | +12.7% | 266.8 | 295.5 | +10.6% | +10.8% | |
111.7 | 114.6 | +3.4% | +2.6% | 223.9 | 228.5 | +1.9% | +2.0% | ||
Other brands1F1F2 | 37.9 | 41.1 | +8.2% | +8.3% | 74.7 | 85.9 | +14.9% | +14.9% | |
TOTAL | 282.4 | 305.3 | +8.7% | +8.1% | 565.4 | 609.8 | +7.7% | +7.9% |
SALES BREAKDOWN BY REGION
In
The network is growing with seven net openings in the second quarter.
In EMEA, sales reached €189m, an organic increase of +9% compared to H1 2022 despite a high basis of comparison. The semester’s performance is driven by the largest markets such as
The latest regained growth momentum in the second quarter with fifteen net openings (notably in
In America, after two years in a row of outstanding performance, sales reached €80m, a slight organic decrease of 4% compared to H1 2022. This slowdown is particularly due to Canada’s slow post-Covid recovery, accentuated by the retail market’s recomposition and by the lack of tourism from
The network regained growth momentum in the second quarter with four net openings.
In APAC, sales reached €137m, +19% organic vs H1 2022. The trend is strongly improving during the semester with +3% organic in the first quarter and +43% in the second quarter. Mainland
Excluding Mainland China, the region also recorded a particularly good performance notably in
The network is slightly decreasing by three POS in the second quarter from network evolution’s phasing (but +2 POS overall in H1).
Unless stated otherwise, all figures used to analyze the performance are disclosed by taking into account the impact of the application of IFRS 16.
H1 2022 | H1 2023 | Change as reported | |
Sales | 565.4 | 609.8 | +7.9% |
Adjusted EBITDA | 121.8 | 115.7 | -5.0% |
Adjusted EBIT | 45.2 | 36.3 | -19.6% |
Net Income Group Share | 20.7 | 14.0 | -32.1% |
EPS2F2F3 (€) | 0.28 | 0.19 | -32.9% |
Diluted EPS3F3F4 (€) | 0.26 | 0.18 | -31.4% |
FCF | 4.9 | -8.7 | - |
H1 2023 CONSOLIDATED RESULTS
Adjusted EBITDA reached €116m in H1 2023 (adjusted EBITDA margin of 19% of sales), compared with €122m in H1 2022.
Management gross margin (73%) decreased by one point due to a bigger part of liquidation of previous years’ collections (especially in
Total Opex (store costs4F4F5 and general and administrative expenses) as a percentage of sales increased by one point, due to the impact of inflation on rents and wages, and the pursuit of investment in infrastructure and IT systems.
Depreciation, amortization, and provisions amounted to -€79m in H1 2023, compared with -€77m in H1 2022. Excluding IFRS 16, depreciation and amortization represent 4.0% of sales in H1 2023, nearly stable vs 2022 (4.2% in H1 2022).
As a result, adjusted EBIT reached €36m in H1 2023 compared with €45m in H1 2022. The adjusted EBIT margin is 6% in H1 2023 (8% in H1 2022).
Other non-current expenses are not very significant (-€1m), and stable vs 2022.
Financial expenses are slightly increasing at -€13m in H1 2023 (vs -€12M in H1 2022), the increase in interest rates was offset by a reduction in average outstanding gross debt.
With an income tax expense at -€5m in H1 2023 (vs -€9m in H1 2022), Net income - Group share remains positive at €14m (€21m in H1 2022).
H1 2023 BALANCE SHEET AND NET FINANCIAL DEBT
The Group maintained a strict control over its inventories and investments during the semester. Inventories went down from €292m year-end 2022 to €278m as of
Capex was relatively stable as a percentage of sales, representing 3.9% of sales in H1 2023, compared with 3.7% in FY 2022.
Net financial debt at €306m as of
The maturity of the main lines of financing (including the revolving credit facility) has been renegotiated and extended to 2026 and 2027 depending on the lines, confirming
CONCLUSION AND OUTLOOK
After a good performance in the first semester in terms of growth, with a resilient profitability in a challenging macro-economic and social environment,
- Pursuit of full-price strategy;
- Costs discipline;
- Prioritization of infrastructure investments while continuing network expansion;
- Improved productivity.
In addition, the second semester, traditionally more profitable than the first semester, will also benefit from:
- The normalization (vs Q4 2022) of the situation in
Greater China , a key market for the Group both in terms of sales and profitability; - And from a more homogeneous performance by brand, notably at
Maje , the most profitable brand of the Group.
Based on these elements and provided geopolitical situation and macro-economic/social context do not deteriorate during the rest of the year,
OTHER INFORMATION
The Board of Directors held a meeting today and approved the consolidated accounts for the first half of 2023. The limited review procedures have been completed by the auditors and the related report is being issued.
FINANCIAL CALENDAR
A conference call with investors and analysts will be held today by CEO
FINANCIAL INDICATORS NOT DEFINED IN IFRS
The Group uses certain key financial and non-financial measures to analyze the performance of its business. The principal performance indicators used include the number of its points of sale, like-for-like sales growth, Adjusted EBITDA and Adjusted EBITDA margin, Adjusted EBIT and Adjusted EBIT margin.
Number of points of sale
The number of the Group’s points of sale comprises total retail points of sale open at the relevant date, which includes (i) directly-operated stores, including free-standing stores, concessions in department stores, affiliate-operated stores, factory outlets and online stores, and (ii) partnered retail points of sale.
Organic sales growth
Organic sales growth refers to the performance of the Group at constant currency and scope, i.e. excluding the acquisition of Fursac.
Like-for-like sales growth
Like-for-like sales growth corresponds to retail sales from directly operated points of sale on a like-for-like basis in a given period compared with the same period in the previous year, expressed as a percentage change between the two periods. Like-for-like points of sale for a given period include all of the Group’s points of sale that were open at the beginning of the previous period and exclude points of sale closed during the period, including points of sale closed for renovation for more than one month, as well as points of sale that changed their activity (for example, Sandro points of sale changing from Sandro Femme to
Like-for-like sales growth percentage is presented at constant exchange rates (sales for year N and year N-1 in foreign currencies are converted at the average N-1 rate, as presented in the annexes to the Group's consolidated financial statements as of
Adjusted EBITDA and adjusted EBITDA margin
Adjusted EBITDA is defined by the Group as operating income before depreciation, amortization, provisions, and charges related to share-based long-term incentive plans (LTIP). Consequently, Adjusted EBITDA corresponds to EBITDA before charges related to LTIP.
Adjusted EBITDA is not a standardized accounting measure that meets a single generally accepted definition. It must not be considered as a substitute for operating income, net income, cash flow from operating activities, or as a measure of liquidity.
Adjusted EBITDA margin corresponds to adjusted EBITDA divided by net sales.
Adjusted EBIT and adjusted EBIT margin
Adjusted EBIT is defined by the Group as earning before interests, taxes, and charges related to share-based long-term incentive plans (LTIP). Consequently, Adjusted EBIT corresponds to EBIT before charges related to LTIP.
Adjusted EBIT margin corresponds to Adjusted EBIT divided by net sales.
Management Gross margin
Management gross margin corresponds to the sales after deducting rebates and cost of sales only. The accounting gross margin (as appearing in the accounts) corresponds to the sales after deducting the rebates, the cost of sales and the commissions paid to the department stores and affiliates.
Retail Margin
Retail margin corresponds to the management gross margin after taking into account the points of sale’s direct expenses such as rent, personnel costs, commissions paid to the department stores and other operating costs. The table below summarizes the reconciliation of the management gross margin and the retail margin with the accounting gross margin as included in the Group’s financial statements for the following periods:
(€m) – excluding IFRS 16 | H1 2022 | H1 2023 |
Gross margin (as appearing in the accounts) | 363.3 | 384.3 |
Readjustment of the commissions and other adjustments | 57.6 | 61.8 |
Management Gross margin | 420.9 | 446.1 |
Direct costs of point of sales | -243.0 | -269.8 |
Retail margin | 177.9 | 176.3 |
Net financial debt
Net financial debt represents the net financial debt portion bearing interest. It corresponds to current and non-current financial debt, net of cash and cash equivalents and net of current bank overdrafts.
***
METHODOLOGY NOTE
Unless otherwise indicated, amounts are expressed in millions of euros and rounded to the first digit after the decimal point. In general, figures presented in this press release are rounded to the nearest full unit. As a result, the sum of rounded amounts may show non-material differences with the total as reported. Note that ratios and differences are calculated based on underlying amounts and not based on rounded amounts.
***
DISCLAIMER: FORWARD-LOOKING STATEMENTS
Certain information contained in this document includes projections and forecasts. These projections and forecasts are based on
This document has not been independently verified.
APPENDICES
Breakdown of DOS
Number of DOS | H1-22 | 2022 | Q1-23 | H1-23 | Q2-23 variation | H1-23 variation | |
By region | |||||||
462 | 460 | 456 | 463 | +7 | +3 | ||
EMEA | 394 | 395 | 391 | 399 | +8 | +4 | |
America | 167 | 166 | 164 | 167 | +3 | +1 | |
APAC | 251 | 259 | 305 | 301 | -4 | +42* | |
By brand | |||||||
Sandro | 546 | 551 | 569 | 575 | +6 | +24 | |
453 | 457 | 476 | 477 | +1 | +20 | ||
206 | 201 | 203 | 206 | +3 | +5 | ||
Suite 341 | 2 | 2 | - | - | - | -2 | |
Fursac | 67 | 69 | 68 | 72 | +4 | +3 | |
Total DOS | 1,274 | 1,280 | 1,316 | 1,330 | +14 | +50 |
* Including the stores operated in Retail in
Breakdown of POS
Number of POS | H1-22 | 2022 | Q1-23 | H1-23 | Q2-23 variation | H1-23 variation | |
By region | |||||||
463 | 461 | 457 | 464 | +7 | +3 | ||
EMEA | 542 | 552 | 505 | 520 | +15 | -32* | |
America | 195 | 198 | 196 | 200 | +4 | +2 | |
APAC | 470 | 472 | 477 | 474 | -3 | +2 | |
By brand | |||||||
Sandro | 742 | 752 | 733 | 744 | +11 | -8 | |
620 | 627 | 611 | 615 | +4 | -12 | ||
239 | 233 | 223 | 227 | +4 | -6 | ||
Suite 341 | 2 | 2 | - | - | - | -2 | |
Fursac | 67 | 69 | 68 | 72 | +4 | +3 | |
Total POS | 1,670 | 1,683 | 1,635 | 1,658 | +23 | -25 | |
o/w Partners POS | 396 | 403 | 319 | 328 | +9 | -75** |
*Including the closure by the local partner of the POS in
** Including the closure by the local partner of the POS in
CONSOLIDATED FINANCIAL STATEMENTS
INCOME STATEMENT (€m) | H1 2022 | H1 2023 |
Sales | 565.4 | 609.8 |
Adjusted EBITDA | 121.8 | 115.7 |
D&A | -76.7 | -79.4 |
Adjusted EBIT | 45.2 | 36.3 |
Allocation of LTIP | -3.2 | -3.5 |
EBIT | 42.0 | 32.8 |
Other non-recurring income and expenses | -0.8 | -0.9 |
Operating profit | 41.2 | 31.9 |
Financial result | -11.8 | -12.7 |
Profit before tax | 29.4 | 19.2 |
Income tax | -8.7 | -5.1 |
Net income - Group share | 20.7 | 14.0 |
BALANCE SHEET - ASSETS (€m) | As of | As of | |||
626.3 | 631.3 | ||||
Trademarks, other intangible & right-of-use assets | 1 128.5 | 1 116.9 | |||
Property, plant and equipment | 82.5 | 76.3 | |||
Non-current financial assets | 18.7 | 18.6 | |||
Deferred tax assets | 35.7 | 36.3 | |||
Non-current assets | 1 891.7 | 1 879.5 | |||
Inventories and work in progress | 291.6 | 278.1 | |||
Accounts receivables | 62.9 | 65.5 | |||
Other receivables | 61.4 | 86.7 | |||
Cash and cash equivalents | 73.3 | 33.8 | |||
Current assets | 489.2 | 464.1 | |||
Total assets | 2 380.9 | 2 343.6 | |||
BALANCE SHEET - EQUITY & LIABILITIES (€m) | As of | As of | |||
Total Equity | 1 172.1 | 1 191.6 | |||
Non-current lease liabilities | 302.9 | 295.5 | |||
Non-current financial debt | 261.9 | 84.4 | |||
Other financial liabilities | 0.1 | 0.2 | |||
Provisions and other non-current liabilities | 0.7 | 0.5 | |||
Net employee defined benefit liabilities | 4.2 | 4.5 | |||
Deferred tax liabilities | 169.2 | 176.5 | |||
Non-current liabilities | 739.0 | 561.6 | |||
Trade and other payables | 171.8 | 158.3 | |||
Current lease liabilities | 100.0 | 94.8 | |||
Bank overdrafts and short-term financial borrowings and debt | 104.2 | 255.2 | |||
Short-term provisions | 1.6 | 1.6 | |||
Other current liabilities | 92.2 | 80.5 | |||
Current liabilities | 469.8 | 590.4 | |||
Total Equity & Liabilities | 2 380.9 | 2 343.6 |
NET FINANCIAL DEBT (€m) | As of | As of |
Non-current financial debt & other financial liabilities | -262.0 | -84.5 |
Bank overdrafts and short-term financial liability | -104.2 | -255.2 |
Cash and cash equivalents | 73.3 | 33.8 |
Net financial debt | -292.9 | -306.0 |
adjusted EBITDA (excl. IFRS) – 12 months | 151.3 | 139.5 |
Net financial debt / adjusted EBITDA | 1,9x | 2.2x |
CASH FLOW STATEMENT (€m) | H1 2022 | H1 2023 |
Adjusted EBIT | 45.2 | 36.3 |
D&A | 76.7 | 79.4 |
Changes in working capital | -27.7 | -11.4 |
Income tax expense | -5.4 | -13.3 |
Net cash flow from operating activities | 88.8 | 91.0 |
Capital expenditure | -18.7 | -24.0 |
Others | - | -6.1 |
Net cash flow from investing activities | -18.7 | -30.1 |
-2.4 | - | |
Change in long-term borrowings and debt | - | - |
Change in short-term borrowings and debt | -74.1 | -73.0 |
Net interests paid | -6.8 | -9.0 |
Other financial income and expenses | 0.6 | -0.9 |
Reimbursement of rent lease | -59.8 | -65.3 |
Net cash flow from financing activities | -142.5 | -148.2 |
Net foreign exchange difference | 0.8 | -0.5 |
Change in net cash | -71.6 | -87.8 |
FCF (€m) | H1 2022 | H1 2023 |
Adjusted EBIT | 45.2 | 36.3 |
D&A | 76.7 | 79.4 |
Change in working capital | -27.7 | -11.4 |
Income tax | -5.4 | -13.3 |
Net cash flow from operating activities | 88.8 | 91.0 |
Capital expenditure (operating and financial) | -18.7 | -24.0 |
Reimbursement of rent lease | -59.8 | -65.3 |
Interest & Other financial | -6.2 | -9.9 |
Other & FX | 0.8 | -0.5 |
Free cash-flow | 4.9 | -8.7 |
ABOUT
CONTACTS
INVESTORS/PRESS | |
BRUNSWICK | |
Amélie Dernis | Hugues Boëton |
+33 (0) 1 55 80 51 00 | +33 (0) 1 53 96 83 83 |
amelie.dernis@smcp.com | smcp@brunswickgroup.com |
1 Organic growth | All references in this document to the “organic sales performance” refer to the performance of the Group at constant currency and scope
2
3 Net Income Group Share divided by the average number of ordinary shares as of
4 Net Income Group Share divided by the average number of common shares as of
5 Excluding IFRS 16
Attachment
- Press Release -
SMCP - 2023 H1 Results
© OMX, source