China crossroads: SMCP invests there, Steve Madden would leave it

China crossroads: SMCP invests there, Steve Madden would leave it

China turns out to be the crossroads of brands’ strategies, for better or for worse. SMCP is invest there to take the playground and augment sales. Conversely, Steve Madden is disinvesting to go away and subsequently relocate its supply chain somewhere else.

SMCP invests there

SMCP comparable sales in China increased by 30% in the third quarter of the year. The French group (controlled by Chinese Shandong Ruyi) is planning to make some investments aiming to redouble earnings in the Asia-Pacific area. According to their plans, takings will supposedly increase from 25% up to 50% of the overall turnover within 2025 (source MF Fashion). Back to quarterly financial statements, SMCP revenues amounted to 248.4 million euros, therefore dropping by 10.6% at fixed rates of exchange and decreasing by 9.5% at current rates of exchange. Online sales went up by 27.6%. Talking about brands, at fixed rates of exchange, Sandro made -11.8%, while Maje down 7.7%; Claudie Pierlot and De Fursac together made -15.4%. In the first nine months of the year, the group’s sales decreased by 25.8%, at fixed rates of exchange. “Our performance in the third quarter proved quite comforting” anyway, commented Daniel Lalonde, Chief Executive Officer of SMCP, who recommended prudence for the future.

Steve Madden does not

The present pandemic has been hindering Steve Madden’s plans to go away from China. Just for the time being though: in fact, the company still aims to leave starting from next spring.

However, the brand’s made in China share has already decreased: two years ago, provisions coming from China accounted for 90% of the total amount; today they account for around 60%. Shoes will arrive, rather than from China, from Mexico, Cambodia, Brazil and Vietnam. Steve Madden announced that sales have dropped, in the third quarter of the year, by 30.9%, down to 346.9 million dollars. They therefore went beyond expectations, reported by Footwear News, which were about 329.3 million dollars.

Adjusted income reached 39 cents per share, compared to 67 cents per share last year. Likewise, things have gone better than expected, as estimates were 21 cents per share. In the first nine months of 2020, sales have been decreasing by 38%.

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