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SMCP’s results illustrate the success of affordable luxury segment in China

Sandro - timesquare hong kong

SMCP, the group behind French fashion brands Sandro, Maje and Claudie Pierlot, reported higher annual profits and sales, which its chief executive said was partly due to the allure of Parisian chic for Chinese customers.

“Our brands embody a Parisian chic, both aspirational and accessible, that seduces Chinese clients,” SMCP chief executive Daniel Lalonde told Reuters in an interview.

The French fashion group, controlled by China’s Shandong Ruyi, said 2016 earnings before interest, tax, depreciation and amortisation (EBITDA) rose 22 percent to €130 million ($140 million).

Sales rose by 16.4 percent to €787 million.

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SMCP operates in what analysts classify as the accessible luxury segment of the fashion market, and it aims to become a leader in the more affordable space.

Accessible luxury is benefiting from buoyant demand among a fast-growing middle class, particularly in countries such as China, where the group already has 70 stores.

The Sandro, Maje, and Claudine Pierlot labels sell dresses for between €150-250, and employ supply chain practices borrowed from retailers such as Zara and H&M.

SMCP’s solid 2016 results strike a contrast to rival luxury brand Michael Kors, which last month reported profit below market forecasts, raising concerns over Michael Kors’ efforts to reinvigorate its brand.

SMCP’s growth in its domestic French market also stood out, compared with the overall French fashion market, where sales have declined by 2.6 percent.

International sales, which now account for 54 percent of SMCP’s global turnover, rose by 24 percent.

SMCP, which opened 105 new stores in 2016, plans to open 100-125 more shops this year in major cities around the world.