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Etam shows how to work Europe and China with strong Q2 sales, but 1.2.3 brand suffers misstep

With businesses spanning Europe and China, French womenswear retailer Etam Développement showed Thursday how to be a success in two pretty tough camps – outperforming the domestic market and notching up even better results in China, where a period of consolidation looks to be paying off handsomely.

The lingerie and casualwear retailer saw a double-digit sales rise for Q2 and with first half figures released at the same time, it’s clear that the second quarter has seen the firm’s business gaining pace.

And China looks to be an even sweeter spot because, tough though that market may be at the moment, it’s largely high-end brands that have been suffering the most as wealthy shoppers either rein-in their spending or buy their designer labels in Europe. Less affluent shoppers don’t have that option and, fortunately for Etam, they seem to have been won over by its much more affordable offer.

So what does all that mean in numbers? In its Q2 (to June 30), total sales rose an impressive 10.1% to €299.3m, as same-store sales rose 4% currency-neutral. The company even said it saw a positive currency effect of €17.6m for the quarter – a refreshing change from the succession of companies being hurt badly by currency issues at the moment.

For H1, sales were up 7.8% to €645.3m with comps rising 2.3%.

In Europe, quarterly sales rose 5.4% to €213.3m with comps rising 4% currency-neutral, while H1 sales were up 4% to €428.2m, with those comps rising 2.8%.

Etam said in H1 its signature and Undiz brands “achieved a good sales performance thanks to the product, the shopping experience, the store concepts and the successful rollout of the multi-channel strategy”.

OK, the news wasn’t all good, as the retailer admitted its fashion brand 1.2.3’s spring/summer collections “suffered from the lack of attractiveness” and saw a “significant drop in store footfall”.

But that didn’t dent the overall upbeat tone as the company said that in France, Etam it outperformed a market very weak market.

But it’s China where we got the best news: Q2 net sales jumped 24% to €86m. Nobody can complain about figures like that and even though much of it came from new stores, comp sales still managed to rise a respectable 4.1% currency-neutral, on the back of better inventory management and restocking.

H1 net sales lifted 16.3% to €217.1m, including a positive currency effect of €38.3m due to the appreciation of the yuan against euro. Currency-neutral comps increased 0.9%.

In China, 119 “unprofitable” units were closed in department stores and seven stores opened in shopping centres during H1.

New stores included Mexico and in Chile for Etam, and Undiz in Saudi Arabia. In addition, 1.2.3 began opening new stores in France and in Switzerland.

The group operates 4,023 points of sales with 945 in Europe, 2,823 in China and a further 255 international franchisees.

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