SMCP SA

PAR:SMCP

Earnings Call Transcript

[Operator]

Hello, and welcome to the H1 sales call. My name is Rosie, and I'll be your coordinator for today's event. Please note, this call is being recorded. [Operator Instructions] I will now hand you over to Mathilde Magnan, Head of Investor Relations, to begin today's conference. Thank you.

[Mathilde Magnan]

Thank you. Good morning, everyone. This is Mathilde Magnan, Head of Investor Relations speaking. Thanks for being with us today for SMCP H1 sales. I'm here with our CEO, Daniel Lalonde; and CFO, Patricia Despointes. As usual, we'll go through the presentation, and then we'll have the Q&A session. Before I hand it over to Daniel and Patricia, I invite you to go through our usual disclaimer on Page 2. And I think we can start now.

[Daniel A. Lalonde, Founder, CEO & Director]

Yes. Thank you, Mathilde, and good morning, everyone. Thank you all for joining us this morning. I'll begin with a quick overview of Q2 2021, and Patricia will detail our sales performance by region, and I will briefly conclude. So if you turn to the first slide. In the second quarter, we achieved sales of EUR 229.4 million, up 61.1% on an organic basis and that was minus 14% reported, versus 2019. We share a couple of key messages on the quarter performance. First, on a global basis, we see the confirmation of a progressive catch up versus 2019, which is very positive, taking into account the store restriction measures in all regions. In Mainland China, the performance remains very strong, both in brick-and-mortar and digital, including plus 22% of growth versus 2019. In the U.S., the momentum observed in Q1 has been confirmed, going from strength to strength. Sales are back to pre-pandemic level, reaching 11.3% on organic sales basis versus 2019. In France, we completed a very successful store reopening since May 19, reaching 33.7% growth versus 2020 with a very similar base of comparisons. And a very good performance supported by loyal local customers, very excited to be back in our stores. And the EMEA region recorded a strong growth despite store closures in key countries and a very low tourism. On digital, the group achieved a penetration of 25% of sales in Q2 with again impressive figures in absolute value, normalizing in percentage of sales due to the full reopening of our physical stores. Regarding network, as planned, we continued our brick-and-mortar network optimization plan with minus 15 -- minus 19 DOS in the first semester. In France, we closed 25 stores, mainly very small stores, again, located in small cities and not in concept and including 14 stores under the Suite 341, which is, again, as you know, no longer strategic for the company. On the other hand, we continued our expansion in APAC with plus 14 stores over the semester, of which 11 were in China. To conclude, all regions contributed to this continued sequential growth over the quarter. Very good results considering the store closures, restrictions, low tourism and less promotional sales. Our teams are committed to the execution of our One Journey strategic plan that we presented last year. And in this context, the group made solid progress on its strategy to improve full-price sales, a question we often get asked. As an example, this quarter, we deliberately decided to remove or to stop a former traditional commercial operation in Europe called the Summer Party. In this way we managed to meaningfully decrease our discount rate in all regions, both in brick-and-mortar and digital. Now I wanted to share with you some brand initiatives on Q2, illustrating our One Journey implementation. On Slide 5, as you probably saw, Maje has launched the first rental service of the group on [ June 10 ]. The project is central to our strategy since it combines Echo responsibility with our service culture mindset. As an extension of Maje's Dream Tomorrow approach, we wanted to offer a new online service, allowing our customers to change their style whenever they want and indulge themselves for every occasion. This service brings back to live some of the most beautiful pieces of our old collection and includes a selection from the new ones, an offer that is 100% ceremony. From EUR 20 a day, customers can rent dresses, suits and accessories for a few days. Through our new rental platform, where we guarantee an eco-friendly service from cleaning to delivery. Our rental service has been launched in France and online exclusively. A 360 activation has been implemented to promote this new service, including a pop-up store in the famous Parisian department store in the Galeries Lafayette Haussmann. And our clients are very, very enthusiastic and results are promising. So we're very, very proud of this initiative. This innovative digital service, strengthening our brand desirability, targeting a new category while spreading a suitable and sustainable message to be engaged. On Page 6, some other initiatives on sustainability. First one, Sandro with Yuko Nishikawa, times One Tree Planted. In Q1, we presented the artistic collaboration with Yuko Nishikawa, the Japanese artist based in New York who designed for Sandro, sustainable recycled paper mache mobile sculptures. Sandro and Yuko decided to go further in Q2, from April 2021 in North America, Sandro offered these sculptures for sale in partnership with a selected website specializing in art. And all profits will be donated to One Tree Planted, an environmental charity committed to environmental conservation. This summer, Maje is bringing the Sun with 100% organic GOTS capsule collection called High Summer, a colorful take on the classic loose-fitting floral dresses. All the pieces are made of 100% GOTS certified cotton. These vibes of Maje this summer are light and responsible. And finally, Claudie Pierlot has gone further on its strategy, reaching a summer over half of the ready-to-wear designs, and more than 1/3 of the accessories marked Claudie Cares. It means that pieces are made of the certified eco-friendly fabric or that the be manufacturing process is more environmentally friendly than traditional processes with Denim that consumes less water, organic cotton shirts, responsible world standards, certified wool, et cetera, et cetera. If I go to page -- Slide 7. Here, you'll see a few innovative and creative collaborations and capsules, done in Q2 by our brands. Sandro with Smiley. Sandro is once again partnering with a pop-up culture icon for a capsule collection a symbol of optimism and positivity. The smiley is extended in multicolored print pieces that are perfectly embodied with Smiley's spirit between freedom and happiness. Claudie Pierlot with Voltaire, a French-made electric bike brand, taking an ever more committed and bold approach. Claudie Pierlot has teamed up with cycles Voltaire for a photo shoot. They've also shared a pop-up in London for the reopening of Harrods, a famous luxury department store. And last this summer, Fursac was inspired by the French Riviera. The Côte d’Azur reserves a special kind of beauty for the gaze of an American camera. Fursac's latest collection in capsule pays homage to the iconic film Bonjour Tristesse, exploring a vivid and typically French palette and an American inspired style. So these initiatives add desirability to our collections and enable us to speak to our audiences in a more intimate way, giving the opportunity to surprise, to seduce our community and to enhance customer service. And the results are very promising, boosting sales, driving traffic and new customers as well. On Page 8, our brands have also implemented new creative initiatives, engaging millennials in China. You'll find some examples here. Maje collaborated with Tmall Hey Box to promote its the Ibiza Capsule during the Tmall anniversary event. Hay Box is an online event that Tmall offers to a selected brand to promote new innovative products, a very efficient collaboration, which boosted traffic on our Maje Tmall flagship website. More than 100,000 additional unique visitors during this promotion. Sandro, Maje and Claudie Pierlot have also worked on the second biggest sales events in Tmall after 11/11, called 6.18 Shopping Festival. We have launched the making of over 260 product short videos, generating plus 30% in additional traffic and Sandro has worked on a Timeless Dress Campaign with a famous KOL, increasing the sales of dresses category by 15% versus last year. Maje and Claudie Pierlot have also worked on with KOLs, like Jing Tian, Chinese actress chosen by Maje, as brand ambassador for the spring/summer collection, who has a follower base of 24 million people on Weibo. And Wong Fei Fei, a Chinese singer and actress dressed in the spring/summer collection, followed by more than 8 million people on Weibo and this is for Claudie Pierlot.So these key initiatives illustrate our strategy to invest in APAC and particularly in China to benefit from the latest growing region of the group with further digital boost. Turning to Slide 9. We also opened new flagships with unique store experiences in Paris. On May 19, Sandro reopened its flagship on the prestigious Rue Saint-Honoré in Paris. This new concept inaugurates a new architectural concept with eco-responsible materials designed to offer new warm and artistic experience with an exclusive and premium sales ceremony, hitting cash desks, exclusive packaging and gifts. For this new showcase, Sandro collaborated with the artist, Stephen Ormandy, who lives and works in Sydney, Australia. The paintings and sculptures of the artists are honored, the shapes and color of these works are poetic in the women's -- and integrated in the women's and men's collection. It's also inspired the first Instagram filter of the brand, creating engaged interaction with new generation clients and a new Maje flagship opened its store in Etienne Marcel district, first arrondissement of Paris, offering a vibrant shopping experience, its new signature design concept. The 2 floors displayed from temporary architecture and a selection of vintage furniture coexists just like the new collection for this opening, Maje rental collection showed up in July on the second level of the store. On Slide 10, here you can see some meaningful store openings we did in APAC over the quarter. Very pleased to announce the opening of our new stores in April, both Sandro and Maje, in Kuala Lumpur, KLCC in Malaysia, one of the newest -- our newest country of the group. In Shanghai, Claudie Pierlot opened a new flagship in Grand Gateway, a new concept, new energy, new architecture, Claudie Pierlot has unveiled a new store with an eco-friendly design approach and a fresh new architectural concept, both audacious and yet at the same time, elegant. This new design celebrates the sense of Parisian Folie Douce so dear to the brand in its own unique way. Sandro and Maje have also opened their stores in Hainan Island in Sanya in the Duty Free mall. The introduction of these brands in Hainan follows the travel retail launch of Sandro and Maje in Mainland China airports last year. As we opened also -- and we also opened a store in Shenzhen, a beautiful Maje door in the Hay Avenue shopping center. All these beautiful things openings, again, we wanted to illustrate our expansion strategy in this key region. Now let's move to Page 11, Slide 11, illustrating other tailored expansion strategies and approaches located in Europe and the Americas. First, Fursac continued its European expansion and opened its first store in Belgium on the famous Avenue Louise area. In North America, Maje opened a store at The Grove in Los Angeles. The brand is thrilled to have launched a store boutique at The Grove, which offers a vibrant outdoor shopping experience for luxury customers. The space features the brand's signature design concept with a focus on sustainable design elements, a key pillar for the brand. Then as you probably know, the famous department store, La Samaritaine created in 1870 reopened in June. We can currently open Sandro, Maje and Claudie Pierlot in this very prestigious location, with strong initial results. And last, Slide 12. As part of a One Journey plan and to complete the customer experience, we've continued to roll out our omnichannel services such as click and collect, e-reservations, store-to-web, and launched last year a fourth omnichannel service called ship-from-store which, in my view, is the most important one. This service unifies our store and warehouse inventories to offer the right products at the right time and in the right place. After successful French rollout last year, we deployed this service in Q2 in new countries in Europe, such as the U.K., Germany and Spain and Italy and more to come. So now I'll turn it over to Patricia, who will take you through the H1 sales performance and Q2 sales by geography in greater detail.

[Patricia Huyghues Despointes, Group Chief Financial Officer]

Thank you, Daniel. Good morning, everyone. So moving on to Slide 14 to get an overview of our solid H1 performance. In H1 '21, our sales growth was up plus 23.3% organic, driven by like-for-like and minus 16% reported versus 2019. The sequential improvement in all regions despite store closures and restrictions, especially in Europe, low traffic and tourism. By region, France and APAC represents, each, 31% of sales, EMEA, 25%, and America 13%. It's the first semester in the history of the group with APAC above 30% of sales. By brand, Sandro 47% of sales, followed by Maje, 40%, and other brands with 13%. E-commerce reached almost 28% of the total sales over the first semester. So now on Slide 15, let me highlight some key messages on Q2 performance by region. In France sales were up plus 33.7% organic, a very good performance versus last year considering that. First of all, we had similar conditions in terms of store closures and restrictions due to the pandemic. And then we had less promotional sales. We decided, for example, to remove the summer party event and form a traditional promotional events in Europe. Now if you compared with 2019, sales were down minus 28%, we would say only considering 3 key points: First, the closure of the entire network for half of the quarter; second, a less promotional environment, no summer party, as already mentioned, and also the delay of summer sales, 13th of June this year versus mid-June in 2019; and finally, a low touristic traffic. Over the semester, we continued our brick-and-mortar network optimization plan, and we are in line with our 2021 yearly strategy. In EMEA, we delivered a strong growth of plus 48.9% organic, so nearly doubling sales, a very solid performance considering the restrictive measures we faced in the first part of the quarter. If we compare with 2019, sales were down minus 16% from an impact of store closures over the quarter in key countries like U.K., Germany or Belgium, the voluntary cancellation of promotional events and the loss of tourism related sales. To be noted, the excellent performance of Russia, above 2019. To conclude on these 2 regions and considering all the pandemic impacts, we consider that we delivered a strong performance. Now turning to Slide 16. In APAC, we delivered a very solid growth of plus 33.2% organic, driven by strong double-digit like-for-like. Revenues are above 2019, despite some pandemic headwinds in key cities in Mainland China, some key cities had store closures and restrictions, for example, Shenzhen, Guangzhou, or Shenyang and also in Taiwan, Singapore and Malaysia. Despite those restrictions, Mainland China's performance remained strongly positive, which is plus 22% versus '19 and supported by double-digit like-for-like growth, both in brick-and-mortar and in digital. Another successful market in APAC, South Korea, back to the level of 2019. And finally, over the semester, we continued the network expansion plan with plus 14 DOS of which plus 11 in Mainland China. Now let's talk about Americas, where sales more than tripled versus last year, supported by triple digit like-for-like growth. While Canada was still impacted by store closures and restrictive measures to contain the pandemic, the momentum observed in the first quarter in the United States has been confirmed. With sales exceeding prepandemic level at plus 11% organic. I will now hand over to Daniel for a brief summary.

[Daniel A. Lalonde, Founder, CEO & Director]

Yes. Thank you, Patricia. Listen, in summary, everyone. We recorded, again, a strong momentum in Q2 in all regions, reaching a 61% growth on an organic basis. with APAC in the U.S. above pre-pandemic levels. We've made solid progress on our full-price strategy, which is super important, delivering a meaningful reduction in promotion sales share. Our teams pursue the execution of our One Journey road map very strongly in H1 with strong creative and disruptive brand initiatives. It's why we took a little time to present some of them. The continued successful rollout of our omnichannel services such as ship-from-store, selective, impactful stores, store openings in Europe and North America and the continued digital expansion in APAC. So thanks for your attention. I think we can now take some questions.

[Patricia Huyghues Despointes, Group Chief Financial Officer]

Thank you, Daniel. Operator, I think we have 1 question.

[Operator]

[Operator Instructions] Our first question comes from the line of David Da Maia from CIC.

[David Da Maia, Research Analyst]

So 3 questions for me, please. Two on your performance in the French market and one on markdown policy. So starting with the French market. So I understood the delay of the sales period and the consolidation of the summer party have weighted on your performance in Q2. But can you quantify the negative impact? For example, is it fair to assume that the decrease of your sales versus 2019 would have been close to Q1 if we exclude this negative impact from your reduced promotional activity? The second question on exit rate in France. If we look at the data from institutions like IFM or organizations like [indiscernible] they suggest that the French apparel market was close to or even slightly above 2019 level in June for the first time this year. maybe thanks to strong pent-up demand following reopening. So have you recorded similar improving trends in June or more recently in July with sales now above 2019 levels in France. And the last one on markdown. You said that you have significantly reduced your promotional activity in H1. Can you give us an update on the level of your discount rate? And the share of full price sales compared to last year or even 2019? And what would be the impact of your full price strategy on your gross margin this semester?

[Daniel A. Lalonde, Founder, CEO & Director]

Yes. Thank you, David. Those are very specific and detailed questions, fine on the French market. Maybe I'll let Patricia get back to you or answer the 3 of them. I just wanted to say maybe in response to your third question on markdown. As you know, it's a big part of our strategy going forward. It's one that was -- that we put in place in 2019, just prepandemic. We've made some really good progress, as we mentioned in the talk this morning. over like Patricia decided if she gets very specific on what the decrease in markdown rate that we've had, but it's anywhere in the 400 basis points range in the in H1. But we've -- I think what I wanted to say is we've taken a very deliberate effort to look at all the promotional cadence in a typical year and then decided on a global basis to remove them, very selective ones. The market is still -- the best promotional markets, we've made some meaningful decreases in discount rate in the Asian market, which still is the lowest one as well. So it's a real strong objective of ours, and I was really happy and very pleased with the performance in H1. Patricia, maybe I'll let you comment on the other 2 questions.

[Patricia Huyghues Despointes, Group Chief Financial Officer]

Yes. Okay, Daniel. David, thank you for your question. So regarding France, First point to confirm to you that we are in line with the typically IFM panel that you mentioned in June, so reflecting the sequential improvement month by month over the quarter. Second, regarding the summer party and the delay of sales, I would say that those 2 effects combined account for EUR 5 million to EUR 10 million of sales. So yes, it has a meaningful impact on the quarter. But once again, we completely accept this impact since it's better for gross margin and image.

[David Da Maia, Research Analyst]

Can just -- the impact in terms of millions of euro sales. Sorry...

[Patricia Huyghues Despointes, Group Chief Financial Officer]

I said EUR 5 million to EUR 10 million. Okay? I think Daniel answered to you about the discount rate. So I confirm that we -- over the semester, we reduced the discount rate by 4 percentage points. So we are very happy about that since we now normalize the level of discount rate at circa 30%. And we are very happy about that because it's visible in all the channels, brick-and-mortar and digital in all geographies, Americas, Asia and Europe and also for all the brands. So this is for sure something very positive for the group. We will give you additional details and impact on gross margin rate early September during the H1 results call.

[Operator]

So the next question comes from the line of Kathryn Parker from Jefferies.

[Kathryn Parker, Equity Analyst]

And so I've got two. My first question is on the store network. So I just wondered if you could make some comments on what you think the net store opening pipeline will look like for the second half. I was positively surprised by the 25 net openings. So I wondered if you perhaps want to increase your guidance from what you said for the full year? And then my second question is on the Maje rental service. And how you would measure success of that initiative whether it's sales or volumes or perception, which you perceive as most important. And a follow-up to that is, would you consider launching a subscription service rather than one-off rentals? And then third follow-up is for rental, which would be your next target market, would it be the U.S. or maybe the U.K.

[Daniel A. Lalonde, Founder, CEO & Director]

Okay. Kathryn, thank you. Thank you. Maybe I'll take your questions 2 and 3 very briefly. I'll let Patricia give some comments on the store network in H2. Just a quick line on the store network, we have -- as planned this year, we're finishing up. I'll give you a little context on the physical store network. We're finishing up. This is the last year of the French optimization plan. It's program that we put in place roughly 18 months ago in order to optimize our brick-and-mortar network in France. We had a lot of stores, as you know, and they were in some very, very small locations. And simply, that was done in the past. They were all profitable, but we decided to really use them. I guess, crises in some senses are just right before it as well. We have decided just to look at it as we were starting from white piece of paper on how to optimize distribution in France. So that was set as this year. Maje rental, a couple of things. So there is four things that are important for me in this service. So we wanted to take baby steps because, as you know, we've done it all ourselves. So it's -- you go on the website and it's navigation button of the website to get to Maje rental, et cetera. So it was a very strong customer experience. I look at three -- four things. I look at sales, obviously. The acquisition of new customers. Brand desirability by proposing a sustainability concept, and it has to be profitable. I'm not looking for it to be initially profit accretive, but certainly profitable. So those are the things that we were looking at when we launched it. Subscription basis, we decided -- Maje decided to go another way to make it very, very simple. You have 3 or 4 levels of pricing for 2 or 3 days rentals. And we may look into subscriptions a little bit later. In terms of rolling out, the markets were already present today in North America, with Rent the Runway. So that's more of a partner, but we will roll out this Maje-owned rental, if you will, in a couple of key markets, probably next year. I want to give it a little bit more legs and see how it goes until the end of the year. And we're also -- we'll announce this in the future, also working on some resale concepts that we can appropriate ourselves in the future. Well, Patricia, maybe I'll let you say a few words on the store network, H2 in France.

[Patricia Huyghues Despointes, Group Chief Financial Officer]

Yes, Daniel. So as we already mentioned, in France, we closed around 25 stores in H1 and should be about the same number in H2. And by the end of the year, we will have completed our French network optimization. So H2 should be similar to H1, mainly concentrated in Q3, basically due to end of contracts.

[Operator]

The next question comes from the line of [ Charles Krestell ] from [ Aleze ].

[Unknown Analyst]

I would have 2. One is for Patricia. Could you give us a picture on the level of temporary closures in Europe over the second quarter? And maybe one with Daniel, which was partially answered just now on the network, do you consider restarting new openings outside APAC? And when would you expect some visibility to do so?

[Daniel A. Lalonde, Founder, CEO & Director]

All right. Patricia, I'll let you start.

[Patricia Huyghues Despointes, Group Chief Financial Officer]

Yes. So I think we have to look area by area because these are very specific situations. So in France, the basis of comparison was very similar to Q2 2020 with the health of the network closed from early April to 19th of May for the reopening. In Europe, let's say, it's about 10%, 15% of store closures or store impacts, can be closures, can be limited attendance in the stores. In APAC, it was from time to time, a few days in Mainland China. I listed some countries, there are some others, difficult to say a percentage, it's marginally a few points. And in Americas, nothing special in the U.S. But in Canada, Ontario region was closed nearly all the quarter. So let's say, it accounts for probably around 10% of closure in Americas over the quarter.

[Daniel A. Lalonde, Founder, CEO & Director]

Thank you very much. All right. And listen, on the network, I can say a few things on the brick-and-mortar network. So it's in a typical year this year because if you aggregate all the numbers, we complete the French network. So I'd have to take that out for now. The French network, as Patricia mentioned, will probably close on a net basis. So you see we've opened some beautiful new stores as well. So we're not disinvesting from France. We're optimizing the network. I think that's super important. But maybe 50, 55 stores this year will come out of the network in France. Then it will be more stable going forward, and that our objective clearly is continue to gain market share and like-for-like growth in France. In the other regions, APAC, primarily China. So we continue to open -- to run our digital strategy in that region, both online and offline for probably 15 to 20 stores -- new stores in the region this year, but most of them being in China. And we will continue on this pace and maybe increase it over the next years as well. But also increasing digital as well. Digital, not only organic sites, but also potentially opening new websites -- new e-commerce websites in the APAC region. In North America and Europe, our approach is, again, very to be selective on brick-and-mortar. There will be some store openings. I mentioned the Grove in L.A., which is a fabulous, fabulous mall. It's hard -- you can't get in. It's hard to get in. So we're very proud that Maje opened up. So there are some opportunities in North America, but the network will stay relatively stable over time. And in Europe, we still have some areas where we're not present, some markets, like in Portugal, some Eastern European countries as well, which are interesting and even some existing countries like Germany, where we have 57 stores among 3 brands. So still have some areas to open up our store network, but more selective, obviously, in Europe and even more selective in North America going forward.

[Operator]

The next question comes from the line of Geoffroy Michalet from ODDO BHF.

[Geoffroy Michalet, Research Analyst]

The first one has to do with the like-for-like growth. Could you give us some hints on the global level of like-for-like and especially versus 2019. The second question has to do with your analysis of the recent share price performance or shall I say, underperformance, especially in the context where we have no real bad surprises in terms of the operational performance, which is great or at least in line with consensus. And thirdly, maybe could you give us just a few words on the controversy for the [ vigors ] work in some regions that you denied to be involved in.

[Daniel A. Lalonde, Founder, CEO & Director]

Sure. Thank you, Geoffroy. Listen, again, maybe I'll take question 2 and 3 and let Patricia give you some details on like-for-like question. So share price, that's going to be an easy one. I'm -- my job is mainly on the second part, you said, the operational side, to make sure that the business is healthy, is strong, it's got legs for the future and that we're working on the right subjects and that we're investing in the right areas, which I'm convinced we are and that there's plenty of -- still of growth, profitable growth to be had in our plans. So that's been my focus, and that's the focus of the team -- the teams all the time. I don't really have any insights into the ups and downs of the share price underperformance. But you can say a few months ago, there was a big rally as well in the share. So it's hard for me to pinpoint a specific elements. There has been, as you know, in the overall market in the past week or so, there's been some sell-off in different sectors. So I think obviously, we -- there were some cyclical and some stock market overall trends that we were part of. But again, my focus has been on running a great company, a great company for the future. On the vigors, I guess, on the claim, you're asking about clarity on the claim. Well, listen, the claim was filed, as you know, on April 9. And we have made many statements in the press and people who feature this article, et cetera, internally as well, saying that we just simply deny all these accusations. We're very, very shocked. I was surprised, very surprised to read that. We will cooperate with the investigation because we have to, of course, and we'll play a good guy. We're already preparing any documents available. And again, we steadfastly just deny any accusations. We -- I was really shocked because I think we're a good guy on all this. We have a strong supplier code of conduct that's been in place for quite some time. We ask every supplier to tie it. Some have not, and we stopped working with them. We do audits as well. We audit our supplier base since 2017, both environmental audit and social audits. Some of them we have to pass the test. Some of them who haven't, we've stopped working with in the past. Our sourcing is also very independent, 100% independent of our majority shareholder, Shandong Ruyi. And we don't produce at all. We have never produced in the Xinjiang region ever in the history of our company. So these are just a couple of things I wanted to put forth to say that we were really, really surprised, and we deny the accusations 100%, and we'll just comply.

[Patricia Huyghues Despointes, Group Chief Financial Officer]

Regarding your question on like-for-like, Geoffroy, it's a tricky exercise to calculate like-for-like year when many stores are closing, and we think it's not the ideal year to talk about like-for-like. That being said, we would say that like-for-like versus '19 or '20 is not very different from the performance we display at constant rate. And this is also part of our strategy to have most of the evolution coming from like-for-like. And this is what's happening in 2021.

[Operator]

Our next question comes from the line of Marie-Line Fort from SG.

[Marie-Line Fort]

I've got 2 just to complete answers you've got already provided the network expansion. Could you give us some level of CapEx you projected for 2021? And also a quick comment on your online penetration? Because if I'm right, your penetration decreased slightly in Q2 compared to Q1. Do you have any reasons for that?

[Daniel A. Lalonde, Founder, CEO & Director]

Thank you, Marie-Line. Patricia, maybe I'll let you take those questions, if you like.

[Patricia Huyghues Despointes, Group Chief Financial Officer]

Yes. Maybe the first one on online penetration. Marie-Line, Q1 was a little bit distorted in some areas due to the closures of some stores. When you compare 1 area in 2021 versus 2020, with the opening/closures of stores, it makes figures distorted in Q2, just because we reopened our physical stores. What we see is that our customers, yes, they continue purchasing online, and they like this, but they are also very happy to get back to the physical stores. So we think it's just some normalization of this ratio. This is why it's decreasing a little bit compared to Q1. However, it remains at a very high level of 25% which is in the history of SMCP, a very strong level. So this is for online penetration. And CapEx, I think we'll discuss this more in detail early September at the call regarding results and cash position.

[Operator]

We have one final question, so this comes from the line of [ Clara Dexter ] from [ Apache Investors ].

[Unknown Analyst]

Just a quick question for me. So from what I understand, there could potentially be a change in ownership in September. Could you discuss the potential implications on the operations of the business. So how integrated is Ruyi with the SMCP story. For example, are they important to your supply chain?

[Daniel A. Lalonde, Founder, CEO & Director]

Yes, sure. That's a precise question. So listen, I think I'd say that the context, if you look at the context from our initial relationship with Ruyi, it was in 2016, I was there. In fact, I met them at the end of '15. The premise was always they would come on board as a strategic investor, i.e., more just an overall investor, but not involved in the operations. And it's been the case ever since. So we've been running our operations, I'd say, independently really even in China as well. We know the market. We simply have an executive team that knows the market very well, the landlords, et cetera. We ask for their help if and when needed, but we've run the company fairly autonomously. And from the sourcing point of view, we have no sourcing. We have -- first of all, our sourcing strategy is separate that of Ruyi, and we don't use them. We don't source from Ruyi at this point in time. So it's never been part of our approach on [indiscernible] with our majority shareholder. We've run the business independently as well on the financing side. We've got our own funding programs with our key banks in Europe, which is independent of that than Ruyi. So that's been the hypothesis and the way we run the business, if you will, from '16 -- from 2016.

[Mathilde Magnan]

Thank you very much. I think we are done with the questions. So I wish you a nice day. The next publication will happen in September for our H1 results. So thank you very much.

[Daniel A. Lalonde, Founder, CEO & Director]

Thank you, everyone. Wish you a nice day.

[Patricia Huyghues Despointes, Group Chief Financial Officer]

Thank you.

[Operator]

Thank you, everyone, for joining today's conference. You may now disconnect. Thank you.