MILAN — Moncler chairman and chief executive officer Remo Ruffini believes 2021 will be a year “of rebirth and fresh energy,” as well as “of great work and zest for new projects.”
The year has certainly started well, with China, Korea and North America lifting Moncler revenues up 18 percent to 365.5 million euros in the three months ended March 31, compared with 310.1 million euros in the same period of 2020. At constant exchange rates, sales rose 21 percent. Compared to the first quarter of 2019, sales dropped 3 percent.
At the end of March, Moncler finalized the acquisition of the Stone Island label and Ruffini underscored the “bold plans to develop the group, all with a clear goal in mind: to enhance our brands’ identities, honor their uniqueness and, at the same time, build a solid framework to support their evolution and future development.” Stone Island revenues will be consolidated in the second quarter.
During a conference call on Thursday evening to comment on the first-quarter results, Luciano Santel, chief corporate and supply officer, reiterated the company’s commitment to the Moncler brand’s identity because, while he said that the performance in the period was above expectations, analysts grilled him on product mix and comparisons with other major luxury groups reporting their numbers for the quarter.
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“We compare our business with ours. From a product point of view, honestly I don’t see a big competition,” said Santel, underscoring that other brands are less linked to seasonality and that Moncler is highly exposed to Europe, which in the first quarter represented 31 percent of the total. The continent for “big brands usually represents around 14, 15 percent, so the weight of Europe impacts results. It’s not the product mix, but the geography mix that makes the difference.”
In any case, he underscored, “we want to maintain our roots in outerwear, in the mountains while implementing other categories, and we are looking at the long term. The brand is strong everywhere, even in Europe. When stores were open, we saw traffic because the brand is strong and we did not see a deceleration of business in the first quarter,” said Santel.
The executive emphasized Moncler’s ongoing development of other categories, such as knitwear, cut-and-sew and shoes, which are “growing nicely, better than outerwear,” and that, although their selling price is lower, “strategically this is a very good sign.”
Analysts did not name any brand, but Gucci, for example, earlier this week posted a 24.6 percent gain in organic growth and on Thursday Hermès reported a 44 percent jump in revenues.
Ruffini generally does not participate in the calls for the quarter, and in his statement issued with the figures, he said that the three-month performance, “broadly in line with the first quarter of 2019, is a very good result.” He admitted there was “still a lot to be done. The coming months will be crucial for the many projects that we are working on right now. As I told our store managers at the Digital Summit a few weeks ago: we should not stop being proactive; we must continue to learn and evolve. Our customers — wherever they are, and whether they meet us in a physical or digital space — expect an ever-changing, unique and exciting experience. Our products caught them yesterday, but it is the relationship we strengthen today that will allow us to continue to engage with them tomorrow, around the world and across every touch point.”
Santel said that January was “very good and much stronger than February and March,” and that the second quarter “started pretty well, but it’s a small quarter for Moncler although it has been growing in the past couple of years, it was loss-making and now it’s turning a profit.”
In the first quarter, sales in Asia climbed 49 percent to 198.1 million euros, accounting for 54.2 percent of the total, with a positive contribution from all three regions: Asia Pacific, Korea and Japan. APAC almost doubled its revenues in the first quarter of 2021 due to exceptional growth in the Chinese mainland and positive performance in the other main markets, Hong Kong SAR, Macau SAR and Taiwan.
Korea also recorded exceptional results as it has been less impacted by measures to contain the pandemic while benefiting from strong brand momentum, said Paola Durante, strategic planning, intelligence and IR director.
Japan saw a positive performance in the first quarter despite the decrease in traffic linked to COVID-19 restrictions. “There was no deceleration in China, and the first quarter was in line with first quarter of 2019,” she said.
After a recent opening in Ningbo, two other stores are scheduled for the year in China, including one in Chengdu, but Santel underscored that Moncler is “not changing its very selective strategy.”
Globally, the company plans to open 15 stores in 2021.
In the Europe, Middle East and Africa region, excluding Italy, sales decreased 16 percent in the quarter, representing 23.2 percent of the total, impacted by the restrictions imposed by the various national governments to contain the pandemic and by limited tourist flows, while local demand continued to grow. France and the United Kingdom were most impacted by the restrictive measures. Russia, Spain, Germany and Scandinavia performed well, said Durante. In June, Moncler plans to internalize its online business in Europe.
Italy registered a 16 percent decline in the quarter to 29 million euros, representing 8 percent of the total.
Revenues in the Americas were up 28 percent to 53.4 million euros, showing growth across all channels and accounting for 14.6 percent of the total. Santel said there are no plans to open stores but to expand existing ones, such as the unit in Los Angeles on Rodeo Drive, relocating to a bigger space, and in Chicago, in “a more visible and powerful location.”
In the quarter, retail revenues rose 18 percent to 279.2 million euros, compared with 236.3 million euros in the first quarter of 2020. This result was led by strong performance in China and Korea and the exceptional growth of e-commerce in all markets, particularly in North America, where online business tripled, and Korea.
As of March 31, Moncler’s monobrand distribution network consisted of 221 directly operated stores and 63 wholesale shops-in-shop.
Wholesale revenues grew 17 percent to 86.3 million euros, compared with 73.8 million euros in the first quarter of 2020. Santel said the channel performed better than expectations, as it did in the last quarter of last year. A store in Hainan operated by China Duty Free was the number one in the network, Santel said.
Asked about Moncler Genius, which will be presented in September in China this year, Santel said that the brand accounts for less than 10 percent of revenues but that it is important in terms of communication with customers and to generate traffic.
Responding to a question about price increases, Santel said that Moncler only raises prices to protect margins from currency deterioration and plans an uptick in the second half, “not much in Europe,” but in the U.K. because of duties to be paid, and versus the dollar and the yen.
Separately, Moncler said Thursday that it was supporting the rollout of vaccinations in Lombardy. Ruffini said that in this “crucial phase for the future and the hope of everyone,” he was proud to continue to support the Milan community. Described as the biggest vaccination hub in Lombardy, it is located at the Generali Square Garden – Palazzo delle Scintille, part of the former fairgrounds. Ruffini said this “is a building with a high historical value for the city and I hope it can continue to represent a symbol of rebirth and restart.” The hub will provide around 10,000 vaccinations a day. The center is expected to be inaugurated on April 25, with the first 2,000 vaccinations for extremely vulnerable patients.
Moncler fully contributed to the costs of the realization of the hub and all that it implies, including supporting more than 80 individuals tapped for the registration for the vaccines, for a total of about 900,000 euros.
Moncler has recently supported the digitalization of students, supplying 3,600 devices, from iPads to personal computers as part of a project for a total value of about 2.1 million euros.
It has also financed machines and home medical assistance for those affected by COVID-19 for a value of 2 million euros.
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