MILAN — Moncler’s turnaround is easily billed as a textbook case.
This story first appeared in the June 16, 2017 issue of WWD. Subscribe Today.
The man responsible for growing the brand from a dusty collection of utilitarian down-filled jackets with mostly local distribution into a luxury fashion label with more than 200 stores around the world is Remo Ruffini, who confesses his longstanding soft spot for Moncler and what it stands for.
Going for what he called his “dream brand,” the chairman and chief executive officer of Moncler bought the company in 2003, spearheaded its global expansion, publicly listing it in Milan in December 2013 and reaching the $1 billion in sales milestone last year, while wiping out its debt. Since its initial public offering, Moncler has seen its stock price soar 107 percent to 21.1 euros, or $23.6, while profits have risen 158 percent looking at the company’s net income growth between full-year 2016 and full-year 2013. Earnings in the 12 months ended Dec. 31 rose 17 percent, reaching 196 million euros, or $215.6 million, compared with 2015, on revenues that gained 18 percent to 1.04 billion euros, or $1.14 billion.
Along the way, Ruffini has shown he is one of those rare left-brain/right-brain executives in the industry. On the one hand, he has forged strong relationships with the private equity funds that have supported Moncler over the years, while on the other he has driven Moncler’s growth by forming close relationships with designers from Nicolas Ghesquière to Junya Watanabe, Giambattista Valli, who designs Moncler Gamme Rouge, to Thom Browne, who’s in charge of the Moncler Gamme Bleu line for men.
In his no-nonsense and rapid-fire manner, sitting in his Milan office overlooking a leafy road and surrounded by a few of Moncler’s ad campaign images, Ruffini tells WWD how he plans to continue to grow the brand by diversifying its product offering while staying true to its roots. He is aware that his strategy for the future is being watched by analysts, but he is determined to avoid becoming “a generalist,” in an industry filled with “stereotypes” and too many total look brands.
More than once, Ruffini says “doing something crazy” is not in his line of thinking. And as he points out, if it’s served him well so far, why change?
WWD: Next year, you will mark 15 years since the acquisition of the brand. A lot has happened since then.
Remo Ruffini: The truth is that it’s very much changed but it is the same company, updated, but still loyal to its history, the mountains, the Himalaya, Grenoble and all that it is based on. Times have changed, we maintain the strong roots of the mountain, but also went to the city with the new technologies. However, I feel Moncler is the same of those [storied] photos that I have [such as one of French explorer Lionel Terray in Alaska in 1964 wearing a Moncler jacket]. That value and uniqueness have been transferred into this stereotyped world, because beautiful or not, all the brands that I see around in luxury malls in Asia and or the U.S. have a business model that is very similar. You go in, there is a wall of bags, then accessories, then further in you see the ready-to-wear. What we have done is to continue on our own path, without being influenced by the industry. With creativity and uniqueness. I believe that, when consumers think of the cold, of protection — and lightness — I think they come to our store, otherwise, had we not had a distinctive identity, we would not have reached this point, [starting] as an unknown brand in this very competitive world.
WWD: What did you see in Moncler, why did you choose this brand in particular?
R.R.: In 2002, I sold the company I founded when I was 21, called New England, and bought Moncler in 2003. I was looking for a true brand that had roots. New England was a label based on the six [American] states, it did have a strong DNA, but it was a label that I invented. I always tried to create a dream. Moncler had a stronger matrix and I always liked it. It represented one of the greatest moments for a young boy, 14 to 16, 17 years old, the first times you can go out alone, with the first motorcycle. When Moncler was available on the market, I tried to buy it right away, it was my dream brand. Also it was based on a strong passion of mine, the mountains. Everything came together. Despite the fact that Moncler was a small company at the time, smaller than the New England one, it had a very strong appeal for me — even if it was not appealing to others.
WWD: You have always worked well with private equity funds. Could you elaborate on these relationships?
R.R.: I could not take this on by myself, so it was inevitable to ask funds for help. Their mission is to help entrepreneurs to create value. I always tried to explain and share my strategy and my vision, and how I planned to develop the company. Starting with Mittel and then Carlyle and Eurazeo, they always followed me. And I still have a good relationship with them. It’s what I do today that the company is public, but I did it before with the funds. We always had a clear relationship. They would not manage the company, I would, but I shared all the strategies, [the cards] were always on the table during our meetings.
WWD: You are quite unique in the industry as you have both a financial mind as well as a creative one.
R.R.: My company was the classic private company and in those first years, I did everything. It was mine, so I tried to be present in all areas, I followed production, marketing, I managed the design office. I am self-taught. When I bought Moncler, I started to create a more efficient structure and to fill the gaps. Maybe in a superficial way, but I know all areas that are part of an apparel company. Over the years, depending on the [situation], I would follow one area more than another, but, in time, I carved out a role that was more into the development and the perception of the brand, closer to the consumer. I am not as much into design as many would think.
R.R.: It’s part of my job. I don’t design, but I personally manage the creative side. It’s instinctive, a perception.
WWD: I read that you have always followed your instinct. Is this still true now that the company is a more than $1 billion entity?
R.R.: It’s a mix, a combination of being present on the markets, understanding what consumers want, while being faithful to our own strategy from the first day with no compromises. It’s not the intuition of someone holed up in a room. It comes from feedback from consumers, the market, other cultures that stimulate, traveling and meeting people, seeing how the market changes, and it does so every day now. I don’t know what it is, but it’s all this together.
WWD: During recent conference calls with analysts, you have been emphasizing a consumer-centric strategy. Could you describe this consumer?
R.R.: This is not a strategy born now. I always told private equity funds that our main shareholder was the consumer, so our strategy was based on the consumer and less on the pipeline typical of our sector. Before getting to the consumer, [in the past] you would pass by franchisees, distributors and agents. I cut this chain from Day One, to reach and satisfy the customer. That, I believe, was fundamental in our success. There is no filter between us and our consumers and everything is under our control, not that of our franchisees, who set up their windows as they please because they need to sell what they have in their stores, not that of distributors that have their own interests at heart. This development may not be fast but it is solid.
WWD: Conversely to many of your peers, you have opted for pacing your retail growth.
R.R.: Yes, if you have a distributor in China, you can open 30 stores in three years and he manages them as he likes. We opened two or three per year, but now we have a solid structure with the customer at its center.
WWD: You’ve said before that you are planning the opening of several shop-in-shops this year.
R.R.: We are focusing on wholesale, it’s something I really care about. Where we can, we open our stores, but if it’s not possible, in some locations such as department stores, we open shop-in-shops. To develop wholesale well, either you sell to great quality multibrand stores or, if you turn to department stores, especially in the U.S., you must create your own dedicated area, otherwise you do sell, but it’s not a quality sale. There are not many concessions in the U.S., so we are trying to be present in department stores, and we are in almost all prime locations with our identity and concept. Wholesale gives great energy to the brand. By being in the best specialty stores, there is a confrontation with brands that are stronger, faster, more of the moment. You can’t mistake or forget who your main competitors are, day by day. Wholesale has always been important and it is a fundamental point of our strategy, even though it accounts for less than 20 percent of total sales.
WWD: You have been growing in the U.S. despite the difficulties of department stores. What can you tell us about that market and other key areas?
R.R.: In general, there is a very volatile situation in the world. Today we say that some markets are better than others, but surely in six months we will contradict ourselves. The flow of customers and tourists, the currencies change the market, I wouldn’t say daily, but much more than once per season. In the U.S., we performed very well, it’s slowing down, but it’s not too bad. Two seasons ago, China was not strong and now it’s one of the main markets in terms of results.
Europe was sleepy and now, after [Brexit in] the U.K., the [devaluation of the] pound, despite the impact from the terrorist attacks in France, the macro economy is better than what we expected. The elections in Europe did not give out negative signals. There was the risk of a different president in France affecting the economies and Europe, so there are many positive facts that gave us a boost. Not last, Italy, after the Expo, which brought a lot of movement. I expected a debacle but, on the contrary, Italy continues to grow, which is an interesting signal not only for Moncler. We have a better image to present to foreign customers.
WWD: During the analysts’ call after the first-quarter results, several insisted that Moncler was suffering in Hong Kong.
R.R.: Hong Kong comes from moments of great glory. If you think about the growth there five, seven years ago, it’s not the same, but it’s not the only shopping point for Asians. There are others: Korea is becoming very important, Singapore is growing, and so is Australia. We just arrived there, but we are seeing excellent results. Hong Kong is no longer the shopping hub in Asia, but one of them. The volumes are different, but we are not displeased. The growth seen five or six years ago was not reasonable. I think it’s a place where we can build something in the coming years.
WWD: The flow of tourists continues to be a driver for the luxury industry.
R.R.: Yes, shopping has changed. Before, you would shop at home, now you travel to shop. We are also starting with travel retail, but we only have six doors, so we plan to develop it and plan to open two or three doors every year. In airports, we opened in Seoul, Doha, Hong Kong, two in Fiumicino, one in Malpensa. It’s still a small channel, but we wait for the best location, with an adequate concession fee.
WWD: Travel retail works very well in particular for accessories companies, which leads me to the inevitable question of product diversification, which you’ve been repeatedly asked about. Knitwear is one category you have been investing in.
R.R.: I always answer the same way: We aim at keeping the uniqueness of our roots and of our brand. We were born as the first down jackets of great quality and this distinguishes us in the luxury world. We work on other categories without distorting or betraying the roots of the brand.
WWD: Exane BNP Paribas believes that your growth has reached a plateau.
R.R.: It’s a very generic reading from one research because all the other reports say Moncler is one of the fastest-growing companies in the industry. We are doing everything we can to follow our own strategy, we don’t want to become generalists, doing everything in an average way. I don’t like that strategy and I don’t want to become one of the thousands of total look brands. I want to keep our identity, I hope I am not wrong, but this has paid until now.
WWD: There is a big project coming up with the opening of the revamped flagship in Milan’s Via Montenapoleone.
R.R.: Yes, it will be a new concept, very Italian, as a sign of gratitude to the city that has hosted us. It’s very important in terms of the location, its impact and its size — more than 5,940 square feet over three floors with five windows. The architects are the same [Gilles & Boissier] but it’s part of a new strategy to create different experiences in important cities. We believe consumers travel a lot and they want to find something that ties them to each city, so this will be about Italy in the Fifties, in our taste. We want to create emotions and move away from stereotypes — the focus is to be recognizable.
WWD: There is a lot of talk about omnichannel. I know you have a good relationship with the Yoox Net-a-porter Group.
R.R.: We have a great relationship with YNAP, and we working on the integration of all channels. They are going through a very important technology development and with them we think the result will be of great quality. We have been working on omnichannel for two years, since Dr. [Roberto] Eggs came on board [as chief operating officer]. We are changing the perception of the brand, not in a really new way, but creating our own identity.
WWD: Could you please explain what you mean by changing the perception of the brand?
R.R.: We’ve not had a very long life, we opened our first store in October 2007 [in Paris]. We had lines outside the stores and our priority was logistics, getting the product in, the right packaging. Now it’s a different business model with about 200 stores. As the size changes, there is a different service for and approach, the growth is not only in volume.”
WWD: The year is also important because you have no more debt.
R.R.: Yes, for me it’s fundamental, it’s an important achievement, reached at the same time as we hit sales of over $1 billion. We are cash positive. I’ve always said that good management means generating cash and not only growing one’s top line and margins. With investments in line with one’s possibility, it’s a sign of good health.
WWD: You’ve said before that mergers or acquisitions are not in the cards for now to grow Moncler.
R.R.: No, to grow just to grow is useless. We must invest to create value for the brand. We’ve done it in the past and we will do so in the future. The markets are changing, we’ll see how things evolve. Maybe in the future we’ll invest more on new sourcing, implementing quality, a more efficient research and development and less in opening stores — everything that is needed to create brand value. All this requires cash. Our competitors are 20, 30, 60 years old; we are very young with still a lot to do in terms of quantity and quality.
WWD: You were determined to publicly listed Moncler. Three-and-a-half years since the IPO, how do you view that decision?
R.R.: We’ve always had good relations with private equity funds, but their investments run three to five years, so I wanted an IPO to find a good solution to avoid changing partners because every time a new one comes in, it’s a jolt for the company and I was seeking management stability for the long-run. The IPO came in December 2013 and it was important. We have a good relationship with shareholders. It’s more difficult than in the past, when we had people sitting around a table, now they are on the phone. I say a few things, but in a clear way, I think, outlining my strategy — to shun compromises, avoid discounts, build customer relations, reduce the network of outlets. All this is fundamental for good health. The good relation is based on a good performance.
WWD: We’ve seen an acceleration in the first quarter, and there is a sense of positivity you’ve mentioned. What is it based on? And what do you expect for the year?
R.R.: As you know, the second quarter is very small for us, most of our business comes from the fall/winter season, starting in mid-June and that’s what tips the scales. The first quarter went well, we are happy, but I keep my feet on the ground.
WWD: What do you think of all the changes in the shows’ calendar, and several brands opting for coed shows to be held in September?
R.R.: This market needs its own strategies. The customer is tired of these ratified fashion caravans. Yes, what we do for the industry is important, it gives prestige, but I strongly believe that we must be closer to consumers, remove the filters between us and the customer. I don’t know how many of our customers even see our shows. We must find new ideas, and each brand must have a strategy closer to its own identity, while everyone, from sports to couture, follows the same strategy.
WWD: So you are revisiting the format to present your new collections?
R.R.: I am working on it in my head [smiles], to find an approach to our communication in sync with our DNA, but it’s not going to be immediate.
WWD: How would you describe your management style? How do you motivate people?
R.R.: It’s difficult to define one’s own style, but I always try to convince and not impose. We have a strategic committee that meets once a week to come up with ideas and this is stimulating. I was more rigid and harder in the past, and I noticed that when I imposed my views, people would tend to forget them the next day, they wouldn’t stick in their minds, while when you convince someone, you don’t have to repeat yourself.
WWD: What executives do you admire and why?
R.R.: There are many in our sector, unfortunately those leading successful companies, our competitors [laughs], but I wouldn’t single anyone out to the detriment of others. Also, I think of the uniqueness of the brand and I try to be unique in my own way of managing it.
WWD: What do you look for when you hire people/managers?
R.R.: I never read a curriculum, I ask [the candidate] to tell me about it and, depending on how they tell their story, I draw my own conclusions. I don’t ask many questions, and this helps me to identify [the best]. I seek measured, steady people, not lightning bolts or geniuses.
WWD: What was the best piece of business advice you ever received?
R.R.: I built my strategies correcting the mistakes I made in the past. For example, I learned to have more control on distribution and select quality points of sale. I’ve grown to understand how important like-for-like sales are, while in the past I didn’t realize this.
WWD: What do you believe was your greatest business challenge either at Moncler or elsewhere?
R.R.: The greatest challenge is to conquer the customer, every day, and create a relationship. The customer is the boss.