Moncler Simone Rocha

MILAN Moncler is kicking off the year on an upbeat note and management is banking on its new strategic course for the rest of the year.

In the three months ended March 31, Moncler SpA reported a 20 percent increase in revenues to 332 million euros, compared with 276.2 million euros in the first quarter of 2017. At constant exchange, sales rose 28 percent.

“The first quarter of 2018 marked another fundamental step forward in our group’s development,” said Remo Ruffini, chairman and chief executive officer.” Ruffini defined first-quarter results as “exceptional” with double-digit growth in all geographic markets, but, in particular, he emphasized the relevance of the Moncler Genius project presentation that kicked off Milan Fashion Week on Feb. 20. “A creative hub, which has reimagined Moncler’s soul by going beyond the season’s concept,” said Ruffini. “The idea for this was born from a desire to seek innovative forms of expression, to constantly dialogue with the clients, fueled by a new digital approach. Each collection will be singularly dropped, starting from June 14 with Moncler Fragment Hiroshi Fujiwara, followed by all the others on a monthly basis.”

The Genius Building project involves designers and creative talents including Valentino’s creative director Pierpaolo Piccioli; Sandro Mandrino for Moncler Grenoble; Simone Rocha; Craig Green; Noir Kei Ninomiya; Hiroshi Fujiwara for Moncler Fragment; Moncler 1952, and Francesco Ragazzi for Moncler Palm Angels. The collections for men’s and women’s are being launched as single monthly projects. Genius Building follows the 10-year run of the Moncler Gamme Bleu and Gamme Rouge lines, designed by Thom Browne and Giambattista Valli, respectively.

“We are anxious and excited, the machine is working very hard to make it happen,” said chief corporate and supply officer Luciano Santel of the first Genius drop during a conference call with analysts on Friday. “This is very important strategically, one of the most significant from the commercial point of view because it’s more streetwear and less conceptual than the others.” However, Santel noted that the Genius project was “not material in terms of volumes. The results of the campaign are very good, but this is not particularly significant for the business compared with the rest. It’s extremely important in terms of strategic communication and design.”

In the first quarter, Moncler achieved double-digit revenue growth in all regions, and sales outside Italy rose 22 percent.

In Italy, revenues climbed 10 percent to 43.2 million euros, accounting for 13 percent of total, mainly driven by the retail channel. Santel highlighted the renovation and expansion of the Milan flagship on Via Montenapoleone, and the opening of a banner in Florence.

In the Europe, Middle East and Africa regions, Moncler sales grew 16 percent to 96.5 million euros, representing 29.1 percent of total, with gains in both distribution channels and all markets. France, the United Kingdom and Germany significantly contributed to the performance.

In Asia and the Rest of the World areas, revenues increased 27 percent to 146.4 million euros, accounting for 44.1 percent of total, and were driven in particular by China’s mainland and Hong Kong, which largely outperformed the growth of the region. Santel pointed to “good Chinese flows and the outstanding performance of the relocated Canton Road flagship.”

The executive emphasized the help of a “cold long winter, the timing of the Chinese New Year, which was better this year and more favorable for Chinese traffic.”

In the Americas, revenues grew 18 percent to 45.8 million euros, accounting for 13.8 percent of total, fostered by improvements in the U.S. and Canada and in both distribution channels, particularly in retail, and Santel noted favorable weather conditions. At constant exchange, sales rose 34 percent.

Santel said “the majority of retail was driven by organic growth and this will have an impact on operating margins, a good portion of which will be invested in the organization and in the A&P [advertising and promotion ] budget. This is the year of Genius Project and we invest a lot in communication, not more than what we said, not lower than 6.7 percent, but closer to 7 percent. A&P expenses will be very high in 2018, but this project is very important for the brand.”

Responding to a question about trading, Santel said April “went well, but back to normal. All regions performed well, but Europe was worse than the others, impacted by the Easter timing.”

In the quarter, sales in the retail channel were up 26 percent to 256.2 million euros, accounting for 77.2 percent of total. At constant exchange, sales in this division gained 35 percent.

The wholesale channel recorded revenues of 75.8 million euros, a 5 percent increase compared with the same period last year, driven by good results of the spring 2018 collection and the newly opened monobrand wholesale stores, or shop-in-shops.

As of March 31, Moncler counted 205 directly operated stores, an increase of four units compared to Dec. 31, and 61 shop-in-shops, an increase of two units compared to the end of December last year. In the first three months of the year, Moncler opened its first flagship in Dubai, located at Dubai Mall, and two stores in Korea, while it converted a wholesale shop-in-shop dedicated to the Moncler Enfant business into a retail store at London’s Harrods.

For 2018, 11 locations have been secured for directly operated stores and about 15 relocations and expansions are planned. A shop opened at the Munich airport and the goal is to open 15 shop-in-shops in 2018. Santel said the following are very important for Moncler in 2018: The first store in Norway, Oslo; the first banner in Mexico in Mexico City in the second half; in San Francisco, the first concession in a department store, at Bloomingdale’s, and the second unit in Singapore, at Marina Bay Sands. He also remarked on the relevance of the relocation of a store in New York’s SoHo, from one side to the other of Princess Street, in a former J. Crew banner; the changes at the Sloane Street store in London, and the relocation in Copenhagen, “which is not a huge country, but it’s very important for our business, in a bigger and much better location.”

Santel was especially pleased with Moncler’s fall 2017 sell-through, “one of the best ever, we usually plan with 70 percent of sell-through but [in this case] it was more than 70 percent. We are very happy with a very good retail machine, the auto-replenishment system did very well, we allocated product very efficiently, and the supply chain is getting very flexible and better and better. We keep adjusting the inventory plan based on the current trend.”

Moncler has been shifting away from its core down business, said Santel, noting “a very consistent and continuous, slight decrease of sales of outerwear, and the increase of other categories such as knitwear for fall/winter and cut-and-sew [polos, T-shirts etc.] in spring.” Evergreen items account for one-third of volumes as they did in the past, he added.

Online sales continued to grow at a double-digit pace, said Santel. “We are happy, but we aim to do better,” he observed.

Santel said like-for-like in the first quarter showed a low double-digit growth, which was “much better than expected. The strength of the brand is the most important driver and makes us confident. In like-for-like, volumes represented two-thirds of organic growth, with price and a new price mix making up the remaining one-third.”

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