Moncler Genius

MILAN — In Remo Ruffini’s words, 2019 was “another extraordinary year” for Moncler SpA, which posted double-digit growth in all its markets and reported a 9 percent increase in net profits. But the chairman and chief executive officer and his management team on Monday spent most of the conference call with analysts addressing the potential impact of the coronavirus.

“We face a new and unexpected scenario,” said Ruffini, shifting the focus from the year-end figures to how Moncler is managing the current situation. “Our love and care go to China and to our people in this health emergency. The first concern is to protect our people and take measures to protect our company,” said Ruffini, emphasizing the company’s ability to “react to scenarios even when things are out of our control. This is one of our assets,” he contended, together with “a solid, long-term vision and flexibility in evolving strategies.”

The executive admitted it was “impossible to forecast how long” before things could change, but underscored how the company is making “clear contingent plans, focusing on essential projects.”

Ruffini said the Moncler Genius project has “taught us how to evolve staying true to the brand, leveraging our uniqueness. Moncler is a never-ending start-up. Our 4,600 employees give us energy and power. Moncler can face the situation and be even stronger.”

With a cash pile of 662.6 million euros, and following the market rumors last year of a possible Kering takeover of Moncler, Ruffini also had to repeatedly clarify to analysts that “nothing is on the table. We talk to many people, that is the way we work, we have very good relations with everyone, we explore the market, but we have not found yet an opportunity. There is no news honestly.”

At the same time, underscoring how the market has changed, he hinted at an interest in “not the typical luxury [labels], but young, luxury brand experiments.”

Chief corporate and supply officer Luciano Santel echoed Ruffini, saying “there are no M&A files or dossier on the desk. We are open to look at eventual opportunities in the future but we don’t see any now. And now more than ever we are happy to have cash. There are no specific plans to buy back shares, but we propose an increased dividend of 55 cents up from 40 cents last year.”

Santel said the business impact of the coronavirus in the last two weeks was “very, very serious,” and that any forecast “would be imprudent,” even for the first quarter. “Right now it’s a critical situation, and after the breakout, we took important actions, cut expenses, reducing and postponing to protect margins.” He said “landlords are less open to discuss rent reductions in Hong Kong but in China they are conscious of the current situation.”

Until the coronavirus was revealed, the year 2020 kicked off in line with the previous year, said chief marketing and operating officer Roberto Eggs.

In the 12 months ended Dec. 31, net profit climbed 9 percent to 361.5 million euros, compared with 332.4 million euros a year earlier.

Revenues rose 15 percent to 1.62 billion euros, compared with 1.42 billion euros in 2018. The company saw an acceleration in the last quarter, with sales growing 16 percent.

Like-for-like sales grew 7 percent.

Adjusted earnings before interest, taxes, depreciation and amortization increased 15 percent to 574.8 million euros, compared with 500.2 million euros in 2018, with a 35.3 percent margin.

Operating profit climbed 15 percent to 475.4 million euros, compared with 414.1 million euros in 2018.

Sales in Italy grew 10 percent to 185 million euros, accounting for 11.4 percent of the total. The company saw a strong acceleration in the region in the last quarter, up 21 percent, driven by the retail channel.

Sales in Europe excluding Italy were up 14 percent to 463.5 million euros, representing 28.5 percent of the total. The U.K., Germany and France helped drive the performance.

Sales in Asia and the Rest of the World rose 16 percent to 715.2 million euros, accounting for 43.9 percent of the total. Mainland China continued to lead the growth in the region followed by Korea, both accelerating in the last quarter. The protests in Hong Kong dented the performance in Asia, however.

“China had a very good start of the year until Jan. 23, when the virus was made public. One-third of stores closed in China, and there is an 80 percent decrease of traffic in stores in malls. We are following guidance on when we can reopen,” said Eggs, adding that five duty-free shops closed in Korea last week. The company is postponing three relocations in China until the beginning of 2021 and two openings have been postponed, he said. There have also been logistics issues in the last two weeks that have also affected e-commerce activities.

Last year, revenues in the Americas rose 16 percent to 264 million euros, accounting for 16.2 percent of the total. Eggs said both distribution channels performed well, and that the company rationalized its approach to North America, reviewing buying, converting some doors into concessions and increasing training. Holt Renfrew and Bloomingdale’s are starting to convert into concessions.

Eggs said there are still many possibilities to expand the brand, as Moncler is opening in Spain for the first time, and, in the last quarter of this year, it will open its largest store in the world in Paris on the Avenue des Champs-Élysées.

Moncler has secured 15 locations for new stores in 2020 and there will be 15 relocations.

Eggs also shared some information on the evolution of the Genius project, which accounts for less than 10 percent of business but has increased the desirability of the brand, with a split between outerwear and other categories that is “almost ideal” also for Moncler, with outerwear representing 70 percent of sales, knitwear 20 percent and the rest made up of other categories. He said that “50 percent of clients that bought Genius also bought Moncler and, after two years, 66 percent of consumers that bought Genius also bought Moncler. Genius is amplifying the effect on Moncler.”

Eggs also noted that 50 percent of customers that buy Moncler belong to the Y or Z generation, and that the average ticket of Genius is 30 percent higher than Moncler.

Ruffini spoke of the evolution of Genius, which this month will present a new chapter with the addition of a capsule by JW Anderson, and a collaboration with Rimowa and “We want to give voice to our customers, talk with them and we feel very confident on the project,” said Ruffini, touting the experiential shift for the brand. “JW Anderson is one of the strongest designers, he has a different, genderless approach, very new for the market,” observed Ruffini.

In 2019, retail sales grew 16 percent to 1.25 billion euros. As of Dec. 31, the company counted 209 directly operated stores, an increase of 16 units compared with the end of Dec. 2018, and 64 wholesale stores, an increase of 9 units compared to Dec. 31, 2018.

The wholesale channel was up 11 percent to 370.7 million euros.

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