MILAN — Moncler is ready to “reach even higher peaks,” according to Remo Ruffini, the brand’s chairman and chief executive officer.
The company is leaving 2020 behind with a performance that beat analysts’ expectations and is eyeing new opportunities in 2021 that hinge on focusing on China; accelerating its e-commerce while reinforcing its omnichannel platform; launching a new phase of the Genius project, and developing the Stone Island business.
“The market has changed and the only chance is to have a different approach, to give energy to customers and different tools to talk to them,” said Ruffini during a conference call with analysts on Thursday.
Ruffini was pleased with the performance of Moncler in 2020, which saw an acceleration in the last quarter, and despite the impact of the COVID-19 pandemic.
In the 12 months, net profits amounted to 300.4 million euros, down 16.2 percent compared with 358.7 million euros in 2019. However, Luciano Santel, chief corporate and supply officer, reminded analysts that Moncler in the first half of the year reported a loss of 31.6 million euros for the first time, hurt by the effects of the health emergency.
In 2020, revenues totaled 1.44 billion euros, down 12 percent compared with 1.62 billion euros in 2019. However, in the fourth quarter, sales rose 7 percent to 675.3 million euros, mainly driven by the strong expansion of the Chinese market, growth in Korea and Japan, and a solid performance of the online channel. Bloomberg expected sales to decrease 14.4 percent.
Operating profit amounted to 368.8 million euros, down 25 percent compared to 491.8 million euros in 2019.
Last year “will remain marked in the world’s and in Moncler’s history. Going back over all the thoughts, emotions and actions of these past months would only be reductive, and I usually like to look ahead, to the future,” said Ruffini. “At the same time, I think it is important to acknowledge those crucial moments when you act with courage amid uncertainty. This has been the strength that has guided us through these past months, especially in the last key weeks of 2020.”
Challenges, he said, “turned to opportunities,” and Moncler reinforced its community and sense of belonging. A community that he sees growing through the tools provided by technology. He candidly expressed his marvel at succeeding in attracting seven billion viewers through a TikTok challenge and, in this vein, the Moncler Genius project is poised to open up to an expanded community.
Genius will become “a media hub,” and Moncler is “building a broadcasting studio. In 2021 Genius will come to you,” Ruffini explained. The new project will launch in September, with events to be broadcast from China and the goal is to attract “millions of viewers. It can be physical but in different locations, we will talk to customers in different ways, through gaming, music, TV, cinema, videos.” There will be bases in Shanghai, Tokyo, New York, Milan and Paris, Ruffini noted.
“I realized three or four years ago that luxury was no longer part of the Moncler approach, we needed to talk to the young generations,” said Ruffini, expressing his belief in a “new luxury between the likes of Hermès or Chanel and Nike.” In this space fits Moncler and now Stone Island, following the acquisition of the brand revealed in December.
“The final months of 2020 will always be remembered at Moncler, as in the midst of a difficult time for Italy and the world, we announced the Stone Island deal. It is a union that I hoped for and pursued, and which was made possible thanks to the common vision of two entrepreneurs, [chairman and CEO] Carlo Rivetti and myself, who share the same ideals, the same passion, the same love for their companies,” said Ruffini, noting that Stone Island reminded him of Moncler 10 years ago.
The closure of the deal, valued at 1.15 billion euros, is expected by March 31.
Moncler is working on the integration of Stone Island and focusing on its direct-to-consumer potential. “This is a fantastic opportunity, we’ve had many offers to buy over the years but we never found the right company. We are confident we can help develop Stone Island at retail, and build up a solid brand perception. Already the brand is strong in digital,” said Ruffini.
Digitalization is a key focus for Moncler, which has been bringing its e-commerce platform in-house, upon the expiration date of its contract with the Yoox Net-a-porter Group after nine years, and working on the launch of its new website, expected in June.
By region last year, sales in Asia were flat at current exchange rates, but they were up 2 percent at constant exchange, amounting to 717.8 million euros, and accounting for 49.8 percent of the total. In the fourth quarter, they gained 26 percent. Mainland China led the performance of the region with strong double-digit growth in the year with an acceleration in the last quarter, which was followed by Korea and Japan, both also improving in the last months of the year, said Roberto Eggs, chief marketing and operating officer.
There are now 35 stores in China and Eggs said there will be 40 by 2022. However, this was “less about the number and more about the size and position and the quality of the position,” he observed. Stores are expected to open in Hangzhou; Chengdu, where the company will launch a highly digitalized pilot store; Wuhan; at Plaza 66 in Shanghai, and at Sanlitun in Beijing. “The Olympics will bring awareness about skiing and we plan to push the Grenoble brand with pop-ups,” said Eggs of the upcoming Winter Olympics in Beijing.
The company will also launch a dedicated store on Tmall’s Luxury Pavilion in 2022.
In the Europe, Middle East and Africa region, excluding Italy, revenues last year decreased 18 percent to 379.5 million euros, accounting for 26.3 percent of the total. Business slightly improved in the fourth quarter, which was down 13 percent, supported by good local demand, which partially offset the lack of tourists despite the temporary closure of some stores. Germany, Scandinavia and Russia recorded the strongest performance in the year and also in the fourth quarter, with excellent results in both channels, said Eggs.
Sales in Italy recorded a 34 percent decline in the year to 122.3 million euros, representing 8.6 percent of sales, hurt by lockdowns and the lack of tourists.
Sales in the Americas decreased 16 percent to 220.6 million euros, accounting for 15.3 percent of the total. They were up 5 percent in the fourth quarter with positive performance in both channels.
In 2020, the retail channel was down 13 percent to 1.09 billion euros. The company reported a pickup in the last quarter, seeing a 5 percent growth led by Asia, in particular the Chinese market and e-commerce, which reported double-digit growth with a sharp acceleration in the last quarter.
Moncler opened its biggest flagship in Paris and its first store in Spain, in Barcelona, last year.
Like-for-like sales decreased 18 percent but in the second half they were down 9 percent.
The company has earmarked 15 new doors for 2021.
Eggs said Moncler has built a rich database of 3 million clients, which is “an incredible asset-clienteling is key,” and touted the relationship developed with customers throughout the lockdowns and the restrictions.
Sales in the wholesale channel were down 5 percent to 350.9 million euros , with double-digit growth in the fourth quarter, showing a 31 percent increase at constant exchange rates.
As of Dec. 31, Moncler’s monobrand distribution network consisted of 219 directly operated stores, and 63 shop-in-shops.
Eggs said Moncler plans a price increase of products in 2021 to reduce the gap with Asia.
Responding to an analyst, Eggs said the current year started well and that the company’s performance in January was in line with that of the end of last year.
That said, the outlook is difficult to predict, given the challenges in the global economy and the sector, with the vaccines rollout uncertain, said Ruffini, while touting the need to be “even bolder to invest for what is crucial in the long-term.”
“We are more resilient, we adapted very soon to a completely different scenario,” remarked Santel.
Capital expenditure last year decreased to 90.4 million euros in 2020, compared to 120.8 million euros in 2019 following Moncler’s decision to postpone some corporate and commercial projects due to the pandemic. Santel said Moncler halted some marketing events and slowed media buying activities, but invested in distribution, retail, infrastructure, logistics, in-sourcing and e-commerce. “We will go back to Capex of more than 120 million euros in 2021. We must be flexible and ready to react to different scenarios.”