MILAN — Moncler SpA in the first half of 2019 recorded double-digit growth across the board, boosting chairman and chief executive officer Remo Ruffini’s confidence in the company, its new business model — and its independence.
In the six months ended June 30, net income climbed 16 percent to 71.3 million euros, compared with 61.6 million euros in the same period of 2018.
Revenues also rose 16 percent to 570.2 million euros, compared with 493.5 million euros in the first half of 2018, showing an 18 percent acceleration in the second quarter.
Ruffini emphasized the company’s effort to support such growth. “Innovate to invent our future every day, go beyond the ordinary to discover our extraordinary, continuously find new methods of collaboration to harness the genius that lies in each and every one of us. This is what I ask and what my team demonstrates every day,” said Ruffini.
The executive cited the company’s first 24-hour Hackathon on July 4, defining it as “an emotional moment for all of us, filled with excitement for innovation and the results exceeded any of my wildest expectations. Seeing over 450 Moncler employees, coming from different countries, departments and backgrounds, working together on numerous themes relevant to our future, further consolidated my belief in the uniqueness of our company and in its great strength, as also expressed by our results.”
Ruffini expressed his confidence in the rest of the year, while admitting the six months ahead are “important and, as always, challenging months,” but he underscored the company’s “well-defined path.”
In a conference call with analysts on Wednesday, he touted a semester that was “above market and my own expectations.” He said the Genius project “continues to give very positive results and input and to attract new customers.” Half of new clients are driven by Genius, he noted. “We need to leverage this to make them loyal and reinforce the Moncler community. We have evidence we are moving in the right direction.”
Ruffini said the new advertising campaign, “Genius Is Born Crazy,” unveiled this week and fronted by Will Smith, reflects the brand’s own direction — past and present. “How crazy were we to create a jacket from a sleeping bag?” asked Ruffini rhetorically. That said, the craziness belied “an always clear vision and great rigor in execution,” he underscored. “Genius is in all of us,” he said of his team and employees.
Asked by one analyst about remaining independent compared with large fashion conglomerates, Ruffini said he felt “really very confident in staying alone. Our strategy is quite unique and helps us to talk to our customers.”
He said he did not really see many advantages in being part of a big group, “except maybe in terms of real estate. I feel really good honestly.”
At the same time, responding about possible Moncler investments, Ruffini said there are “few interesting companies, not that many.” As the analyst who posed the question mentioned Stone Island, the executive admitted it was “a very good brand,” but did not elaborate.
“We really feel like a start-up, we have just changed our business model and there is a lot of energy and we have many things to do, we are very concentrated building a modern company. It feels good to develop this new way of working and we don’t see anything that interests us. That said, we are always watching the market.”
In the first half, revenues in Italy rose 8 percent to 68.4 million euros, representing 12 percent of the total, mainly driven by the strong performance of the retail channel.
In the Europe, Middle East and Africa region, revenues grew 15 percent to 169 million euros, accounting for 29.6 percent of the total, with a double-digit increase in both distribution channels, which was even more significant in the second quarter. The United Kingdom, Germany and France led growth in the quarter.
In Asia and the Rest of the World area, revenues were up 18 percent to 249.3 million euros, representing 43.7 percent of the total with an acceleration in the second quarter. Mainland China, Japan and Korea were the main drivers of growth in the region. Hong Kong accelerated in the second quarter, and chief marketing and operating officer Roberto Eggs said he was confident about a new opening at the city’s Sogo department store. “There’s been a small slowdown in traffic due to the political protests but overall we’ve seen a positive growth in the second quarter in Hong Kong,” he said.
In the Americas, revenues advanced 15 percent to 83.5 million euros, accounting for 14.7 percent of the total with both channels and both markets contributing to it. Responding to a question about that market, Eggs admitted “some turmoil” in American department stores. During the second quarter of 2019, Moncler converted the Bloomingdale’s store in New York from wholesale to a retail monobrand store and Eggs expressed his belief that shifting into retail will “provide better results.” He said there will be two other openings with Bloomingdale’s and some conversions at Holt Renfrew in the first half of 2020.
Eggs touched on Barneys New York’s financial troubles but said that Moncler’s credits are “fully covered. We’ve seen delays with the fall/winter collection with Neiman Marcus, too, that has shown some slowdown, but we hope to recover in July or August. It is true there is much higher volatility in the U.S. and the political tensions in China are not helping. It’s become a more local market, benefiting less from foreign traffic, especially from the Chinese.”
Eggs said that markets were “balanced, with China being number one,” and Mainland China performing very well. He saw an acceleration of the Chinese in Europe and in the U.K. in particular, while the yellow vests protests have slowed down their presence in France. South Korea has accelerated and local spending in Europe was very good, he added.
In the first half of 2019, revenues from the retail distribution channel increased 16 percent to 437.1 million euros, driven by a robust organic growth. The company reported a 9 percent like-for-like growth, with an acceleration in the second quarter, lifted by “very good results” of the spring/summer collection and the “highest sell-through in the past four years,” helped also by the Genius drops in the second quarter, said Eggs. He also trumpeted the performance of the brand’s online channel, which “outperformed and has grown more than twice the retail” channel. A month ago, Moncler also launched its Korean web site.
The wholesale channel was up 14 percent to 133.2 million euros due to the development of the network of monobrand stores and to Moncler Genius.
As of June 30, there were 196 directly operated stores — an increase of three units compared to the end of December, and 60 wholesale shop-in-shops, an increase of five units compared to December last year. The company will open six stores in the third quarter and six in the last quarter, including “a very important flagship in Munich,” said Eggs.
Marketing expenses totaled 42.9 million euros, representing 7.5 percent of revenues, showing a slight increase compared to the first half of 2018, when they accounted for 7.3 percent, primarily due to a different spending timeline between the semesters. Eggs said that Moncler has shifted its media spending into digital by 50 percent and that it had just tapped an in-house chief digital media officer. “Social media is a daily battle of content,” he recognized, explaining that the company has been more engaged, also helped by Genius, which is the brand’s “first digitally native project.”
Eggs cautioned against comparing the performance of the different Genius drops as they also have different targets. He said that the recently launched Palm Angels by Francesco Ragazzi was a “volume driver above expectations,” mostly sold out in the first week, and that had drawn a younger crowd “as we had not seen in many years.” Three House of Genius stores will open in the second half in Omotesando, at Galeries Lafayette in Paris and in Milan’s Galleria Vittorio Emanuele II, which will also see a future opening of a new Moncler flagship.
On March 29, Moncler acquired a 6 percent stake in the Japanese subsidiary Moncler Japan Corporation (MJC) from its partner (Yagi Tsusho Limited, YTL) for a net cash outlay of 10.9 million euros. As a result of this, Moncler now controls 66 percent of MJC share capital.