LONDON — Despite a hammer blow from Hong Kong, Moncler delivered double-digit revenue growth in third quarter and in the nine months to Sept. 30, albeit at a slower rate than in the first half.
Consolidated revenues at Moncler grew 14 percent to 995.3 million euros in the first nine months, the company said in an interim trading update Thursday. In the first half, they grew 16 percent.
In the nine-month period, retail revenue was up 16 percent to 690.4 million euros, beating consensus by more than 2 percent. Approximately two-thirds of sales come from retail and one-third from wholesale sales.
Wholesale rose 11 percent to 304.9 million euros, due to the fall 2019 collections, the Moncler Genius collaborations and the development of the shop-in-shop network and despite a tighter edit of wholesale accounts.
Revenues from international markets grew 15 percent to 864.7 million euros.
Remo Ruffini, Moncler chairman and chief executive officer, said the third quarter grew “despite unexpected external events,” which affected the company’s performance in important markets.
He was referring to Hong Kong where Moncler saw a 40 percent decline in sales due to the pro-democracy and anti-extradition protests that have been devastating a city that’s long been a magnet for luxury brands.
In a conference call late Thursday, Luciano Santel, chief corporate officer and executive director of Moncler, said the company’s priority in the region is to protect its staff in the region, keep the stores productive and reduce expenses.
Santel described the situation in Hong Kong, a profitable market that generates 6 percent of Moncler’s revenues, as “very difficult and very complex.” He said the situation on the streets has remained unchanged since the summer, and he’s not expecting it to get better in the fourth quarter.
“It was the worst-performing region, with double-digit declines since August. We are pursuing our client-focused strategies and staying in strict contact with our clients there,” said Santel, describing the brand’s customers as a mix of Chinese tourists and Hong Kong residents.
He added that Moncler has been talking to landlords about rent reductions and said those discussions are still open. Hong Kong is profitable for us and the decline in sales will impact our full-year margins, which is why we are working to protect them.
Overall, the Asia region and the rest of the world grew 15 percent, due to demand in Japan, mainland China and South Korea. Japan saw a spike in retail sales ahead of the new VAT sales tax, which came into effect on Oct. 1.
Santel said mainland China did “very well” with sales strong into the fourth quarter and during Golden Week in particular.
The Americas was also a strong performer, growing 10 percent at constant exchange in the third quarter and the nine months, fueled by wholesale and retail alike.
In the third quarter, at constant rates, revenues in Italy were up 4 percent, mainly driven by retail performance while in the EMEA regions they rose 7 percent, due chiefly to robust demand in Germany and Scandinavia.
Luca Solca of Bernstein said Moncler produced “a solid set of results” in the third quarter, confirming the “strong brand momentum.”
Earlier on Thursday, in a glowing research note, Solca argued that Moncler has built an “enviable position” at the top of the outerwear market.
“Moncler has done virtually everything right in recent years, from relentless product newness to achieving unprecedented EBIT margins [29.2% in 2018] at small scale. No competitor has been able to match their casual-plus-expensive product offer.”
Solca said he’s expecting another three or four years of “above industry growth” from Moncler, due to “more stores, more jackets, as well as more growth in adjacent product categories like footwear and knitwear.”
As of Sept. 30, Moncler had 199 directly operated stores and 62 wholesale shops-in-shop. During the first nine months it opened six retail mono-brand stores and seven shops-in-shop.
A further six openings are planned for November and December, with 15 directly operated stores set to open in 2020.
Moncler also said it plans to bring back its “House of Genius” in November, having introduced the retail project in October 2018. It took its concept stores to Paris, New York and Tokyo and they housed the Genius collections, various brand collaborations, and the Moncler 1952 and Moncler Grenoble ranges.
In a brief statement accompanying the results, Ruffini said the company is mindful of the “uncertainty and volatility” ahead. “We have interesting months ahead, and I am certain that Moncler will move forward with tenacity to emerge as an even stronger player.”