MILAN — Strong expansion in all international markets and growth in both its retail and wholesale channels helped Moncler SpA register a 14 percent gain in revenues in the first nine months of the year.
In the period ended Sept. 30, sales reached 639.3 million euros, or $709.6 million, compared with 561.5 million euros, or $623.2 million, in the same period last year.
“Focus, exclusivity, clarity and selectivity are the pillars on which the Moncler brand development strategy has been based since 2003,” said chairman and chief executive officer Remo Ruffini. “Now, more than ever, I am convinced that it is this foundation which has made it possible for us to achieve exceptional results and I hope will enable us to continue to do so in the future.”
Ruffini highlighted the fact that Moncler saw double-digit growth once again in the third quarter, and underscored the “very positive feedback” from customers in reference to the brand’s fall 2016 collections. The executive emphasized the opening of flagships in cities such as London and Seoul as well as in New York, with the recent opening of Moncler’s Madison Avenue store.
“Although the macroeconomic and political scenario remains uncertain and volatile, requiring even more selectivity and focus on our part as we move forward, I remain convinced that Moncler will continue to achieve excellent results in the future,” Ruffini concluded.
In the nine months, retail sales grew 20 percent to 400.4 million euros, or $444.4 million, lifted by both the ongoing development of the group’s directly operated stores and organic growth. The division accounted for 63 percent of total sales in the period.
The wholesale channel grew 5 percent to 238.9 million euros, or $265.2 million, driven by the European and North American markets.
International markets represented 83 percent of total revenues, compared with 81 percent in the first nine months of 2015.
Sales in Asia and the Rest of the World grew 27 percent to 216.2 million euros, or $240 million. During a conference call with analysts, chief corporate officer Luciano Santel emphasized Moncler’s strong performance in China, the brand’s second-largest country in the region, “thanks to the strength of the brand and a good response to the fall collection.”
In South Korea, sales grew organically as well as through the recently opened stores, including a directly operated store at Incheon Airport and a duty-free store in downtown Seoul. “Japan was the most difficult region in the third quarter due to the appreciation of the yen and a slowdown in tourism, mostly from China,” Santel said. ” The Japanese buy in Japan, and abroad they buy the most in North America and Hawaii, where we have two stores.”
The Americas were up 17 percent to 109.7 million euros, or $121.7 million, boosted by a strong performance of the stores opened in the last 12 months, such as in Hawaii, San Francisco and Las Vegas, and solid results in the wholesale channel at luxury department stores. In the third quarter, the channel also benefited from the opening of four shops-in-shop in Toronto, Los Angeles and two in New York. There are plans to open 12 shops-in-shop in America in 2017.
In Europe, the Middle East and Africa, sales climbed 7 percent to 203.8 million euros, or $226.2 million. Santel cited very strong business in the U.K., which accelerated in the third quarter after the Brexit vote, and also in Germany. The double-digit growth seen in the U.K. was driven by increased local demand and a rise in tourism as well as the good performance of the newly opened flagship in London on Bond Street. France was weaker, but Santel pointed to recent signs of improvement.
Revenues in Italy were up 2 percent to 109.6 million euros, or $121.6 million, lifted by the retail channel but offset by lower growth from the wholesale channel, which was in line with management expectations, resulting from an ongoing selective strategy. Santel said the rationalization is ongoing and told analysts not to expect growth in Italy’s wholesale division in 2017.
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As of Sept. 30, Moncler had 186 directly operated stores, an increase of 13 units compared with Dec. 31, 2015, with seven openings in the third quarter, and 40 wholesale shops-in-shop, an increase of six units, with four openings in the third quarter.
Santel said the company has secured 12 directly operated stores for 2017, spread out in different regions, including Moncler’s first store in Australia, another in mainland China, a few in North America, and a second unit in Toronto.
Santel said plans to expand Moncler’s flagships in Milan’s Via Montenapoleone and in Hong Kong were even more important than the expected new openings, “touching two important stores and cities for us.” In Hong Kong, the flagship will be “three times bigger and much more visible” with two main entrances. The executive said the company maintains a selective retail strategy, avoiding “cannibalization. Next year, we will see bigger stores but based on our experience and this year, we don’t see any dilution of productivity of our stores. The increase in space is something we want to continue. We strongly believe in the presentation of our collection, and for the presentation we need bigger stores in some locations, but there is no risk of dilution of sales density.”
Asked about price harmonization, Santel said the appreciation of the yen and the depreciation of the British pound took place at the end of June when the fall collection was already in stores. For this reason, the company did not adjust its prices. “We face more competitive prices in the U.K.,” said Santel, acknowledging the price gap between Japan and Europe. Prices will be adjusted for the spring season in 2017 and “are under process” for fall 2017. “We tend not to change prices, we try to maintain them flat as much as possible,” he said, pointing to possible price hikes on new products to reduce high gaps.
Santel said the fourth quarter “started very well” and the company was “very happy with October and the first week of November was very good,” pointing to encouraging signs. He said the consensus of year-end revenues of one billion euros, or $1.11 billion, was “reasonable.” He cautioned analysts that at the end of September, “50 percent of Moncler’s retail business still is to be done so any anticipation is premature.”
In reference to product categories, outerwear still represents Moncler’s core business, but Santel said the company is “investing a lot” in other categories, especially knitwear. He said he was “very happy” with Marcolin’s first eyewear capsule.
Asked about the announcement of an initial public offering of the Canada Goose brand, Paola Durante, investor relations director, said it was “a fantastic brand, positioned differently, with a different proposition and business approach. We don’t think the space is crowded.”