MILAN — Moncler on Wednesday was the latest luxury brand to wave away any concern of a slowdown in China, reporting an 18 percent growth in revenues in the first nine months of the year. Kering earlier this week also saw no decelaration in Mainland China, as reported.
“Based on current visibility, Chinese demand is still very good, we are very happy with Chinese shopping locally and in other markets,” said Luciano Santel, chief corporate and supply officer in a conference call with analysts at the end of trading on Wednesday. “Everything we hear about duties, restrictions, rules on goods, we can’t really comment but [it has been] overestimated, we don’t see any, any sign of slowdown,” said Santel.
To be sure, the Asia and Rest of the World regions helped drive growth at Moncler, outperforming all other markets and recording a 32 percent revenue growth to 339.1 million euros, the biggest area for the brand, representing 39 percent of the total.
In the nine months ended Sept. 30, Moncler total revenues climbed 18 percent to 872.7 million euros, compared with 736.8 million euros in the same period last year. At constant exchange, sales rose 23 percent.
“Being able to post a further 18 percent growth also for the third quarter of 2018, despite an increasingly challenging comparison base, is an exceptional result for Moncler which, I believe, confirms the strength of the strategy and our ability to execute,” said Remo Ruffini, chairman and chief executive officer of the company. Ruffini ticked off the initiatives launched in the third quarter, starting with the implementation of the Moncler Genius project and its monthly launches, its 20 pop-up stores, its arrival in about 30 directly operated stores, Pierpaolo Piccioli’s first capsule, and the opening of the brand’s New York flagship in SoHo. “As I always repeat, an idea is nothing without the ability to implement it. This is Moncler’s big difference: our capacity to pursue projects, even the most challenging ones, with great passion and with the ability to bring them to term. The fourth quarter has just started, but we continue to see very positive signs in all our markets. The Chinese Golden Week produced even better results compared to last year, and Moncler’s brand momentum remains strong on all markets. All this allows us to look confidently toward the future, in the belief that our chosen path, no matter how steep, is the right one,” concluded Ruffini.
“Genius is a building with open doors, we will announce the occupants of the building, but we can’t anticipate anything about the new designers that may come,” said Santel. “It is a very important project in terms of communication, product and design,” he said, reiterating that the company does “not expect the project to develop into a significant business overall” and believing it will represent “mid-high single digits” of the total.
Citing the collections’ drops in the third quarter, from Noir in July to the most recent Palm Angels and Piccioli’s capsule, Santel said they were all “very successful and generated traffic in stores. They were helpful for overall business, benefitting sales, but Genius does not represent a material component and it’s not what we are aiming at.” The Moncler Grenoble and the second Fragment drop will be available in November and December, respectively.
Responding to analysts’ questions about the size of Genius, Santel said this year, he expected the project to represent “not more than high, single digits” and that it was “bigger” than the now-ended Gamme Rouge and Gamme Bleu collections, designed by Giambattista Valli and Thom Browne, respectively, which represented midsingle digit. “It’s important to highlight that it is doing well online and with e-tailers, too,” said Santel. He also noted that June “historically is not a strong month, but Genius brought additional traffic and volumes in the second quarter.” The project will “be more impactful in 2019 than last year.”
In the nine months, revenues in Italy rose 8 percent to 122.8 million euros, mainly driven by Moncler’s retail performance, also because of the new Florence store and the Via Montenapoleone flagship in Milan.
In the Europe, Middle East and Africa region, the brand grew 13 percent to 272.4 million euros led by solid growth in both distribution channels and by an increased demand from tourists.
Japan reported robust results also in the third quarter, largely driven by the retail channel.
Mainland China outperformed the rest of Asia-Pacific also in the third quarter. The business in Korea registered a solid double-digit increase driven by strong retail organic growth. “Chinese demand was very strong in the third quarter and totally in line with the first half,” said Santel, adding that there was “a very strong demand” in the first two weeks of October with a Golden Week “better than last year.” Mainland China was “even stronger” and Chinese customers in other countries were double digits higher than last year. Chinese consumers in retail accounted for one-third of total in 2017 and Santel expects they will increase in 2018.
Asked about the Chinese government’s clamping down on daigou, Santel said this issue was not particularly relevant for Moncler. “We have very strict rules in stores to limit the number of product any customer can buy. The demand is even stronger in Mainland China and this had no impact on our business.”
He said Millennials account for 40 percent of customers based on customer data base and in China “more than average.”
Speaking about Moncler’s recent arrival on Tmall, the executive said this was “a very, very important test to understand its validity and we are very happy based on the results, but we can’t yet tell if the impact is material — we started a few weeks ago.”
Sales in the Americas were up 10 percent, or 19 at constant exchange, to 138.2 million euros with solid growth in the U.S. and Canada and in both distribution channels. “The apparent slowdown was not due to the weather,” said Santel, although he admitted there has not been a favorable weather so far, with winter “yet to come” in several markets. In North America, third-quarter sales were mostly driven by wholesale. “We are confident that sell-out will be better than last year. We are very happy and confident in our business in the U.S.”
Santel said the negative foreign exchange impact in the third quarter was less than in the first half and more in line with last year.
In the nine months, revenues from the retail channel rose to 597.3 million euros, up 25 percent, compared to 477.8 million euros in the first nine months of 2017, driven by “outstanding” organic growth and development of the monobrand retail network.
The wholesale channel recorded revenues of 275.4 million euros, a 6 percent gain compared to 259 million euros in the first nine months of 2017, driven by Moncler’s fall collection, the Moncler Genius launches and the shop-in-shop network development. Santel said wholesale is “growing very nicely,” expecting to communicate by year-end a low, double-digit growth and this while continuing to reduce the number of wholesalers, which in Italy for example shrank from 1,500 to 350. “We keep selecting and we keep growing,” said Santel.