Moncler S.p.A. (MONC) Earnings Call Transcript

Good evening. This is the Chorus Call conference operator. Welcome, and thank you for joining the Moncler 9 Months 2026 Interim Management Statement Conference Call. [Operator Instructions] At this time, I would like to turn the conference over to Ms. Elena Mariani, Group Strategic Planning and Investor Relations Director. Please go ahead, madam.

Thank you, operator, and thank you all for joining us tonight. I will host this call together with Luciano Santel, Chief Corporate and Supply Officer. And first, I will briefly walk you through our Q3 results. And then I will be happy together with Luciano to take your questions. Before starting, I need to remind you that this presentation may contain certain statements that are neither reported financial results nor other historical information. Any forward-looking statements are based on group current expectations and projections about future events. By their nature, forward-looking statements are subject to risks uncertainties and other factors that could cause results to differ even materially from those expressed in or implied by these statements, many of which are beyond the ability of the group to control or estimate. Let me also highlight that given the nature of our business, interim results can be influenced by seasonal effects and therefore, cannot be taken as a proxy for full year trends or results. Finally, I remind you that the press has been invited to participate to this conference in a listen-only mode. Okay. Let me start with a brief comment on the group 9-month revenue development, focusing on growth at constant effect. In the first 9 months of the year, the group generated revenues of EUR 1.895 billion, up 6% compared to last year with Q3 at EUR 606 million, flat year-on-year. The Moncler brand revenues were up 6% in the first 9 months and down 1% overall in Q3. The performance in the quarter was impacted by a sequential slowdown in the DTC channel, while wholesale recorded positive growth. Stone Island brand revenues were up 8% in the first 9 months and up 5% in Q3, with both DTC and wholesale contributing positively to the sales development in the quarter. Now moving on to Page 4. I would like to highlight some of the key Moncler brand initiatives of the third quarter. And one of the most iconic moments, not just over the past few months, but I would say of the entire year was the celebration of Moncler special relationship with New York. After decades of collections between Moncler and New York, we told the story of our relationship with the city through one of the largest open air public exhibitions that New York has ever seen. This initiative turned the whole city into a gallery, with the main highlight being a dedicated exhibition at Grand Central Terminal. And this initiative was accompanied by a phone narrated by Alicia Keys and by a series of very powerful portrays shot by iconic Photographer Platon, celebrating global icons and friends of the brand. You can see some of them in the page, all united by creativity, talent and, of course, shared connection with the City of New York. And during this incredible week, on September 10, we unveiled our Fifth Avenue flagship store, which is not just our biggest store opening. It is generally the strongest expression of the Moncler universe. It is way more than a simple retail space. Hopefully, many of you have already had the chance to see it. We designed it as a place for community, discovery, cultural exchange where the many size of the Moncler universe comes together through products, services and also experiences. The opening also provided early access to our second collection cocreated with LoveFrom, Jony Ive's co-created collective. And also, it marks the launch of Moncler to Measure, our new made-to-order atelier and, I would say, the highest expression of Moncler's craftmanship and product personalization. So all in all, this was not just about a store opening, as I said. New York in Moncler has been 30 days end-to-end activation celebrating the long-lasting relationship between ourselves and the City of New York, which we expressed through multiple executions at every customer touch point from our campaign to dedicated CRM activation to a unique pioneer's dinner to the platoon portrait and so on and so forth. So a very big moment for our brand. And the results overall were great ahead of our expectations in terms of brand reach, engagement, press coverage, digital traffic, all the brand metrics that we monitor. And this store has also been performing very well since day 1. But this quarter was not just about New York. If we move to Page 7. As you can see, we also launched a new chapter of our long-standing collaboration with Hiroshi Fujiwara with the new segment collection designed around some of the decisive codes of both Moncler and Fragment, and centered around the revisited version of the vintage Japanese souvenir jacket. And finally, talking about footwear. During the quarter, we introduced a new Moncler CityTrek, a technical outdoor-inspired sneaker that brings together performance, craftmanship and comfort, which performed extremely well. And I would also flag a new collaboration with Clarks Originals, which reinterpreted the iconic Wallabee through Moncler's technical expertise. Moving on to Stone Island, let me highlight the most important brand initiatives launched during Q3. First, the brand [indiscernible] its retail presence with the opening of a new flagship store in Rome in Via del Babuino, which we developed in collaboration with the OMA/AMO studio. As you know, we remain extremely selective with new store openings at Stone Island, and this was one of the few core projects on which we worked this year. very consistent with the brand DNA and translating Stone Island's culture of research and material innovation into a profitable retail experience. During the quarter, Stone also continued its dialogue with the world of music and contemporary culture through Stone Island Sound, presenting The Calm and the Chaos, a short film capturing the energy of various brands traveling across Europe and North America between the case of the shows and the comp of the downtime featuring both current and [indiscernible] thesis. So this was another way for which the brand kept engaging with communities that share its values. And finally, in London, Stone has taken over since September 21, the corner shop at Selfridges, with big collector series and installation that is still ongoing that you could visit until November 6. This is a project that is bringing together collectors archive pieces with current collections as well as exclusive products. And laterally, also a program of the film, music, art and tops that have been celebrating the strong connection between Stone Island heritage and its very strong and loyal community. Talking about numbers, we will start with the Moncler brand on Page 9, looking first at the performance by geography. Starting with Asia, which, as you know, includes APAC, Japan and Korea. Revenues were up 5% year-on-year at constant currencies in Q3. All countries within the region registered positive growth in the quarter with Japan and Korea doing better than others, but overall, a pretty good broad-based performance. In EMEA, revenues were down 8% in Q3, in line with the performance registered in Q2. Here, trends continue to be impacted by subdued tourist flows, particularly from Asia. Given that, as you all know, we over-index Asian nationalities, but we also experienced a somewhat softer local demand over the quarter. And finally, the Americas region was up 2% in Q3, slightly decelerating sequentially mainly due to some slower traffic observed during the summer period, particularly over Tier 2 cities, while Tier 1 cities where our awareness is stronger performed pretty well, including New York. Looking at Moncler revenues by channel. The DTC channel was down 2% in the third quarter at constant currency, which reflected a more challenging operating environment. And as just mentioned, subdued to risk flows, particularly in the EMEA region, while trends, including tourists, remained more solid within Asia. Looking at wholesale. Revenues were up 2% in Q3 despite our ongoing efforts to upgrade the quality of our distribution. And let me take this chance also to remind you that for fiscal year 2026, we continue to expect wholesale revenues for Moncler to be flattish, so no change in our yearly outlook for this channel. Moving on to Stone Island regional trends on Page 11. You can see that Asia continues to outperform with revenues up 19% in Q3 and all the main countries in the region are continuing to register strong double-digit growth. The Americas region was also strong, up 13% in the quarter, supported by continued strong growth in the DTC channel. EMEA revenues instead were flat in Q3, which reflected a sequential slowing traffic in the DTC channel, also impacted by our own decision to reduce markdown activities in the core region of the brand over summer, a decision taken in light of the ongoing strong performance of the full price DTC channel, fully aligned with our strategy to pursue a healthy and clean growth profile. And looking at trends by channel, Stone Island DTC remained on a positive growth trajectory in the third quarter, with revenues up 2%, despite what I've just mentioned, i.e., some slower traffic in the brand's largest region, EMEA, also due to the decision to limit markdowns. Importantly, full price sales continued to grow double digits globally, which is an important indication of the solid underlying trend of the brand. Looking at wholesale, revenues were up 7% in Q3. This performance was supported by positive underlying growth. but also by a different timing of deliveries between Q3 and Q4 compared with last year. And this is because last year, as a reminder, we had experienced some delays in the deliveries that penalized Q3 and shifted some revenues in Q4, something that will reverse this year now that we have anticipated the production cycle at Stone Island. So this will imply a double-digit negative wholesale decline in Q4, which would lead to flat wholesale revenues in the fiscal year, fully aligned with the guidance that we shared at the beginning of the year. And finally, let's briefly go through the evolution of our store network. At the end of Q3, the Moncler U.S. network reached 305 units. The most important store related activities in the quarter were, of course, the previously mentioned opening of the New York Fifth Avenue flagship store, but also the expansion of the [indiscernible] in Paris, where we accommodated a brand new VIP area. And looking at Stone Island, the directly operated store network counted 94 stores at the end of September, down 1 unit compared to the 95 stores registered at the end of June. I'm going to stop here now and I will hand over to the operator for your questions. [Operator Instructions] And operator, now you can open the line. Thank you.

[Operator Instructions] First question is from Erwan Rambourg, Goldman Sachs.

Erwan from Goldman. Thank you so much, Elena and Luciano and well done on navigating what seemingly was a pretty tricky quarter. So I'll stick to 2 as instructed. So maybe a word on Europe. I think you had mentioned last quarter that you were seeing a sort of buy now, wear now attitude. Is there any way to measure maybe what you've lost in Q3 linked to tourism flows evaporating and what you might regain in Q4? How do you think about the quarter, which historically has been more local in nature? Any indications on how you think about Europe here? And then maybe the second question on Asia. I think you said all markets were up, particularly Japan and Korea. But likelihood is China was flat to up as well, which is a bit counterintuitive given what the peers are doing. So can you talk about China, what you're seeing in China? Are you -- is it a case of you massively taking share? Or is it a case of the outdoor segment outperforming other verticals in luxury? Any comment on the psychology of Chinese consumers in general and then as it relates to your 2 brands?

Okay. Erwan, thank you for your question. I mean the first question about Europe, of course, it's difficult to quantify how much business we have lost and how much we can recover. But I mean you made the 2 most important points on point is to some extent, also associated with the weather, of course, talking about Q3, July and August, even though they are quite meaningless month for our business, but the weather was particularly hot September, when normally the [indiscernible] season starts this year more than last year temperatures were quite high and higher than last year. So overall, this is something that, for sure, impacted the business in Europe. But honestly, not only because this increase in temperature is something that regards all the different regions, of course, to a different extent that is across the board. And of course, this is something that, I mean, we expect and we plan to recover, but I don't know which extent in a little bit different discussion talking about tourist because tourist flow historically, as interested Q2 and Q3, [indiscernible] Q3, Q4 historically has never been significantly impacted in Europe by tourists from other regions. And so this is something that unfortunately impacted Q3. And as I said, mostly tourism coming from Asia. And I'm not sure how much of this loss in tourists in Q3 can be recovered in Q4. And of course, it will totally depend on how and if and how much the tourism flow will get back to what it was in the past. So Europe still, I mean, region that in this quarter has performed has been softer than the other regions, totally in line, honestly with Q2 and for the same reasons you highlighted. Talking about China, of course, China was still is the strongest region or, let me say, better the strongest customer for our brands. Wherever Chinese customers to buy when they buy locally or when they buy in other regions, in other countries that we believe that our brand is very strong in China. Honestly, what we saw in Q3 and what we still see at the beginning of Q4 is a soft traffic. Of course, traffic has been quite soft honestly, across the regions, of course, to a different extent. Even though with on the other side with a better conversion rate. But I mean, traffic overall was soft in China, softer than in Q2. [indiscernible] is about the very first quarter -- the very first week of the current quarter, when there was the week. I mean, you didn't ask the question, but I'll let you highlight at this point because [indiscernible] did very well. And I'm highlighting this because it was better than last year when it was better than the year before. And so again, in China, every time there is some kind of important events like call the week or in Chinese New Year in January or mean the upcoming [indiscernible]. Of course, we don't know yet. But every time there is an important event that generates traffic. We see people, we see customers coming to visit our stores and buying our product. And this, of course, even though it is quite meaningless while week only out of 13 weeks in the quarter and of course, in China and close by countries only. But this is miles upon the business result. But this is very important for us because once again, it shows that the brand is strong in China. And every time people that come and visit the stores and come to us or they buy the product. So overall, our view on China, if I look at the overall environment, we see objectively a soft traffic. We see less traffic in the shopping malls, less people going around. But again, looking at our brand we are honestly confident about China. Also, I mean the reason why traffic is soft in China as well as in the other regions. So once again, is you may be due also to the temperatures that in September and in October as well higher than last year. But again, we have to leave with the weather, with the temperatures, but overall, what matters to us is the strength of the brand. And I think that China is a very healthy region for Moncler.

Next question is from Anne-Laure Bismuth, HSBC.

I will stick to 2 questions. The first one is on the sales by nationality. So will it be possible to give us some granularity about the performance by cluster. And particularly on the Chinese materiality, if we can have the breakdown between onshore and offshore? And my second question is that given that Q4 accounts for over 40% of your [indiscernible]? Or are you aging against seasonality on start to the winter in key markets also like EMEA and how are you managing the inventory risk related to that?

Okay. Thank you, Anne-Laure, for your question. Okay, the first question about the cluster. I mean nothing particularly different cluster by cluster. Honestly, all the clusters have been more or less flattish, excluding Europe, excluding European cluster that is down, that is negative. Nothing particular to add. I can tell you that talking about onshore/offshore Korean for sure, we're much stronger in their market than a broad mean Korean customer sell part of the tourist flow that we missed in Q3. Japanese historically, but I mean the number, I mean, the flattish number reflects their business, mostly their business in the local market. Fo Chinese, I would say that is more or less equally distributed between the local market and other regions. And in the Americas, I will say that overall, more in local market than in Europe, talking about the region where they come [indiscernible] overall. This is the color I can add. But again, all the regions, all the countries, all the clusters are flattish, more or less excluding Europe that was evidently negative. Okay. The second question was about -- I mean, inventory risk into Q4. And I mean, the inventory risk just in case business should not be good in Q4. I mean, this is a very understandable question. Of course, the simple answer is that inventory is mathematically, say, related to business. That means that if a business will be good. inventory will be lower. And if this should not be the case, of course, inventory, inventory may grow. But this is something, honestly, that I can't predict [indiscernible]. Talking about actions. Of course, we are taking actions as usual in making production in season. That is something we did last year and over the past years. And of course, right now, we are slowing down some production, and this is some kind of action we normally take when the business trend is not particularly strong. But of course, I said that other actions we can take right now that we are in -- I mean, closer to the end of October are quite difficult. Of course, we have no reason to be afraid about this quarter, except the fact that overall, again, I mean, weather is not on our side, but you know that I don't like to talk about the weather. Also the weather is a never-ending discussion we are having have been having every year in this period in this quarter. It is not October, November or December. But at the end, you know very well our financial results of the Q4 of the last year. So it's not something, honestly, we are particularly worried about, but objectively, of course, some of the softwares of traffic is due to temperatures mostly in September and October. I think I answered all your questions, Anne-Laure,, but if not, let me know.

Next question is from Thomas Chauvet, Citi.

I have 2 questions, please. The first one on the composition of growth for Moncler brand. So minus 2 DTC, as soon space was probably not very different in Q3 than the first half, so that would imply like-for-like of around minus 5. Would you be able to give a rough ID of the mix effects, pricing, volume that may have contributed to this minus 5? And then secondly, do you have any perhaps indication for next year? I think last summer, Luciano, you gave a preliminary guidance of 4% space contribution for next year. Pricing, you said, around low mid-single digit. Have you refined these estimates? Are they still valid? Or any other elements of guidance you would like to provide now rather than perhaps in February?

Okay, Thomas, thank you for your question. I mean the first question, of course, we don't report like-for-like in this quarter. But your assumption is reasonable. By the way, of course, reporting a negative DTC growth. This implies a negative like-for-like, higher than the 2%. How much this is due to volume to price, I mean, let's say that getting back to the retail metrics, mostly due to traffic more than the other retail metrics because, as I said before, conversion was up, UPT was up. Pricing was up, not that much because, I mean, and that we get into these details, but I mean probably may help you to understand better in Q3. Also due to the temperatures, our business with the spring summer season was did better than the full winter season because, of course, people when the weather is not yet quite cold. They ended by more lighter product than [indiscernible] products. And this implies on side a decrease in the pricing mix. But on the other side, we have an increase in price mix on the full winter season. So again, long story short, pricing was positive, but not as much as we expect the full winter to be positive. But talking about volumes, volumes decline was of course, the predominant reason of this decline. The other question was about FY 2027. Yes. So the space, I mean, for the time being, we don't have different views to the best of our knowledge about the space contribution in 2027. We still maintain our low to mid-single digit, that implies more or less 4%. Talking about pricing, I can tell you that our prices next year will still grow prices only in the region of low single digit. Of course, there might be a mix effect that, I mean, is I would not be precise right now is something that we can elaborate better during the next call. But this is what I can tell you right now.

Next question is from Daria Nasledysheva, Bank of America.

This is Daria from Bank of America. I have 2 as allowed. The first one would be, could you please share with us any color on the shape of the quarter? You flagged softness in July and just now. But since then, has it developed and since the end of the quarter, how has the retail trend been for Moncler on a global basis? Thank you very much for the Golden Week commentary. However, just like on a global basis, what sort of acceleration in October and potentially Q4, should we be thinking about as I understand it's very difficult to answer right now, but it would be very helpful. And my second question would be, what would you say you might be doing differently next year for the summer selling season? What changes are you thinking of making to the product assortment, inventory management or anything else worth highlighting for us as we start to look at building our models for next year quarterly as well, and obviously, comps don't really matter? So just how should we be thinking about summer next year?

Okay. Thank you, Daria. About, I mean, some more color on the shape of Q3, as I said before, July and August softer September a little bit better from a traffic point of view, but also, of course, from the business point of view. As I said before, the start of Q4 was not much different from Q3, so still traffic soft, not particularly strong, but something I highlighted was the Golden Week. But of course, as I said, not particularly meaningful for our business results because we are talking about 1 week out of the 13 weeks of the quarter, and we are talking about 1 region that is China and close by countries. But again, very important for us, but it is important for the brand because it shows it is a testament, once again, that our brand in China is good. Another aspect I highlighted before, at regards on the other side of the world that is North America, U.S. is the good performance of our New York Fifth Revenue store. Of course, we just opened at the store in mid-September. But I can tell you that from the very first day of business, that store is performing well and in line even a little bit better than our plan. And of course, this was in September, but still maintaining the same trend in October. So I think that this is the color I can tell you about Q3 and also about the start of Q1. The other question is about Spring/Summer. Of course, as you know Spring/Summer, what do we keep calling as Spring/Summer, but actually, we should call it product or transitional product, the lighter products or whatever that meet a demand in some amounts that are not called like April, May, June, July, August, but also September and October when the Fall/Winter starts late. This project that, of course, started many years ago, but that -- I mean we were a particular intentional also from the communication point of view, this year at summer '26 is and will still be very, very important for our future. I can tell you that the summer of '26 this year did well, did very well. And something I said before that I mean talking about the weather, the hot weather in July and August, the mild start -- the mild temperature in -- at the start of the fall in September that was something that, of course, impacted -- that negative impacted traffic and our business was positive or summer because the pre-summer product in Q3 did very well with a very good growth rate. Of course, this is not visible in our business results, but it's something we take very seriously for next year, for next season. And next year, you will see still a Moncler, let me say, very intentional in developing Spring/Summer collection, very intentional in communicating the collection, but also very intentional in the amount of product we will put in the stores. You will see more stores carrying the full collection of the summer more than this year and with a higher, higher that. So the investment next year will be higher. And the year after will still be even higher. So this is a long journey. But just to tell you, and to represent that based on this year results next year, we will invest more. And based on the results of next year, we will keep investing because this is very important, as you know, for our business and even more important now that, of course, there is a discount of volatility in [indiscernible] and also this kind of behavior from customers that we call by [indiscernible] now. It's very important to have the right product to meet the demand in all the different amounts of the year without changing at all our DNA that is still and will still be forever based on winter cold mountain, but we also believe that we have a space also in the other seasons to become relevant as a brand.

Next question is from Luca Solca, Bernstein.

At the risk of asking the obvious, Luciano, you were saying that the spring/summer development is not visible. Would you be willing to give us a good rate that you achieved year-on-year on this product so that we can separate the wheat from the chaff, we can separate the tourist effect and then the Fall/Winter not being bought ahead of the season? The other question I have is on wholesale. You've been providing very clear full year guidance. This quarter, we see wholesale growing faster than retail. I wonder how you read that. Are you comfortable with the amount of inventory that you traditionally kept very tight in the wholesale channel, would you be continuing to be comfortable with that. And would this be, let's say, a good indication of how strong the Fall/Winter could be as you're standing ahead of the season or a push into the channel?