Moncler Reaches $1 Billion Benchmark
The company reached the milestone in 2016, boosted by all markets and divisions.
MILAN — The year 2016 was sweet for Moncler SpA, as net profits rose 17 percent and the company reached the $1 billion in sales benchmark, with a performance that was lifted by all markets and channels.
Earnings in the 12 months ended Dec. 31 reached 196 million euros, or $215.6 million, compared with 167.9 million euros, or $186.3 million in the previous year.
Revenues were up 18 percent to 1.04 billion euros, or $1.14 billion, compared with 880.4 million euros, or $977.2 million, in 2015.
During a conference all with analysts, Remo Ruffini, chairman and chief executive officer of Moncler, said he was “proud” of achieving “another important milestone” in 2016, reached while “staying true to the brand’s heritage and DNA.”
He touted “a solid company with no debt” for the first time in 2016, underscoring how in 2003, when he took over, Moncler had sales of “a few tens of millions, mainly in Italy and through its wholesale channel.”
Things have changed and Ruffini was instrumental in building Moncler to an international brand relying on a retail network that at the end of last year had 190 directly operated stores.
“Today, I am proud to say that Moncler is a brand synonymous with quality, innovation and reliability for a growing number of consumers around the world,” said Ruffini, citing the group’s 3,200 employees “whose commitment and hard work made it possible to deliver this performance.”
“In the last quarter of 2016, Moncler saw double-digit growth in all markets and across all channels, despite an uncertain and volatile environment, that I expect to continue in the near term. Therefore, I consider it fundamental, today more than ever, to have a flexible and streamlined business capable of making decisions quickly. I am, therefore, convinced that Moncler can look to the future with confidence with the aim, also in 2017, to continue to grow and create value for all of our stakeholders,” said the executive. Ruffini observed that 2017 started on a positive note.
Adjusted earnings before interest, taxes, depreciation and amortization, before non-recurring costs related to stock based incentive plans, rose 18 percent to 355.1 million euros, or $390.6 million, resulting in a margin of 34.1 percent, the same as in 2015.
Adjusted operating profit increased 19 percent to 313.4 million euros, or $344.7 million.
In 2016, sales in Italy grew 5 percent to 143.2 million euros, or $157.5 million, representing 13.8 percent of the total.
The Europe, Middle East and Africa region gained 13 percent to 303.3 million euros, or $333.6 million, accounting for 29.2 percent of total. The U.K. delivered a strong performance thanks to local customers and tourists, and boosted by the opening of the Bond Street flagship in London, while Germany and France accelerated in the fourth quarter. During the call, chief operating officer Roberto Eggs said there were “especially encouraging” signs in France, where “Chinese consumers are coming back.”
Revenues in Asia and the Rest of the World were up 25 percent to 418.5 million euros, or $460.3 million, accounting for 37.9 percent of the total. Japan had double-digit growth, and China and South Korea also delivered very good results. Ruffini underscored a “very important relocation” in Hong Kong’s Harbor City on Canton Road. It will be the only store with an entrance from the mall and the street, Eggs said, and will grow five times in size.
The Americas gained 24 percent to 175.2 million euros, or $192.7 million, representing 16.8 percent of total, growing in both channels and benefiting from new openings, such as New York’s Madison Avenue flagship, which showed “encouraging results,” said Eggs, and a consistent growing trend in the last quarter.
Revenues from the retail distribution channel rose 23 percent to 764.2 million euros, or $840.6 million, organically and through the opening of stores. Eggs said the company had secured 14 locations for 2017 in cities such as Dubai, Almaty, Stockholm and Melbourne. Eggs also emphasized the enlargement of the store in Milan’s Via Montenapoleone, which will more than double in size. “The average size of stores is increasing to accommodate new categories.”
Eggs said that “complementary categories are performing very well, with knits, shoes and bags, growing at a stronger pace, twice as much, than outerwear,” helped by “improved visibility” and through a change in customer experience.
Like-for-like sales grew 7 percent.
The wholesale channel posted a 6 percent increase to 276.1 million euros, or $303.7 million, supported by a good performance in the European and North American markets.
Chief corporate officer Luciano Santel underscored that as of Dec. 31, Moncler’s net financial position was positive, standing at 105.8 million euros, or $116.4 million, compared with a net debt of 49.6 million euros, or $55 million, at the end of December 2015, with a strong net cash generation of 155.4 million euros, or $171 million.
Asked by one analyst about the possibility of investing cash in mergers or acquisition, Ruffini said he felt the company was “not very old” and that its retail business started eight years ago. “There are many things to do in our supply chain and there are a lot of relocations to do. There are cities that need better stores, such as Zurich, Vienna or Munich,” he said, pointing to investments in retail also in China, South America and Australia. “Not too fast, but we need to open more doors.”
Eggs also touched on the subject of digitalization, a priority for Moncler. He said while the company has “internalized part of the service,” the plan is to continue to work with Yoox Net-a-porter, “letting them do what they are doing better than us,” as Moncler is preparing for omnichannel in 2018.