Moncler reported H1 16 results after close on 27th July that came in +17% to
€346m Sales and adj EBITDA +10% to €78m, or in line and 3% below JPME
respectively. However, this included excess rent costs relating to upcoming
openings (€3m incremental) and ‘Retail excellence summit’ costs. Excl those,
adj EBITDA would have been +16% on our calcs, 2% higher than JPME. H1
is a small semester for Moncler arguably (80% of EBIT is derived in H2 for
this highly winter biased business) and the stock is up meaningfully YTD
(+21% vs sector -7%). But underlying costs better controlled than expected
and a valuation that remains undemanding for its growth profile make this
attractive still, in our view. Moncler trades on 18.1x CY16E earnings vs sector
on 17.3x on a faster growth profile. Some investors raise the risk of Private
Equity placing as Eurazeo last placed 5 days after a strong reporting (at €17.2)
and still has a 15.5% stake, an increasingly lower stake to swallow though.
Underlying cost base better controlled than expected. Excl the excess
burdens detailed above, we calculate adj EBITDA margin would have been
23.8% or ‘only’ -20bps yoy vs JPME -60bps. The good news stemmed from
G&A, still growing at a fast pace of +16% yoy, but lower than the expected
20s% and GM expansion (+140bps yoy, channel mix driven) converging
with the S&D costs compression (-140bps excl one offs) instead of
undershooting as it did in FY15. We also note that D&A slowed down
meaningfully, a further boost to EBIT. These augurs well. We slightly
raised, and not cut, our FY16E and 17E on the back of these numbers.
LFL came in better than expected at +5%, a strong achievement in light
of the significant comp base (+22% LFL in H1 15). Management stated that
there was no marked difference between Q1 and Q2 in the delivery of this
+5%, that all regions saw positive LFL and China was the best.
Moncler is the last high space growth story in our luxury goods sector
universe. Space growth was c17% in H1 16 incl 6 store openings in H1 and
9 to come in H2. There was some confusion on the call as to whether space
growth might be decelerating more than expected in FY17E with mentions
of ‘8-11 stores’. But this, we understand, refers to the stores already secured
while the target remains c15 stores (same as in FY16E) underpinning our
11% space growth in FY17E. And we believe Moncler has the management
talent in place to manage this fast opening pace.