Moncler, the challenge on directly operated shops to increase profitability

A single semester, as is well known, always tells part of the story. This is also the case for Moncler. Useful, therefore, to compare - in addition to recalling the focus on revenues from directly operated shops - the dynamics of the latest data with the historical series of the income statement. Well: the luxury group, whose top management the Letter to the Saver heard from, achieved a turnover of 1.23 billion (+11% at constant exchange rates) in the first half of 2024. Ebit, for its part, stood at 258.7 million (21% as a percentage of revenues compared to 19.2% for the same period in 2023). Finally: net profit. This came to EUR 180.7 million (compared to EUR 145.4 million in the first half of last year).

These are upward figures which, albeit with due differences in the wake of the variables influencing the figures in the various years, are in continuity with the last financial years. In this sense, net of 2020 - in which there was the Covid pandemic - and starting from 2021 (in which Stone Island is consolidated for nine months), the business continued along the path of expansion. According to the Bloomberg terminal, adjusted revenues were 2.046 billion (2021) and rose to 2.6 in 2022 and settled at 2.984 last year. The ratio of Ebit to revenue also showed upward momentum. The adjusted ratio was worth 29.5% in 2021 and increased in the following year (29.8%). In 2023, then, the Ebit margin rose to 30%. Of course! The individual items in the profit and loss account moved at different speeds in the course of the years under review or the different periods under consideration. Thus, for example, revenue expansion in the last half-year (+11% at constant exchange rates) is lower than in the first half of 2023 (+24%). That said, however, the underlying consideration remains correct: Moncler is a growing business. And the last second quarter of 2024 itself confirms this. The figures, despite the difficult environment that has created problems for so many other luxury players, are up with revenues in line with the consensus. In particular, among others, Chinese buyers drove sales. True! In July there was a normalisation (together with the French market impacted by the Olympics). But Moncler emphasised that the month in question is hardly significant (far more significant, however, is September, which last year - analysts point out - also suffered from global warming).

Already, higher temperatures. The saver points out that ongoing climate warming can be a problem. A brake on the purchase of society's products. The example? The garments of the Moncler Grenoble brand, which is linked to the mountains and the concept of cold. The luxury company rejects fear. With respect to the Grenoble line, for example, lighter spring collections have already been presented. Furthermore, with regard to the entire Moncler brand, there has long been an effort on product diversification. So much so that, the company recalls, turnover in the second quarter of 2023 was six times that of 2014. Lastly, although there is a structural trend of rising temperatures, what we are likely to encounter,' the company explains, 'are strong fluctuations in temperature and even extreme phenomena. As a result, the demand for garments for the cold, or against bad weather, will presumably remain strong.

Yes, it will remain strong. On closer inspection, despite, precisely, the latest upward figures, the saver also turns his gaze towards the margin outlook. Here the group has indicated, on the one hand, on 2024, that it has the ambition to maintain the EBIT margin at the level of 2023; and, on the other hand, that in any case the indicator will depend on sales performance. A combination which, given the possibility of an Ebit margin not rising further, makes savers turn up their noses. The luxury group does not share the disappointment. First of all because, says Moncler, there has never been any claim to go beyond a 30% Ebit margin. A level - is the indication - that is to be considered absolutely optimal. Then because, the company recalls, in order to sustain the business, investments - such as in marketing, organisation or supply chain - are fundamental and are expensed in the profit and loss account and, therefore, inevitably affect the marginality. Having said that, however, it may be further objected that the same analysts, especially due to geopolitical uncertainty and the economic slowdown, emphasise the normalisation of sales for companies in the sector, including Moncler. On closer inspection,' says the group, although aware of the situation, 'a more detailed analysis is required. First of all, says the company, the second quarter - despite being weaker than a surprisingly strong first quarter - still saw an increase in revenues. Furthermore, thanks to the diversification of markets and products - and together with flexibility in managing supply and inventory - the group is showing its resilience. Finally, Moncler concludes, the management of the business is guided by a medium- to long-term vision. A strategy which, as Covid has shown, makes it possible to manage difficult and volatile contexts.

So far, some considerations on the profit and loss account and its prospects. However, the saver is also interested in the company's business model - and its developments -. In this sense, the company - in addition to continuing to pursue product quality, innovation and contemporaneity - continues to aim, on the one hand, to maintain brand exclusivity; and, on the other, pushes to ensure its inclusiveness. A twofold objective which, among other things, is achieved by strengthening customer communities. These, in principle, - with respect to the Moncler brand - are three and to them corresponds the triple dimension of the brand itself, which is articulated in Moncler Collection, Moncler Grenoble and, finally, the Genius collection. So: regarding, for example, the latter, an event will be held on 19 October in Shanghai - for the first time outside Europe - which will be attended by the brand's various designers, creatives or co-creators. An event -evidently- also aimed at strengthening the brand in the reference community. With regard to Moncler Collection, one instrument exploited is that of the so-called sub-collections. That is, products that, within the general paradigms of the collection itself, satisfy the changing tastes of a part of the community. An example? The company, given the general expansion of the 'quite luxury' trend (more sober garments and classic style revisited in a modern key), considers this trend in its products. With respect, finally, to the more technical Moncler Grenoble, there is, among other things, the continuation of meeting the demand of a community that demands increasingly technical garments in the world of skiing.