Good afternoon. This is the Chorus Call conference operator. Welcome. Thank you for joining the Moncler Q1 2023 Interim Management Statement. As a reminder, all participants are in listen-only mode. After the presentation, there will be an opportunity to ask questions. Should anyone need assistance during the conference call, they may signal an operator by pressing star and zero on their telephone. At this time, I would like to turn the conference over to Ms. Elena Mariani, Strategic Planning and Investor Relations Director. Please go ahead, ma'am.
Thank you, Operator, and thank you all for joining our call today. The interim management statement call is hosted by Luciano Santel, Chief Corporate and Supply Officer, and by myself. I will start providing a brief overview of our results, and then Luciano will be happy 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 the 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. Great. Moving to page three of the presentation, I would like to start our call today commenting on The Art of Genius, an unprecedented event which took place on February 20th in London that marked the evolution of Moncler Genius from a universe of collaborations with fashion designers into a real platform for co-creation across different industries, including the world of art, design, entertainment, music, sports, and culture.
These extraordinary events at Olympia London have seen the physical participation of over 12,000 people. It became the biggest brand event in Moncler's history from the point of view of brand reach and engagement, beating the recent record set by the 70th anniversary with results that have surpassed any expectation. That evening, we presented collections from Alicia Keys, Pharrell Williams, Roc Nation by Jay-Z, Salehe Bembury, Palm Angels, Fragment, Mercedes-Benz, adidas Originals, and Rick Owens. All these collections are being launched and will be launched over the coming months through both Spring/Summer and Fall/Winter 2023. Talking about Genius, if you move to page four, we can quickly go through the two launches that we had over Q1. First, JW Anderson and then the first launch from The Art of Genius, the Alicia Keys collection, launched at the end of March.
This quarter was not just about Genius. As you know, we continue to focus on all the three dimensions of the Moncler brand, Genius, Grenoble, and Collection. When it comes to Grenoble, we're very proud to say that after a soft launch last year, this year, we have successfully launched our first ever full spring/summer collection featured by Shaun White, our Grenoble brand ambassador. This collection is based around super versatile garments fitting all kinds of weather and activities, and we're very proud of this. Last but not least, in spring/summer 2023, we introduced new variations of colors and styles in our Trailgrip family. The new Trailgrip Life is a lighter and slimmed-down version of the original Trailgrip, but still maintaining its comfort and excellent technical power. Moving to page five, let's talk about Stone Island brand initiatives.
First, let me highlight the extremely successful footwear launch in collaboration with New Balance. Stone reinterpreted New Balance classic 574 style using a distinctive design and a linear and more modernized structure. It was an enormous success, and all pairs were sold out practically immediately after launch. We also launched the new Ghost collection, derived from the concept of camouflage with totally monochromatic pieces in 100% organic cotton fabric, and also the new Marina collection, characterized by navy functionality, innovative fabric, pastel colors, and a reflective Stone Island Marina print. We will keep on working on the brand evolution in order to increase the voice, the audience, and the relevance of the brand worldwide.
With this respect, we're pleased to announce that the second phase of development of the brand strategy will be led by Robert Triefus, who will join as CEO of Stone Island starting from June 1st. Let's now move to page six, where we provide an overview of the group Q1 revenue results, focusing on growth at constant FX. In the first three months of the year, the group generated EUR 726 million of revenues, up 23% versus last year. The Moncler brand, accounting for 83% of Q1 group revenues, generated over EUR 600 million of revenues up 28%, while Stone Island grew 5% versus 2022 to EUR 122 million of revenues. First, let's focus on the Moncler brand only, moving to page seven, where we analyze in detail the performance by region.
Asia, that, as you know, includes APAC, Korea and Japan, generated over EUR 300 million in the first three months of the year, contributing to 50% of total revenues. The region rose by 32%, boosted by a strong demand from Chinese customers, also supported by the lifting of COVID restrictions, but not only. Both Japan and Korea continued to register a very strong performance. EMEA was up 29% and contributed for 36% of Moncler revenues, driven by strong demand both from local customers and tourists, particularly coming from the U.S. and Korea. Local consumption in this region continued to grow at a double-digit pace. Q1 revenues in the Americas, 14% of total sales, grew by 9% in the quarter, accelerating sequentially compared to Q4, despite a continued significant outflow of U.S. tourists, particularly towards Europe.
Let's now focus on Moncler brand revenues by channel on page eight. In the first three months of 2023, the DTC channel recorded an extraordinary performance, up 34% with strong growth across all markets. This is true for both the physical and online channel that were both up strong double digits. Wholesale grew by 5% in line with management expectations. Looking at the rest of the year, the performance of this channel will be impacted by the newly approved conversion of Nordstrom from wholesale into a hybrid retail model, which will have a material effect on wholesale revenues already from the second quarter of the year. Moving now to Stone Island regional trends on page nine. EMEA grew 4% in Q1 with Italy and France performing particularly well.
Asia was up 28%, thanks to both a great organic growth in APAC, but also to the effect of the conversions of the Japanese stores that happened in August 2022. The Korean market was weaker also due to the ongoing change in business model. Americas, the smallest region for the brand, was down 20% year-on-year. Wholesale was impacted by a weaker trend and a more cautious approach among U.S. department stores. However, the DTC channel recorded a positive performance. Looking at Stone Island trends by channel on page 10. Wholesale recorded a decrease of 7% in the quarter, mainly due to the Asian conversions, but also to the very selective strategy in the development of this channel with a strong control over volumes.
The DTC channel instead was up 40% thanks to the very strong organic growth in EMEA and also thanks to the conversions. Although, please note that the performance of this channel would be double-digit positive even excluding the impact of these conversions. The direct online channel also continues to register solid double-digit growth. Last but not least, let's briefly examine our store network on page 11. At the end of March, Moncler retail stores reached 255 units while Stone Island stores were 71. Over the course of Q1, Moncler saw four DOS net openings among which Dallas, for which you can see some pictures on page 12, but also London Heathrow and Seoul HD Mokdong. The Stone Island network instead, saw one net closure.
You can see, however, the beautiful pictures of a new store in Sanya, Hainan classified under wholesale, and of the store in Kobe, Japan, on page 13 and 14. We reached the end of the presentation. I will now hand it over to the operator for your questions. Operator, you can now open the Q&A session. Thank you.
Excuse me, this is a conference call. Operator, we will now begin the question-and-answer session. Anyone who wishes to ask a question may press star and one on their touch-tone telephone. To remove your question, please press star and two. Please pick up the receiver when asking questions. The first question comes from Edouard Aubin of Morgan Stanley.
Good afternoon, Elena and Luciano, and congratulations for the strong, very strong performance. Two or three from me, the first one on China. I think in Asia, as you said, Elena, organic growth, sales growth was up around 32%. I don't know if you could provide some, you know, more specifically the performance in China and if you would be kind enough maybe to give us the performance for the fourth quarter last year, the comp base. That would be one on China. The second one on China, it seems clear so far in the result season that there is quite a polarization of performance so far this year, further polarization in the Chinese market. In your view, sorry, what is driving this?
Maybe to ask the question another way, what are you doing in China, which is really particularly resonating in the Chinese market? Lastly, you know, I know it's, you know, sales results, but on you gave earlier in the year an EBITDA guidance of around 30%. I mean, you know, you are taking prices up, you're gonna get operating leverage, advertising is gonna remain around flat at about 7% as per your guidance. You know, shouldn't we expect, you know, some margin expansion, you know, given the strong performance year- to- date? Thank you.
Okay. Thank you. Thank you for your question. About China, I mean, Asia overall did very well in the first quarter. Talking about China did extremely well. I mean, just to remind you what happened in the last quarter of last year, you may remember that the beginning of October was very strong and then there was a month and a half of lockdown in China. At the beginning of December, business started to recover very nicely in December and in January. Honestly, there was some kind of a rebound with a very strong Chinese New Year. In the weeks before and after Chinese New Year, China was up a double digit. February also was very strong. March also very strong.
From the fact that from mid-March last year until the end of May, you may remember China was in lockdown. I mean, from mid-March, including April, I mean, China is doing very well. It is up triple digit, but the base of comparison with last year is not, is not of course meaningful because last year there was the lockdown. Something important, you know, some color to add about China is that, I mean, the release of the strict Covid policy allowed the business in China to recover very, very, very well. But also the business in the areas close by China, I mean, I am thinking of Hainan, which is still China, of course, but, I mean, there were no people in November.
Now, in the first quarter of the year and again in April, in the island, in Hainan Island, we are doing very well. We have three stores there. They are reported under the wholesale channel because they are operated by the local partner, China Duty Free, they are doing very well. Something I like to remind everyone is that Hong Kong is doing very well. Hong Kong, many people said in the past that was dead. Well, now Hong Kong, it's not yet of course at the level of 2018 when it reached the peak in business. Business is getting better and better and is getting closer to that level.
Of course, Macao, of course Taiwan and also the Southeast Pacific, Singapore, Australia, I mean all of that region did very well. What do we do well in China or better than others? I mean, I don't know what, and I want to compare our brand with the others. For sure I can tell you that, I mean, the brand in China is very, very strong. I mean, the brand momentum in China, and not only, but China first brand momentum is very strong. I can tell you that also our business strategy that has been driven since ever by a very strong brand strategy and a very selective distribution strategy is something that is delivering good results.
Because you know, we don't have so many stores in China, and over the past two years we have been focused more on expanding the existing stores and to transform them in flagship stores. I'm thinking of Chengdu, Hangzhou, Beijing, Sanlitun. Now, we just opened a few days ago in Shanghai, the new store in Plaza 66, relocating the previous store that was in the basement but still doing big volumes. The making of that store on the ground floor, a real flagship store. We will locate China World. I mean, our strategy, distribution strategy has been on one side, very selective, and on the other side, very brand oriented.
Something very important, our retail operations in that market, but not only, but in that market specifically, I think that are very high level. This is thanks to the, I mean, Retail Excellence project that had been implemented in all the regions. For sure the execution of that project in China is definitely excellent. This is, I mean, in a few words, the explanation of why our brand is doing so well in China. Question number three. I mean, operating leverage. I mean, theoretically, I mean, you are right, of course. On the other hand, again, I mean, we have, I mean, our target, our priority, as I said, I mean, and you know very well, is not how to increase our operating margins, but how to make our brands both stronger and stronger.
Having said that, we have a target in mind, we have an ambition in mind, which is to touch or to barely touch the 30% operating margin. This is still in our mind. You may be right, but I mean, it's more important for us as a management team to keep investing in the brand, in the organization, to make this company stronger and stronger than to achieve one or two points higher operating margin. For the time being, honestly, our position is still the same. I told you, and I said this to the market in the past, 30% is a very good target that we have still in mind. We don't even think of doing more or better. Thank you.
Thank you, Luciano.
The next question is from Melania Grippo of BNP Paribas Exane.
Good evening, everyone. This is Melania Grippo from BNP Paribas Exane. I have three questions. The first question is on Moncler retail. You reported very strong trends. I was wondering if you could give us an idea of how this compare with your current trends. Are you seeing a strengthening from this level? My other question is on the U.S. and the American cluster. Could you please tell what was the performance of the cluster in Q1? What are you currently seeing, if you're seeing any deterioration in the cluster as well as in the U.S.A.? Finally, on Stone Island, U.S. was quite weak. You explained the reason, but do you expect this trend to continue for the rest of the year? Thank you.
Thank you for your question, Melania. First question about retail. I mean, retail, again, needless to say it again, first quarter was very strong across the board. April is substantially in line with the first quarter with the same color. I mean, Europe in line, even a little better. China better, but again, remember that the base of comparison is much easier in April than in the first quarter. U.S., that was already first quarter a little bit softer than the other regions, is in April a little bit softer. Not the DTC. I mean, the DTC is still positive, and DTC is still doing well. The wholesale channel in the U.S., I'm talking about the department stores, their business trend is definitely softer, and their approach is softer and much more cautious and prudent in placing reorders.
I mean, our wholesale business in April is not so material, but last year they placed more reorders than this year. This is the only, let me say, shade of our business in the U.S. The retail business, the DTC business is positive and doing well. About U.S. cluster, again, the point is that our DTC business in the U.S. is positive and doing well, notwithstanding the fact that many American customers are traveling to Europe mostly, and are shopping in Europe. They represent the first component, the first contribution of outside the region customers, together with other, with other nationalities. Specifically, one very interesting to mention is Korea, and the other one is China.
I mean, the Chinese is, I mean, still represent a very small contribution of our business in Europe, but that contribution is growing week after week. Back to your question. The U.S. cluster is doing well. It is up double-digit. Putting together, of course, business in the U.S. and business in Europe, mostly with the U.S. customers. Last question about Stone Island. I mean, our view for the year is, I mean, top line in the region of a high single-digit, honestly. I mean, behind this number, this mid-single-digit number we report in the first quarter, of course, as you see, as you know, there are two different channels. One, very good, which is DTC. The other, negative, declining, that is wholesale.
Of course, both numbers are impacted by the internalization of our business in some markets, specifically Japan and the DTC, the DTC channel in the U.K. Even without this internalization, the retail business would be double digit up, and the wholesale business would be more or less flattish. Again, two different channels. The first one, strategically very important for us because it's the channel we have invested more. We have been focused more over the past two years after the acquisition. The other channel that is, on one side, softer the channel. On the other side, our approach is and will be more than ever, very, very selective with very strong control over volumes as Elena said before.
I mean, this is the picture of the first quarter. For the rest of the year, again, we will keep investing and focusing on the DTC channel, maintaining this very strong and selective approach in the wholesale channel. With the, I mean, the top line, that again, we see the top line in the region of a high single digit.
Thank you.
The next question is from Luca Solca of Bernstein.
Yes, hello, good evening. The first question again on Stone Island and a bit of a broader question here. You presented the acquisition as of Moncler 10 years before. I wonder on this grand project of turning Stone Island into a Moncler, into a future Moncler, where you see you're standing. What are the areas where you have progressed the most, and what are the areas that are still to be addressed? What do you expect the new CEO to focus on? What would be the agenda for Robert as he comes on board?
The second question deals with your events that are becoming more and more impressive. I think that the genius of the Genius event, forgive my pun, is that it caused a huge amount of buzz in the beginning while costing similarly to a traditional catwalk show. I seem to understand that the new and most recent events must have required significantly more investment and more costs. I wonder if you could tell us how you feel about that, and if you feel that the returns you've been achieving on the back of these events outweigh the extra costs, and if the, let's say, return versus cost ratio is improving or not.
Then, as we're just about to move into the two quarters that are least important for you, I wonder what you think about your seasonality prospects and if you're set up to offset some of the weakness in top line growth on the back of the lower season hitting the brand this year because of all you've done in terms of diversifying your product assortment and moving into other product categories. Thank you very much.
Okay, thank you, Luca, for your questions. I mean, the first question about Stone Island. I mean, what did well, what did wrong. I mean, we spend our day to fix problems and not to celebrate success. I think that something important to remind everyone is that 10 years ago, Moncler was not such a brilliant brand as it is right now, not celebrating such a great result of the first quarter. There were lights and shade in Moncler, as there are lights and shade in Stone Island now, for several different reason. First of all, I mean, when we decided to implement that acquisition was an acquisition of a brand, okay? I mean, we didn't look at the results.
Of course we did, but, I mean, our first priority was the value of the brand and the potential of that brand, okay. Of course, we decided immediately that the first priority was to develop, to build a strong DTC strategy. This is what we did, and I would say successfully, because we have internalized the business in Korea, in Japan, in, again, the DTC business in U.K., not yet the wholesale business that will be internalized next year, not yet the China business that will be internalized next year. In parallel, we implemented, I mean, we put at the help of Stone Island, the retail, the strong retail know-how that we have developed over the years.
We have implemented the same we did in the past with Moncler, the Retail Excellence project in Stone Island under the direction, under the leadership of Roberto Eggs. I think that the results, the DTC results of the first quarters are quite good. Of course, again, some shades and some lights. Lights in Europe, lights in Japan, some shades in Korea, as Elena said before, because that market is soft, softer than other Asian markets, but also because we have implemented the real transformation of that, of that business model. We have converted the retail business that was operated by independent third parties to a retail network that is operated by our own store managers that have been hired over the past few months.
Of course, it will take some time to these people, to, I mean, to get the full understanding and knowledge of the brand, of the business, and of their customer base. Again, we are confident about the process. Overall, again, we are satisfied. I don't want to say happy, but satisfied with the results. I can tell you that are totally in line with our expectation and with our long-term plan that is associated with the brand value, not just to the business we can generate or we can increase in the short term, because this is not, and it has never been our priority. I hope I answer your question. Elena?
Yes, of course.
Luciano, maybe-.
Yes, sorry.
Maybe just one point on the retail transformation, because my understanding is that moving Stone Island on the same successful path that Moncler has known in the past 10 years or so, goes through making Stone Island more productive in terms of sales per square meter. I wonder where you stand particularly on that front.
I mean, honestly, but I mean, needless to say, Stone Island right now is less productive. I mean the store productivity, the sales density is less, significantly less than what Moncler has achieved, but is getting better, you know. The gap between Moncler and Stone Island is getting smaller and smaller, but there is still a significant difference. Again, this is not something you can achieve overnight.
This is the reason why we are investing in the DTC business. Again, Retail Excellence Project is aimed to achieve these results. Of course, if I look at the result right now, I mean, we are still far from what Moncler has achieved over the years, you know. Another point about Stone Island I forgot to mention is the arrival of the new CEO. You know, we made a decision, I mean, several months ago and one year ago, we saw, we realized the need of having a new leadership for Stone Island with all the responsibility and the capability to drive the business and the brand, and the brand first. That's why we decided to get in touch and at the end to hire Robert Triefus.
I mean, I think you know, his CV. I mean, he has spent the last 15 years in Gucci, I mean, contributing to the strong brand success of Gucci before in Armani. He's bringing his strong know-how and experience in brand strategy, which is something extremely important because again, we have in our hands a beautiful brand with a great potential. Of course, now we have to increase the voice of that brand, the audience of that brand, and the relevancy of that brand. That's why, I mean, we rely on the capability and the strong experience of Robert Triefus. Second question about the event. I mean, Moncler Genius, as Elena said, I mean, needless to say it again, was a great event in London with about 10 billion reach, over 1 billion engagement.
I mean, all the numbers are unprecedented in our history. 12,000 people in the event, other 40,000 people outside the door desperately trying to enter the event. Everything was very strong. Of course, the return of that event, I mean, it's difficult to quantify, but I can tell you that honestly, looking at the results of the first quarter, I think that the brand momentum that has been generated also by that event is under and evident under our eyes. Of course, to your point, that event was very expensive. Yes. Do we have the money to keep doing that kind of event? Not one a week, for sure, not one a month.
In an event, I mean, as our sales grow, also our marketing budget, 7% marketing budget is growing. I think that what is very important is to spend that 7% wisely, okay, well, and very focused on our three pillars that are Moncler Genius, of course, and this was the event in London, but also Moncler Grenoble. We spend in the first quarter of this year as much as in the last quarter of last year, money in Moncler Grenoble with very good results. Of course, the core, our core collection. Touching also your third question about seasonality, you may have seen that we are running a summer campaign for Moncler right now, and that is, I think, very visible.
This is in the direction to enhance the business in a season that is definitely weaker than the full winter season but is getting better and better. Of course, not only because we are investing money in marketing, but because over the years we have made our collection broader and broader, introducing spring/summer categories, increasing our knitware category, increasing, I mean, our shoe business with the new collection we introduced in August last year that has been renovated for this current spring/summer season, the Trailgrip shoe. So, I mean, from the product point of view and from the communication point of view, I mean, we are increasing that business in spring. Again, this is something you know very well because I told you other times.
I mean, I remember many years ago when the business of the second quarter for Moncler was a loss-making business. Now, I mean, we are not making profit as much as in the fourth quarter, but we make some profit. This is the combination of all the activities we have implemented to enhance the spring/summer season. Product, communication. Okay.
Thank you very much, Luciano.
You're welcome.
The next question is from Susy Tibaldi of UBS.
Hi, good evening. Thanks for taking my questions. I have one follow-up on China. Would it be possible to give an indication on how much the Chinese cluster is growing? Maybe if you are not comfortable to tell us on a year-on-year basis, maybe thinking about on a two year basis versus 2021, it would be very helpful just to have an idea, and also how you're seeing this in mainland China versus the Greater China region, so within Hong Kong, Macao, and Taiwan. Secondly, to go back to the spring/summer season, now that you launched Grenoble, I mean, now that into two this spring/summer collections obviously take the bigger proportion and you have less outerwear, are you already starting to see some positive results?
Are you getting some feedback from the store or from the customers that you can share? Basically, just to understand your maybe, still far from the optimal state that you want to achieve in this, in these product categories, but are you already seeing some meaningful improvement? Also to understand then how we could, we should be thinking about modeling the second quarter. Lastly on tourism, I remember before COVID, in Europe, Q2, Q3, it was 60%, 70% of sales to tourists. Now we don't have the Chinese back yet, but are you expecting the tourists to become over half of their sales in Europe already in the coming quarters or still be below that?
Because of the, we are seeing now a bit more tourism, do you think there is the possibility that we are gonna see a little bit of shift of the seasonality, maybe a bit anticipating the purchases into Q3, we could have a bit stronger flows into Q3 and then potentially a bit of a weaker Q4 because of this tourism flows? Thank you.
Okay. Okay. Thank you. Thank you for your question, Susy. About Chinese cluster, of course, we don't provide, I mean, specifically these kind of numbers, not quarter- by- quarter because it would be not particularly meaningful. In any event, I mean, the Chinese cluster was in the region of 1/3. It is about 35% of our total business. Of course, I'm not talking about the first quarter only, but, I mean, considering the last 12 months.
Retail.
Yes. Correctly, Elena corrected me. We are talking about the retail business because it's difficult to measure this contribution in the wholesale business. I mean, this is the Chinese cluster. Again, the Chinese cluster over the past two years, three years has been growing, has been consolidating in China because in China and in Greater China because they have not traveled after COVID. Again, this is something you know very well, notwithstanding the restrictions and notwithstanding the lack of Chinese customer in Europe, we have maintained that contribution with a strong increase of business in China. The other question was about Grenoble in spring.
Also in China and also in the other regions close by China, I mean, the release of the COVID restrictions allowed Chinese customers, I mean, Chinese people to travel within China and in the regions close by, like again, I mean, I know that of course is China, but as I said before, Hong Kong business is doing very well thanks to locals, but also thanks to people coming from China mainland, Macao and Taiwan. All that region is doing very well. About Moncler Grenoble, what we call Day-namic, which is the Spring/Summer Moncler Grenoble collection. This current Spring/Summer 2023 is the first season we introduced that this category. This line is doing well, honestly.
Of course, again, as we normally do when we introduce a new line, we start with a very selective approach in volumes. We didn't put too much volumes in our network, but the sellout is good and very, very encouraging. We also believe, strongly believe in the potential of this pillar of the Moncler Grenoble to be developed not only in winter, that is of course the heritage and DNA of the brand, but also in spring for a year, all the year round potential. About tourism, I mean, you are right. In the second half of the year, in Q3 even more and Q4, tourism outside the region, represented more than 50%, about 60% of our business. What may happen this year?
Honestly, we don't know, but I can tell you what we see now, that Chinese customers traveling to Europe represent a still small contribution but growing contribution of our business. Still a small percent. Is growing week after week. Of course, this will totally depend also on the availability of flights from China, but we expect, let me say, we hope that in the second half of the year, we will see again a significant return of Chinese customers to Europe, but difficult to predict now.
Thank you very much.
The next question is from Thomas Chauvet of Citi.
Good evening, Elena, Luciano. Three questions, please. The first one, congrats on the very strong Moncler retail growth. +34%. Is it fair to assume high single-digits base contribution and about mid-20s% retail LFL? And within the LFL, is that still well balanced between volume and price? Secondly, on wholesale, back in February, you guided for wholesale up mid-single-digit at the Moncler brand for the year, depending on the shop-in-shop and e-tailers conversion. With what you said about the U.S., Luciano, softer the start of Q2, are you still sticking to that guidance? Can you also on wholesale comment on Stone Island? The U.S. is down 20% in Q1. I suspect that's all wholesale pretty much.
Finally, on margin in H2 last year, you had a bit of margin pressure at the Moncler brand due to the marketing spend of the 70th anniversary and obviously the China revenue shortfall. Can you comment on how you see the shape of H1 versus H2, particularly as you held the big Genius event in London in March that I suspect will increase the marketing budget in H1, but maybe not in the full year. Any clarity on that would be useful on the phasing. Thank you.
Okay. Thank you. I mean, the first question was about the space contribution. Honestly, in the first quarter of this year, the vast majority of that growth rate was driven by comp, by organic growth. Space is a small part of that number. Of course, for the year end, we still maintain our guidance, our plan to see the space contribution in the region of mid-high single digit, but in the first quarter was lower. The vast majority of that 34% was comp. The other question about wholesale, our view for the fiscal year. For Moncler, now this is an important question because, as Elena said, I'm talking about Moncler now. As Elena said, I mean, we are finalizing...
Actually, we have already finalized this agreement with Nordstrom to convert their space dedicated to Moncler brand to in a hybrid retail model. A hybrid, this is the way they call it because inventory is under our control, responsibility, allocation of the product. From the people point of view, they provide the people that are mostly focused on our brand. We will report this business under the retail channel. It means that because it represents about mid-single digit of our growth, the guidance we normally gave to the market to increase the wholesale business of mid-single digit for this year, and I don't know for next, but for this year, will be closer to a flattish growth. Okay?
Also not Nordstrom only, but there are other smaller but several conversion of wholesale shop-in-shop into retail. Our view for this year is not mid-single digit as we said in the past, but it will be more or less flattish. About Stone Island, I mean, any guidance on wholesale only, I mean, is difficult and honestly is not totally meaningful. For sure, I mean, our focus, as I said before, since the acquisition, was the DTC business. The wholesale business is important, but it is strategically very important if and only if we maintain our very selective approach. I don't know what the number we will report at the end of the year under the wholesale business.
What is important for us is to develop a healthy wholesale business without high inventory problems in our wholesale customers. This is the way we want to approach and we have approached in the past for Moncler too. Again, the wholesale business for the year end, for sure will be negative in any event. Again, what we look more and we are interested more is the DTC business and also the wholesale business, but again, more from the qualitative point of view than from the volume point of view, because quality brings quantity. Next. About the U.S.-
More shape of margin.
Okay. The shape of margin and shifts of margin also, I mean, this is another good question because of course having spent this year A significant amount of money for the event in London in the first half of the year, differently from last year when the event was in September. Of course, you should expect for the first half of the year, a result that will be more impacted by marketing higher this year than last year. At the end of the year, it will still be 7%, but the distribution of this 7% between the two semesters will be different this year from last year. I mean, important to highlight. About the U.S. market, you asked some question.
No, it was just about Stone Island in the U.S. if there was... I mean, you talked about business trend, business weakness, but I don't know if there was anything also particular cleanup of those in the U.S. that explain why, yes, Stone Island in the U.S. is down 20%.
I mean, of course, you know that, I mean, behind that, 20% decline, there is a very small business. I mean, Stone Island is still a very small business brand in the U.S. with still very limited visibility, very limited awareness. Of course, this is not helping the business trend in the U.S. Again, the DTC business was positive. We still have a lot to do in the U.S., and not only, but I mean, in the U.S., we still have to build the brand and the potential of that brand, because as I said other times, the brand perception in some specific areas of the U.S. that are New York and Los Angeles, is very good. There are very strong communities of lover of that brand.
Of course, the distribution of this of this awareness is still very, very limited. Again, the business is soft. The wholesale business is soft because of course, I mean, as I said before, department stores are not doing particularly well, and of course, the brand relevance with the department stores is not significant. Not yet.
Thank you. Luciano, can I just come back on your wholesale comments with Nordstrom? Did you say that Nordstrom is 5% of your total wholesale business? This goes to zero and that's why you're missing low-digit guidance, is now flat. I guess you'll get a big tailwind in retail space contribution. I don't know how you're gonna record that, but.
Yes, more or less, yes. What I said is that if you take our original guidance to grow the wholesale business of 5% without Nordstrom in the wholesale business because it's just a shift, that business is expected to grow flat, to be more or less flat. Something important, it's not only a shift from one channel to the other, but also a shift from second quarter and the third quarter to third quarter, fourth quarter. There is a shift, of course. In the second quarter and in the first half, you will see the impact of this Nordstrom conversion. Of course, that business, we will convert it into sellout business in Q3 and Q4.
You said it's a hybrid retail wholesale model. What does that mean? Is it from an accounting standpoint, is this retail or wholesale? Is this accretive to your retail business or is it just moving the?
I mean, it's called, I mean, it is retail and it will be reported under retail business in line with what other brands are doing. Honestly, I mean, we comply, I mean, we believe that this is retail because Moncler is responsible of the inventory. Okay? I mean, we are responsible of buying together with the department store, allocation, and at the end of the sellout and the leftover. It is a hybrid because, I mean, not all the space will be shop in shop. People will be provided by Nordstrom. That's why it is called a hybrid. Again, it will be reported under retail.
Understood. Thank you. Thanks, Luciano.
Welcome.
The next question is from Chiara Battistini of JP Morgan.
Hello, good evening. Thank you for taking my questions. I just have one actually left on Europe to come back on that, because Europe was also very strong for Moncler brand. I was wondering whether First, if we could actually have the contribution of tourism in Europe in Q1, to understand the contribution between the tourists and the domestic consumer. Then looking at the domestic consumer, the European cluster, if you could make any comment on that, please, and maybe possibly, if you are seeing some countries outperforming others.
Also if, I know we touched on this before, but if you could see or could comment in any way on the contribution of Genius and the impact on Genius on the European domestic consumer, specifically maybe post the event, if you've seen any indicator that you could share with us, please. Just sorry, just a follow-up on Nordstrom. Is it fair to assume a sort of 2% tailwind, I guess following up on Toma question, a 2% tailwind to retail this year just because of the conversion from Nordstrom, please. Thank you.
Yes, your first question about Europe, I mean, business in Europe over the past two years have been driven mostly by local customer business. This is very important and very nice to remind everyone because, I mean, that business has been developed over the years, thanks to a very strong, I mean, culture of building relations with our customers and building our customer base. Having said that, the contribution of tourism outside the region is growing. You may remember that since last year, the contribution of American customers was quite important, and they still contribute significantly to our business in Europe. On the top of Americans, we started seeing Korean customers coming from that region, again, still at a smaller extent, also Chinese customers.
Business is still majority driven by local, but the business coming from tourism outside the region is growing very, very nicely. For the time being in these three different nationalities. The European cluster is a positive double digit. Yes, of course. Contribution of Genius on our, on our.
You're asking what's the contribution of I mean, what is the effects that we had for the Genius event, right?
Yeah. If you saw any change or any inflection or any anything you could measure in terms of the contribution from Genius, from the event which was Europe-based.
I mean, the impact of the event, again, and needless to say it again, was huge. Of course, I mean, we saw an impact of traffic in our stores and online. This, I mean, was driven also by that event. I mean, our overall business for sure, even if it's difficult to quantify it precisely, but the overall business after the event was helped by the impact of that event for sure.
About Nordstrom, of course, I mean, we will lose that 5% in wholesale, and we will gain a smaller % because of course, retail is much bigger in retail, because again, it will be a shift of business from one channel to the other. I mean, what we sell at EUR 100 to department stores, they sell out at EUR 250. I mean, this is the math more or less. I mean, you can calculate more or less the impact. Of course, you should calculate also the sell-through. I mean, it's not so easy and immediate, the calculation, but again, it's the normal calculation of what we convert a wholesale business to retail business.
Great. Thank you very much.
The next question is from.
You're welcome.
Excuse me, sir. The next question is from Charles-Louis Scotti of Kepler.
Yes. Good evening. Thank you for taking my question. I have two, actually. The first one, the retail penetration at Moncler increased 3 percentage point in Q1. Do you plan to take advantage of the billion growth in DTC to further accelerate the streamlining of your wholesale channel? What do you consider as an optimal level for the brand in the long run? My second question on your strategy to diversify into new categories and to some extent decentralize your business, are there some geographies where you see stronger or weaker traction from customers for your spring and summer collection? Thank you.
Okay. The first question was about retail penetration. I mean, you're right. The business representing the last year in Q1, 80% now is 83%. This was thanks to the great, performance of all the regions. What is, very important to reiterate is that, the vast majority of that performance was organic, and so, comp driven, which, of course, is something that, makes us, particularly satisfied. Looking at the future, I mean, I'm talking about our distribution strategy, our retail strategy. Our retail strategy, will still be, very, very quality driven, very selective, not many new openings. I mean, we expect for this year more or less 15 new stores.
The most important projects of this year will be associated and related to expansion of existing stores or relocation of existing stores to make of the existing stores a much more visible qualitative stores and even a flagship store. I mentioned before Plaza 66 in Shanghai just opened last week. China World in Beijing ready to be opened in the next weeks. We will relocate Zurich, we will relocate Vienna, and all of these stores I am mentioning will be big, visible and powerful flagship stores. Not powerful only from the business point of view, but powerful from the brand point of view, able to convey a very strong message to our audience.
Sorry, Charles, your second question was on the diversification of categories, and you were asking about which categories are performing better than others. Is that your question?
No, it was more in terms of nationality of clients. Basically, you know, which nationality are reacting, you know, the best to your new spring/summer collection.
I mean, yes. Honestly, we don't see specific differences in different markets or from different nationalities. I would say that in all the different regions, the interest for our other categories, excluding outerwear, has been growing year- after- year, season after season. I remember when knitwear was a very, very small category. Now it is the second after outerwear leading category. Honestly, with a completely different collection, much better quality, much better design. This is the same, I mean the same path, we are implementing for all the categories, including shoes with the new, with the new Trailgrip shoe. I don't see specific differences, honestly, in the different regions or for different for different nationalities.
Thank you very much.
You're welcome.
The next question comes from Anne-Laure Bismuth of HSBC.
Yes, hi. Good evening, Elena and Luciano. Two questions from me, mostly on the U.S. Coming back to the store expansion, about the 15 stores that you are planning to open this year, is it possible to know how many stores do you plan to open in the U.S., and what is your store network there at the moment? My second question is about the soft performance in wholesale for the Moncler brand. Is it affecting more product category than another, or is it affecting more the entry price point? Thank you very much.
Okay. Your first question, Anne-Laure, thank you, is about the new opening in the U.S. I mean, okay, first of all, I mean, we just opened a few weeks ago, and we reported a beautiful picture in our presentation, was in Dallas. This is an important opening that is also doing very well. The second opening after in Texas, after Houston. We have a total of four or five openings-
In America.
In America. Of course, again, something very important is that, I mean, within our projects, there is also the expansion of our store in Miami Bal Harbour. That is an important project, not including any new opening, of course, again, based on what I said before, very important strategically.
Sorry, Anne-Laure, do you mind repeating your second question, please?
Which was about the softer performance in wholesale. Is it affecting more product category or more the entry price point product than higher end products? Thank you.
No, I would not say that there are specific categories, honestly. I mean, you're talking about Moncler, of course, I understand. I mean, wholesale in the U.S. is softer than in other regions, but not in specific categories, honestly, or in specific price points. I don't know if I answered your question, Anne-Laure.
Yes. Thank you.
Oh, okay. Thank you.
The next question is from Liwei Hou of CICC.
Good evening, Luciano and Elena. Thank you very much. I've only one question. We have seen weakness in Korea, not only in Moncler, but across the board. I'm just wondering if you could be kind enough to share with us, you know, the reasons for that weakness in this particular market. You know, we read in the news about the problems in Korea's housing market and the rental system. Just wondering, are there any specific signs of danger that we should be aware of? Most importantly, do they have any similarities to the slowdown in the U.S., you know, between these two countries? Thank you very much.
Our view about Korea, of course, we have to distinguish the two brands. Overall, the market, as I said before, is softer, has been softer in the first quarter and in April too, as compared to the other Asian markets. But still in April, double-digit growth for Moncler and with the growing, as I said before, contribution of Korean customers coming, traveling to Europe and shopping in Europe. I mean, the Korean cluster is still very, very healthy.
Overall, I think that the Korean market, again, even if for Moncler is still very, very solid, is overall softer than other Asian markets, and this is the case for Stone Island for sure, which has been impacted by the softer market, but also, as I said before, by the fact that we have implemented last year and this year some kind of revolution in our retail network, converting all the stores from stores operated by third parties to stores operated by our own managers, store managers. Again, I think that the market overall, I mean, as many people say, I mean, looking at the public information, business information is softer. Honest is not the case for Moncler because Moncler again first quarter, very good. Second quarter, a little bit less, but still double digit.
For Stone Island, yes, we see some impact. Did I answer your question?
Yes, very much indeed. Thank you very much.
You're welcome.
The next question is from Louise Singlehurst of Goldman Sachs.
Hi. Good evening, Luciano and Elena. Thank you. You've been very generous with all the information so far, so I'll keep it brief. I wonder, Luciano and Elena, if you can tell us about the customer loyalty. I imagine there's a very big drive of new customer cohorts joining with all the Genius and activations that are going on. I wonder if you can give us any color about that. I know historically with Genius you had a quite high retention and repeat purchase of customers. That would be helpful. Secondly, I wondered if you could talk to us about the price mix effect with all the elevation that's going through with the product, with Grenoble, with Genius.
I know there's a price list, I wondered if you could help us think about the price mix for 2023 as well. Thank you.
Yes. Thank you for your question. About customer loyalty, the impact of Genius, we tend to talk more and more to a broader audience and to a younger audience. We see a strong engagement of the audience we talk to. Of course, this is generating traffic in our stores, in our online business. The traffic is converted into business, not only of Genius products of course, but of any kind of product, of any kind of line of our collection. Moncler, Grenoble, Genius itself. Genius has been a strategy since ever, not only this year, to attract our customers, to attract new customers, to keep talking with them.
When they come to visit our stores or to visit our online store, they shop and buy not only Genius but other lines that again are Moncler or Grenoble or Genius itself. This is something that we see very clearly. About price mix and prices compared to volume in the first quarter, I mean, volume represented about 70% of our comp. The other 30% was price. You may remember, I'm sure you do remember, that we increased the prices about 10% in this current spring/summer season, mostly in Europe, but not only. I mean, the price impact represented about 30% of our growth rate, comp growth rate. The other 70% was volume.
Very interesting and important to highlight because it means that the price resistance has not been strong at all. I mean, people have bought our brand, we expanded the price increase and increasing the volume of our business.
Really helpful. Thank you.
Did I answer all your questions?
That's perfect. Thank you very much for the color.
Thank you.
The next question is from Paola Carboni of Equita SIM.
Yes. Hello. Hi. Good afternoon, everybody. I have just 1 question very quickly, I hope. I was wondering if you can share with us what you say, how do you look to the impact we had on the Moncler performance from the recent big bold support in terms of marketing from the event we had for the 70 anniversary first and from the Genius event then most recently in London. Clearly we are seeing an impressive growth and an impressive outperformance from the Moncler brand. Just from your perception and from your experience, how long do you think this halo, this positive resonance can last?
When do you think, you will need to be back on, again, a new, as much bold event, in the future? Thank you.
Okay, thank you, Paola. I think that that event, I mean, needless to say it again, that event was great with great success, great results in terms of reach, in terms of engagement. For sure, that event aimed to speak to a broader audience, to attract a new audience, a younger audience, and I think that we made it. Having said that, I think that for sure that event had an impact on our business. I also believe that, I mean, our business is founded on many different and solid pillars.
That is marketing for sure, the event for sure, marketing is not only the event we run in London, but it is also all the activity we have implemented to support Moncler Grenoble, that this year and the end of last year was particularly important more than ever. The activity, as I said before, the campaign to support our summer collection. Again, marketing is not that event only, even if that event was amazing. There are many other initiatives. Also our business is founded on solid roots because of our retail operations, because of our the location of our stores that depend on our distribution strategy we have implemented in the past.
Of course, on the clienteling activity, I mean, we talked before about, the great results delivered by Europe, of course, without tourism. Without tourism means that the vast majority of that business has been delivered thanks to local customers. Local customers depend on the strong clienteling activity that has been developed over the past years, not just in one or two months. I think that, yes, that event was great, but I think that, I mean, it's not the only driver, not at all of our good results.
Okay. Thank you very much.
You're welcome.
Thank you. I think there are no more questions, so thank you very much to everyone for participating in this call. For any follow-up question, as usual, do not hesitate to contact the IR team. Just as a reminder, our H1 2023 interim management statement will be released on July 26th after market close, and our quiet period will start on June 27th. Thank you again, and have a great evening, everybody.
Ladies, and gentlemen, thank you for joining. The conference is now over, and you may disconnect your telephones.