Good evening. This is the Chorus Call conference operator. Welcome and thank you for joining the Moncler First Quarter 2021 Interim Management Statement Conference Call. As a reminder, all participants are in listen only mode. After the presentation, there will be an opportunity to ask questions.
At this time, I would like to turn the conference over to Ms. Paula Durante, Strategic Planning, Intelligence and Investor Relations Director of Moncler. Please go ahead, madam.
Thank you. Thank you, operator, and good afternoon to all of you. As usual, during our first I will provide myself a brief overview on the results and then Luciano will make some final remarks Before going into the presentation, let me 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 Moncler's current expectations and projections about future events and are subject to risks and uncertainties that could cause results to differ even materially From those expressed in or implied by the statements. Let's move now to the presentation.
Now going to Page 3, Let me give you some initial comments on our interim management statement revenue results. Q1 2021 revenues increased by 21% at constant currencies Versus the Q1 of last year. Compared to Q1 2019, revenues declined by 2%. We are extremely satisfied with the results achieved across Asia, particularly in China, But also in the other Asian markets and in the Americas. While in EMEA, government's measures Implemented to contain the pandemic continued to negative impacts store traffic and therefore retail revenues.
In terms of channel, let me highlight the extremely good results of our direct online business, which further accelerated compared to Q4 2020 and almost touch triple digit growth rates. Before going into further details, I need and I want to remind you that I normally comment and I will comment also today cost and currencies performance. Let's now move to Page 4 of the presentation, where we look at the revenue breakdown by distribution channel. In the Q1 of this year, retail revenues rose by 22%, while wholesale was up by 17%. Compared to the Q1 of 2019, retail revenues were down 2% and wholesale minus 1%.
Retail performance was driven by outstanding growth, particularly in the Chinese mainland and online. Note that during the quarter around 60% of our EMEA retail stores were closed. Following the reopening of the U. K. And of most of the Italian stores, this percentage today is lower, but still at around All retail metrics in the quarter improved with the only exception, As you can imagine, of store traffic, which was negative at worldwide level.
Commenting on wholesale, our solid wholesale revenue performance reflects not only the strong reception of our springsummer collections, But also an increasing level of reorders requested from our most important wholesale clients during the quarter. And finally, on the online. The online business was strong in both Both retail, direct online and wholesale online. In particularly, the direct online have Experienced a sharp increase compared to the previous quarter and recorded a very strong and Sandy, I would say double digit growth in all regions with U. S.
And Korea in the triple digits. In terms of main KPIs for online, all metrics improved in the quarter, including traffic, Let's move now to page 5, revenue breakdown by region. I will only make a quick general comment here given that I'm going to analyze each regions in the next page. All regions, excluding EMEA, reported double digit growth in the quarter and were above 2019 level. In details, compared to Q1 2019, Asia grew by 17%, America rose by 3%, While in me, including Italy, it was down 25%.
So let's now go to Asia, Page 6 of the presentation. As you know, when we comment Asia, we comment 3 regions, 3, APAC, Japan and Korea. APAC in the quarter largely outperformed and has been followed by Korea and Japan. APAC growth was boosted by the triple digit performance of the Chinese mainland and also benefited from the positive Contribution of all the other main markets. In fact, not only Taiwan continue to record a very positive But also Hong Kong Sar and Macau Sar were growing by double digits in the quarter.
Korea. Korea Continue to perform strongly despite a more challenging comparative base and also the fact that there were no Chinese Traveler in that market. And this thanks, this performance was really driven by the strong brand momentum That Moncler is having in Korea, but also by the very good, I would say fantastic job that our people there are doing in terms of clienteling and CRM We are also particularly pleased with the performance in Japan, which recorded positive results in the quarter Despite the government measures to limit the spread of the pandemic, which impacted the poor traffic in the quarter And the absence of tourists. Let's now move to Page 7, where we comment on the region EMEA, which include also Europe and Italy combined reported a minus 15% decline. This pro form a was entirely impacted By the long store closure and only partially offset by the very good results of the online business.
In the quarter, we posted positive results in Russia, Spain, Germany and Scandinavia. On the other side, the very important Three markets, Italy, France and UK, underperformed the average of the region, having had many more, I would say, store closure days in the quarter. Moving now to page 8, we comment on the Americas market. Revenue in the Americas region rose 34% with both core markets and all channels up strongly. As I already mentioned, online in the quarter was very strong in both U.
S. And Canada. While wholesale benefit also from increasing reorders. Now we can move to Page 9 and we can briefly examine our store network. At the end of March, our retail stores reached 2 21 units compared to 219 in the end of 2020.
In terms of store temporary closed due to the COVID restrictions, this impacted Around 25% of our store network, as we said and we already commented, this was largely in Europe. So 25% of the store network were closed in the quarter. And today, we have Still around 30 stores temporary closed. At the end of the quarter, there were 56. In any case, for any details, you find a chart and a table more than a chart, sorry, in the appendix of the presentation.
I have completed now the analysis of the revenue results. We will hand over to Luciano for some final remarks.
Okay. Thank you, Paolo, and good afternoon, everybody. Thank you for attending our call today. We are now at Page 11, where we report a quick update of the Stone Island transaction That was finalized, as you know, at the very end of March. And results of Boston Island will be consolidated in the 2nd quarter and the current Q2 of the year starting from April 1.
Business of Ton Island is Doing well. I would say very well. 1st quarter was very good. Unfortunately, the results of Q1 are not included in this presentation, but They will be included and consolidated in, again, the Q2 that will be reported in July. Of course, Together with the Sun Island senior management team, we have started all the different processes For the integration and the announcement of their business of Stone Island brand With very clear goals in our mind that are the announcement of the protection of the strong identity of the brand And on the other hand, the construction of a very solid infrastructures in terms of Information Technology and Logistics needed to support their growth for the next future.
Let's move now to Page 12, where we report as usual our sustainability strategy, which is Based on 5 main pillars that are climate, circularity, responsible sourcing, Diversity and inclusion and the community. And on this last point, but very, very important, something important To remind you that is in our press release today is that Moncler contributed to the construction of a vaccination hub in Milan, which will be the largest hub vaccination hub in Lombardy. And through this vaccination hub, we'll be provided around 10,000 vaccinations per day. So a very important Contribution for the hopeful solution of this unfortunate situation That impacts all the world and Italy particularly. Something more to highlight in this slide, A couple of important projects I wanted to remind you.
I mean, within the pillar of circularity, I wanted to tell you that we started in January of this year to recycle our first ton of a certified down, which is, believe me, a very big amount. And we are very happy and satisfied. Of course, this is only the first step, but we are very happy And proud about it. Another point regards to the sustainable nylon, you may see in the slide that we have a pretty ambitious target by 2025 to achieve the 50% of sustainable nylon well. This year, in the current collection, Spring, summer and even more in the upcoming fall winter season, 5% of the nylon, close 5% will be sustainable nylon, which considering the volumes we use in nylon is another very, very important Step, we are very proud of.
Another point I wanted to highlight is in the diversity and inclusion pillar. We have created, as you probably know, The Diversity and Inclusion Council in January, and we are now implementing with the help of An international consulting firm, a diversity inclusion assessment of our whole population around the world, which is again very important to perceive, to understand the feeling, the Section of our employees, of our people about this very important matter. I'm okay. I'm down for now and we are now ready to answer your questions. Thank you.
Yes. Operator, we can open the Q and A session. Thank you.
Excuse me, this is the Chorus Call conference operator. We will now begin the question and answer session. The first question is from Chiara Battistini with JPMorgan. Please go ahead.
I have 2, please. The first one is on your wholesale performance in Q1, which was actually better than what I had expected. So could you actually maybe give some color or split how to think about the level of In the traditional wholesale business versus the concession strength and maybe any regional color within wholesale? The second question is on the Americas region. You mentioned it was up 3% on a clear stack on Q1 'nineteen.
I was wondering if you could elaborate more by channel in this region because as you mentioned that online has continued to perform very strongly. I was wondering what's dragging whether it's wholesale or retail, physical retail there. And actually, I have a very small one third one. If you could remind us, In a normal year, so say, let's take full year 2019, how much of your sales was tourism in Q1, Q2 and Q4, please? Thank you.
Okay. Hi, Chiara. I mean, about your first question, I mean, Q1, yes, it was good. It was very good and above our expectations also because I mean both Santander performed well. And specifically, as you pointed out, wholesale was very good.
And wholesale was very good in Q4, as you may remember. So wholesale is registering a positive trend. Honestly, in all the different regions, Of course, Europe is suffering. Business is suffering in Europe in all the channel, but wholesale is doing better at retail. And in all of the different sub channels, of course, we have some Shopee Shop that are reported under the And these are the shopping shops are doing very well, specifically some in Asia.
I mean, one for all, I want to remind you is that the store that we have in Hainan that is operated by China Duty Free that is now performing, I mean, the number one store In our network. But also, I mean, all the wholesale business in all the geographies is doing well. And the online business, the business with retailers has been doing very well. And to go to your second question about America, still talking about wholesale. Wholesale business in America, The Q1 did very well and not just for deliveries of spring summer that were, of course, up as compared to last year, But with the same contribution than last year, but because reorders were very strong.
Actually, as Paolo said, reorders Coming from wholesale, we're very strong in all the different regions, including The orders coming from department stores in America in the U. S. About the Americas, I mean, you asked About the 3 different channels, honestly, all the 3 different channels were positive. So we'll say it again, as I said before, Online, needless to say, because Paola has said before, I mean, we reported we are tripling the business In U. S, in the online business, of course, that is based on comparison Last year, that was very weak because you may remember that last year, I mean, the business was operated on the wind up.
And for the COVID situation, the warehouse in New Jersey was closed for 2, 3 weeks. But in the event, I mean, we are reporting A business which is the triple of last year and the retail to retail to in America was positive. So all the 3 channels Okay. In a normal year, I will say that the Q1 is about 23%, 23%, 24%. The second quarter is much lower, it's 10%, 12%.
The 3rd quarter is 25%, 26%. And Q4, of course, is the most important is about over 40%. Yes. So The weight of tourists in the quarter, I mean, I can tell you that Q3 is the most important 1 for tourists from other regions. Q4 less because As you may remember, in Q4, our business, which is very strong, has made a lot with the local customers.
But let's say that Q3 is the most important one.
Thank you very much. Sorry, a couple of follow-up questions. Actually, Q3 most important one. Q1 and Q2, are they similar in terms of tourism rate?
You are similar. While Q1 is slightly above Q2, yes, it's a little bit higher than Q2, but
And
when you mentioned that all channels in the U. S. And in Americas were up, You mean against 2020, not 2019?
Yes. I think Luciano was referring to 2020, exactly.
Okay. Perfect. Thank you very much. Sorry.
Yes. I mean, I was talking about 20 20, but of course, I guess, 2019 is more or less flattish.
Great. Thank you.
The next question is from Louise Singlehurst from Goldman Sachs. Please go ahead.
Hi, good evening, Paolo and Luciano. Thanks for taking my questions. 2 for me, please, if I may.
I wonder if you can help
us think about the space contribution. Obviously, we have the store number, But if you could just help us clearly trying to work out the implied like for like in that retail number, if you could help us there. And then secondly, when we look at The seasonality of the business, I wonder if you can help us think about how you think internally about the seasonality. And the reason I ask that is obviously we had a very good start to the year when we spoke to you back at the full year results in February. I just wonder with the seasonality and the product category, you obviously haven't seen the same strength during the quarter as what we've heard from some of the peers.
And presumably that's partly category related as well as the exposure to Europe with the additional lockdown. And then finally, just in my actually a third question, if I may. On the e commerce, if you can just update us where we are in terms of the internalization of the different regions and still on track for the new website, I think it's coming in June. Thank you.
Okay. Thank you for your questions. About space contribution, like for like, of course, I mean, needless to say, You know that we don't report these numbers by quarter also because honestly, totally meaningless quarter by quarter. I can tell you that like for like, course, it was very strong in Q1 as compared to 2020. Again, sorry to To highlight that, but of course, I'm commenting on the results, I guess, last year, not the year before, unless you have questions about Space contribution, honestly, even if it is meaningless, but it was very low.
Space contribution of Q1 was very low. And the reason is that The stores a few stores more we have this year compared to last year, most or a significant part of them have been opened in Europe, in the Europe, unfortunately, is not doing well. I mean, one example for all our beautiful, Amazing flagship store in Paris at Champs Elysees is not performing as we expect it to perform hopefully soon. About seasonality, I mean, seasonality in our business for our brand is still Very important, honestly, still much higher than for other brands, if I And as we said in the past, probably at the end of Q3, we see this seasonality In this particular situation last year and this year too, a little bit higher than before. Having said that, this is to anticipate your other question that is Performance in the quarter, January was very good and much better, much stronger than February March.
This for sure, Even if honestly looking at the financial results, this is the reality. Looking at the collection, looking at something that is very important Strategically for our business, which is the development of the other categories as we started to sell The spring summer collection, we see now the knitwear category, the cutters on growing very nicely and better and more than our overall, which again is affecting our business Because the average selling price is lower, but strategically, honestly, we believe it is a very good sign For the future. About your last question, the e commerce internalization, let me remind you, I'm sure you know that last year in October, we started the resourcing of North America. Actually, we started 2 year And I have a go with Korea, but that was more a test. So U.
S. And Canada are up Good evening and again, I'm doing very well. Now in June, let me cross my fingers. But I mean, in June, we plan to start The internalization of Europe, which is by far the most important market for Our online business and it is also the most complex market For the online business, because I mean different jurisdictions, different tax rules, different policies, different So I mean, we are very, let's say, hopeful, anxious. We are working Very hard in the very last weeks before the go live.
That again is expected to happen in June.
Thank you very much for the color. Looking forward to seeing the store in Paris when we can. Thank you.
You're welcome.
The next question is from Antoine Belge with Exane BNP Paribas. Please go ahead.
Yes. Hi, good evening. It's Antoine Bege at Exane BNP Paribas. Three questions, if I may. First of all, going Back to this question of seasonality or actually product category, because At the end of the day, we are sell side analysts and we look at you against other players which are selling different products.
So, If my memory doesn't feel good, I mean, usually Q1 is a combination of selling down jacket, still winter products and starting to Sell more like diversification products. So, is it the case that Moncler would be more vulnerable Less resilient in the COVID situation because of the lack of tourism, because usually in that period you have, I don't know, people that only buy Moncler down jacket, when do they travel to colder places? And of course, if they're not traveling, they're not compensating at home. So any sort of Sorry, around that this is or is it completely wrong? And second question, If you look at the product offering more, I would say, the core Collection versus your collaboration collection, I mean, if you could Comment on the mix, which one did better.
And finally, I take on board that Stone Island will only be Consolidated in Q2, but for us to start having a feel for what type of sales we should Consolidate, I mean, would it be possible to either get the Q1 sales in euros for Stone Island or actually Some kind of growth rate that Laurent experienced in Q1. And also any sort of qualitative comments On the integration. Thank you.
Okay. Hi, Antoine. About the seasonality, I mean, your, Let me say speculation is difficult to answer your question. I think that, I mean, again, as I said before, Seasonality is still very important for Moncler. And in this situation, it's even higher than before.
Having said that, COVID started, as you know, more than 1 year ago. You know very well that, of course, Q2 Q was terrible, Q3 much better in Q4, but was, let me say, remarkable. So I mean, I think that, yes, seasonality is a factor. But saying that we are weaker or more vulnerable, I will say that is not the case, honestly. Of course, talking about Q1, as you said before correctly, Our business in Q1 is a mix of the end of following the season down jackets, Heavy jackets end the start of the spring season, of course, with a lower average selling price.
And so this is also one of the reasons why January was stronger, but also, I mean, normally, January is stronger than February March. But I honestly don't agree with you that this is a vulnerability Issue for Moncler. But what I can confirm is that this seasonality is something Stronger, higher now than under a normal year. About Your second question, the vast majority of our business is still developed with our main or Of course, a genius collaboration, special projects are Not important, but extremely important, extremely important for several different reasons. I'm sure you know very well from the communication point of view, But also to keep communicating with our customers to call them every time we have a drop in the store.
And you know that when they come to the store, they buy or they may buy the individual drop, a generous drop or they buy the But I mean this is an important instrument to generate traffic and to keep talking with our Customers, but the genius and collaboration, whatever still represent less than 10% within 10%. The vast majority of our business is still the core collection. About Stone Island, we can't now report Close numbers, but I can tell you that, I mean, I can comment on the consensus if you want, which I find reasonable. Of course, consensus is related to the 9 months from April 1 to December 31. It is over a little bit over €200,000,000 I find that consensus Having said that, again, as I said before, from the quality point of view, we are very happy With the Stone Island results, I can tell you that as you know, as we said in the past, the spring summer campaign back In June of last year, it was up double digit and following the campaign that was completed a couple of months ago, more or less, It's still up double digit.
So I mean, of course, I'm saying that because you know that the wholesale business for Stone Island Still represents about 80% of the total, but we are pretty happy also with the retailer results even if Many stores are still many of the existing stores are in Europe and of course, some of them are closed, but the stores that are open Doing quite well.
Thank you. Maybe just a follow-up on what you said about Genius and the collaboration, I think you said they may account Probably less than 10%, but they are traffic driver. So I'm curious to understand, is there They were a driver when stores were opened, but are they as much of a driver when In Europe, for instance, when people are more having to switch online, yes.
Okay. Yes, I mean, it is a driver. Of course, It is a driver, more powerful in the more powerful region. So when we talked about Asia before, they did very well. It did Very well on all the collection, the Chorus collection, the main collection and Genius, but Genius was very important also To generate traffic in Europe, of course, in the stores that were opened.
But also something important to say that even with And when the stores are closed, we keep doing business, as you know, as we said also in the past, Implementing the so called distal phase. In Europe, we generated in the Q1 Team 17,000 orders through these translations and most of them are important Part of these orders were generated with Genius. I mean, the last one is Craig Ring. The one before was J. W.
Anderson. So I mean, we are actively fighting this unfortunate
The next question is from Susie Tibaldi with UBS. Please go ahead. Mr. Badri, your line is open.
Hi, good evening. Thanks for taking my question. My first one hello? Can you hear me?
Yes.
Hello? Good to
see you. We can hear you. Yes, we can hear you. Can you hear us?
You can? Okay. Yes, yes. You're fine.
Yes. Thank you. Yes, I
can hear well. Yes, so my first Okay. My first question is on the nationalities. I wanted to ask, I know you commented mainly on 2020, but if we look compared to 2019, are all nationalities above the 2019 level In terms of sales and also specifically, what about the Chinese nationality? Can you remind us if that has already returned to growth?
Secondly, I think it's I was wondering Given the seasonality that we already discussed, if you think that during the springsummer season, It may be harder to compete with other players in the market because clearly when it comes to outerwear you are The top brands in the luxury space, but when it comes to other product categories, clearly, there is more competition perhaps from also other Luxury brands, which are growing at an incredible pace. So I was just wondering also internally when you compare your figures versus some of the other How you explain the gap and the sort of sequential deceleration that we have seen? And then thirdly, do you have perhaps an indication that you can give us when it comes to The start of April now, so the Q2, because now Europe, some parts of Europe have reopened. So if you have any comments, if you can if you see that people are actually quite excited to go back to the stores or still I'm a little bit hesitant. And actually, I just had a very quick follow-up to a previous question, because you mentioned that January was very good, much better than February March.
And I was just wondering if that was again related to 2020 or 2019. I was just confused because last year, I think the comp started to get much easier in February, March because of COVID and lockdown. So I just wanted Clarify the comment was related to 2019 or 2020.
Yes. I mean, your very last question And comparison was more with 2019 because, of course, I guess, last year, you're totally right, is also meaning less comparison. No, January was stronger than February, March, even if, I mean, this is part of our seasonality, but this year more than In 2019, Q2 started pretty well, I mean, in line with the Q1, honestly. Again, Q2 for us is a very, very weak quarter. I mean, this is the reality.
It is Now and I mean in the recent couple of years, in the recent years, the weight of Q2 is has been growing Because you know we have developed also from the collection point of view other categories with very good results, but still Unfortunately, but I mean, this is part also of the DNA of our business. 2nd quarter is weaker than the others. You may remember, I don't know if you do, but in the past, when we used to report for all the quarters, our financial results, 2nd Quarter was a loss making quarter, right? Now it's making profit. So I mean, this is a good point.
Even if, of course, Needless to say, the profit that we do in the second quarter is way below the profit that we do in Q4 or even Q1. So I think that talking about comparison with other brands, of course, I mean, we compare or you normally compare Moncler with other Players that are very strong, very good, very big and are reporting very, very strong results. From the product point of view, honestly, I don't see a big, big competition. Probably their product, but for sure, I mean, they don't have the seasonality we do have. So maybe they have for sure a second quarter that will be and it has been historically Better than what it will be our Q2, but again, of course, we compare our business with ourselves.
So what I can tell you is that Q2, for sure, will be weaker. And as in the past, I hope, I mean, for sure, better than last year, but This is not a reasonable comparison. But also, I mean, we look at 2019, and we see very good Science for the brand because at the end what we look at is business, of course, but not just the short The term business results, we look at the strength of the brand. And what is very encouraging is that the brand is stronger everywhere. Even if Even in Europe, where 60% of the stores during Q1 were closed, but the brand is strong because in all the Stores that were opened or any time they opened the stores, traffic comes to our stores because The brand is strong.
Also, something important before talking about your first question, which is probably the most important. But talking about Europe and also, I mean, you used a term that was deceleration In Q1, if I remember correctly, I mean, honestly, if I understood correctly, We don't see any deceleration, honestly, in our business. Of course, again, if you compare our results So with other brands, other players with different product, you may be right. But if I can tell you one reason, Very important is our exposure to Europe, Susie, because I mean Europe Represent in Q1 over 31% of the total business and for the year end is even higher is over 35%, Which is the double than others. So I mean, if you look at our results in each individual regions, I think that Asia, Excluding Japan, it was close to 80%.
Japan, as Paula said, was positive, I mean, mid single digit, but Still positive. America was very good. Europe was down 15%. The weight of Europe, the weight Of that, minus 15% for our business is something that is impacting the final result. But again, I don't see and I will not talk about any deterioration.
About nationality, I mean, Talking about Chinese, I think that, I mean, again, China, in The Chinese market is doing very well. But also, the business we do with the Chinese customers In Q1 of this year, it's close, it's more or less the same we did in Q1 of 2019. That means that we have totally offset the total lack of Chinese tourism with Business we do with Chinese customers in their local market, which is, I would say, very good result. Of course, yes, other nationalities, I mean, Korea is up, needless to say, because A majority of the business is developed in their country that is very strongly up. Japanese is More or less flat.
I mean, they don't travel a lot, not as much as Chinese, but I mean, they used to travel a lot to Hawaii. They don't now. But their business is up. So I mean, more or less, one is offsetting the other. And North America And North America is up, of course.
Okay. Thank you. The next question
is from Elena Mariani with Morgan
A couple of questions from me as well. The first one is on your cost base. I was wondering how we should think about the first half of the year given that Pretty much you do most of your H1 in the Q1. I remember that last year you were unable to Save a lot in the first half of the year. So, how should we think about the savings to come through in the first half?
And Particularly when I think about rentals and also when I think about marketing, if you could help us understand How we should think about it in the first half of the year, that would be great. Second question is about your store base. I was wondering how the pandemic has, if it has in any way changed your view on the store rollout. You talked previously about full year 2021, but I was wondering more about the medium term. Are you still planning to open 10 to 15 stores per annum, how many do you see in China?
What about travel retail? So what's your view there given that the Business has become a little bit more local. And then thirdly, is more of a clarification about all this discussion around the GAAP versus peers. So am I understanding correctly that you feel that perhaps the gap in recovery versus the peers that have already reported results is in your view due to your product categories, so apparelouterwear versus perhaps leather goods or jewelry, Because you talked about Q1 being mostly skewed to Europe, but when I look at the growth rate versus Peers, even in other geographies, there is a little bit of a gap, for example, in the U. S.
So, what's your explanation if there is one? Thank you.
Hi, Elena. Thank you for your question. Let me start from your very last question because this is very important. And To clarify, no, no, I don't think that the difference is the product mix. I mean, even if we are in different businesses, But with different product, but I don't think that the difference and what makes our results that honestly are very good, Lower than the big, bigger players you have in your mind that are, I mean, bigger players, we have to learn a lot.
But this is not the collection. It's not the product. The difference, I mean, one reading of this This fact is that is our exposure to Europe. Geographically, I mean, if you have in mind, I'm sure you do, Because you know the other branch results better than they do, our exposure to Europe is over 31% in Q1. And for the year end, it's over 35%.
If you look at other brands, they are in the region of 14%, 17%, 18%. And again, so the weight of Europe, which is negative for ourselves and is negative For everyone, they may be better, they are better. But again, I'm making comments on our business, not on theirs. But again, they did great results. But the big difference is our exposure to Europe.
So this is what makes Our results that are great, sorry to say again, but they are great, lower or different from the others, Not the product category. I mean, we live with our product categories, with our strategy. We don't want to change it. We want to maintain our roots in the outerwear, in the down jacket, in the winter, in the cold, in the mountain, okay? But We are also implementing other categories, but I mean, we are not competing with great brands that you may have in mind To add our category, add our product.
So again, the difference, if you want To share my reading is the geography mix. Okay. Based on back on your other question, the cost base, I mean, right now, of course, I can tell you, I can give you some qualitative thoughts, comments, The host base, first of all, something you didn't mention, but it's important to mention is that last year, our cost of goods sold And our gross margin was heavily impacted by write down of inventory. This year, again, we don't report the results, but I can tell you that inventory is under control and so gross margin is and will be healthy. About rental, we have implemented last year and we keep Having discussions and negotiations with the landlords, mostly in Europe, of course, but not only.
And we are obtaining some rent reductions that are helping our selling expenses. Of course, overall, The impact of selling expenses in Europe is still pretty high, Very high and much higher than in 2019 because by having 60% of the stores closed in the Q1, hopefully, Q2 will be different, but this is having an impact, notwithstanding the rent reductions We are obtaining. About marketing, something important to say is that for the year end, as we We maintain our, let's say, guidance to go back to the 7%. But in Q1 and Q2, you will not see Marketing budget, high as much as in the past because we have changed, as you know, Our strategy about the Genius event that last year, right before the lockdown and the year before was held in February this year will be held in September. So that part, which is a significant part of the budget, We'll be reported the cost will be reported in the second half of the year.
But again, for the year end, we are still targeting 7%. About the store base rollout. I mean, the, Let's say, overall guidance of 10, 15 stores a year is still the Current guidance. Of course, we were very selective before, and we are even more selective now. We are targeting only Important locations where we wanted to open big stores, very visible stores to properly communicate The values of the brand and also we are spending money to expand some existing stores.
About China, let me Make a comment on Hong Kong, which is a part of Greater China. In Hong Kong, we used to have 7 stores. Now we have 6 because we closed one. Honestly, we are redesigning the store network in Hong Kong based on the situation that unfortunately It's not very healthy and since not the COVID, but even before when the protests in 2019 started. And so we expect in Hong Kong to have for sure a big store in Canton Road, for sure a big store in the central part of Hong Kong.
For sure, I hope for sure, still in the airport. But maybe, probably, we don't know yet, Some other minor milestones may be closed in the future. About China, We have a couple of important openings this year. 1 for all in Chengdu, which is becoming one of the most Important, exciting, vibrating seat in China. In Anjou, So we are opening a 2 floor store, which will be a flagship store with The facade on the street, we just opened in nimble.
But again, the That has not changed. We are not now because China is doing like crazy, we are not opening stores Everywhere, you know, I mean, this is very important, even if I don't want to you to get bored, but let me say it again. The Strategy has not changed. We are, we were, we are and we will still be very, very selective. Travel Retail.
Service Retail, I mean, only 2 years ago was booming. Now is in the situation, I mean, most of the stores in the airports We have our close with only few exceptions. And so travel retail is a big question mark. Even if I believe that Sooner or later, hopefully sooner, when the situation will be back to normal, people will start again to travel. So our stores are in the most important airports.
So we start again to open to be successful. But for the time being, We have put on hold also the projects that we had before. I mean, I don't want to make any Example, but there were some projects that are now on hold waiting for a clearer scenario.
Thank you. And may I ask one final clarification, sorry, because I'm not sure if I understood correctly your comments about the So you said that it started very well, but you said that you would expect it to be weaker. But what do you mean by weaker in terms of growth rate versus Q1, because we all know it's a smaller quarter. So can you help me understand? Maybe I've missed something.
Sorry. Thank you.
No, no, you're right. Thank you for asking the question again because this is a very important point. It's not weaker even if Yours, this term is wrong. 2nd quarter for Moncler is a small quarter. It was small before.
It will be small this Even if I can tell you that over the past years, this quarter is still the smallest, but it's growing more than the others. And so again, as I said before, it was a loss making quarter in the past. Now it's making profit. But it is still A small quarter. We can't and even we don't want to change our identity Overnight, Ms.
Robin, the Q2, Helena, is a small quarter for Moncler, Meaningless or less meaningful quarter for Moncler, for sure. So I mean, the results Have to be considered based on this fact that I mean, the results are good, but are good as compared to last year as Compared to 2018, but still in a small business quarter.
Okay, very clear. Thank you.
You're welcome.
The next question is from Alor Bismuth with HSBC. Please go ahead.
Yes. Hi, good evening. I have just a few quick questions regarding the store rollout strategy. So you mentioned that you are still planning to get 10 to 15 store per So you mentioned that you are still planning to open 10 to 15 store per annum in 2021, 2015 our plan. You may open to in Q1, so meaning that probably the bulk of the openings will occur in Q2 and Q3.
But Is it fair to assume rising digit contribution from NewSpace in 2021 and between mid- to high single digit in the beyond 2021. And just if you can share the weight of online in Q1 as a percentage of group sales, please? Thank you very much.
Hi, Anlor. Yes, as you said, in 2021, we are going to open around The stores that was already announced that are secured this year and most of them will be as usual in the 2nd part of the year. There are There are some to be opened in Q2 in terms of space contribution. I would say that we are Always in the mid single digit, let's say, space that we've been guiding or at least Commenting more than guiding. In the past, going forward, it's a little bit early to say.
So the space contribution depending clearly on the stores that we are going to open. So I would say that a mid Single digit contribution is something that today seems still reasonable for the future. In terms of online, no, we don't comment the weight on Q1 numbers. Of course, it's growing, but it's not a number that we comment.
Thank you.
The next question is from Peter Aldagno with RBC Capital Markets. Please go ahead.
Yes. Hi, good evening. Thank you for taking my questions. It's Paolo 3 quick ones, please. You said that e comm has accelerated strongly in Q1.
Is that because your European network was more closed versus the last period of last year? Or is there a change in your e com approach, maybe around marketing strategy? Any sort of commentary around that would be quite helpful. I think at the full year, you said 70% of your e com activities are geared towards new customer acquisitions. So just trying to get a bit more of a handle on sort of new customer recruitment.
Secondly, price increases. Are you able to confirm what level of price increases you have Planned for spring summer 2021 and then also for autumn winter. And finally, just on the ARIA blockchain consortium that was announced by some of your peers, LVMH Richemont in Prada earlier this week. Is that something you guys have looked at or something you may consider joining in the coming months? Thank you.
Hi. Thank you for your question about e commerce. I mean, talking about Europe, To some extent, what you say may be correct is correct. But of course, the strong increase of our e commerce business in Europe Also due to the fact that last year in March, the warehouse of YNAP that was operating, it Still operating our online business until the internalization and that time was closed for 2, 3 weeks. So the comparison, let's say, is pretty easy.
But you mentioned Europe, but the strongest The increase in the online and the e commerce was in North America, also for the Same reason because, I mean, we were under Wainapp last year. The Tower House in New Jersey was closed, but also because in North America, the online business He's doing very, very, very well. About Price increase, okay, in Q1, it's totally meaningless. In spring summer, we increased a little bit We will increase. I mean, we are increasing.
We plan to increase prices much more in full winter Because you know that we normally tend not to increase prices unless we need to protect our margins from the The currency deterioration and this is the case this year for the U. S. Dollar, but also for the Japanese yen and also the U. S. Dollar related currencies, so prices in the second half of the year, you will see a price increase in Some geographies, not that much in Europe, in the U.
K. Yes, unfortunately, also Calls, I mean, to pay for the duties. But I mean, overall, our pricing strategy The blockchain, I mean, of course, we heard that news about the blockchain. Something important To say is that, I mean, we have been working on this since many years ago, but we have Already implemented digital identity of our product even without or not yet a blockchain because you Probably know that all our products have a NFC, Near Field Connectivity tag in all our garments With the TOKEN technology that make our garments unique And all customers have the 100% guarantee that the guidance are real and not fake. If they do, which is very easy with any device with a cell phone, they scan the tag, The NFC tag.
And by doing this, they see not only that the product is real, but I mean, we can put within that tag all of the information about the product, all the history about that product, including The specific transaction of that customer when he or she bought the product. But again, without blockchain, not yet. But I mean, we know very well the technology because it's something We are studying. But in any event, the most important part of that project that was communicated last week It's something we have implemented in the past, which is what I said.
Perfect. Thank you.
The next question is from Antoine Rieu with Societe Generale. Please go ahead.
Hi, good evening everyone. I have two questions. First question just you mentioned that 2Q was the 2Q started probably in line with 1Q, I guess, you were talking about the 2 year growth versus 2019. Just wanted to get a sense if you could give a bit of granularity by regions and I'm thinking especially of the U. S, which is improving on So just wanted to get a sense on your part if on the, let's say, exit rate in retail in the U.
S. There is an improvement and if we should expect actually the Americas on a 2 year And if we should expect actually the Americas on a 2 year basis to fare a bit better. And the second question, just coming back on this Beyond seasonality and the product categories versus peers, don't you think that the big difference actually versus your And, Luciano, you mentioned that A and P was still down significantly in 1Q and should be down as well in Actually, you do spend you have been a bit late in terms of spending And EBIT been maybe a bit less aggressive in terms of product initiatives, pop up Just wanted to get your thoughts on this. Thank you very much.
Okay. About your first question, On Q2, of course, it's still too early. I mean, the quarter started well with no main differences, honestly, not visible differences is among the regions as compared to Q1. So all the regions are progressing More or less with the same trend. Of course, Europe, even if it's too early, but I mean, as Paola said, And now in Europe, we have still some stores that are closed, but less than during 1st quarter, so Europe, we are more hopeful to see some better results.
But the U. S, Again, talking about Q2, nothing to add. Talking about retail and the future of retail, I think that I mean, the retail business in the U. S. Is doing better, much better.
And I think that there are opportunities to make that business It's even better and more successful working on the stores, on some stores. Talking about new openings, if this is the implicit question, I don't think we have opportunities and we don't Have in our mind plans to open many stores in the U. S, but we still believe that there are some stores In some of them, we have current projects to expand the existing stores. So one is in Los That will be relocated in a much bigger flagship store. 1 is Chicago, again, in the same Sweet.
But again, a much bigger and more visible and more powerful location. And also something that we have already implemented looking at the past 2 years, some Shopee Shop specifically in Canada Have already been converted into retail concession stores as much as we did for Bloomindale in the U. S. So I mean, this is the retail strategy for the U. S.
I think that there are opportunities to make Can I repeat stores more successful? Not to open the many, honestly. I don't think We have opportunities to open in North Dakota U. S. A and P, yes, marketing, Yes.
So this year, the seasonality or the curve of our marketing budget, as I said, will be different. But this is mostly because We made the decision for several reasons to hold our Genius event in September, and it will be held in China, it will be a great event, but we can't now disclose any comments about that event. And of course, this is moving significantly budget that last year was spent in February and so in Q1 to Q3. So this is changing, for sure, the curve of marketing for this year. Difficult to say for next But we will see.
Of course, it will depend also on the result of this little bit different strategy That is also driven also by the current situation because again, February of this year Again, February of last year is not much different. So we are lucky and happy to hold the event It's September and hopefully whether the situation will be better.
Thank you.
Welcome.
The next question is from Omar Saad with Evercore. Please go ahead.
Good evening. Thanks for taking my question, Luciano and Paola. I have three quick questions. Number 1 is on inventory. You ended the year, I think, minus 3% year over year.
How are you feeling? I know you said
you feel very confident that you're not over inventoried, Do you feel like you have enough inventory? It sounds like January was a stronger month and maybe even depleted that minus 3. Help me understand if you've been able to kind of build back inventory and if you feel like you have enough for the demand that's building? 2nd question, Is it fair on the Genius collaborations and collections, is it fair to assume in 2021, There will be a significant increase in the number of the Genius projects that you guys have this year. And then Lastly, I'm sorry to ask one more question about the U.
S. It's a little bit surprising that the 1Q sales once is strong in the U. S. Given the huge amounts of stimulus that came into the market, very quick vaccine rollout that's Is there an inventory issue in the U. S?
I mean, the stores are open. Was there any other I know you're up over 2019 levels, but I'm wondering if there's any other kind of limiting factors in the U. Thank
you. Hi, Omar. Thank you for your question. About inventory overall, No, the answer is no. We don't see any issue with our inventory, not for the current season, Not for the upcoming full winter season.
Needless to say, Omar, that we are scared, very worried about Having too much inventory and not to have enough. But having said that, I think that we are in a Pretty good position with our inventory also because we have implemented over the year some more flexibility in our And so should the demand from the market take off, which is something we all hope so, We have some flexibility and capability to react to the additional market demand with our supply chain. So honestly, we don't see any issue on that side. About the JIUS collaborations, we have a lot this year. I mean, some have already been Presented, as I said before, J.
W. Anderson, very strong category in right now, I mean, last week, but Still at the beginning in the stores, a fragment will be the next one and some also new designers that That will be disclosed in September. And for the future, I mean, the strategy It's still to continue with the Genius because Genius is not one design or one project. It's a strategy, and the strategy It's based on the introduction in the stores of designers, So collaborations that may attract our customers, then they can buy it or they may not, But they probably buy other product. But again, it's a way in the store, not only also digitally through the social network, through Instagram,
And then lastly on the U. S.
Yes, U. S. I mean, U. S. Was I mean, all the channels were good about inventory.
I mean, we don't have I mean, if the problem is Not to have enough inventory, the answer is no. Also because something important I didn't say, but I'm sure you know, We have an important portion of our inventory for the season centralized here in Italy, and we allocate To the different regions that reserve based on the performances, I saw some inventory That unfortunately may not be allocated to the stores that are closed in Europe, may be allocated to the U. S. Or to China or wherever And the demand is stronger. And this is the same for the online business because online business again is tripling in the U.
S. But even if, Omar, we don't have implemented yet the one pool inventory, which would be implemented After they go live over the new website and the new platform, but the fact that We have in the same warehouse in the U. S. Now the inventory for the retail channel, for the wholesale channel, for the online channel, It makes it much easier to take product from one inventory and to move From one channel and to move it to other channels. So again, we have this kind of flexibility.
That is also one of the reason why The Olympics in the U. S, back in October when we started with a new platform and with the new operations, started doing Very well. Also because we had this kind of flexibility, which is not the scientific one point inventory yet, but I mean, something that helped to feed the demand from the market.
Okay. Thank you.
Thank you.
The next question is from Flavio Cheda with Jefferies. Please go ahead.
Yes. Hi. Thank you. Good evening, Luciano, Paula. Two super, super quick questions.
Compared to 2019, The incidence of new customers, what you see now compared to what it used to be, has it shifted significantly one way or another? And again, compared to 2019, the percentage of outerwear, so the jackets, That given we have the weird 2020 in the meantime, is it up, down or similar to 2019? Thank you.
About your question about outerwear, I can tell you that the contribution of outerwear is decreasing. Also, the other categories are growing. And this for sure in 2021, even if I mean we are looking at the very first Quarter, it is premature, but in any event, this is something we keep seeing because of the other categories and Specifically, the need to add the Catarsson, the Jersey is doing very well and is growing faster than So if I look back at 2019, I would no doubt that our contribution is a little bit lower. I mean, The leading category, of course, but knitwear is growing faster together with other categories like Shoes, for example. About new customers, it's the I mean, difficult It depends on the geographies.
But even in Asia, for sure, we see new customers Also because, I mean, the growth of the business compared to last year and also The year before, because we are talking about Asia and local markets, I mean, we see a lot of new customers. Europe, less, but we have more local customers, repeat customers. Let's say that A lot of new customers in Asia, in China, but not only. And in America, too, yes. In Europe, there are more repeat customers.
Like now more local, I mean, the business we do in Europe right now, of course, there are no travelers. People are not moving.
Okay. I think we have time for the very last question. Flavio, if you don't have Follow-up.
No, no, no, no. It's late. No follow-up.
Thank you. So, operator, we can take the very last one. Thank you.
Ms. Brandt, we do not have any further questions.
Fantastic. So thank you very much to everybody And just remind you that the first half results will be published on July 27. The conference call will be as usual on the same day and the quiet period will start on June 28. For any follow-up question, feel free to call us anytime. My colleagues, myself, we are here if
Ladies and gentlemen, thank you for joining. The conference is now over and you may disconnect your telephones.