Welcome, and thank you for joining the Moncler Nine Months 2020 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. 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. Paola Durante. Please go ahead, madam.
Thank you. Good afternoon, actually, good evening, everyone. Thank you for joining Moncler Nine Months 2020 Interim Management Statement conference call. We know today is a busy reporting day. We will keep this call as short as possible. As usual, today for Q1 and Q3, you have myself and our Chief Corporate and Supply Officer, Luciano Santel. Let me also remind that before our comments, this presentation may contain specific statements that are neither reported financial results nor other historical information. Any forward-looking statements are based on Moncler's current expectations and assumptions on future events and are subject to various risks and uncertainties that could cause actual results to differ materially from those projected or implied by these statements and from historical trends. Let me also remind you that interim results can be influenced by seasonality and cannot be used as proxy for year-end results.
That, as usual, media have been invited to participate in a listen-only mode. Let's now move to the presentation, page three, revenue results, key highlights. I will comment only cost and currencies trends, if I don't say otherwise. Before commenting on nine months and Q3 results, I would like to make three quick comments. Even if 2020 results continue to be impacted by the COVID-19 pandemic, in Q3, we started to see clear improvements, with revenues declining by 14% compared to the -52% in Q2. Improvements were driven in particular by the outstanding performance in China, but also Korea and the online continued to significantly outperform. The positive signs reinforced further in October, even if uncertainty remains very high while we face the most important weeks of the year, as you perfectly know. Let's move to page four, revenue breakdown by distribution channel.
Both channels showed improved performances thanks to store openings and better domestic traffic. In particular, retail revenues declined by 18% in Q3, with Mainland China and Korea the best-performing markets. Online grew sound double-digit in accelerations compared to the first six months of the year. Wholesaler recorded a very good performance in the quarter, mainly thanks to the good acceptance and good reception of the fall-winter collections and the strong domestic demand in some markets, in particular in North Europe, Middle East, and in APAC. E-tailers also in this channel continue to grow double-digit. Let's now move to page five, revenue breakdown by region. As I already highlighted before, recovery in the third quarter has been largely driven by China, followed by Korea and the Americas. China in particular showed outstanding, strong, I would say, double-digit growth in Q3, recovering partially the loss of Chinese travelers.
On the other side, EMEA, and Italy actually in particular, continue to suffer due to the lower international travelers, which as you know, are important in the third quarter. Let's go to page six for a deep dive on our EMEA region. In this case, I will comment EMEA, including also Italy, as usual. In the first nine months, EMEA, including Italy, reported a 25% decline, 21% in Q3, with the wholesale outperforming retail thanks to the very good domestic demand. The retail performance, on the other side, has been penalized by the decline in international travelers, which in EMEA in Q3, in a normal year, can account up to something around 70% of revenues. In Q3, we saw improved performances, in particular in Germany, Russia, and in the other European markets. Going now to page seven and commenting on the Asia performance.
You know that Asia in Moncler includes APAC, Japan, and Korea. In the third quarter, Asia was down 4%, significantly less than the -38% we recorded in Q2, as you remember. This performance has been supported by the strong double digit in China, but also Taiwan and Korea grew double digit in the quarter. This largely offset, not entirely, but largely offset the negative performance in the rest of the other APAC markets, in particular, the still negative performance in Hong Kong, Hong Kong SAR. The positive trend in China has continued even stronger in October, boosted, as you know, by the very good Golden Week. Finally, Japan in particular has been penalized in August and September by the challenging base of comparison. In October so far, so the first few weeks, few days in October, we are seeing some clear improved performances.
Finally, let's move to the last, page eight, the last region, Americas. Revenues in Americas decreased by 13% in the quarter, with similar performance among the two main markets. The trend has improved significantly during the quarter, month-after-month. August better than July, September better than August. Retail outperform, driven by the very solid local demand and, I would say, very good positive consumer sentiment and the strength of our brand in the market. Online also perform well, and we are very happy with the internalization of our North America online business, which occurred in October. I leave that after Luciano to provide you with some more colors and comments on this. Finally, page nine of the presentation. Let me comment on our store network, which at the end of September was at 217 units, 217. In the quarter, we opened four stores.
During Q3, we have also relocated some important stores, and we have enlarged our flagship in Old Bond Street that you see some pictures in the presentation. Very nice store, even if I haven't seen it. In Q4, we expect to open two doors, two further doors to get to around 10 for the year as we were anticipating. While for next year so far, we have secured around 15 stores with a large focus on Asia. I leave now the floor to Luciano to comment on some of our main strategic projects and actions to face the current scenario, and then we are open and ready for all your questions.
Thank you, Paola, and good afternoon, everybody. Okay. A quick update comment on the current situation related to the pandemic, starting from people. You know that under this situation, people was, still is our first priority, the protection of our people, first from the health point of view. Early September, we started working again regularly in the offices for the majority of our employees. Unfortunately, right now the situation in Italy not only is getting more and more serious, so we are planning for next week, unfortunately, to get back to a higher percent of remote working. We are getting used to work remotely, and in fact, we organized early in October, we held for the first time our business regional summits totally digital. Of course, we are implementing regularly testing swabs for all our people. We continue the production of surgery masks.
Projects, as you know, we set priorities this year more than ever in order to select only the most important, essential projects for the business, for the brand. One of these project, probably number one project, was and still is the insourcing of our e-commerce business. As expected, as we originally planned, we started October 6th, early October in North America. I would say with very good results, not only from the business point of view. Business online in North America is doing very well in October, but also we are very happy about all the infrastructure, all the machine, because you know that we started last year in Korea, but the e-commerce business in North America is very big and bigger than Korea. Of course, we still take under control our expenses, all the expenses.
Something to add about rents, as you know, as we already said at the end of the first half of the year, we implemented negotiation discussions with the landlords, very tough discussions, but at the end, we reported at the end of June pretty good results, and the negotiations are going ahead with additional good results that are coming. This is the situation right now, and I think that we are ready now to answer your questions. Thank you.
Operator, you can open.
All right. Excuse me, this is the conference operator. We will now begin the question-and-answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. To remove yourself from the question queue, please press star and two. Please pick up the receiver when asking questions. Anyone who has a question may press star and one at this time. The first question is from Susy Tibaldi with UBS. Please go ahead.
Hi. Good evening, everyone. Thanks so much for taking my questions. My first one would be on the trends by channel. I would like to dig a little bit more into what's driving the strength in the wholesale channel, and if there was any timing effect or any anticipation of deliveries from Q4 into Q3. I think it is quite unusual to see the wholesale outperforming retail by this extent. Especially because in the previous quarters, you had talked about taking a more cautious approach to wholesale. Can you maybe discuss a bit which markets are seeing higher levels of deliveries? Most importantly, are you comfortable with such levels of products in the market given all the ongoing uncertainties, or is this a sign that Q4 is expected to be particularly strong?
One question on potential pent-up demand, because arguably your Q3 being weaker than peers is also due to the type of product that you sell. As there was no tourism this summer, is it reasonable to expect that some of the sales may have shifted from Q3 to Q4, as people will buy winter jackets when it's actually cold? I was wondering if this is something that you are witnessing, and are you expecting to see some of this pent-up demand, or is there also an element of risk that perhaps due to lack of international travel, those customers that live in warmer climates, maybe they will not be buying these jackets this year, and this is to be lost? Very short one on gross margin.
If you can give some indication on the key moving parts, relative to last year in terms of price mix, but also in terms of channel mix, given the outperformance of wholesale, and if there is any reason why gross margin will be below H2 last year. Thank you so much.
Okay. Thank you, Susy, for your question. About wholesale. Wholesale is doing well. Of course, the numbers that we report are based on deliveries. There is not any particular shift in deliveries from Q2 to Q3 or anticipation of Q4, honestly. The wholesale is doing well. Just to make it clear before making any comments, we still have a very prudent approach in all the channels, of course, but in wholesale more than the others because we tend, as you know, to ship only product we expect our customers can successfully sell out. Wholesale is doing well for several reasons. One is the very good acceptance of our full- winter collection. That is driving very good reorders, honestly. Another point is that, as compared to the retail business, the wholesale business is Not all the wholesale business. Wholesale is a variety of different sub-channels.
Normally, wholesale business is less exposed to travelers. It is much more local. Think of Italy, Europe, Japan, even United States, where the big department stores have stores in minor cities, much less touched by travelers. Because business with locals is doing well, but that is another story. We are doing very well with locals in retail, too. I think that this is one reason why wholesale is doing well. About Q4, of course, needless to say, our wholesale business in Q4 is not particularly material because you know that wholesale is a business in Q1 and Q3 mostly. Based on the current trend, we are pretty confident about our wholesale deliveries in Q4. Again, wholesale is very good.
About your elaboration, let's say, of the trend we reported in Q3 and whether or not we can expect some kind of shift, if I understand your question, from Q3 to Q4, I think you are totally right. I think you are right because the current situation is, to some extent, increasing a little bit our seasonality. People under normal circumstances, last year, for example, started buying our product in summer much more than what they did this year. In Q4, of course, it's still very early and premature to predict, but based on October, we have just 20 days behind us. I can tell you that October is doing very well, probably also because the weather is particularly good for our product. It is pretty cold, better than last year.
I think that you are right, and our, let's say, curve may be considered a little bit shifted from Q3 to Q4. You mentioned international travelers. Of course, this is a risk by definition, because we lost the vast majority of international travelers. I have to tell you on the other hand, that the tourism outside the region, the international tourism in Q3 is much more important than in Q4. As Paola said, in Q3, international travelers represent up to 70%, a number very high. In Q4 is the other way around. The locals are more important than international travelers, but this is a risk. I will say that unfortunately is more than a risk right now, the lack of international travelers.
On the other hand, another point important to highlight is that because the international business is coming in Europe, but not only, mostly from Chinese customers, we are implementing in all the regions, but specifically in China, business actions to capture these people that are not traveling any longer, what we call new locals, by implementing activities to contact them and to call them to come to visit our stores in their local market. In this case, specifically in China mainland. Third question is about gross margin. Gross margin in the second half of the year, honestly, more or less, should not be different from last year. One reason important, we already said that, but important to update you about the write-down of our inventory that was very heavy, very important in the first half of the year. Remember, EUR 30 million.
In the second half of the year until now, of course, let me cross my fingers, but based on the current visibility we have, we don't see any reason to furtherly write down inventory. Without any depreciation of our inventory or extraordinary depreciation of our inventory, I think that the gross margin in the second half of the year should be in line with last year. You are right, the wholesale may be for the year-end a little bit better than retail, but again, we are not talking about significant impact on gross margin.
Very clear. Thank you.
The next question is from Louise Singlehurst with Goldman Sachs. Please go ahead.
Hi, good evening, Luciano and Paola. Thank you very much for the commentary so far. A couple of questions from me and one following up from the prior question. In terms of the domestic consumer, we've obviously been hearing some fairly strong anecdotes over the last kind of two or three weeks or so. I just wondered if you could help us. I think, Paola, you mentioned Northern Europe. You also mentioned the Middle East and APAC, obviously. Are any of the consumer clusters turning positive towards the end of the period? Any color for October? Obviously, you said that that's generally starting well. My second question is just about product initiatives for Q4. We've obviously seen a delay on Genius, understandably, this year, but we've seen new content from Rick Owens, Jonathan Anderson coming. If you could just talk us through the pipeline for the fourth quarter, that'd be really helpful. Thank you.
Yes. About domestic demand overall, in Q3 was good. Much better than, of course, the demand coming from tourism. September much better than July and August. The trend was progressively improving in September better than the two months before, and the exit rate was very good. In fact, as I said, October is doing now very well and much better than September. This is in all of the different regions. Honestly, starting from, unfortunately, the weakest region now, which is Europe, notwithstanding Europe is suffering a lot about the lack of tourism, but the local, the domestic demand is very good and is up against last year. China, needless to comment because we already said that.
Korea, another market which is driven mostly by domestic demand, and now more than ever because the only stores that in Korea are not doing well, not at all, unfortunately, are the duty-free stores, which are doing business only with the tourists, with the Chinese tourists. These stores are not doing well at all. The lack of business in these stores is offset by the other stores. The domestic demand is doing pretty well everywhere. Japan in Q3, the demand, which normally is mostly local demand, was not good. Japan was down in Q3. September was also negative, there was a reason. Last year, September was particularly strong in Japan. Because many people, in anticipation of the VAT increase, which started October 1st, Japan in September was very strong. The base of comparison was very tough. September, Japan was heavily negative.
However, in October, when the base of comparison is much easier, Japan started again to be positive and to do pretty well. Domestic demand, U.S. was the same. U.S. and Canada, in Q3, if we take out Hawaii, and the business in Hawaii is 80%, 90% made with customers coming from Japan, normally. This year, of course, without tourism, these two stores, very big stores, are not doing at all the business they did last year. Taking out Japan, North America overall in Q3 was pretty good. Again, most of the demand in North America is local, domestic demand. The other question was about Genius.
Yes.
Genius, we have been able so far, and I think that there is no reason why we couldn't respect our timeline, which is very intense, honestly, this year, notwithstanding the situation. We have delivered with some delay only in June, July, if you remember. We were able to deliver all the collections. The most recent collections were JW Anderson.
The Rick Owens. Sorry, go on. Rick Owens will be the-
Now, yes. JW Anderson was 10 days ago, and today, exactly today, we delivered, you can find in our stores Rick Owens. Next will be Grenoble, and then in December, ALYX. As planned, as expected. Again, notwithstanding the situation, I think that the Genius project this year is doing very well, considering the situation.
That's very clear. Thank you.
You're welcome.
The next question is from Luca Solca with Bernstein. Please go ahead.
Yes, good afternoon. I was wondering about product availability. There's a possible scenario where you face, in the fourth quarter, significant growth from all nationalities. You are seemingly seeing the pent-up demand and the recapture of that demand in the fourth quarter. It must be very difficult to be planning in these days. I wonder, in case that scenario materializes, would you have enough products to be satisfying that demand, the trend, and a positive year-on-year growth? Would you be short of products because you haven't necessarily planned for this kind of context? As a second question, the progress you are achieving in digital in the U.S. seems to be very reassuring and potentially bringing forward similar progress in China. I wonder where you stand in developing your digital distribution in China, and how much of an opportunity you see there?
Last but not least, you have been on the forefront inventing a new way of presenting new collections through the Genius party event. I wonder how you're thinking about making the Genius event COVID-19 compliant and possibly, in the ideal world, generating the same amount of buzz and positive momentum for the brand. Thank you.
Okay. Hi, Luca. Thank you for your questions. Let me, for a second, to joke about the availability of product, because we strongly hope to face this problem. I think that we shouldn't have a problem, notwithstanding, as you remember, we implemented a very important cut in our production plan. I don't think we will face this problem seriously, also because we have implemented, over the years, some flexibility, better flexibility in our supply chain that may allow us to react to the demand. Of course, not for some specific, particular seasonal product, but for all the products we have materials in-house, that are most of them. If we have fabrics and components, we can react in a few weeks. Again, seriously, I think that this is not a problem. About digital, of course, we are very happy with North America.
Again, not only for business, because we are talking about just 15 days that are meaningless. Because when you start with a new platform, it's very difficult to protect the business because technically behind the screen, there is a different machine. The fact that even with a completely different machine, we protected the traffic of our customers and the business, which is doing even better than before, makes us very satisfied. That this was a success of our teams in North America and at headquarters , and our people again, that made it happen. About China, and not only because U.S. is the first very important step, but the most important step will be next year in May when we expect May and June. It's not well-defined yet, but when we will insource Europe.
Europe, as you know, is much more complex than North America for tax, for duty, for currencies, whatever, is much more complex. Also from the business point of view, is by far right now, the most important region for the online business. After Europe and Japan, because Japan is the other region that we'll start May, June of next year. We expect for the end of second half of next year to implement our platform in China. The digital project for China has already started. It's a completely separate project because from the technology point of view, from a social point of view, from many different points, China requires a completely different project. This is something the two separate teams of China and the headquarters are working very hard to make it happen next year.
For the time being, needless to say how important is digital in China, because it's important and it's a big opportunity because we are doing really something more than zero, but not so much. We have huge opportunities. We have opened the TikTok account. We are implementing shortly the mini program with WeChat. The machine is moving. I think that on one side, we are very weak in China from the digital point of view, but on the other side, we see really huge opportunities. Because the machine is moving and the organization now is very focused on China.
The last question was on Genius evolution, but I think we will surprise them.
Oh, yes. This is something we cannot disclose, Luca. It is something that you have to wait. You will see something, as usual, amazing.
We'll look forward to that. Thank you.
All right.
The next question is from Anne-Laure Bismuth with HSBC. Please go ahead.
Yes. Good evening. I have three questions, please. I just want to come back to the performance in the U.S. You flagged in the presentation that the results have been strong since August and further accelerated in September, meaning that you are back in positive territory in the U.S. Is it possible to understand the magnitude of the improvement in the U.S.? More generally speaking, regarding your comment about the performance in October, which is very encouraging. Is it back to positive territory? Finally, I have two other questions, sorry. Is it fair to assume contribution from new space in Q3, which is globally similar to H1, that is to say roughly 3%-6%? My last question is about the store openings for full year 2021. You have already secured 15 store locations with a big focus in Asia. Is it possible to know how many stores do you plan to open there out of the 15 planned in 2021? Thank you very much.
The first question was on the acceleration magnitude in the North American market in the quarter. Clearly the months, August, as I mentioned, Anne-Laure, August was better than July, and September better than August. We cannot provide further comments on that. For sure, we are happy with what we have seen, but we need to wait. As we said, the most important weeks are ahead of us, so it's important to understand how the business will develop now in these following weeks. The second question, and this I leave it to you, is a new space contribution. Is it fair to assume a 6% in Q3?
Of course, Anne-Laure, we don't report these numbers. We just give a general guideline for the year, normally. I think that for Q3, honestly, is an accurate, reasonable estimate. Is a reasonable estimate, I think. The other question, it was about new openings for 2021. Yes, your assumption is correct. We are opening some stores, probably for sure more than this year in China. There are two stores that I would like to mention because are two stores that we expect to become flagship. One is Hangzhou MIXC, which will be a two-floor store, very big, very visible, and what we consider a flagship. The other one is in Chengdu Swire, another store that will be a flagship, and others. These are the two most important. Also, among the 15 stores, there are two important openings in Europe.
One is Milan Galleria, which is a project we already mentioned in the past, but will happen next year, again, a flagship. The second store, after Barcelona, in Spain, which will be Madrid. Of course, a very important, very visible store in Calle Serrano. These are the most important openings of next year. Again, in China, as you said, we have two important openings and other minor, but one in Wuhan, another one in Dalian. China, of course, is important market also for some new openings.
Thank you very much. I just want to come back to the performance in October. Sorry. I know that the two most important months are ahead of you with November and December, but just going back on October, and even the comment that you made about a very good performance, does that mean that you are already back in positive territory?
As I was saying, it was referring to U.S., but it's the same even for October in general. We cannot comment on single month performance or in details. The signs are good, but the 11 weeks that we have ahead of us are very tough, and the environment overall remains very uncertain. No further comments on the October. Happy, yes. We are happy, but we know that there is still two very important months ahead of us.
Thank you, Paola and Luciano .
Thank you, Anne-Laure.
The next question is from Omar Saad with Evercore. Please go ahead.
Good evening. Thank you for taking my question. Congratulations on the nice results. We understand it's a very difficult operating environment. My first question, I wanted to follow up. I believe you said tourism represented 70% historically, 70% of EMEA in the third quarter. How does that evolve as we move into the fourth quarter? Is it more or less dependent than the third quarter? Are there different callouts as we think about the tourism effects and the lack of travel, in different regions, and the seasonality around that? I'd also like to ask a question on kind of what your outlook is for the backdrop for the broader outerwear category. Do you have any insights into outdoor activities, ski resorts?
Do you expect them to be open and the key resorts to be open in Europe, in North America, and other markets where you see a lot of the winter activities that is so important to your brand? Thank you.
Yes. Hi, Omar. About the tourism outside the region, the number that Paola mentioned, this is associated with the summer period, with the Q3 specifically, which is up to 70%, very high. In Q4, the percent of the contribution is much lower. On the other hand, the local demand is much higher. We have two months and a half ahead where the local demand is more important than the tourism that was outside the region. Your assumption is accurate.
With sector evolution in resort.
Yes. About the Grenoble line, of course, this is not only a part of our DNA, but also, you know that we have invested a lot in this line over the past few years, not only from the style point of view, but also from the technical point of view, to protect and to develop more and more a very technical credibility in this field for our brand. Something important to highlight about ski resort is that we are relocating actually, shortly, the store of Zermatt and Kitzbühel, and both locations are really amazing, much bigger, much more visible. Zermatt particularly is really an amazing location. The ski resorts are more and more important more than ever. We keep investing because they represent also the credibility of our brand, not only for business, but also because they represent the DNA of our brand.
Thank you.
The next question is from Oh, excuse me.
No, Omar, I think I answered your question, but probably you ask also if they will be open, the stores. We hope so, of course, but the future this year more than ever is very uncertain. We strongly hope so.
Thank you.
The next question is from Thomas Chauvet with Citi. Please go ahead.
Good evening, Paola, Luciano. I have two, three questions, please. The first one on e-commerce. I know it's only two weeks of trading, but any lessons you can share on the internalization of e-com in Canada and U.S., any difficulties on the integration? Anything that surprised you in terms of maybe a change in the merchandising mix? Are you still sticking to your schedule for next year for Europe and Asia rollout? Secondly, on the wholesale performance, I guess within that -6% you said retailers outperformed, I guess travel retail underperformed, then you had positive reception for winter and reorders from maybe some of your multi-brand retailers. Should we take that, in light of your -25% like-for-like, maybe, is that a positive reception of full- winter effectively a very good indicator, you think, for the fourth quarter?
Does that give you actually confidence about November, December, to have seen maybe a surprisingly strong or less bad than expected performance in the wholesale channel? Finally, on the Asia growth, I'm trying to reconcile the country mix. You had China, Korea double digits, Taiwan positive. Is it fair to assume that Japan was down 25%-30% in the period? As you said, Luciano, up low single digits maybe in October, given the depressed comp.
Okay. Thomas, about your first question, e-commerce. Key learnings, a lot. Again, honestly, it is still premature to get to significant conclusions about product mix and merchandising for the regions that should start next year. The most important key learning, again, is about the capability of our organization to make it happen, which again is something important and something that makes us more, let's say, optimistic, because the project is still long and very complex. About wholesale-
Wholesale, he was asking if it's an indicator of a good reception of our-
Yes. This is what we look at. Of course, the business may be better, may be worse. We may have the help of the climate, the weather. At the end, what makes us confident is the results of our collection, of our products, the strength of our brand. Again, wholesale did well and better than retail. Retail is doing in October, as we said, well. These are all encouraging signs for the future. As Paola said, and let me say it again, it's very difficult. I would say that it's totally impossible to predict the future. Normally it's impossible, and this is what I normally say in October every year. This year, more than ever, you know that the situation overall is very, very critical. We are happy, yes.
We are happy because notwithstanding whatever happened in the last months or whatever may happen, hopefully not, in the future, but our brand is strong, our product is good. People, when they can, come to visit our stores. Again, overall, we are happy, yes. Without any particular indication on the aggressive expectation for the year-end. Also because results are important. Again, we look at the brand for the future, not just for this quarter. About Asia.
Japan. Yes.
Yes. Overall, China mainland are number one by far. Korea, again, as I said, as you highlighted very well. On the other hand, Hong Kong a disaster. Macau, a disaster. Macau is getting a little bit better now in October. If I have to comment Q3, Hong Kong and Macau, a disaster. Taiwan, fairly well. Japan in September, negative. Double digit negative. Again, October is positive, if I can say that it is positive also because, as I said before, the base of comparison is much easier. In any event, we are very confident about the possibility, the capability, the potential of Japan. Of course, Q3 has been heavily impacted, not only by the base of comparison with last year, but by the pandemic. Japan in Q3 was still in a very serious situation. Again, any expectation, any forecast is more than ever, very difficult now.
What we can say for sure is that the signs are good, the brand is very strong, and the collection, which is very important, received a very good acceptance by our customers.
Thank you, Luciano.
You're welcome.
Thank you.
The next question is from Manon Coulon with Erasmus. Please go ahead.
Hello. Thank you for taking my question. I just have one, if I may. I was just thinking about the link in Q4 between winter holidays and going skiing and so on, and buying Moncler, especially in Europe. I was thinking it might be a strong link. What could be the size of the impact if people can't go on winter holiday due to a second wave worsening?
Sorry. Your question was, what's the impact if the resorts are not going to open in winter? The resorts are open, but clearly maybe the ski slopes will not be opened. No, the impact is, as Luciano was saying before, and I think maybe he was saying that the ski resorts are very important for the brand, for the strength of the brand. They are our DNA. It's important. They are critical for us, but not as much in terms of contribution to business, not even in Q4. There's no big impact if they're not going to be open. Of course, if they are open, everything helps. Otherwise, it's not going to have a big impact, if this was your question.
I was thinking about the sales in ski resort, but also just about buying a jacket before going skiing. Not only the sales in ski resort. I was just thinking maybe people were buying a Moncler jacket because they know they are going on winter holidays, and they might not do it if they don't. I was just thinking about the link between these two.
Our Grenoble collection which is the ski collections account, we normally say single digit of our revenues. Of course, you can also buy products of the main collection used for skiing. This is something that can happen, but otherwise I would say it's not going to be such a big impact on our revenue. As we were saying, of course we hope they would be open because it will be much, much better, but more for a general environment than really for a big impact or an important impact on our revenues.
Okay. If I may squeeze in the same room, you said that Q4 sales from travelers were lower than Q3, so lower than 70%. Can we have an idea of the percentage Q4?
Sorry, we couldn't really understand the question. Can you repeat? There is the line that goes and it's not regular, so we don't really get all your words. If you can repeat.
No, excuse me. You said that the travelers account for 70% of the sales in Q3, and then you said that Q4 is lower. Can we have an idea of the percentage in Q4?
Yeah. Travelers in EMEA, we were specifically mentioning, not travelers overall.
Okay.
No, yes, correct, because travelers in EMEA are very important. 70% in summer, in Q3, less than 50% in Q4. In the region of 40%, 30%, 40% in Q4 in EMEA, as Paola said. Okay?
Thank you very much.
You're welcome.
Thank you.
The next question is from Paola Carboni with EQUITA SIM . Please go ahead.
Yes. Hi. Good evening, everybody. I have a few questions. First of all, looking to the insourcing of your e-commerce activity now that part of the project is already up and running in the U.S. and Canada, I was wondering whether you can share with us a bit more of colors in terms of the impact this project might have in terms of profitability. As a broader question, looking maybe to next year or whenever you will have regained 2019 revenues, would you expect profitability as well to come back to your 2019 levels? Another question is about your marketing budget. As I presume and I understand you are going to be more vocal with your marketing activities in the winter season now, I was wondering how we should look at your marketing costs in the second half of the year compared to last year.
A quick question, if you can, on the travel retail channel, if you have any different thought now on this channel because of the situation, in terms of your development strategy there. Last one, in terms of the mix of clientele you are seeing in the most recent month or so with the restart of winter sales that are more, let's say, more in tune with your core offering. I was wondering if you can share with us anything about the evolution of the [DH cluster] with the current situation rather than, for example, the evolution of the price mix with the current situation. What are you seeing since the start of winter sales? Thank you very much.
Hi, Paola. About e-commerce, everything we said about America is important for the future. To be honest with you, and even if, in my role, I should look as I do normally at profitability, but right now, profitability of this channel is not on the top of our priorities. What is on the top of our priorities is to become strong, able, and stronger in driving this complex machine from all the different points of view. This is also the strategic reason why we decided to resource this business. This business may be profitable even more than before, in theory, but everything is theory now. When the machine will be up and running in all the different regions, and when we will comment, one year from now, more or less, the result of all the other regions, we may start to look also at profitability.
For the time being, in our plan, we maintain the same profitability we currently have, or we had before and currently have with YNAP. Again, the strategy behind this project is different. Your point is correct, but right now is honestly premature. About marketing budget, second half will be lower than last year, of course. We expect for the year end, a marketing budget in the region of 6%. Last year was 7%. You know that we included in that budget also charity activities actions we did in the first half of the year. For sure, marketing activity this year is and will be much lower than last year. You asked a question about price mix?
Travel retail channel development or retail development.
Travel retail, right now is the channel which is suffering the most. We still have a few stores still closed, and all of them are in airports. One is Hong Kong, the other one is Istanbul.
The other one is Melbourne, it's still locked down.
Melbourne, yes. Two of the three are in the airport. The stores in airport that are open, unfortunately, are suffering a lot. I'm thinking of Incheon, Korea, and all the others. Travel retail right now is suffering. Nevertheless, we still believe that travel retail business, we want to hope that travel retail business will be important again in the future. For the upcoming year, we have a project, only one. One important is Sydney Airport, where we plan to open a store. Then we have, yes, a couple in China, in Shanghai and Guangzhou. Again, not so many, but I think that this channel, after this unfortunate situation, will be again a very important channel if people, as we all believe, will start again to travel and to enjoy in traveling and in shopping abroad. One question was about price mix?
The initial indication on this for winter collections in terms of average price customer.
Yes. We see in some regions more than others, some younger customers, for example, in North America, which is encouraging, of course. It means that we developed a collection which is looking not only at our existing loyal clientele, but also at younger and new customers. Price, right now, is more or less in line, probably a little bit higher because we are selling now more outerwear. Not big differences, honestly. Not at all. Yes. Additionally, if we look at the retail metrics, this is very important to highlight because all our stores, with no exclusions, except China, are suffering of much lower traffic. On the other hand, we are offsetting, not completely but in part, the lack of traffic with a much higher conversion rate and with higher and increasing units per transaction.
These two metrics are doing well, not as much to totally offset traffic, not in Q3, of course. Again, these are very encouraging signs of the capability of our store people to convert business.
Okay. Thank you very much.
Thank you, Paola.
You're welcome.
Operator, I don't know if there are follow-up questions or other questions. I think if any, we can get the last one.
There are no more questions registered in the queue.
Perfect. Fantastic. Thank you all for participating in this call. Clearly, as usual, myself and the IR team here with me is at your disposal if you have any follow-up tonight or tomorrow. I remind you that, I don't know if you have seen, we published today our 2021 financial calendar. Full year 2020 results are going to be published on February 18, and the silent period will start on January 20. I wish you a very good evening, and speak to you very soon. Bye. [Non-English content]
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