Good evening. This is the Chorus Call conference operator. Welcome and thank you for joining the Moncler 9 months 20 20 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. Please go ahead, Madam. Thank you.
Good afternoon actually, good evening, everyone. Thank you for joining Moncler 9 months 2020 interim management statement conference call. We know today is a busy reporting day, so we will keep this call as short as possible. As usual, today, you have for Q1 and Q3, you have myself and our Chief Corporate and Supply Officer, Luciano Sante. 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. And that, as usual, media has been invited to participate in a listen only mode. Let's now move to the presentation, Page 3, revenue results key highlights. I will comment only cost the cost and currency strength if I don't say otherwise.
But commenting on 9 months in Q3 results, I would like to make 3 quick comments. Even if 2020 results continue to be impacted by the COVID-nineteen pandemic, in Q3, we started to see clear improvements with revenues declining by 14% compared to the minus 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 4, revenue breakdown by distribution channel.
Both channels showed improved performances, thanks to store reopenings 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 1st 6 months of the year. Wholesale recorded a good very good performance in the quarter, mainly thanks to the good acceptance, a good reception of and the strong domestic demand in some markets, in particularly 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 5, revenue breakdown by region. As already highlighted before, recovery in the 3rd quarter has been largely driven by China, followed by Korea and the Americas. China, in particularly, 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 lack to the lower international travelers,
which, as
you know, are important in the 3rd quarter. And let's go to Page 6 for a deep dive on our EMEA region. In this case, I will comment EMEA, including Italy as usual. In the 1st 9 months, EMEA reported, including Italy, reported a 25% decline, 21% in Q3, with 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 accounts in a normal year can account up to something around 70% of revenues.
In Q3, we saw improved performances, in particularly in Germany, Russia and in the other European markets. Going now to Page 7 and commenting on the Asia performance. You know that Asia in Moncler includes APAC, Japan and Korea. In the 3rd quarter, Asia was down 4%, significantly less than the minus 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.
And this largely offset, not entirely, but largely offset the negative performance in the rest of the other APAC markets, in particularly the negative the still negative performance in Hong Kong, the Hong Kong SAAR. The positive trend in China has continued even stronger in October, boosted, as you know, by the very good golden week. Japan last finally, Japan in particular has been penalized in August September by the challenging base of comparison. In October, so far, so the 1st few weeks, few days in October, we have seen some clear improved region, Americas. Revenues in Americas decreased by 13% in the quarter with similar performance above among the 2 main markets.
The trend has improved significantly during the quarter month after month, August better than July and September better than August. Retail outperformed, 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 performed well, and we are very happy with internalization of our North America Online business, which occurred in October. And I'll leave that after Luciano to provide you with some more colors and comments on this. Finally, Page 9 of the presentation.
Let me comment on our store network, which at the end of September was at 2 17 units, 2 17. In the quarter, we opened 4 stores. During Q3, we have also relocated some important stores, and we have enlarged our flagship store, even if I haven't seen it, in Q4. Store, even if I haven't seen it. In Q4, we expect to open 2 2 500 DAS to get to around 10 for the year as we were anticipating.
While for next year, so far, we have secured around 15, 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 the 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. But we are getting used to work remotely. And in fact, we organized early in October, we held for the first time our business, Regional Assam, is 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. And one of projects, probably number one project was still is the insourcing of our e commerce business. As expected, as we already planned, we started October 6, early October in North America, I would say, with very, 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, I mean, all the infrastructure, all the machine because you know that we started last year in Korea, but I mean, the business, 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, I mean, 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.
So this is the situation right now, and I think that we are ready now to answer your question. Thank you.
Operator, I think you can open.
All right. Excuse me. This is the Chorus conference operator. We will now begin the question and answer session. The first question is from Susie Tibaldi with UBS.
Please go ahead.
Hi, good evening, everyone. Thanks so much for taking my questions. So 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? Because I think it is quite unusual to see the wholesale outperforming retail by this extent and especially because in the previous quarters, you had talked about being taking a more cautious approach to wholesale.
So can you maybe discuss a bit which markets are seeing higher levels of deliveries? And 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? Then 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. And as there was no reason 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?
So 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 just could be lost? And very, 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. Thank you, Susie, for your question. About wholesale, wholesale is doing well. Of course, the numbers that we report are based on deliveries, but there is not any particular shift in deliveries from Q2 to Q3 or anticipation of Q4, honestly.
And Wartsila is doing well. And just to make it clear, before making any comments, we still have a very, very prudent approach in all the channels, of course. But it will sail more than the others because we tend, as you know, to ship only product that we expect our customers can successfully sell out. So wholesale is doing well for several reasons. 1 is the very good acceptance of full inter collection that is driving very good reorders, reorders, honestly.
Another point is that, I mean, as compared to the retail business, the wholesale business is less not all the wholesale business. I mean wholesale is a variety of different subchannels. But normally, wholesale business is less exposed to travelers. It's much more local. Think of Italy, Europe, Japan, even United States, where the big department stores have stores in minor cities less much less touched by travelers.
And because the business with locals is doing well, but this is another story. I mean, 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. But based on the current trend, I mean, we are pretty confident about our wholesale deliveries in Q4.
So again, wholesale is good, very good. About your elaboration, let's say, of the current of the trend that we reported in Q3 and whether or not we can expect some kind of shift, if I well understand your question, from Q3 to Q4, I think you are totally right. I think you're right because I mean the current situation is, to some extent, increasing a little bit our seasonality. I mean 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, I mean, 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. But I think that I mean, you are right. Our, let's say, curve may be considered a little bit shifted 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, I mean, the international tourism in Q3 is much more important than in Q4. I mean, as Paola said, in Q3, travelers international travelers represent up to 70% and number very high. In Q4, it's the other way around. I mean, the locals are more important than international travelers. But I mean, this is a risk.
I will say that, unfortunately, it's more than a risk right now than 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 and 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. 3rd question is about the 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 30,000,000. But in the second half of the year, until now but I mean, of course, let me cross my fingers. But based on the current visibility we have, we don't see any reason to firstly write down inventory. And so 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, wholesale maybe for the year end a little bit better than retail. But again, we are not talking about significant impact on gross margin.
Okay, clear. Thank you.
The next question is from Louise Singlehurst with Goldman Sachs. Please go ahead.
Hi, good evening, Luciano and Paola. Thanks very
much for the commentary so far. Just a couple of questions for me and one following up from the prior question. Just in terms of domestic consumer, we've obviously been hearing some fairly strong anecdotes over the last kind of 2 or 3 weeks or so. But I just wondered if you could help us, I think Paolo, you mentioned Northern Europe, you also mentioned the Middle East and APAC, obviously. But are any of the like consumer clusters turning positive towards the end of the period?
And any color for October? Obviously, you said that that's generally starting well. And then 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 Cohen, Jonathan Anderson coming. If you could just talk us through the pipeline for the Q4, that would be really helpful.
Thank you.
Yes. I mean, about domestic demand overall, I mean, in Q3 was good, I mean, much better than, of course, the demand coming from tourism. September, much better than July August. So the trend was progressively improving in September better than the 2 months before. And the exit rate was very good.
In fact, as I said, October is doing now very well and much better, much better than September. This is in all of the different regions, honestly, starting from unfortunately, the weakest region now, which is Europe. But notwithstanding, Europe is suffering a lot of 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. So these stores are not doing well at all. But the lack of business in these stores is offset by the other stores. So the domestic demand is doing pretty well everywhere. Japan in Q3, the demand, I mean, which normally is mostly local demand, was not good.
I mean, Japan was down in Q3. September was also negative, but there was a reason. Last year, September was particularly strong in Japan because many people in anticipation of the VAT increase, which started October and Japan in September was very strong. So the base of comparison was very tough. So 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.
I mean, U. S. In Q3, U. S. And Canada.
In Q3, if we take out Hawaii and the business in Hawaii is 90%, 80%, 90% made with customers coming from Japan normally. This year, of course, without tourism, these stores, 2 stores, very big stores are very are not doing at all the business they did last year. But taking out Japan and North America overall in Q3 was pretty good. And again, most of the demand in North America is local domestic demand. About and other question was about Genius.
I mean, Genius, I mean, we have been able so far, and I think that there is no reason why we couldn't respect our time line, which is very, very intense, honestly, this year, notwithstanding the situation. But we have delivered with some delay only in June, June or July, if you remember. But we were able to deliver all the collections. The most recent collections were JW Anderson. And the
recall one.
The recall one is a bit Yes. JW Anderson was 10 days ago. And today, exactly today, we delivered I mean, you can find in our stores, Recovers. Next will be Grenoble. And then in December, Alex, as planned, as expected.
So again, notwithstanding the situation, I think that the Genius project this year is doing very well considering the situation.
The next question is from Luca Sohka with Bernstein. Please go ahead.
Yes, good afternoon. I was wondering about product availability. There's a possible scenario where you face in the 4th quarter significant growth from all nationalities? Are you seemingly seeing the pent up demand and the recapture of that demand in the Q4. It must be very difficult to be planning in these days.
But I wonder, in case that scenario materializes, would you have enough products to be satisfying that demand trend and a positive year on year growth? Or would you be shorter 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? And 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-nineteen compliant and possibly in the ideal world generating the same amount of buzz and positive momentum for the brand? Thank you.
Okay. Luca, thank you for your questions. And 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 very important cut in our production plan.
But I don't think we will face this problem seriously also because I mean 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. I mean, if we have fabrics and components, we can react in a few weeks. So again, seriously, I think that this is not a problem. About digital, of course, I mean, we are very happy with North America. But again, not only for business because we are talking about just 15 days that are meaningless, but 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.
And so 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 a very I mean, very satisfied. And this was a success of our team of our teams, I mean, in North America in that quarter and our people again that made it happen. About China and not only because in U. S. Is the first very important step.
But the most important step will be next year in May when we expect May June. I mean, 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. And 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 reason that we will start in May, June of next year, We expect for the end of second half of next year to implement our platform in China.
And the project, 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, many different points, China requires a completely different project. And this is something the 2 separate teams of China in the quarter are working very hard to make it happen next year. For the time being, I mean, the middle to say how important is digital in China also because, I mean, it's important and it's a big opportunity because, I mean, we are doing really something more than 0 but not so much. And so we have huge opportunities.
We are implementing I mean, we have opened the TikTok account. We are implementing shortly the mini program with WeChat. So I mean the machine is moving. But I think that on one side, we are very, very weak in China from the business point of view. But on the other side, we see real issues opportunities also 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.
Yes. I mean this is something we can't we cannot disclose. Look, it's something that you have to wait, and you will see something, as usual, amazing.
We'll look forward to that. Thank you.
You're welcome.
The next question is from Anne Laure Bismuth with HSBC. Please go
ahead. Yes.
Hi, good evening. So I have two questions, please. I just want to come back to the performance in the U. S. So you flagged in the presentation that the results have been strong since August and further accelerated in September, meaning that you are back in political territory in the U.
S. Is it possible to understand the magnitude of the improvement in the U. S? And more generally speaking, regarding your comment about the performance in October, which is a very encouraging, is it back to political territory? And finally, so I have 2 other questions, sorry.
Is it possible is it fair to assume contribution from new space in Q3, which is globally similar to H1, that is to say obviously or for free 6%? And my last question is about the store openings for full year 2021. So you have already secured 15 store locations. With a good focus in Asia, is it possible to know how many stores do you plan to open there out of the system planning in 2021? Thank you very much.
The first question was on the acceleration of magnitude in the North American market in the quarter. Clearly, the month August, as I mentioned, Anur, August was better than July September better than August. So but I cannot provide we cannot provide further comments on that. So for sure, we are happy and 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 the NewSpace contribution, is it fair to assume a 6% in Q3?
Of course, Laura. I mean, we don't report these numbers. I mean, we just give a general guideline for the year normally. I think that for Q3, honestly, is inaccurate, a reasonable estimate, I think. And the other question was about new openings for 2021.
Yes, your assumption is correct. I mean, we are opening some stores probably more than for sure more than this year in China. But there are 2 stores that I would like to mention because there are 2 stores that we expect to become flagship. 1 is Anjou, MIXI, which will be a 2 floor store, very big, very visible and what we consider a flagship. And the other one is in Chengdu, Swire, another store that will be a flagship and others, but this is the most important.
Also among the 15 stores, there are 2 important openings in Europe. One is Milan Galleria, which, I mean, is a project we already mentioned in the past, but we have in the next year again a flagship. And the second store after Barcelona in Spain, which would be Madrid, of course, a very, very important, a very visible store in Calle Serrano. These are the most important openings of next year. But again, in China, as you said, we have 2 important openings and other minor, but one in one another one in Dalian.
So China, of course, is an 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 2 most important months are ahead of you with November December. But just going back on October, given 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, I was referring to U. S, but it's the same even for October in general. We cannot comment on single month performance in detail. So the signs are good, but the 15 the 11, sorry, weeks that we have ahead of us are very tough and the environment overall remains very uncertain. So no further comments on the October.
Happy, yes, we are happy, but we know that there is still 2 very important months ahead of us.
Thank you, Paula and Cielo.
Thank you, Amloor.
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 represents 70% represented 70% historically, 70% of EMEA in the Q3. How does that evolve as we move into the Q4? Is it more or less dependent than the Q3? Are there different callouts as we think about the tourism effects and the lack of travel in different regions and the seasonality around that? And I'd also like to ask a question on kind of what your outlook is for the backdrop for the outer broader outerwear category?
Do you have any insights into outdoor activities, ski resorts? Do you expect them to be open? And you're the key resorts to be open in Europe, North America and other markets where you see a lot of the winter activities that's so important to your brand? Thank you.
Yes. Hi, Omar. About the tourism outside the region, the number that Paolo mentioned, I mean, this is associated with the summer period with Q3 specifically, which is up to 70%, very high. But in Q4, the percent of the contribution is much lower. On the other hand, the local demand is much higher.
So I mean, we have 3 months, I mean, 2 months and a half ahead where the local demand is more important than the tourism outside the region. So your assumption is accurate. Yes. I mean about the I mean the Grenoble line, of course, this is not only a part of our DNA, but also, I mean, 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. I mean, something important to highlight about SKU Resort is that we are opening we are relocating actually shortly the store of Zernat and Kislmul and both locations are really amazing, much bigger, much more visible.
Zermatt particularly is really an amazing location. So the ski resorts are important, more and more important more than ever. And I mean, 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.
No, Omar, I think I answered your question. But probably you asked also if they will be open in the stores for I mean, we hope so, of course. But I mean, the future this year more than ever is very uncertain. But I mean, we strongly hope so.
The next question is from Thomas Chauvet with Citi. Please go ahead.
Good evening, Paul and Luciano. I have three questions, please. The first one on e commerce. I know it's only 2 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? And are you still sticking to your schedule for next year for Europe and Asia rollout? Secondly, on the wholesale performance, I guess within that minus 6%, you said e tailers outperformed. I guess Travel Retail underperformed.
And then you had positive reception up for winter and reorders from maybe some of your multi brand retailers. Should we take that in light of your minus, I don't know, 25% like for like maybe? Is that positive reception for winter effectively a very good indicator, you think, for the Q4? 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? And finally, on the Asia growth, I'm trying to reconcile the country mix.
You had China, Korea, double digit Taiwan, positive. Is it fair to assume that Japan was down 25%, 30% in the period. And as you said, Luciano, up low single digit, maybe in October, given the depressed comp.
Okay. Thomas, about your first question, e commerce, I mean, a key earnings, a lot, a lot. But 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 up and which again is something important and something that makes us more, let's say, optimistic because I mean the project is still long and very complex. About, well,
sale Well, that's an indicator of a good reception of our
Yes. I mean, this is what we look at. I mean, of course, the business may be better, may be worse. I mean, we may have the help of the climate, the weather. But at the end, what makes us confident is the results of our collection, of our product, the strength of our brand.
So again, wholesale did well and better than retail. Retail is doing in October, as we said, well. And so these are all encouraging signs for the future. As Paola said, and let me say it again, I mean, 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. But this year, more than ever, I mean, 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 I mean, our brand is strong.
Our product is good people when they can come to visit our stores. And so again, overall, we are happy, yes. But without any particular indication on the aggressive expectation for the year end, also because, I mean, results are important. But again, we look at the brand for the future, not just for this quarter. About Asia, yes, overall, I mean, China, Mainland are number 1 by far.
Korea, again, as I said, as you highlighted well, very well. On the other hand, Hong a disaster. Macau, a disaster. Macau is getting a little bit better now in October. But if I have to comment, Q3, Hong Kong and Macau, a disaster.
Taiwan, fairly well. Japan, in September, negative, I mean, double digit, double digit negative. But again, October is positive, if I can say that it is positive also because, as I said before, the base of comparison is much, much easier. But in any event, I mean, we are very confident about the possibility, the capability, the potential of Japan. Of course, Q3 has been heavily impacted not only by the based on comparison with last year, but by the pandemic.
I mean, Japan in Q3 was still in a very seasonal situation. So again, any very difficult now. But what we can say for sure is that, I mean, the signs are good. The brand is very strong. And the collection, which is very important, is received a very good acceptance by our customers.
The next 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. And I was thinking like there's strong link. What could be the size of the impact if people can't go on winter holiday your 2nd wave worsening?
Sorry, your question was what's the impact if the resorts are not going to open in winter? So I mean, the resorts are open, but clearly, maybe the ski slopes there will not be opened. No, 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, that our DNA. So it's important.
They are critical for us, but not as much in terms of contribution to business, not even in Q4. So there's no big impact if they are not going to be open. Of course, if they are open, everything helps. But otherwise, it's not going to have a big impact, if this was your question.
Yes. I was thinking about the sales in ski resorts, but also just about buying a jacket before going skiing. So not only the sales in ski resort, I was just thinking maybe people are buying a Moncleraj Acad because they know they are doing the winter holidays and they might not do it if they don't. We're just thinking about the link between these 2.
You know, our Grenoble collection, which is the ski collections account, we normally say single digit of our revenues. So this is so of course, we have you can also buy products of the main collection used for skin. This is something that can happen. But otherwise, I would say it's not going to be so 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. And if I may squeeze in the same one. You said that Q4, it seems from traffic were lower than Q3, so lower than 70%. Can you have an idea of the presentation in Q4?
Sorry, we couldn't really understand the question. Can you repeat? Because 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. So I was so 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?
Yes. Travelers in EMEA, we were specifically mentioning, not travelers overall.
Yes. I mean no, yes, correct. Because I mean, travel in EMEA are very important. 70 percent in summer in Q3 and less than 50% in Q4, I mean, 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. 1st of all, looking to the in sourcing 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 colors in terms of the impact this project might have in terms of profitability. And 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? Then 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. Then a quick question, if you can, on the travel retail channel, if you have any different thoughts now on this channel because of the situation in terms of your development strategy there? And last one, in terms of the mix of clientele, you are seeing in the most recent month, 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 I mean, the evolution of the DH cluster with the current situation rather than, for example, the evolution of the pricemix with the current situation? What are you seeing since the start of winter sales?
Thank you very much.
Paola. About ecommerce, I mean, everything we said about America is important. Of course, the future, to be honest with you and even if as in my role, I should look as I do normally at the 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.
And 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 1 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 the YNAP. But again, the strategy is behind this project is different.
But I mean, your point is correct, but right now is honestly pretty mature. About marketing budget, second half will be lower than last year, of course. I mean, we expect for the year end a marketing budget in the region of 6%. Last year was 7%. And you know that I mean, we included in that budget also charity activities actions we did in the first half of the year.
So for sure, marketing activity this year is and will be much, much lower than last year. Can you ask a question about price mix? Yes.
Travel Retail, final development or
I mean, travel retail, I mean, right now is the channel which is suffering the most. I mean, we still have a few stores still closed, and all of them are in airports. One is Hong Kong, the other one is Istanbul. Melbourne, yes. But I mean, 2 of the 3 are in the airport.
And the stores in airport that are open, unfortunately, are suffering a lot. I'm thinking of Incheon, Korea and all the others. So travel retail right now is suffering. Nevertheless, we still believe that retail business we want to hope that our retail business will be important again in the future. For the upcoming year, we have a project, only one I mean, one important in Sydney, Sydney Airport, where we plan to open a store.
And then we have, yes, a couple in China, in Shanghai and Guangzhou. And 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.
Yes. The initial indication on this for winter collections in terms of average price
customer. Yes. I mean, we see in some regions more than others some younger customers, for example, in North America, which is encouraging, of course, because I mean, at least that we developed a collection, which is looking not only at our existing loyal clienteling but also at younger and new customers. Price, I mean, right now is more or less in line, probably a little bit higher because we are selling now more outerwear. But I mean, not big differences, honestly, not at all.
Yes, I mean, additionally, if we look at the retail metrics, this is very important to highlight because, I mean, all our stores with no exclusions, I mean, except China suffering of lack, I mean, lower, much lower traffic. But 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. So these 2 metrics are doing well, not as much to totally offset traffic. I mean, not in Q3, of course. But again, these are very encouraging signs of the capability of our store people to convert business.
Okay. Thank you very much.
Thank you, Paola. Operator, I don't know if there are follow-up or other questions. I think if any, we can get the last one.
There are no more questions registered in the queue.
So 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. Also, I remind you that I don't know if you have seen, we published today our 2021 financial calendar. So full year 2020 results are going to be published on February 18. And the selling period will start on January 20.
I wish you a very good evening and speak to you very soon. Bye.
Ladies and gentlemen, thank you for joining. The conference is now over, and you may disconnect your telephone.