Good afternoon. This is the Chorus Call conference operator. Welcome and thank you for joining the Moncler First Half 2018 Financial Results 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. Paola Durante, IR and Strategic Planning Director of Moncler. Please go ahead, madam.
Thank you. Good afternoon, everybody, and thank you for joining our call today on Montclair's first half twenty eighteen financial results. First of all, as usual, let me introduce you the executive team on today's call. Our Chairman and CEO, Mr. Remo Ruffini Luciano Santa, our Chief Corporate and Supply Officer Roberto Aks, our Chief Marketing and Operating Officer Andrea Thieghi, Head of Retail and Sergio Bongiovanni, Executive Board Member.
Before starting the presentation, I need to remind you that this presentation may contain certain statements that are neither reported financial results nor other historical information. Any forward looking statements are based on Moncler's current expectations and projections about future events. By their nature, forward looking statements are subject to risks, uncertainties and other factors that could cause results to differ materially from those expressed in or implied by these statements, many of which are beyond the ability of Moncler to control or estimate. Let me also highlight that given the nature of our business, interim results can be influenced by seasonal effects and therefore cannot be taken as a proxy for full year trends or results. I finally remind you that press has been invited to participate in this conference in a listen only mode.
Let me now hand over to our Chairman and CEO, Mr. Remo Ruffini.
Good evening, everyone, and welcome to Moncler's first half twenty eighteen results conference call. Let me start this conference call with 3 short comments on a set of results that I consider exceptional. I will try to be as brief as possible to leave more space to your question, which are always very interesting for us. First, let me say that I'm very happy with the success of Moncler Fragment Hiroshi Fujiara launch. It was our first Moncler Genius drop and actually the most important one.
Supply chain did a fantastic job. Our marketing division supported extraordinarily along with our CRM, retail and wholesale teams who did something I believe unique. I'm very proud of the energy that this project has generated both inside and outside of the company. 2nd, I cannot avoid commenting our outstanding results. In the 1st semester, our consolidated revenues increased by 27% at constant currency, with both channels up double digit, while our comparable store sales rose by an extraordinary 27%.
All markets, including our domestic market, posted results above expectation. I'm particularly impressed by the results that we continue to achieve both in China and Japan, markets that are recording a very strong double digit growth. 3, I'm very satisfied that our outstanding growth came from a healthy business and has been supported by high sell through, tight cost, control and good working capital management, generating sound result also in term of profitability. The 2nd part of the year is not going to be easy. We are all aware of it.
We continue to face an increasing challenging base of comparison and a tough comp. But we must remain confident, also considering that important project planned for the upcoming months. We still have many Monclergienos launch to complete, starting from Moncler Noire Quaiyenomia, which has been launched today. We shortly opened our flagship store in Seoul, New York, which will be the largest DOS of the network and we will finalize the relocation of other important stores like London, Sloane Street and Copenhagen. More than 15 doors are secured for 2018, including the 9 open as of today.
Last but not least, in October, we will launch the whole Montclair Genius building project with an important pop ups around the world. I would like to conclude by underlining that we are working on several important projects with the aim to deliver what our new corporate campaign, Moncler Beyond, is communicating. To go beyond limits, expectation and generation. I can guarantee that we are all fully committed to it. Now, thank you very much.
Let me hand over to Robert and Luciano for more details and
comments.
Okay. Good afternoon, Roberto Rex. I'm very pleased to comment the results of the first semester with some highlights on Q2 results. Let's start by the breakdown by region. Moncler continued to deliver robust double digit growth in Q2 2018 with the plus 26% when cumulating the results of retail and wholesale, driven by the successful launch of the 1st June's collection, the one of Hiroshi Fujiwara fragment.
The 1st semester 2018, the group revenues rose by 27%, reaching €493,500,000 Revenues growth in all regions. In Italy, they rose by 90% in H1, largely driven by the channel, the retail channel. Q2 was at plus 5%. We continue in Italy to clean the distribution on the wholesale side by really going selective in our distribution. Concerning EMEA, the growth remained solid with a +17% in H1.
Results of the Q2 were more or less in line with a + 15%. The growth was driven mainly by France, UK and Germany. Asia show us the most outstanding results of all regions with the plus 42% in H1 and with the plus 47% and slight acceleration during the Q2. This growth has been strong in all regions, being Japan, Korea, Hong Kong, China and the rest of APAC. Finally, the result of Americas with a plus 29% on H1, with the result of the 2nd quarter more or less in line with the 1st semester at plus twenty 6% for the Q2.
This has been driven by double digit growth in both distribution channels, wholesale and retail. Regarding the revenue, the breakdown by distribution channel, we have been growing in retail by plus 33% during the 1st semester. The result of the 2nd quarter were at +29%. This growth has been driven also by an excellent results in e commerce, which has been growing in line with last year at twice the pace of the retail channels. Wholesale revenue rose by 12%, which is slightly above our targets of high single digit growth.
This has been driven in all regions mainly by the effect of the anticipation of the fragment collection compared to the launch of Gambler in 2017. This has been probably having an impact between 2% to 3% on the additional growth. So, without the effect of fragment, the growth will have been in line with the growth that we were forecasting around 8% to 9%. The growth has also been driven by the very good results of our monogram wholesale shop in the shop and also by the opening of stores in airports. The mix now between retail and wholesale is 24% in wholesale, 76% in retail.
We can expect a year end being at 22%, 23% in wholesale and about 76%, 77% on the retail side. Regarding the stores opening, we reached now a network of 209 monogram stores with 4 new openings in Q2. We expect, as it was said by Mr. Rolfini, a total number of 15 doors opened by the end of this year, but also this year with important relocation about an expansion about 15, the most important ones being the one of New York store, London Sloan Street and Copenhagen. The Western Monobrand network is now 65 doors in total as of June 30, including shop shops in North America with 4 of them in Canada, in Toronto, Vancouver and Calgary.
But also with the transformation of the introduction and the opening in the net cell phone recorded desk of the women's shop after an opening 18 months ago of the main shop in the shop and the opening of the Munich airport. I hand over now the word to Luciano Santa. Thank you.
Thank you. Thank you, Alberto, and good afternoon, everybody. Let's get started with our financial results at Page 10, where we report our income statement. The top line, €493,500,000 already presented in greater detail by Roberto, up 21% at current FX and 27 percent at constant FX. So with a gross margin of 76% against the 75.6% of last year, Such increase totally due to the channel mix because our retail business is growing faster than the wholesale business.
And the gross margin by each individual distribution channel are totally in line with last year. Selling expenses, 36.2 percent against the 37.8% of last year, But the last year very good percentage clearly due to the extraordinary organic growth of our retail business and the lower impact of our retail fixed costs. G and A expenses 12.5%, same number, the same percentage of the last year, but with almost €11,000,000 more costs totally invested in our organization to make it stronger to support the complexity, the growing complexity of our business. N and P, 7.3%, again, same percentage as last year. But with expectations for the year end to spend slightly more than last year when we spent as you see 6.7%.
For this year, we plan to spend about 7%. Stock based compensation, same percentage as last year with year end expectation to spend slightly more 2.2% probably as compared to the 2% we spent last year. Financial results are much better than last year, thanks to much lower, very low FX losses. Tax rate, 27.3%, much lower than the 30.5% we reported last year, totally thanks to the tax benefit coming from the Patent Box agreement we signed, as you may remember, in December of 2017. Net income, EUR 61,600,000 up 47% as compared to last year.
And last but not least, EBITDA, EUR 123,900,000, a 25.1 percent margin as compared to the 23.8 percent that we reported last year. Let's move now to Page 11, where we report the net CapEx. CapEx, €34,500,000 in the first half of this year, the same number we reported last year, but with a totally different composition. Last year, the vast majority of this number was allocated in the retail channel because of 2 important projects we implemented last year, Milan Montelupolion and Hong Kong Canton Road. For this year, the number is €18,500,000 we can say back to normal.
But quite unusual difference from last year is the amount of €14,100,000 we report in the corporate line, which includes some important projects. First of all, we spent this year much more in information technology than last year. And also we started an important project in our logistics hub in Piacente that is planned to be worth about €15,000,000 €15,000,000 in the year this year starts 2019 2020. And we started this project in the first half of this year and we reported about €4,000,000 in the first half of the year. Last but not least, we included the acquisition of an industrial building in Romania where we operate our production facility in Bacau.
Let's move now to Page 12, where we can see our net working capital. Nothing particular to comment. 5%, slightly better than the 6% we reported last year. Very good credit control, very good inventory management, nothing more to add. And let's move now to Page 13, net financial position, which at the end of June was 2 €44,000,000 about €114,000,000 better than last year, than 1 year ago and €61,000,000 less than what we reported at the end of December 2017 because in this first half of the year, we distributed dividends for over €70,000,000 €70,500,000 and we implemented a buyback program for €73,400,000 We can fly over Page 14, balance sheet, unless you have questions later.
And move to the very last slide, very important, cash flow statement, where we can see how we generated cash and how we absorb the cash. Of course, the majority of our free cash flow, €66,000,000 about 70 percent higher than last year. The majority of this free cash flow has been generated by operating income, but also a very good net working capital, as we said before. And also something important to outline, a better number than last year in change in other current assets, Again, mostly due to the tax cash benefit coming from the Patent Box agreement. Again, the agreement we signed last year in December with the tax authority.
So free cash flow, again, €66,000,000 below the free cash flow, the dividends paid for €70,500,000 much more than last year. And the change in equity that this year is negative because of the buyback program. Last year was strongly positive because of the equity injection coming from the exercise of our stock option plans. So I'm done for the presentation, and we are all ready now for your questions. Thank you.
Operator, can you open the Q and A session?
Excuse me. This is the Chorus Call conference operator. We will now begin the question and answer session. The first question is from Alain Bismuth of HSBC. Please go ahead.
Yes, hi, good evening. It's Alain Bismuth from HSBC. I have three questions, please. Regarding the performance of the retail like for like of 27% in H1, it implied a 6 percent contribution from NewSpace in H1. So I remember that the contribution from new space for the full year is expected in the high single digits.
So should we still expect an acceleration in H2 in terms of conversion from new space? And also, is it possible to have the difference of the evolution of the retail like for like between Q1 and Q2 because what we have in mind is that the Q1 like for like were up around 23%, but it would imply a negative contribution from new space in Q2. So is it possible to have a bold idea of the evolution between Q2 and Q1? My other question is about the current trading and the performance in July. Is it continuing on the same trend?
And finally, on the Genius project and the Noir collection launching in July, is it possible to have more details about the rollout and etcetera? Thank you very much.
Okay. Hi, the new space contribution, honestly, the 6% that you come out with is not correct. This is a technicality, but the new space contribution accounts for about 11%, 10.7% precisely of the total retail sales growth. The contribution of comp stores, which technically is 27%, accounts for the rest for the other 22% because it is calculated on a base of comparison that does not include all the stores that last year were expanded, like Milan Montenacolione, Hong Kong, Canton Road, Egalerie Lafayette. We will just mention the most important ones.
These stores are not compared this year, in the first half of this year, but they have significantly contributed to the NewSpace contribution, which again was 11% in line with our indications and honestly based on our current visibility in line with what we still expect for the year end.
I can comment on the current trading and the Genius Noir, if you want to. Good afternoon, Alain.
Regarding the Genius Noir launch, I
think it's a little bit premature to give any figures as we started to sell it at with the opening this morning at 10 a. M. I can give you some more highlights if you would like to on the Fragment launch. Just to make the difference between the 2, as you know, a Fragment was a full network launch, so it included closely to the full network that we had with the exception of the store in the mountains. So roughly 175, 190 stores, while Nuance, it's a much more selected network of roughly 70 doors.
Regarding the fragment launch, which we have been very happy about the impact on the results, We have seen, 1st of all, an increase in the foot flow of our stores that have been good. It was an increase prior to the launch close to 10%. And after the launch, during the 1st 2 weeks after the launch, this increase in the foot flow was of about 20 percent. So, we clearly have seen that the launch or the come down that we organized with the windows, all the push we had on social media brought some very positive results. What we have learned also from our fragment is that the 1st week when you have such an exclusive product is essential.
So more than 50% of the volumes are done during the 1st week. That is we'll have to monitor all the new launches to see it depending on the patterns of sales if all of them are the same. But clearly, the more commercial one, the more streetwear had a huge impact on the 1st day. The second point is that these launches have also a positive impact on the non outerwear category as the weight for fragment was 2 third outerwear and 1 third non outerwear. So, above the average that we have for non outdoor, which is around 20%, 22%.
The other surprise that came was the fact that we talk a lot about being genderless. What we have noticed is that 30% of the sales that are done for Fragment, which is positive surprise. The other one, which one of the target was to really, let's say, acquire new clients and new consumers. This is also something that has been successful. About 45% of the new buyers were new clients that were not amongst our clients before.
The way the actual number of existing client 55 is also quite high because I think we have been doing with our CRM team a very good work in terms of clientele and in store action that have been driven traffic, but also sales to existing consumer that we have identified as being people interested in the Fragment launch prior to the launch. And finally, on the impact, because I'm sure that this could be a potential question on what has been the impact of the Fragment launch during period. It has been of roughly 10% of the sales during that period. So this has been also a positive result. Regarding the current trend and the current trading for the 1st 2 weeks of July, it's more or less in line with the result of the Q2 with a slight slowdown in the tourism in Europe that we have noticed not only U.
S. But also through the data that you can get for Global Brew. We have seen a decrease in the tourism in Europe, but at the same time, we have seen a slight increase since a couple of months in the tourist of Chinese in the other neighboring country, namely Singapore, Hong Kong, Japan and Korea.
Yes, Alvar, this is Luciano again. And your last the other question you asked was about like for like Q1 and Q2. Of course, as you know, we don't report like for like comp by each quarter. What I can tell you, which is what we told you and the market where we reported in the Q1 is that like for like in the 1st quarter was very strong, very, very strong. And we reported another very strong number in the first half with not the main differences honestly between the Q1 and Q2.
Okay. Thank you.
The next question is from Fred Spiers of UBS. Please go ahead.
Good evening, everyone. Thank you for taking my questions. I had three questions, please. The first was around by category, just trying to understand a bit about how the gross margins are trending by category. 2nd was around your S and D cost leverage in H1, up very nicely.
Clearly, some of that coming from the organic performance. You also mentioned more management of the retail network. Just wondered if you could give us some specific examples there. My last question was around the operating margin outlook for the full year. Consensus is looking for around 20 basis points EBIT margin expansion from you this year.
Be very interested to hear if you could explain what would need to happen in for you to deliver EBIT margin expansion higher than that for the full year? Thank you.
Okay. Fred, the first question was the trend by categories.
Yes. How the gross margin for outerwear and for non outerwear have been trending? Thank you.
Margin, please.
Yes. I mean hi, Fred. About gross margin by category, I mean, as you know, gross margin in the outdoor category is still higher, much higher than other categories. The other category and specifically the categories that we have invested more over the past few years like in EBITDA, Osnagel is getting better and better. And Osnagel NITO is still slightly below outerwear, but much, much higher than what it was only Q3 as you know.
Because we have invested in our production in house, we have gained credibility on the market. So I mean, right now, gross margin is slightly less, but not significantly less. In other minor categories, minor because we are still not credible, not as much as the other categories, gross margin is still lower. But honestly, there is no reason why in the future, by investing in these categories, investing in our investing in technicality and technical people, what we are doing now, and what we did, for example, last year for sure. So there is no reason why gross margin can get better and better.
And to get closer, I don't think ever will be equal to outer, but to get closer and closer to outerwear gross margin. Of course, this is gross margin. Needless to say that these categories are very, very important strategically, not only strategically, but because they are helping us to increase one of the most important metrics of retail, which is the unit that transaction and ultimately to improve and to make a stronger strong our operating margin.
The second question, Fred, was on selling expenses. Am I right? The line was not clear here.
Exactly. And you mentioned in your press release more efficient management of the retail network contributed. I was just wondering if you could give some specific examples around that, please.
Yes, Fred. Selling expenses, I mean, as you see, were very, very good and with an unusual, let me say, unusual decrease in the percentage as compared with last year. You know that normally as our retail business grows, our selling expenses grow as well, because we open more stores and we report additional retail expenses. But because of this year, because in the first half of the year, the majority of our retail growth has been driven by organic growth. And we have experienced a lower impact of our retail fixed costs like rent, like in the payroll is not fixed, but it's not a variable, 100%.
And so we got the benefit of such organic growth. And this is the reason why you see a very strong percent better than last year. Of course, this is not and should not be considered as an indication for the year end because it's again most driven by such extraordinary organic growth. So that is not something we can even think about in the second half of the year of course. Operating margins, I mean, we're looking at consensus.
Consensus about operating margins is consistent with the top line. Of course, the top line expressed by consensus is very, very challenging. Difficult to predict from the financial mathematical point of view, it makes sense, but it is still everything is still to be developed. The second half of the year will be very challenging also because of the pump. The base of comparison in Q3 is very tough and in Q4 is extremely tough because still we did extremely well in Q4.
So again, difficult to say from the financial pure financial point of view, from pure technical point of view, operating margins expressed by consensus makes sense. But again, the top line is still everything is still to be done.
Understood. Thank you.
The next question is from Piral Dadania of RBC. Please go ahead.
Yes, hi, thanks. It's Piral here from RBC. I just have one question and it relates to your planning for Genius. Obviously, a very successful initial launch. But as we look towards future Genius collection launches, Should we expect you to commit to higher volumes?
And what kind of growth should we expect in that? Obviously, it feels like this first collection has exceeded your expectations. Are your own is your own internal planning now looking for more contribution from Genius as we look forward? And if you put any numbers around that, that will be very helpful. Thank you.
Yes. Good afternoon and thank you for the question. I think we received a lot of these type of questions after the explanation when we disclosed the project around Genius. And I will just repeat what we said in the past. We remain consistent with the approach of Genius, which has been born as our first digital innovative project, a project that is more of a communication project around the brand, around the values of the brands, around different technology of what is making Moncler what it is today.
Still very much around the outerwear, but talking to different type of audiences, different type of clientele. And the objective remains the same. We knew that by starting this fragment, we will be starting with 1 of the designers that will be the most successful in terms commercially speaking. We have some orders that are more, let's say, like more couture project that where we are not planning to have big volumes. So, I think it's a mix of both.
But most of all, it's really a communication project and also to drive traffic in the stores. Then if people buy Genius products, it's excellent because we have been doing the right work in terms of communication and in terms of clientele and CRM action. Of the first fragment drop.
Okay, great. Thanks. Maybe just a follow-up then in terms of corporate campaigns. Mr. Ruffini comments in his initial remarks around Moncler beyond being a new corporate campaign.
Could you perhaps give us a bit more color around what the ambitions are there? Is that an internal initiative? Or is there anything further you might be able to add in relation to that? Thank you.
Yes. I think with this corporate campaign, what we want is to communicate around the values of the the different values of the brand. It's also something where we think there is potential to get even more involvement of our people. Those people recognizing themselves because it's a campaign that is going beyond generation, beyond origins, beyond passions and what is making people move. And I think it's something that we deeply talking towards the different generation, and we have had fantastic feedbacks on it.
And it's something that is completely complementing the approach on Genus, which is something that is more around the product. And here we have something that are more around the values of more clients or so, something that is greater to be communicated to do with a very simple message on the channels where we are now focusing our investment, which are the social media channels and the outdoor advertising. And we have been moving, in my opinion, much faster than what we had foreseen also in terms of splits of communication budgets. We were thinking to come to the split of 1 third social media, 1 third outdoor, 1 third traditional media in a couple of years. And basically, what we are seeing is that things are building so fast that this is going to happen already this year.
So, the shift to our more digital communication and digitalization is something that is helping already now for Max Ver. And this campaign, as well as the Genius one are completely sustaining this new approach.
Great. Thank you, Roberto.
The next question is from Edouard Aubin of Morgan Stanley. Please go ahead.
Yeah, good evening. Just three questions online for me. The first one is, I believe that you have in sourced your online operations in Korea recently as Korea was not part of the scope of the agreement with YNAP. So I was just wondering how the in sourcing is going and how quickly you could move to a full insourcing of your operations worldwide. So that's number 1.
Number 2, in the release, you talked about the growth rate of online being higher than the retail growth rate. So should we assume that online could be close to 15% of your sales in 2018? Or is that too high? And then lastly, in terms of impact on your profitability, my understanding is that the e commerce was margin neutral up until now for you, but could it become margin enhancing relatively soon for more player?
Yes, Edouard, it's Roberto. I will try to answer your first question and then maybe on the profit part, while we share the answer with 2 channels. First on the online, what we disclosed during the Capital Market Day was our plan to launch our current e commerce with full omni channel capabilities by the first by H1 2019. So we have started the project. It's a project where we have also chosen which type of platform we're going to use, which is going to be based on sales force.
We have also a company, Accenture, that is helping us in the integration and the launch of these very important projects. And everything is running as planned with the launch that is going to be taking place probably at the end of Q2 next year with the launch of the full winter 2019 season. I would like to add also that this is one very important project. There is another very important project for this year, which is the launch of a pop up store with Genius in China with Tmall in the Luxury Pavilion. And if successful, and we are working to meet the success, the idea is then to open at the same time at the opening of the e commerce in Korea to launch a flagship store with TIMORLE in at the beginning of Q3 2019.
Regarding the weight of the e commerce is we have been growing at a faster pace on e commerce already in 2017. What we commented also in February was the fact that we grew at twice the pace of the growth of the retail channel. But as you see, our retail channel is also growing faster. So we cannot double the weight by doubling the speed of growth. Is going to take probably a couple of years to reach 15%.
I think this year, moving from the 7% of last year, will be going around something around 8.5% to 9% by the end of this year if the trend continues. Regarding the profitability, it's true that we commented in the past that this channel is there is not a margin dilutive, it's not a margin enhancer. But in order to see maybe one day a positive effect of having the full internalization, I think we need to weigh the objective for the time being if you have the full control of the vision of this one client vision throughout all the touch points. And it's something that we started to do by integrating the database of YNAP at the end of last year. Regarding the decision to go alone or not, as we said a few months ago, what we want is to be in the position probably in the second half of next year after the launch of the e commerce in Korea to assess if we are better off going alone.
And this could be the transition phase in the end of 2020 or to continue mainly with a different business in other group right now. Decision has not been taken yet.
Okay, great. Thank you.
The next question is from Omar Saad of Evercore ISI. Please go ahead.
Thank you. Great results. I just wanted to ask one question, actually a follow-up.
Omar, sorry, we cannot hear you. Can you talk a little bit closer to the mic?
Yes. Is this better?
That's much better. A little better?
Okay, great.
Great.
So I wanted to ask a follow-up on Moncler Genius. And I'm wondering, it's such a differentiated way to bring products to the market through those collaborations. Are you seeing your existing customers through your CRM really respond to those offerings? Or is it bringing new customers into the brand? And if you are bringing new customers in the brand, what type of customers are they?
And are they very different than different profile than your existing customer base?
Thanks. Hi, Omar. I just restate maybe briefly what I need the comments I need at the beginning. So far, we have not we have just been launching the first drop of fragments and we are today launching the second one of NOIRE. So, for us, we are still completing the learning phase.
We are very open to leverage on what we are going to learn for all future launches. And I think this is the approach. And each launch will be different. We'll be learning from each one of them in order to do even better when we have the 2nd launch. Regarding the first one, which is the only one that I can comment is the launch of Fragment.
As I mentioned, 45% of the clients were new ones, 55% were existing ones. I see those figures as being positive. 1st of all, really bringing younger generation with the launch of Fragment with new customers was something positive. But also the fact that through our CRM and all the efforts that have been done over the past 2.5 years in gathering now, database of more than 1 point 5,000,000 clients, adding clientele in action even every single day by more than 1,000 client advisor has helped us to identify potential people, existing consumers, clients interested into the segment offer. And we organized throughout the world initiatives with Easter events even prior to the launch where we have been starting to pre sell fragments.
This is explaining also the very good and positive result of the 1st week because we have been leveraging on one of the swings, one of the pillars of Montclair. The approach was to have more people as an admin for the launch of Fragment, For the launch of Noir, it's a collection with a higher price, different philosophy. It's something that is going to be much more on a one to one basis where we have already meetings scheduled with in our different stores where we have the NOIRE offer with the clients that we think are the right one for noir. So, it's going to be something where probably the start of the sales is going to be a little bit more so a formula and is going to be more on client planning action.
That's very helpful. It should be very interesting to watch these developments. Thank you.
The next question is from Flavio Chirreda of Jefferies. Please go ahead.
Hi, thank you. Yes, good afternoon. Great results, of course. A quick question ideally for Mr. Rolfin, if he's still around.
So it's noticeable that in spite of your best attempts by significantly increasing payout and the share buyback, you can't really seem to avoid to start accumulating cash at quite an alarming rate. So I was wondering whether you look at 2, 3 years down the road, you'd be sitting on a very substantial cash position. Any ideas what you're likely to be doing with this cash? Thank you.
So as you know, we know each other since a long time was my biggest dream, one of my dream to build up a very healthy company with very good cash. And this is where the point, we have, I think, a strong brand, a strong reputation in the market. We have a very solid financial situation. Having said that, I think last year we started to have a different payback. We have a buyback of our share.
And I feel this could be the strategy. Anyways, it is a safe strategy again to have a very strong company. Having said that, if something happens, some opportunities in the future, for sure, we have to invest a lot of money more in the industrial part to improve our supply chain that I really feel is the key for the future to build up a a stronger brand. It's not only for build up more quality, but as you know, we're growing. I want to really have the same quality from the first pieces in my productions in the last one.
Means, I don't feel it could be for the next couple of years a big problem. And if something, if I feel we feel we make more cash than when we think. I think we have to think about something different. We can improve the payout or we can let's see if there come some opportunities in the market. We've never closed the doors on any opportunity, but my feeling is really very strong that I think Moncler need a lot of effort, a lot of work, again a lot of energy because I think we have more space to build up a very strong brand for the luxury
industries. Yes, you're right. I remember conversations we were having years ago on this and it was quite a different position then. So it must be immensely rewarding to be in the position that you're in today. So congratulations again.
Thank you.
Okay. Thank you.
The next question is from Paola Carboni of Equita. Please go ahead.
Yes, hello. Good afternoon, everybody. Can you hear me? Hello?
Yes. Yes. Okay. Yes, we hear you, Paola.
Hi. I have a few questions. The first one is on your working capital improvement. If you can elaborate on this, maybe how much did impact the different timing in wholesale deliveries for fragment and therefore whether this improvement is sustainable also on a full year basis? 2nd, if you can comment about the sell through you enjoyed for the 1st Genius Drop, so for fragment, if this was consistent with your expectation.
Then if you can comment a bit more on the project you mentioned for your logistics center in Piacenza? And the very last point is on your outlook for the second half, you flagged some prudence generically mentioning most challenging comps. Actually, I have in mind several and you mentioned also several initiatives, which should underpin your top line for the second half. So basically, July was also consistent with 2nd quarter trends. So I was wondering whether is there any different element to consider when you suggest prudence for the second half?
Thank you very much.
Okay. Hi, Paola. This is Luciano. About net working capital, honestly, I don't have so much to add. The net working capital is very healthy.
And as it was in the past, as it was last year, a slight improvement, but not particularly significant. Of course, the percent is a little bit lower also helped by the top line that has been particularly strong. What I can tell you is that we are very happy with, as I said before, the credit control, the inventory management and receivable inventory are the 2 most important components of working capital. Of course, talking about inventory, as you know, over the past couple of years, I would say our asset through has been getting better and better with percentage close equal to and even better last year 70%, which is a very, very high number. And this is the main reason why I don't think there is any other extraordinary or timing element that can explain our working capital.
So very, very good, very healthy hope to be able to maintain such a healthy situation in the future.
Hi, Paul, it's Roberto. Regarding Fragment,
the results of the launch is completely in line with the expectation we had. I think also in terms of buying level of sales through is exactly what we were expecting. We're really looking forward to our fragrance being launched in the 2nd drop, as you know, is on the 2nd December. So with the design that is a little bit more inventory, a little bit more delivery. So we are quite confident with it.
Just maybe one comment on the outlook, and then, Andre, if you can, wants to add something for the year end. Remember that and I think this was part of the comments done by Remo at the beginning of the conference call, is the fact that we have had an exceptional year in terms also of weather condition. If you remember well, winter started early September last year and it was cold in all region until end of March, beginning of April. In April, we're still selling the following collection, but I'll explain also why the level of inventory in a way was low is because we went through an exceptional level of sales for the following collection. So if you can assure me that we have the same exactly weather condition, we would be able to do probably a better forecast.
But I think this will need to be prudent because climate condition like the one we had last year are probably difficult to replicate. So we remain prudent on that.
Okay, Paul. About our logistics hubby Piacente, This is a project that is expected to last for at least 3 years this year, 2019 2020, with a total budget of about €15,000,000 This project is about expansion first of the logistics hub because we are growing. The top line is growing, as you know, and we need more space. We need more capacity to support the business growth that is even honestly even higher than what we may have planned a couple of years ago, only last year. So we are building a second building.
Actually, the second building has already been developed. And now we are investing in automation. Automation, of course, to for the picking of the product, for moving the product inside of the facility. I mean, everything is about to have a bigger capacity and also to become faster and faster in the reaction to the market demand. Also with the view at our eventual online business that as Roberto said is planned to start in Korea first and in the future we will see.
But we totally understand and we are totally aware that we have to react now to be ready in 2 years from now. So this is the main reason why we are investing in this project, which is very important.
Okay. Thank you very much. Just
a better point, if I may. Can you give us a flavor of how much was the growth the ForEx impact at gross margin level that is possible?
The ForEx impact on gross margin was not material. I mean, of course, the ForEx impact is material because, I mean, you have seen our top line impact 1% against 27%. And so the impact on gross margin is there. But what is important to highlight is that, as I said during the presentation, is that our gross margin by each individual channel is totally in line with last year, which is the result of a pretty good pricing policy and a pretty good hedging policy because as you know, at the time, we develop our pricing policy. Of course, we look very carefully at how to protect our gross margins.
This is not only the only objective we have, but it's one of the most important ones. And at the time we defined our pricing policy, we hedge the currencies, the most important currencies. So everything did pretty well over the past season. And the gross margin, again, is totally in line by each individual channel, totally in line with last year. Of course, under the FX of last year, it would have been even better.
But I mean, of course, we have look at what it is now.
Okay. Thank you very much.
Gentlemen, there are no more questions registered at this time.
Thank you. Thank you, operator. So thank you very much to everyone for participating. As usual, I'll just give you a quick reminder for next release, which is Q3 2018 interim management statement. So that will be released on October 24.
As usual, aftermarket close and the conference call will take place the same day. Quite period, we start on September 25. If there is any follow-up, if you could call us today or tomorrow. Myself and Arita will remain at your disposal. In the meantime, we wish you a very nice summer break for those of you that has not already had one.
Thank you and see you soon.
Ladies and gentlemen, thank you for joining the conference