Good afternoon. This is the Chorus Call conference operator. Welcome and thank you for joining the Moncler's 9 months 2017 Interim Management Statement Conference Call. At this time, I would like to turn the conference over to Ms. Paula Durante, Investor Relator and Strategic Planning Director of Moncler.
Please go ahead, madam.
Thank you. Good afternoon, everybody, and thank you for joining our call today. As you have seen, the call has been slightly anticipated given the busy reporting day. For this reason, we will try to be as short as possible to finish before a 6:30 p. M.
Chat. As usual for Q1 and in the call, you have myself and our Chief Corporate and Supply Officer, Luciano Sante. Before commenting on our revenues results, 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 and are subject to risks and uncertainties that could cause results to differ even materially from those expressed in or implied by the statements. In addition, let me remind you that we have invited members of the media to participate in this conference in a listen only mode.
Moving now to Page 3 of the presentation. Let me just make 2 quick comments. We are very happy with Moncler sales results, which continued to grow double digit also in Q3. All regions and all channels contributed positively to these results. Going to Page 4.
Global expansion continued with international markets growing 19% at constant exchange rates and accounting for 85% of total revenues, driven by an ongoing positive trend in Europe, accelerated solid growth in Asia and a good trend in the Americas. At the same time, we are highly satisfied with our domestic market performance in both channels. Let's move to Page 5. Both channels, retail and wholesale, showed strong performances. In particular, retail sales rose by 20% constant currencies in Q3, driven by sound comp store sales growth and by newly opened or enlarged relocated stores, some of which are achieving results ahead of our expectations, notwithstanding some delays in openings, which will be recovered in Q4.
Our online store continued to outperform significantly. Wholesale also performed well, driven by the good results of the fallwinter collections, the expansion of the mono brand network and the good growth of the e tailers. Q3 wholesale results have been particularly strong in North America and APAC. Also Europe performed nicely in the quarter, driven by Germany, UK and Italy. Let's now analyze more in details Moncler's performance by each region.
On Page 6, we start with a focus on EMEA, including Italy. EMEA reported a solid 21% growth in the 1st 9 months and 18% in Q3, supported by strong local demand and a good touristic floor. All European markets showed positive growth in Q3. We continue to see excellent ongoing performances in the UK and France. Revenues in Italy continue to report good organic growth in both channels thus, as expected, have been affected by the temporary closure of the Montenapolleone store.
As you know, the store has just been reopened with a double surface. Talking about Asia, which, as you know, includes APAC, Japan and Korea. Asia recorded 90% growth in the 1st 9 months, an acceleration in Q3, which grew 24%. In Q3, all markets in the region showed double digit growth. We are very happy with the initial performance of our flagship store in Hong Kong Country Road, which has been opened in July with a soft opening, but that will have its official opening event on November 16.
We are extremely excited about this event, which we hope you will be able to attend in person. Americas. Revenues in Americas increased 11% in Q3 with both markets, Canada and U. S, and both channels, retail and wholesale, growing double digit. In particular, our retail revenues growth has been largely driven by the contribution of the newly opened stores.
Wholesale performances benefited also from the opening of new shopping shop, in particular in Canada. Let's finally briefly comment on our store store network, Page 9 of the presentation. At the end of September, our retail stores reached 195 units. In the quarter, we opened 4 locations. As of today, we have 198 stores having opened in October the 2 stores, MENA and the new Arena Centi in Rome and our 2nd store in Toronto in Blough Street yesterday.
In the forthcoming weeks, we have some important openings and relocations to be finalized, including Moscow Gama, Woma, which will be relocated from the store in Stolechnikoff, our first retail store in Stockholm and the first store in Dubai. We confirm that we have some 5 additional stores to open in 20 70. And as of today, some 13 stores secured for 2018 with a similar number of relocation and expansions. In addition, we are targeting some additional 10 new shop in shop in 2017 and at least 15 new shop in shop in 2018. I will now leave the floor to your questions.
Operator, can you please open the Q and A session, please?
Excuse me. This is the Chorus Call conference operator. We will now begin the question and answer session. The first question is from Elena Mariani with Morgan Stanley. Please go ahead.
I'm going to start with your performance in Retail and the 20% organic growth that you've achieved in Q3. If I understood correctly, your space expansion this year is going to be much more skewed towards the Q4. So perhaps could you give us an indication on the Q3? Is it broadly in line with what we've seen in the first half of the year, so around 7%? Or are we already looking at something like close to low double digit in line with what we should expect in the second half?
And then my second question is on the early trends you're seeing in October. Obviously, it's going to be a tough quarter for you in terms of comps. I remember you mentioned that you would be happy with the positive like for like. Are you satisfied so far even if it's just the beginning? And are you seeing meaningful changes in trends starting from perhaps September as some of your peers have seen?
And last question is on wholesale. You've had a bit of an acceleration in Q3. And I remember that you're generally budgeting for like low single digit, low to mid single digit growth. What is driving these strengths? And what should we expect going forward?
Thank you.
Okay. Elena, this is Luciano Santel. I'm taking your question. About your first question, yes, you're right. Nothing particularly different about the space growth as compared to the first half and the comments we made in the first half.
As you know, in Q1 and Q3, we don't report precise numbers about comp and about Space growth. But again, your assumption is correct. And most of our openings will be in Q4, and most of our space growth will happen in Q4. About the current trend, Elena, I mean, October honestly started well, started very well. So we are confident about the quarter.
Even if, as you pointed out, this quarter is very challenging. The base of comparison is very tough. And honestly, as you may know, as you may remember, in the quarter, November December last year were particularly, particularly stronger. So we still have had 2 important months to compare with. But again, so far so good.
So we are confident. About wholesale, something important to highlight is that, yes, you're right. We originally planned and what we normally say about our strategy is about growth rate in the low single digit. But after the Q1, considering the results of our sales campaign for spring and fall, we anticipated that for this year, we were looking more at the mid single digit than the low single digit. So September ended up with a good growth rate.
Honestly, in line with our expectations for this year because this year, again, we expect a result closer to the mid than definitely to the low single digit.
Thank you. Just to be precise, on the Space contribution, do you confirm the full year guidance of like low double digit contribution, which is what you had mentioned before? So that implies basically a meaningful reacceleration into the 4th quarter.
Yes, Elena. Absolutely. Our guidance, it is still about the space growth in the low double digit for the year end.
Thank you. And congratulations on your wonderful flagship The next question is from Elor Bismuth with HSBC. Please go ahead.
Yes, hi. Good evening. Alain Bismuth Just to come back on the I just wanted to come back on the contribution from NewSpace and the like for like. I know that are no longer disclosing the like for like on a quarterly basis. But just based on your previous comments, so 7% broadly similar contribution from new space in Q3 implies slight deterioration of 13% like for like in Q3.
So do you have any commentary regarding that? And yes, that's my main question. Thank you very much.
Yes, Alvar. About the Space growth, again, we don't report numbers. So honestly, I can't make a comment. But I mean, some facts speak clearly by themselves. We have not opened important number of stores in FirstStaff and in the Q3.
The majority of our stores will be opened and in part have been opened in Q4. And so of course, the expected low double digit growth in space will happen at the end of this year. In Q3, it's less than what we expect for the year end. So again, I can't tell you exactly what the comp was in Q3. But I mean, the overall assumption and overall, let's say, thinking process is correct.
Of course, we are happy with our comp for sure.
And just regarding Q4 sorry for that. Regarding Q4, I know that you will face the total basis of comparison of the year, but do you think that reaching flat to slightly positive like for like would be pretty difficult? Thank you very much.
As I said before, October started very well. So, so far so good. I have to be honest with you, November is much and December as well are much more challenging. And so yes, I think that they are achievable. Honestly, not easy, not at all.
I would say challenging, but achievable. But again, it's very difficult to predict now because, again, the real battle is still to happen in November December.
Thank you very much.
The next question is from Piro D'Adrena with ADC Capital Markets. Please go ahead.
Yes. Hi, good evening. Would you be able to just give us some indication of whether the warm weather trends had any impact on your 3rd quarter like for like? And whether there was any change in footfall relative to the first half? That's my first question.
And then secondly, would you have any visibility on how the springsummer wholesale order collections have gone for 2018? And then finally, just in terms of e commerce, I think you said that trends are strong both in your own website and also e tailers. Are you able to give us an indication of the relative growth rates of both of those channels? Thank you.
Yes. Piral, I take the question on weather, which is one of my favorite. No, we don't well, actually, Q3 is there is only September that can make some differences. And to tell you the truth, no, nothing really related. Actually, we are very happy with the Q3 performances.
So if any, there was we had very good results. No impact on weather for sure in Q3. And to tell you the true, we will see Q4. But we are confident, as Luciano said today, October is doing well. We are happy.
But November, December, despite any weather, is going to have a challenging Yes. I mean, again, weather is important, but I mean,
Yes. I mean, again, weather is important, but I mean, we have to live with and 1 week or 1 month may be better than the other. But at the end, what we look at is the brand strategy, the brand health. And to your question, the order campaign for spring summer has been good. We are very happy with the spring summer order campaign.
I mean, we are happy about the volumes, but we are happy also because we have seen our customers appreciate, they appreciate the collection, the product. And so I mean everything makes us confident about 2018. And yes, about online. Online, I mean, our own online business is growing well faster than the retail brick and mortar business. So I mean, we are happy with our online business even if we totally know and understand that the potential is still high and much, much higher than what we are able to deliver now.
We're also happy with the online business developed by our wholesale customers. I mean, the volumes are growing. And honestly, I mean, our job is more to control the amount of product we sell to them and they sell to their consumers than the other way around. So you know that our strategy distribution strategy and even more on online is very selective, very conservative. We want to preserve, to protect first the brand.
And of course, I mean, we are happy if we develop volumes, but volumes come after the brand.
Okay. Great. Thank you.
The next question is from Melanie Flouquet with JPMorgan. Please go ahead.
Yes. Good evening. I have two questions, if I may. The first one, if I understood well, you are citing 15 openings for full year 2018. I was wondering whether you could indicate to us what sort of space cost question is regarding Mr.
Ruffini's statement in the release. He's talking about big changes that are breaking well established molds and using new tools and codes. I was wondering whether you could share a little bit more on what has actually what molds have been broken in second one. Yes, I mentioned,
one and then I'll leave Luciano to comment on the second one. Yes, I mentioned that as of today, we have 13 one-three stores secured and similar number of relocation and expansions. So we can confirm also in 2018 low double digit growth in terms of selling surface.
Perfect. Thank you.
Okay. Melanie, about the new projects, the new tools, the new codes Mr. Finn is talking about, Yes, I mean, we are working on new important projects. Honestly, I would say that the brand has been working on new projects since several. So nothing particularly new, but new exciting projects are coming up.
About new tools and new codes, of course, we are thinking more and more of a new way to communicate our brand together with the product, to communicate our brand to younger generation that are using more and more online. So digital is something that we have in mind when we think about the new project. But it is not only about digital, it is about the brand itself, it is about the product, the collection and the way we want to communicate a little bit differently from the past, but still within the spirit and identity of the brand.
And the molds that have been broken in your view, what are those? That's a big
statement.
I mean, when you introduce you want to develop a new tools or a new code, so you have to break something that is or we consider it is old. And so this is the meaning of this
sentence. The next question is from Janet Kloppenburg with JJK Research. Please go ahead.
Good evening, everyone, and thanks. Congrats on a nice quarter. Just a couple of quick questions. I heard you say that the e comm business was quite strong. Just love to know how much broader your distribution is?
How many more platforms you're on year over year in the Q3 and how that looks for the Q4? And also, I was wondering if you could comment on the progress you're making with your new product categories, including your accessories, your footwear and your knitwear and also some of the broader fabrications being used in the outerwear, including the Whirl and the Shearling mixed in with
the I
don't know when you talk And just lastly, on next year's expansion, I was wondering if there would be any if the store opening sizes would be larger than they have been historically and that's a major expansion plan. Thank you.
Janet, sorry, your first question was on e commerce or new platforms?
On the e tailers that you're working with, Paolo, like you say that your distribution is significantly broader this year over last, which could offer you a great opportunity for a strong momentum in the channel over the holiday season.
Yes. Hi, Janet. This is Luciano. About e tailers, I mean, yes, distribution is growing. It's growing pretty fast, but not as much as our customers would like to because again, as we said before, we tend to control the volumes we put online in their sites.
I mean, the customers we are working with are the most important retailers, most important and the most, I mean, let's say, high end. I'm talking about Net A Porter, Visa A Porter matches. We're talking about Miteles and Saibob. Saibob, yes. Thank you, Tal.
And so these are the sites we're working with, and these are the sites that we wanted to work with because, again, as I said before, brand first, brand first. And then I mean, volumes and income. Okay. So I hope I answered your question first question. About second question was about the new categories and new other categories.
They are doing well, Janet. I mean, in spring, as you may remember, when we made the comments after the end of June, we reported very strong numbers in the other categories. The growth rate was high and high double digit and higher than in the afterword. For the 1st part of full season, as far as we know now, they are still growing faster and faster than afterward. So I mean, we are very happy.
I mean, we are confident because we see more and more consumers asking for these categories, appreciating these categories. And so what we want is to get credibility as much as we have developed for Outdoor also in these categories. Of course, I'm talking about the first knitwear, knitwear in the 2 subcategories, which are treco and cut and sewn. But I'm talking also about shoes. Of course, shoes are still a little bit behind knitwear.
But I mean, step by step, season after season, we see these categories are growing very nicely. Honestly, about the third question
The third question was on new projects for 2018 in terms of retailer. I think I understood. So if this was the question, yes, we have some well, a couple of new markets we are entering next year. Mexico, we will open also our store in Oslo, as I think we already mentioned during the last call. And then we have some important relocations we are finalizing.
And will the average store size be similar to what it's been trending at? Or could the stores be moving larger?
But in terms of average store, you know that we talk about store average size for a normal store of around 200 square meter. For flagship, flagship are higher, but we are not expecting many more flagship, but we still are reinforcing this network. So the indications that we gave in the past of a high single digit average growth in terms of size, store size, it's something I would still consider.
Okay. Thanks so much.
You're welcome.
The next question is from Paola Carboni with Equita. Please go ahead.
Yes. Hi, good afternoon, everybody. You have a few questions. The first one is if you can comment about same store sales growth, which I understand you don't deliver, but just to give us an idea of the ranking and the performances by the different geographies. And in particular, possibly a comment on the Chinese cluster.
The second question is about wholesale. If you can share with us a kind of trend, let's say, how much of this growth is being driven by new space also in wholesale, in particular from the opening of shopping shops. And I would say with reference to both channels, if you can come back one moment on the U. S. Market, which in the presentations you said was basically driven at retail level adjusted by new openings.
So if you can comment about the environment that you are seeing there. And last question, if possible, an update on your projects for 2018, specifically about Travel Retail and new flagships? Thank you.
Okay. About comp, Paolo, as you said, of course, we don't report any comp. But I mean, what I can tell you is that Europe was very, very good. I mean, Asia was very good too. I mean, all the different on the different countries.
I would put Japan first. But again, Mainland China, Hong Kong, Korea, all of these markets performed very well. Italy also, I mean, part of Europe, but very, very well Italy too. And then America. In America, still fairly good, but honestly, I mean, not as much as the other markets.
About the
Paula can confirm that the Chinese class is growing double digit.
And about, I will say, the growth driven by space, I mean, the question is correct because, I mean, as you know, as you may remember, I mean, in the past, our strategy was to be very selective with wholesale distribution. Now we are still very, very selective, but we started more than before to open shop in shop with department stores. So we have an important program in progress for this year, for next year. Honestly, I can't tell you exactly how much is paid, how much is organic. What I can tell you is that in some countries like Italy, for example, where we don't open shop in shop, even if actually we opened one in Roma, in Argentina, but this is the only example.
The majority of our wholesale distribution in Italy is multi brand stores. Notwithstanding, we keep and cutting the number of stores we are growing on the wholesale business in Italy. So it is both. It is organic. But you're right, it is, to some extent, also new openings or transformation of existing stores and department stores under what I call a shelves business into shop in shop.
About the U. S, I answered in part to your question saying that comp is weaker or less stronger than in the other regions. Of course, needless to say, the U. S. The retail in the U.
S. Is not particularly healthy now. So we look at this market with a lot of attention also because, I mean, our wholesale business is growing with the department stores. Department stores on one side are doing very well with our brand, but on the other side are not doing particularly well overall. And so we have to look at their overall performance.
It's not only the performances with our brand. So we monitor very closely the credit aspect of the business, but also, I mean, strategically, the future business we can do with them. I mean, so far so good, But again, the retail business overall in the United States is not now particularly strong.
The last question was, if I remember well, Paola, on Travel Retail for 2018. We are working on some projects. We will update you more when we will release the full year results. There is one new market, Thailand, the airport that we should enter next year and few others. And also sorry, if I interrupt you.
Also for The terminal 2. Yes?
Yes. For flagship store as
well, I don't know, maybe it's
too early to
The next question is from Flavio Tureira with Jefferies. Please go ahead.
Just a very quick question, please. If you look at Italy, you correctly highlighted that Q3 was affected by the temporary closure. How temporary was that closure? Can you remind us what the impact was, please, in Q3?
Fabio, hi, this is Luciano. You're talking about the close
Pantera Polione.
Pantera Polione was closed end of June. Beginning of June. Beginning of June. Beginning of June. Beginning of June.
But in part because at the very beginning, we closed one part. But I mean, it was totally closed in June, okay? So it has been closed for more than 3 months, I would say 4 months, 4 months because we opened that in 2019 October last Thursday. So that store has affected store has affected business overall business in Italy, of course, because it was, it is still even more than before, a very important store.
Excluding the Montanapolone effect, Italy had a similar trend. If we look at H1, the trend has been similar.
Great. Super numbers. Thank you.
You're welcome.
Gentlemen, there are no more questions registered at this time.
Okay. If there are no more questions, we're very happy so we can leave the time and the right time for the forthcoming conference call that we know it's at 6:30. In any case, Ana Rita and myself, we are available for any follow-up question that you might have. Just remind you that we have published on our website the financial calendar for 2018. So you can see all the dates for next year.
Full year results will be published on February 26, as usual, after the closing of business. And our quiet period will start on January 27. I thank you very much, and don't hesitate to call if you need any follow-up questions. Thank you.
Ladies and gentlemen, thank you for joining. The conference is now over. You may disconnect your telephone.