Good afternoon. This is the Chorus Call conference operator. Welcome, and thank you for joining the Moncler's nine months 2017 Interim Management Statement conference call. As a reminder, all participants are in listen-only mode. After the presentation, there will be an opportunity to ask questions. Should anyone need assistance during the conference call, they may signal an operator by pressing star and zero on their telephone. At this time, I would like to turn the conference over to Ms. Paola Durante, Investor Relations 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 6:30 P.M. CET. As usual for Q1 and Q3, in the call you have myself and our Chief Corporate and Supply Officer, Luciano Santel. 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.
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 three of the presentation, let me just make two quick comments. We are very happy with Moncler sales results, which continue to grow double digit also in Q3. All regions and all channels contributed positively to these results. Going to page four, 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 five. Both channels, retail and wholesale, showed strong performances.
Retail sales rose by 20% constant currencies in Q3, driven by sound Comparable store sales growth and by newly open 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 fall/winter 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. Europe performed nicely in the quarter, driven by Germany, U.K., and Italy. Let's now analyze more in detail Moncler performance by each region. On page six, we start with a focus on EMEA, including Italy.
EMEA reported a solid 21% growth in the first nine months and 18% in Q3, supported by strong local demand and a good touristic flow. All European markets showed positive growth. In Q3, we continue to see excellent ongoing performances in the U.K. and France. Revenues in Italy continue to report good organic growth in both channels that, as expected, have been affected by the temporary closure of the Montenapoleone store. As you know, the store has just been reopened with a doubled surface. Talking about Asia, which as you know includes APAC, Japan, and Korea. Asia recorded 90% growth in the first nine months, in 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, Canton 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 shop-in-shop, in particular in Canada. Let's finally briefly comment on our store network, page nine of the presentation. At the end of September, our retail stores reached 195 units. In the quarter, we opened four locations.
As of today, we have 198 stores, having opened in October the two stores, men and women, at the new La Rinascente in Rome and our second store in Toronto in Bloor Street yesterday. In the forthcoming weeks, we have some important openings and relocations to be finalized, including Moscow GUM, which will be relocated from the store in Stoleshnikov, our first retail store in Stockholm, and the first store in Dubai. We confirm that we have some five additional stores to open in 2017, 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&A session, please?
Excuse me, this is the Chorus Call conference operator. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. To remove yourself from the question queue, please press star and two. Please pick up the receiver of asking questions. Anyone who has a question may press star and one at this time. The first question is from Elena Mariani with Morgan Stanley. Please go ahead.
Hi. Good evening, Paola. Thanks very much for taking my questions. I am going to start with your performance in retail and the 20% organic growth that you have achieved in Q3. If I understood correctly, your space expansion this year is going to be much more skewed towards the fourth quarter. Perhaps could you give us an indication on the third quarter? Is it broadly in line with what we have seen in the first half of the year, so around 7%, or are we already looking at something close to low double digit, in line with what we should expect in the second half? Then my second question is on the early trends you are seeing in October. Obviously, it is going to be a tough quarter for you in terms of comp. I remember you mentioned that you would be happy with a positive like-for-like.
Are you satisfied so far, even if it is just the beginning? Are you seeing meaningful changes in trends, starting from perhaps September, as some of your peers have seen? Last question is on wholesale. You have had a bit of an acceleration in Q3. I remember that you are generally budgeting for low to mid single digit growth. What is driving these trends, and what should we expect going forward? Thank you.
Okay, Elena, this is Luciano Santel. I am taking your question. About your first question, yes, you are 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 do not report precise numbers about comp and about space growth. 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, in October, honestly started very well. We are confident about the quarter, even if, as you pointed out, this quarter is very challenging. The base of comparison is very tough. Honestly, as you may know, as you may remember, in the quarter, November and December last year were particularly strong. We still have had two important months to compare with.
Again, so far so good. We are confident. About wholesale, something important to highlight is that, yes, you are right. We originally planned, and what we normally say about our strategy is about a growth rate in the low single digit. After the first quarter, considering the results of our sales campaign for spring and fall, we anticipated that for this year we were looking more at mid single digit than low single digit. 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 low double digit contribution? Which is what you had mentioned before. That implies basically a meaningful re-acceleration into the fourth 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 in Milan.
Thank you.
The next question is from Anne-Laure Bismuth with HSBC. Please go ahead.
Yes, hi, good evening. Anne-Laure Bismuth with HSBC. I just wanted to come back on the contribution from new space and the like-for-like. I know that you are no longer disclosing the like-for-like on a quarterly basis. Just based on your previous comments, 7% broadly similar contribution from new space in Q3 imply a slight deceleration of 13% like-for-like in Q3. Do you have any commentary on that? Yes, that's my main question. Thank you very much.
Yes, Anne-Laure, about the space growth, again, we don't report numbers, honestly, I can't make a comment. Some facts speak clearly by themselves. We have not opened an important number of stores in the first half and in the third quarter. The majority of our stores will be opened, and in part have been opened, in Q4. Of course, the expected low double-digit growth in space will happen at the end of this year. In the Q3 is less than what we expect for the year-end. Again, I can't tell you exactly what the comp was in Q3. The overall assumption and overall, let's say, thinking process is correct. Of course, we are happy with our comp, for sure.
Just regarding Q4, sorry for that. Regarding Q4, I know that you will face the toughest basis of comparison of the year, but do you think that reaching flat to slightly positive like-for-like would be feasible? Thank you very much.
October started very well, so far so good. I have to be honest with you, November and December as well are much more challenging. Yes, I think that they are achievable. Honestly, not easy, not at all. I would say challenging, but achievable. Again, it's very difficult to predict now because, again, the real battle is still to happen in November and December.
Thank you very much.
The next question is from Piero D'Egidio with ABC Capital Markets. Please go ahead.
Hi, good evening. Would you be able to just give us some indication of whether the warm weather trends had any impact on your third quarter like-for-like, and whether there was any change in footfall relative to the first half? That's my first question. Secondly, would you have any visibility on how the spring/summer wholesale order collections have gone for 2018? 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.
Yeah. Piero, I take the question on weather, which is one of my favorite. Well, actually, Q3, there is only September that can make some differences. To tell you the truth, no, nothing really related. Actually, we are very happy with the Q3 performances. If any, we had very good results. No impact on weather for sure in Q3. To tell you the truth, we will see Q4. We are confident, as Luciano said today, October is doing well. We are happy. November, December, despite any weather, is going to have a challenging base of comparison, as we all knew. The second question, I leave it to Luciano.
Yes. Again, weather is important, we have to live with, one week or one month may be better than the other, at the end, what we look at is the brand strategy, the brand health. To answer to your question, the order campaign for spring/summer has been good. We are very happy with the spring/summer order campaign. We are happy about the volumes, we are happy also because we have seen our customers appreciate the collection, the product. Everything makes us confident about 2018. Yes, about online. Online, our own online business is growing well, faster than the retail brick-and-mortar business. We are happy with our online business, even if we totally know and understand that the potential is still high, much, much higher than what we are able to deliver now. We are also happy with the online business developed by our wholesale customers.
Volumes are growing, honestly, 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. You know that our distribution strategy, even more on online, is very selective, very conservative. We want to preserve, to protect first the brand. Of course, we are happy if we develop volumes, the volumes come after the brand.
The next question is from Mélanie Flouquet with JP Morgan. 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 contribution this would mean. Maybe between 9 or 10 would be a good idea. The second 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 molds have been broken, in your view, in the industry, and what are the new tools and codes you are actually working on. Thank you.
Yes. Hi, Mélanie. I just take the first one, and then I leave Luciano to comment on the second one. Yes, I mentioned that as of today, we have 13 stores secured and a similar number of relocation and expansions. We can confirm also 2018, a low double-digit growth in terms of selling surface.
Perfect. Thank you.
Okay, Mélanie, about the new projects, the new tools, the new codes Mr. Ruffini is talking about. Yes, we are working on new important projects. Honestly, I would say that the brand has been working on new projects since ever, 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 the online. Digital is something that we have in mind when we think about a new project.
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 the identity of the brand.
The molds that have been broken, in your view, what are those? That's a big statement.
When you introduce, you want to develop a new tools or a new codes, you have to break something that is, or we consider it is old. This is the meaning of this sentence.
Okay. Thank you very much.
You're welcome.
The next question is from Janet Kloppenburg with JJK Research. Please go ahead.
Good evening, everyone. Thanks. Congrats on a nice quarter. Just a couple of quick questions. I heard you say that the e-com business was quite strong. Just love to know how much broader your distribution is, how many more platforms year-on-year, over the year in the third quarter, and how that looks for the fourth quarter. 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 wool and the shearling, mixed in with the, I don't know exactly. Just lastly, on next year's expansion, I was wondering if the store opening sizes would be larger than they have been historically, and if there's any major expansions planned. Thank you.
Janet, sorry. Your first question was on e-commerce, on new platforms?
On the e-tailers that you're working with, Paola. You say that your distribution is significantly broader this year over last, which could offer you a great opportunity for strong momentum in the channel over the holiday season.
Yes. Hi, Janet. This is Luciano.
Hi.
About e-tailers, yes, distribution is growing, and it's growing pretty fast, but not as much as our customers would like to. Because again, as I said before, we tend to control the volumes that we put online in their sites. The customers we are working with are the most important e-tailers, most important and the most high-end. I'm talking about NET-A-PORTER, Mr Porter, Matchesfashion, we're talking about Mytheresa.
Stylebop.
Stylebop, yes. Thank you, Paola. These are the sites we are working with, these are the sites we want to work with, because again, as I said before, brand first. Volumes will come.
Okay.
Okay. I hope I answered your first question. About second question was about new categories, new other categories. They are doing well, Janet, in spring, as you may remember when we made the comments at the end of June. We reported very strong numbers in the other categories. The growth rate was high double digits, and higher than in outerwear. For the first part of fall season, as far as we know now, they are still growing faster than outerwear. We are very happy, we are confident because we see more and more consumers asking for these categories, appreciating these categories. What we want is to get credibility as much as we have developed for outerwear, also in these categories. Of course, I'm talking about first, knitwear. Knitwear in the two subcategories, which are tricot and cut and sew.
I'm talking also about shoes. Of course, shoes are still a little bit behind knitwear. Step by step, season after season, we see these categories growing very nicely. About the third question was?
The third question was on new projects for 2018 in terms of retail. I think I understood. If this was the question. We have 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. We have some important relocations we are finalizing.
Will the average store size be similar to what it's been trending at, or could the stores be moving larger?
In terms of average store, you know that we talk about store average size for a normal store of around 200 sq m.
For flagship are higher, but we are not expecting many more flagship, but we still are reinforcing this network. The indications that we gave in the past of a high single-digit average growth in terms of 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. I 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. 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 the shop-in-shop. I would, let's 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 just by new openings. If you can comment about the environment you are seeing there.
Last question, if possible, an update on your project for 2018, specifically about travel retail and new flagships. Thank you.
Okay. About comp, Paola, as you said, of course, we don't report any comp. What I can tell you is that Europe was very, very good. Asia was very good, too, in all the different countries. I would put Japan first. Again, Mainland China, Hong Kong, Korea, all of these markets performed very well. Italy also, part of Europe, but very well, Italy, too. Then America. In America, still fairly good, but honestly, not as much as the other markets.
About the Chinese cluster, Paola, I can confirm that the Chinese cluster is growing double-digit.
About wholesale, the growth driven by space. The question is correct because, as you know, as you may remember, in the past, our strategy was to be very selective with the wholesale distribution. Now we are still very, very selective, but we started more than before to open shop-in-shop with department stores. We have an important program in progress for this year, for next year. Honestly, I can't tell you exactly how much is space, 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 Rome, in Gente. This is the only example. The majority of our wholesale distribution in Italy is multi-brand stores. Notwithstanding, we keep selecting and cutting the number of stores. We are growing on the wholesale business in Italy.
It is both. It is organic, but you're right, it is to some extent also new openings or transformation of existing stores, in department stores under what I call the shelves business, into shop-in-shop. About the U.S., I answered in part to your question, saying that comp is weaker or less strong than in the other regions. Of course, needless to say, the retail in the U.S. is not particularly healthy now. We look at this market with a lot of attention also because 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. We have to look at their overall performances, not only the performances with our brand.
We monitor very closely the credit aspect of the business, but also, strategically, the future business we can do with them. Far so good, but again, the retail business overall in the U.S. is not now particularly strong. Yeah.
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 a few others.
Also, sorry if I interrupt you, also for.
In terms of terminal 2. Yep.
Yes. For flagship store as well, I don't know, maybe it's too early to mention a specific location, are there other projects also for flagship stores in 2018?
We are working, yes.
Okay. Thank you.
Thank you.
As a reminder, if you wish to register for a question, please press star and one on your telephone. The next question is from Flavio Cereda with Jefferies. Please go ahead.
Hi, good afternoon. 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?
Flavio, hi. This is Luciano. You're talking about the closure-
Monten apoleone.
Monte Napoleone.
Yeah.
Monte Napoleone was closed end of June.
Beginning of June.
Beginning of June.
Beginning of June.
In part, because at the very beginning we closed one part, but it was totally closed in June. Okay? It has been closed for more than three months, I would say four months. Four months because we opened that.
19
19 of October last Thursday. That store has affected overall business in Italy, of course, because it was, it is still even more than before, a very important store.
Excluding the Montenapoleone effect, Italy had a similar trend. If you look at H1, the trend has been similar.
Great. Super. Super numbers. Thank you.
You're welcome.
Once again, if you wish to ask a question, please press star and one on your telephone. 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 right time for the forthcoming conference call, that we know it's at 6:30. In any case, Anita 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 26th, as usual, after the closing of business. Our quiet period will start on January 27th. 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.