Good afternoon. This is the CorVel conference operator. Welcome and thank you for joining the Moncler First Half 2017 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, Investor Relator and Strategic Planning Director of Moncler. Please go ahead, ma'am.
[SPEAKER JEAN FRANCOIS VAN BOXMEER:] Thank you. Good afternoon, everybody, and thank you for joining our call today on Moncler First half twenty seventeen financial results. First of all, as usual, let me introduce you to the executive team on today's call. Our Chairman and CEO, Mr. Remo Ruffini Luciano Sante, Chief Corporate and Supply Officer Roberto X, Chief Marketing and Operating Officer Andrea Tieggi, 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 and 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. Welcome to Montclair's first half twenty seventeen results conference call. Given the late timing of our call due to a busy reporting day, I will keep my introduction short. 2017 has started very positively, even ahead of my own personal expectation. In my opinion, we have again delivered some impressive numbers.
Revenues plus 17%, with retail plus 21% and wholesale plus 8% EBITDA plus 24%, net income plus 25%. Although the coming months would not be easy, given the higher base of comparison, today, I can say that I'm proud of what Moncler has achieved so far, which once again confirm the strength of our brand and the solidity of our strategy. Let me underline the most important element of our result. In H1 2017, Moncler achieved a solid sell through in all region and channels. Spring summer 2017 collection have been highly regarded, with knitwear and shoes significantly outperforming expectation.
We are also happy with the initial appreciation of fallwinter2017 collection and the result of springsummer 2018 sales campaign. All our core markets were up with solid double digit growth. In Europe, all coal market were up strong double digit. Italy remained good, with retail up double digit and wholesale positive. Outstanding growth continued also in China, Korea and Japan.
Profitability and cash generation has remained robust, notwithstanding all the investment we are doing at the new talent people who are joining the group. A new retail culture is now visible across Montclair, not only in our store, but in the old organization. With the recent relocation of Hong Kong Harbor City, we started very well. In the enlargement of Milano, Montenapol in October, we almost completed our flagship project. I'm happy with the performance of our flagship, which not only contribute significantly to our result, but also strongly support the Montclair brand perception.
Before leaving the floor to Roberto and Luciano, let me just add one final comment. I believe that the recently announced leadership reorganization will allow Moncler to face future challenges in even more cohesive, coherent and flexible way and will help to create further future value of our stakeholder. Let me now hand over to Roberto.
Good evening, everybody. I would like to comment the results by region. As mentioned by Mr. Remo Ruffini, the good performance on the 1st semester has been very strong with a plus 17% with the 2nd quarter in acceleration at +21%. All region and channel has been growing positively.
The Italian market, our more mature market, is that currently has been growing by 7% during the first half of the year with the second quarter in acceleration at plus 9%. Europe continued to perform very well at plus 24% with very positive results and strong results on the UK market and on the French market. All regions in Asia have been growing double digits with also here an acceleration in the second quarter. We are currently trading at plus 17% for the 1st semester with the 2nd quarter at plus 29%. Same result for the U.
S. Market at a +16 percent with the growth both on the wholesale side and on the retail side, both in Canada and on the U. S. Market. If we move to the results by channel, as commented, we have been growing at a +20 plus 8% on the wholesale side, here also with a slight acceleration in the 2nd quarter and at plus 21% with on the retail side with the comp results for the 1st semester at plus 14%.
The collection has been very well received and springsummer has been a strong success with especially good results on new product category like the knitwear. If we look at the expansion of our retail network, we plan and we have confirmed 14 net opening for the year 2017, 11 of them are planned between September December this year. Let me just mention some of the main openings that we will have this year. The first one is going to be the relocation of our store in Moscow with an opening of a flagship store in GUM, a double opening in Roma with the new Arena Chiente, where we'll have a women and the men store. The first presence and the first store we are going to open in Firenze is to complete the Italian opening, plus some new markets, the opening of Kazakhstan with a store in Almaty, the opening of Sweden with a store in Stockholm, the opening of the Middle East with a store in Dubai.
We are going also to open our first store in the U. S. In a department store under a DOS approach. So directly approach, this is going to be in San Francisco with Bloomingdale's. We are going to open a 2nd store in Toronto.
And we have also the 1st store on the ground floor in Busan in Korea that is planned for the end of the year. I would like to mention also 2 very important relocation, one of them that took place early July with the first very encouraging result, the relocation of Canton Road. It is now the 1st flagship and the largest flagship we have in Asia. And we have planned another big relocation, which is an expansion in Milano with the largest store that we're going to have in the world in Montina Polione, basically adding 2 additional floors on the existing store plus an enlargement of the ground floor. This is going to be also an opportunity for us to transform our store in Spiga and to open our 1st store dedicated to the Enfran.
So Spiga will be the first U. S. Dedicated to the Enfran business. To close the description, like to mention also more than 10 openings of shop in the shop that are planned for the second half of this year. With here also some new country opening, we're going to open a store with DFS in New Zealand in Auckland, also here a ground floor.
We're going to open Guam. We're going to open a 1st store in Bangkok that is going to be followed next year by the second store at the airport. And we have 3 openings in airports that are planned for the end of the year, Paris in December, Munich and Taipei.
Okay. Thank you, Roberto. I'm Luciano Santel. Good afternoon, everybody, and thank you for attending our call today. Let's move now to Page 11, where we report our income statement.
Top line, up 18%, already presented in detail by Roberto. Gross margin, 75.6%, better than last year because of the channel mix, but also better than last year by individual channel. Retail channel specifically has performed better than last year, not only regular stores, but also outlets performed well with the lower discount than last year. Selling expenses, 37.8%, higher than the 37.2% we reported last year, but not as much as the increase of our gross margin, which means, as you know, this is our rule of thumb that we have maintained even slightly improved the productivity of our retail network. G and A substantially in line with the last year at 12.5 percent and the advertising promotion 7.3%.
It was 7.2% last year. EBIT adjusted, dollars 73,300,000, 18% margin. Below EBIT, we report stock based compensation, a line which was formerly named as non recurring items. But now this year and last year, it includes only stock based compensation, which are non cash expenses associated with our stock option and performance share plans. The number is significantly higher than last year at 10,000,000 almost double than last year, but this is mostly due to timing effect.
For the year end, we expect a number higher than last year that was at the end of the year, €15,700,000 We expect this year a number in the region of $21,000,000 to $22,000,000 but again higher but not as much as we report at the end of June. Financial results, slightly negative, totally mostly due to negative FX impact, mostly due to the recent depreciation of some important currencies like U. S. Dollar and Japanese yen. Tax rate, 30.5% against the 32.8% of last year, totally expected and totally due to the decrease of tax rate in Italy, as you probably know.
On the bottom of the page, last but not least, our EBITDA adjusted, EUR 97,000,000, 23.8 percent, better higher than the 22.6% we reported last year. Important to remember that last year, first half was weaker than the second half. You may remember that the second half was very strong and particularly within the second half, Q4 was very, very, very strong. Okay. Let's move now to Page 12, where we report CapEx.
CapEx at the end of June were $34,400,000 higher than the $28,900,000 last year, but on a percentage basis, in line with last year, 8% on revenues. Most of the CapEx, as usual, has been spent, has been allocated to our retail network, but still a significant portion of CapEx are invested in organizational information technology. Important to highlight that we have now a better visibility of our CapEx for the year end and we expect a slight increase as compared to what we indicated before. Last time, we discussed together, we said that we expected CapEx in the region of €65,000,000 Now we think that they will be closer to a number of $70,000,000 The reason of this roughly €5,000,000 additional €5,000,000 is associated to several different small projects. But one above all is the expansion of our store in Mila Monte Napoleone and our flagship store in Mila Monte Napoleone, where we are implementing a breathtaking design, really amazing, amazing design, but also needless to say more expensive than what we recently planned.
So these are the main reasons of the additional CapEx we expect for the year end. Let's go now to Page 13, where we report net working capital. Net working capital at the end of June, very well, very good. I mean, you know that on the percentage basis, we reported 6% as compared to 8%, very good credit control, very good inventory control. Nothing to add.
I can say that inventory management and credit management have been very, very positive in this first half of the year. Let's move now to Page 14, where we report our financial position, which indicates €100 and €30,000,000 net cash with a pretty good cash generation in the 1st 6 months of the year of about $24,000,000 How and where we generate the cash is something we can see moving directly to Page 16. I don't have any comments on the balance sheet, but of course, if you have any or any question, please ask the question later. Cash flow statement at Page 16, I said very, very good. Of course, it starts with a very good EBITDA, but also a very good number in the change in net working capital and notwithstanding CapEx that, as we said, are higher than last year, we ended up with a free cash flow, which is closer to EUR 40,000,000 and as you see, much higher than first half of last year.
Below the free cash flow, we paid $45,000,000 dividends, as you know. But we also report a very positive number under the change in equity, mostly due to €40,000,000 about €40,000,000 coming from the exercise of stock options that took place between March April for EUR 40,000,000, slightly mitigated by about EUR 7,000,000 of cash out due to our share buyback plan that was implemented at the end of June and it is still in progress. So at the end, net cash generation of €24,000,000 Okay. I'm done with the presentation. Thank you.
And operator,
if you can open the Q and A session.
Excuse me, this is the CorSo conference operator. We will now begin the question and answer session. The first question is from Anur Bismuth of HSBC. Please go ahead.
Yes. Hi, good evening. It's Annoue Smith from HSBC. I have three questions. Can you give us an indication of the like for like evolution between Q1 and Q2?
I know that you are no longer disclosing it on a quarterly basis, but I'm just wondering if like for like between Q1 and Q2 were broadly similar to the 14% that you have posted for H1. My second question is about the contribution from news page, which was to 7% in H1. Can why it has decreased to 7% and do you confirm the 10%, 11% contribution from NewSpace for full year 2017? And I know that you mentioned the 11 store openings for between September December, but would it be possible to have a split between Q3 and Q4 of the store openings and the number of store openings that you plan for full year 2018? Thank you very much.
Okay. Just on the comment for the like for like, as you know, we don't disclose anymore the results per quarter, but what I can say is that there was a slight increase during the Q2, but the performance has been quite consistent between the Q1 and the Q2. Your other question, Marillor, was regarding the I think there was a question on wholesale.
The contribution from New Space, because it was 7% in H1 and do you confirm the 10%, 11% for full year 2017?
Yes. This is Luciano, Laura. About the new space, you are right. We normally indicate and we indicated an average growth of 10%, 11%. For this first half of the year, it is in the region of 7%.
But as you know, as you know very well, we didn't open. I mean, we opened just one store in the first half of the year as compared to the six stores we opened in the first half of the year last year in 2016, which is roughly the 7 6%, 7% you indicated. But let me confirm that for the year end, we expect the 10%, 11% additional space.
Regarding the number of store opening, if we have the split between quarter 3 and quarter 4, we had already opened at the beginning of July 2 store, one of them being in Paris, it was the Galeries Lafayette Tranfant. We have foreseen for September 3 other openings, the opening of Almaty, Ezeentai, so in Kazakhstan, the 2nd store in Toronto and the store in Beijing, Shinkansen Place, which is also a store dedicated to the Enfran. So which means you have 3, 5 openings that 2 have already been taking place. We have 3 orders for the Q3 and the additional 8 are foreseen between October December, mainly in October November and just 2 in December. Regarding the number, I think you had a question also regarding the openings for 20 18.
I think we are still working very hard on it. You can think of something in the same magnitude of the number of openings we have had this year, which means a number that is around 14 to 15 new openings, the U. S. And also a figure between 10 12 openings of shop in the shop.
Thank you very much.
The next question is from Janet Kloppenburg of JJK Research. Please go ahead.
Good evening, everyone, and congratulations on a very strong performance. Just had a couple of questions. The comp acceleration, was it driven by any particular product category? And if you could talk a little bit about the contribution, the impact of the knitwear and footwear on the total revenue growth? Was it better than expected?
And how are you thinking about growing those categories going forward? In other words, could they demand greater presence in the stores than they have now and online? And lastly, if you could talk about your e commerce performance and how the digital channel is doing? Thank you.
Jan, thank you for your question. Regarding the comp acceleration, I say it was in the same magnitude. So it's more the global performance in the beginning of the year that has been good. As you know, part of is linked also to the work that has been done during the last 18 months regarding retail excellence, the fact of delivering a different client experience in store, all what we have been developing regarding the clienteling. Now we have 80% of our stores that are equipped with our app, which is more clear, but it's more important than the app is more the mindset of people that are now not only thinking about product, but are thinking about product and about clients.
And we have had since beginning of the year 29,000 clienteling action. I think that this has probably also contributed to drive traffic in the store and probably helped on some of the retail CapEx that we have. We have we are not disclosing precise figure, but UPT has been increasing, sales point transaction has been increasing also and the transformation rate, the conversion rate in the store has been improving. Part of the performance and the increase in the unit per transaction has been driven by the very good result on the knitwear. We took some reasonable risk last year when we decided to go for the open to buy regarding these categories.
In parallel, we have been working on the client experience in store to support the development of this category and to have also a storytelling that was supporting this increased push in the knee to our side. And we have also been developing a strong visibility of this category in store, which has helped to have a performance that is more than double than the one of the outerwear business. This being said, the performance of the outerwear has also been on a double digit basis. Regarding the e commerce, here also a performance that is stronger than the one we report in total, growing also at a little bit more than twice the pace of the results that we have had during the globally as a company during the first half of the year. With some strong development that we have had.
We have been merging the database from the retail side with the one from the digital. These have been taking place in at the beginning of July. We have changed or more YOOX has been changing the platform moving into the IBM platform. It's still July the month where we are finalizing these move from one platform to the other, but we have been reassured by the fact that the move has been going well. There are still some fine tuning to be done, as you can imagine.
And we are working now on the implementation of the omni channel in 2 phase. The first one, which is the soft move into the omni channel. By the end of this year, we'll be implementing the click and collect in store and the order from store. And we have a plan for the second half of twenty eighteen to go into a more complete version of the omnichannel having the at that time the possibility to have the visibility of what is in stock in the store with the stock that is at the disposal of YOOX. So going into a complete omnichannel approach.
Okay, great. And one more just on the gross margin, better than expected results for me. I know some of it has to do with the swing towards the retail channel. How should we be thinking about second the opportunity for gross margins to continue to leverage in the fashion that we saw in the first half? Thank you.
Yes. I mean, the first half, again, imagine was very good for the reason I told you. And second half, of course, most of the result in gross margin will depend on the top line,
you
can imagine. And I think that the current trend makes us confident that we can maintain a pretty good gross margin. But again, it will depend on the top line. Last year, you may remember that Q4, we reported exhaust margin for the year end very good, but we said very clearly that most of this result was due to the very strong performance in Q4. So I mean based on our visibility now, I think that the gross margin should be good.
I can't tell you if it will be good as much as it was in the first half, honestly. First half, as much as Q4 of last year, gross margin was particularly good.
Okay. Thanks very much.
Welcome.
The next question is from Elena Mariani of Morgan Stanley. Please go ahead.
Hi, good evening. And first of all, congratulations Luciano and Roberto for your enhanced roles. A few questions from me. The first one again on like for like. You've given already quite a lot of color, so thank you for that.
But maybe can you help us understand a little bit the split between price mix and volumes? I know that lots of KPIs you're monitoring are coming into place, but it would be very helpful to get this split. And also how you're thinking about pricing, potential price increases for the second half of the year? And second question is around your working capital. I'm always very impressed by your inventory control and I've noticed that your inventory position has come down.
Can you give us some color around that and how to think about it for the second half? So how are you planning it ahead of the upcoming fallwinter season? And then thirdly, on the margins, is it correct to say that the margin improvement between so H1 this year versus H2 last year was a little bit less than what is visible just because last year you had a couple of negative exceptionals affecting your operating profitability. I remember that there was some additional rental expenses of stores that were not opened yet. Do we have something like this this year as well?
And how should we think about the operating cost evolution for the second half of the year? Thank you.
Good evening, Helena, and thank you for your congratulation. Regarding the like for like, as you know, in the past, we had
most of
the time a split fifty-fifty between price effect and volume effect. We have started 1 year ago what we call a pricing harmonization between the geo pricing that we have mainly between Europe and Asia. As you know, we were at the time really too high in terms of pricing, especially for Japan and China. And we have been trying to reduce that gap quite successfully over the last 2 years, coming now to something that was even better than the price gap that we had 2 years ago. So the results of the 14% like for like that you have has been driven at 90% by an increase in volume and we have been able to further decrease the price gap between Europe and China and Japan that is now around 50%, 55% for China, around 60% for Japan, while it was 2 years ago more like plus 90%.
So a significant decrease that has been well perceived and that has had an impact in terms of increasing volume store level, which has been then generating the like for like result that you have seen.
Okay. Elena, this is Luciano. Thank you on my side for your congratulations. About net working capital, I mean, net working capital was very good. I mean, we were impressed too honestly by inventory.
But honestly, I think that we had we still have the correct level of inventory to support our sales. Our sell through has been good at the end of spring season. We are ending the spring season now. But differently from last year, when you may remember, we said that we missed some sales in some categories, specifically in the Nemethro category because we were short of inventory. This year, I mean, our also Roberto said that, I mean, our inventory investment for this season was in line and consistent with our sales plan, and sales were totally in line with our plan.
So again, I think that inventory management has been very good so far. I can't tell you guarantee that we will be good in managing inventory well as much as we did over the past 6 months, I would say 9 months because last quarter last year, Q4 was very good too. But in any event, I mean, we are we have a right level of inventory also. The quality of the inventory we report is very good. All inventory is associated with this year current seasons, spring and the full winter and the last year only for the portion that is now in our outlet network.
About the profitability, last year, you remember well correctly, we said that profitability was affected by €3,000,000 rent €3,000,000 additional €3,000,000 for rent associated with stores not opened yet. This was as compared to 2015. We didn't say anything this year because we have a similar number still in the region of, I mean, the $4,000,000 last year, they were €4,000,000 3,000,000 more than 2015. This year, we still have €4,000,000 rent, 1st also not opened yet, including, for example, Hamburg City that was just opened early in July. So the impact between 201720 16 is almost neutral.
Thank you. Can I ask you just one quick follow-up? Still on working capital, you've also shown a meaningful decrease in receivable days. What was driving that, please? Thank you.
Receivable was very unusually low because, I mean, our wholesale business is growing. Also, our concession business in department store shopping malls is growing. So it is definitely unusual to report a lower number than last year. There is some timing effect honestly. I mean, we collected some credit earlier than last year in June specifically.
And so there is a timing effect. But even excluding the timing effect, honestly, the number is good and it is good because we have a pretty good control on credit and we collect I would say, very nicely our credit.
Perfect. Thank you. The next question is from Piral Dadania of RBC Capital Markets. Please go ahead.
Yes, thank you for taking my question. Could I just ask for a clarification point? Maybe I'm reading this wrong, but if the retail like for like was 14% in the for the half year and my estimate was that the Q1 like for like was around 7%, then if my math is correct, I thought that the Q2 would have accelerated to in excess of 25%. Could you just correct me if I'm going wrong somewhere there please on the first point? And then my second question is just around the actions you took in the spring summer this year versus last year.
I guess I'm just curious to know how can spring summer develop going forward? And what is the kind of medium term incidence on sales that it could drive? I guess these strong numbers suggest that there is a lot of momentum and your core customer is very encouraged by the product. I just wanted to see what how much further you'll go next year in terms of your buying upfront and product availability. Thank you.
Pierre, I would not like to comment too much on the precise figure that you mentioned for the Q1. But just as a general comment, I think you a little bit underestimated the Q1. We have not been I would like to say that we grew by 25% like for like the 2nd quarter, but this is not the case. I think the 2 performance, 1st and second quarter, they've been pretty much in line with a slight acceleration in the second quarter. Regarding the action plan and the weight on the springsummer, we mentioned it many times, I think this is one of the area of improvement that we have with potential to do even better in the future.
I think some of the action we have been undertaking regarding the development of this category like the especially the need for are starting to pay off. As we mentioned in the pre already this year, we have been investing also in terms of style, in terms of developing new product, new design. We have been investing also in terms of technology, headquarter invested in people, invested in know how and aqua know how from outside. And we have pilot lines where we can develop internally. So this is speeding up the level of development.
And I can see that also we're now closing the springsummer campaign for 2018. And I must say that the collection for next year has been very well received by our wholesale client, but also by our team internally. So I think there are still margin for improvement on that side. We usually say that the way between spring, summer and for winter is a 25%, 75%. But I just remind you that we are selling the spring summer during 5 months during the year.
We are selling the fallwinter during 8 months. So there is a 1 month overlap. This is why I'm getting to the 13 months. But if you then report this back into the sales and if we would be selling 6 months of fallwinter and 6 months of spring summer, it will be more on 1 third, 2 thirds. So we are still very much balanced towards the winter season, but the spring summer is delivering very good results.
Brilliant. Thank you and congratulations.
The next question is from Omar Saad of Evercore ISI. Please go ahead.
Thank you for taking my question. My first question is, I'm looking for an update on your customer relationships management strategies. I know you've been focusing on not just attracting new customers, but really harvesting the existing customer base. Maybe you can give us an update and how that process is going. And then I wanted to ask maybe a more specific question, what you're seeing in the kind of seasonal and transitional product as a few years, several years, I guess, beyond the IPO, it seems like the brand is really starting to get some traction in non kind of core down filled outerwear.
But I want to kind of hear it from you guys if that's really what you're seeing
happening. Thank you. Omar, thank you for your question. Regarding the first part, which is the CRM, as you know, it has been a very strong focus. And when I joined the company, it was really the challenge that was given me by Remo Ruffini to say we need to change the approach and this is what we did for Retail Excellence.
At the time, our acquisition rate in terms of data collection from new client was around 30%. We are currently at 75%. I think there is still some room to further increase it maybe to 77%, 78%. But the natural consequence of this approach has been that we have tripled the database of clients that we are following in the past 2 years. At the same time, we have developed tools for our team to do clienteling.
We have implemented a welcome approach for our clients. So when they are registering for the first time, they are entering into a path of communication during the 1st 6 months and then entering there is a specific program for the first 6 months and then entering into normal path of communication. So there is much more interaction between the client and Moncler and we have narrowed the distance between the client and the brand. And I think this is also part of the strategy that is helping also to generate more solid results. We are still dependent on the recruitment and the attractiveness of the brand and the collection and the style are playing a key role as well as communication.
But I think also that having now this possibility to interact more closely with the clients is something that is starting to pay off. As I mentioned, 80% of the stores are equipped. We are going to finish the rollout by the end of September this year. So all stores will be equipped. We'll have more than 1,000 people interacting daily with their clients.
And I think we are just starting to see the potential of this tool. Regarding your question on seasonal and non core category, I think, of course, it's one of the focus of the company, but we are still very much thinking in terms of outerwear. What we want to communicate is we are the outerwear company. When you think about down jacket, you need to think about Moncler automatically. This being said, we see the development of this other category as being an opportunity.
So we have had specific development also for the change of season with also more lightweight jackets, also jackets that we call Vuoto, so the one without the down, that has been very successful. And as you know, we are monitoring the change of season store by store on a weekly basis. And depending on the results of the different collection and every month, there is a new theme with a refreshed visual merchandising in the store that is helping. So I think this is very close monitoring of the performance store by store to have really been thinking about product that are there for the change of the season that is helping to the current results.
The next question is from Stoyke Mova of JPMorgan. Please go ahead.
Good evening. Thank you for taking my questions. So firstly, I would just like to go back on the pricing element. I appreciate your comments on H1, but given where the euro dollar exchange rate is heading now, are there any plans for you to take any pricing in H2? This is the first question.
And then secondly, you made the reference in the statement about your organic growth rate in Italy and retail accelerating in Q2. Would it be possible to provide a bit more color on what was behind that? And then lastly, are there any things that we should keep in mind in terms of phasing of OpEx going to H2? Thank you.
Okay. About our pricing strategy for second half of the year, honestly, we are not adjusting or changing anything for this season. Of course, the depreciation of U. S. Dollar and Japanese yen and all the other currencies is an element of concern for our business, as you know, as for everyone.
But we are not taking any
change. We are
not making any change now to our pricing strategy. Yes, for UK, but the UK prices have been already adjusted first half of the year, but this is independent on the current, I mean, what occurred in June July about US dollar and Japanese yen.
I think there was a question regarding the Italian market, if I understood correctly. It's our as I mentioned, it's our most mature market. It's a market where the weight between wholesale and retail is now balanced. It's fifty-fifty. We are still continuing to do some, let's say, cleaning of the wholesale distribution, which is still quite large.
But even while reducing some of the accounts that we have in the Italian market, we have been able to grow positively on the wholesale side. Most and the biggest part of the growth has been coming from the retail side. We are on the Italian market as well as in Europe more depending, of course, on the tourists. So if you look at globally, the results of Europe are driven at 60% by the flow of tourists and 40% by the flow of locals. The positive elements, but not only for the Italian market, I could say the same regarding France, regarding Germany, Switzerland and the UK that we have been growing on the local side on the double digit base for Europe.
And we have had a good inflow of tourists, slightly above the let's say, the results that are disclosed by Global Blue regarding the result of the first half, we have been growing double digit and so on the tourists, still with the largest majority being Asians, especially from China. As you know, the Chinese, they represent 1 third of our sales. They are stable in terms of weight in our portfolio. And the good results have been coming also from other Asian countries, especially from Japanese that have really started to travel again and from Russians that have been coming back mainly to Europe with destination to UK, mainly to UK, France and Italy.
Sorry, your last question was about OpEx in the second half of the year. Am I correct?
Yes, this is correct. Yes.
Okay. So of course, as you know, OpEx, I mean, G and A and all the other expenses in the first half of the year was totally in line with our plan. I don't have any element, any reason why they shouldn't be in line the second half of the year. Honestly, I think that based on the current visibility we have, I think the topics will be consistent with the first half of the year.
Thank you very much.
Welcome.
The next question is from Amelia Hamer of Bank of America Merrill Lynch. Please go ahead. Hello, it's Amelia Hamer here from Merrill Lynch. Thank you for taking my question. Firstly, I was
just wondering on the performance of springsummer versus fallwinter. Now forgive me if I'm wrong on this, but I believe at the end of the quarter that you do have some fallwinter collection that comes into the stores. Can you talk a little bit about the relative performance of those two categories? Because I know you've been developing knitwear in these new categories and that's been very strong growth. So I'd be interested to hear that.
And then secondly, just on the Chinese consumer worldwide, how is that group of consumers been performing for whether you can qualitatively or quantitatively qualify that would be great? And then lastly, just a little bit of color if you could on Mainland China versus Hong Kong and the performance within there because obviously Asia Pacific as a region has been very strong, but just to break down those bits. Thank you.
Thank you for your question. Regarding the performance on the Q3 between springsummer and for winter, it's still very much the Q2 linked to the performance of the springsummer. There is an injection of fallwinter that is starting second half of May, which is very light. And basically, when you are still in June, the vast majority of sales are still driven by the springsummer just in July, where we start having at a given point during the 1st 2 weeks of July, we switched from springsummer to fallwinter and by the end of July is usually at 90%, 95% completely for winter. So the result that you are seeing on the Q2, they have been driven mainly by the spring summer and also as I was mentioning by some product that have been specifically developed with lighter weight and so on in the change of season to go into the following.
Term. Regarding your question on China, as I was mentioning, the weight of our Chinese clientele, which is 1 third of the total is stable, which means that they are growing at the same pace as the total growth of the company. We have seen an increase of Chinese in Europe, but not only. The performance of Chinese have been also good in Japan, and they are now, especially in June, coming back to Hong Kong. Lower performance of Chinese in Korea.
But as I mentioned already in the past, we are not really heavily dependent in Korea from travel retail. Usually, travel retail in Korea represents a little bit more than 1 third of the sales, 40% and 60% to local market. But if you look at our 19 stores, we have only 2 stores that are duty free. So basically, our business in Korea is at 85% local business. So even if the flow of Chinese has decreased in Korea, we have not been impacted, at least not to the same magnitude that the other luxury brand.
Regarding the results of Mainland China and Hong Kong, positive results on both. Of course, Hong Kong is still a region that is more difficult. We were positive in Hong Kong as we have been always since we opened that market. This is probably one exception because some of the brands that are showing better results in Hong Kong, they have been probably losing but this was prior to the opening of our Canton but this was prior to the opening of our Canton Road flagship. So I'm expecting a rebound of our Hong Kong business towards the end of the year.
And then just on Mainland China?
Right. Just on Mainland China, it's continued to progress very positively for us. As you know, we are not we only have in brackets only 28 stores in Mainland China. We always say that the correct figure for us was probably something a figure around 30 stores. So there is a couple of openings that are foreseen in the next 2 years.
But the current performance and the for like performance in the existing store has been very good during the 1st 6 months of the year.
Thank you very much.
The next question is from Paola Carboni of Equita SIM. Please go ahead.
Yes. Hello. Hi. Good afternoon, everybody. I have a few questions.
The first one, probably a strange question, I don't know. But I you shared with us clearly the idea that we should bear in mind that the very tough comp base of H2 and Q4 in particular. I would like just to share with you what are your I don't know, your the actions you feel you're going to implement, which might be differential compared to last year, which can give you still additional support notwithstanding these tough comps. I'm referring, for example, what you did last year in terms of inventory management, inventory centralization. And so just to mention some initiative more on operation on the operation side or if any, some specific product you feel particularly confident about that you have possibly stocked more than last year and you feel might be a bit a game changer for this season.
Then so this was probably more a qualitative question. Then on the working capital side, if you believe such an improvement is sustainable also on a full year basis or if there is anything we should bear in mind? Then I would like a comment, if possible, on the situation of the department stores in the U. S, particularly with reference to Neiman Marcus, if you have any comment to share on that? And possibly also some color on the performance of Japan specifically?
Thank you.
Paola, I'll start with the first question regarding the comp for the second half of the year. The DNA of the brand is very much linked to the mountains and what we have in front of us, it's a mountain. The comp we had for the second half of last year and especially the last quarter was very high. And I must say that we'll be happy if we could be reporting positive comp for the last quarter and the second half of the year. I think we are really doing everything possible to continue.
I think the basics of the business, they are solid, but has been done and what has been delivering good results for the first half of the year is something that we're going to continue. We're going to finish the deployment of our approach with Moncler. We are going I think the current collection firework of openings of store for the year end. We usually prefer to concentrate the openings on the second half of the year to start with the fall winter season, which is much more representative of the brand auto replenishment system now auto replenishment system now is has been completely and fully rollout. We plan for next year to increase it to to some new categories.
I think all this is in place and is now up and running. On working capital, I think you take it.
Yes, Paolo. Net working capital for the year end, honestly, we don't aim to beat the 10% working capital reported last year. We target now to maintain more or less that 10% because net working capital in the first half of the year was, to some extent, unusually very, very good. I think that we don't expect the deterioration in the second half of the year, but honestly, I think that a 10% would still be a very good, very good investment. We don't expect a deterioration in the second half of the year, but honestly, I think that a 10% would still be a very good percent.
Paolo, as you know, the situation with the American department store is quite tense. They are facing a a decrease in food flow and turnover. As we mentioned in the past, I think the way we see our business in department store is that we have still the possibility to improve our visibility in the stores through the deployment of shop in the shop, but also by moving sometimes on different floors where there is a higher traffic and probably a better adjacencies. So what we have been experienced on the 1st semester was a positive growth on the wholesale side. As you know, our business in departments are in US is, for the time being, purely wholesale and with the opening of the store in San Francisco, Bloomingdale will start the first phase, I think the first step into changing part of this business into a retail operation.
I think the situation is there. It's very volatile. It's something that we are following in a cautious way, but so far so good. Regarding the result of Japan, it has been especially good during the first half of this year. We had some specific product development that has been developed for the Japanese market, some lighter weight.
We know that during the summer season, especially during the past few years, they have had a very high temperature with very high level of humidity. So they have been requested coming from our team in Japan, and we have been developing products that are currently working well. What we have seen also in June is a return of Chinese consumer in Japan. That is, of course, positive and that is contributing to the result we have had during the 1st semester.
Okay. Thank you. Thank you very much.
The next question sorry,
just the very final one, if there is one. Sorry, it's very late for everybody, I believe.
The last question is from Flavio Cereda of Jefferies. Please go ahead.
Hi, thank you. So I think you covered pretty much everything, but I do have a question for Mr. Thieghi, mostly just to make sure he's really there and hasn't fallen asleep. What are you seeing in terms of sourcing new locations? Has the landscape changed?
Is it becoming easier? Is it becoming cheaper? Have you seen any change in momentum compared to say a year ago or so? Thank you.
Yes. Yes, I think that it's not easy, but I think the power of the brand and the fact that now we have more than 190 stores all over the world, it's giving us a bit better visibility. So I find it a bit easier to promote Moncler within the malls in China, also with department store in U. S, like Roberto mentioned, we were able to open the 1st concession in America, in San Francisco. And also, we got some also some good news because, as you know, in China, we are contracts have a 3 year duration and we're able also to get some savings on certain projects.
So I see a better situation as we had in the maybe 4 or 5 years ago. So it's I think it's a good momentum for us to find location also because you have to always remember that our average size is not that big. So it's quite easy for us to also to combine stores on to get locations that are coherent with our format. I'm not sleeping, Cora was listening. Good
to know. Good to talk to
you guys. Well done again. Thank you. Thank you.
Ladies and gentlemen, this was the last question.
Thank you. Let me just remind you that Q3 2017 interim management statement that would be released on October 24 and our silent period will start on September 25. We wish we thank you for specifically for the one that has remained until this very later in at least in Europe, and we wish you a very nice summer break.