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CDI - Christian Dior SE News Story

€486 -0.2  -0.0%

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Sector
Consumer Cyclicals
Size
Large Cap
Market Cap £75.83bn
Enterprise Value £122.69bn
Revenue £40.61bn
Position in Universe 12th / 847

FOCUS-Moncler bets on twentysomethings, Chinese shoppers for post-virus recovery

Wed 16th December, 2020 5:01pm
* Moncler sees scope for recovery from July 2021 onwards-CEO
    * Young and Chinese consumers seen driving luxury market
growth
    * Group expanded into casual wear with Stone Island
acquisition

 (Adds details on Chinese store openings, Bain's latest
forecast)
    By Claudia Cristoferi and Silvia Aloisi
    MILAN, Dec 16 (Reuters) - Luxury puffer jacket maker Moncler
 MONC.MI  is betting heavily on younger consumers and the
Chinese market to help sales bounce back from the coronavirus
crisis, its boss told Reuters, seeing scope for a recovery from
the second half of 2021.
    Makers of luxury handbags, clothes and jewellery have been
hit hard as the global health emergency has shut stores, shrunk
demand and exposed the industry's reliance on Chinese tourists. 
    With a new wave of restrictions in much of the western world
in the run-up to the holiday season and uncertainty over the
timing of a recovery, luxury companies are being forced to find
new ways to lure shoppers, including making more use of social
media to live stream collections as well as sell products. 
    Moncler's latest move is to buy Italian high-end casual
fashion brand Stone Island, a label popular with so-called
Generation Z shoppers, who are now in their twenties.
 urn:newsml:reuters.com:*:nL1N2IN0EK
    The 1.15 billion euro ($1.4 billion) Stone Island deal helps
Moncler position itself "between Hermes and Nike," wooing both
top-end luxury and streetwear buyers, Chief Executive Remo
Ruffini said in a phone interview from the group's Milan
headquarters.
    "After the pandemic, any vision and strategy needs to be
based on these two very strong pillars: being able to speak to
younger generations and understanding that the bulk of the
market will be Chinese," he said late on Tuesday.
    Chinese consumers will account for almost half of global
luxury goods sales by 2025, and two thirds of purchases will be
made by people now under 40, consultancy Bain says.
        
    ALPINE ROOTS
    Moncler was created in 1952 in a village in the mountains
near Grenoble, focusing on Alpine sports clothing. Ruffini
bought the then-struggling label, which had sales of around 50
million euros, in 2003 and transformed its puffer jackets into
status symbols. 
    Having listed a decade later, Moncler has a market value of
12.6 billion euros, five times its initial valuation. Ruffini is
its top investor, with a 22.5% stake through a holding company.
    Revenues are expected to plunge by 15% this year, based on 
analyst forecasts distributed by the company, recovering next
year to 1.64 billion euros, a touch above their 2019 levels. 
    Ruffini, 59, said that he now hoped to see a meaningful
recovery from July 2021, but he also believes it may take 3 to 5
years for international travel to return to pre-crisis levels.  
    "I don't see a situation that can change much in the first
half of next year. My hope is that things will be very different
in the second half. We have seen that when you reopen, consumers
... want to return buying in the shops and online."
    Stone Island is cheaper than Moncler - whose jackets can
sell for more than 1,000 euros. It has had average revenue
growth of 18% in the past 10 years and sales rose 1% to 240
million euros in the year to October - no small feat given
overall luxury goods sales are seen falling by almost a quarter
in 2020.  
    It increases Moncler's exposure to men's "ready to wear",
which is growing faster than women's at present, and makes the
group less geared towards the winter season. The goal is to
double Stone Island's sales in the next five years and drive its
expansion in Asia where it now only has a limited presence.
    
    GETTING THE MESSAGE OUT
    Ruffini said Louis Vuitton's appointment of U.S. streetwear
entrepreneur and DJ Virgil Abloh as its menswear designer in
2018, as well as Christian Dior's sneakers collaboration with
Nike, highlighted an increasing overlap between luxury and
casual wear - a trend that COVID 19 has accelerated.
    Labels are also targeting more directly their customers in
Asia, where sales have surged since lockdowns began to ease in
the spring. In a report on Wednesday, Bain said 2020 luxury
goods sales in mainland China would rise by 48% to $53 billion. 
    Moncler, for example, will broadcast its Moncler Genius
event - a show where guest designers dream up more fanciful
versions of its puffers - from China next year.
    "Until recently you'd have a fashion show with 200-300
guests, we've had events with 10,000 people, now you can
organise an event in China where you can have a dialogue with
150-200 million people," Ruffini said, adding brands needed to
master social media platforms like Tik Tok, Weibo and WeChat.
    "The real challenge is this completely different approach,
you are like a disc jockey with a console who needs to reach out
to all customers on more than a dozen shopping platforms."
    Moncler's latest marketing stint on Tik Tok, with
influencers wearing its jackets, was viewed by more than 2
billion people. 
    Moncler already makes 43% of its revenues in Asia, and plans
to open two flagship stores in mainland China, where it now has
35 stores in total, next year. The group also aims to double
online sales in three years from 10% of revenues in 2019.       
    Long seen as a possible bid target, Moncler's Stone Island
deal could signal the company's intention to become predator
rather than prey. 
    A person close to the deal said it could mark the first step
towards the creation of an Italian luxury hub in an industry
dominated by French luxury conglomerates LVMH  LVMH.PA  and
Kering  PRTP.PA , which have both snapped up a string of Italian
labels in recent years.
    Ruffini said however his main priority for now would be to
make sure the two groups can grow together.
($1 = 0.8198 euros)

 (Editing by Keith Weir and Jane Merriman)
 ((silvia.aloisi@thomsonreuters.com; +39 02 66129 723; Reuters
Messaging: silvia.aloisi.thomsonreuters.com@reuters.net))
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