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Edited Transcript of MONC.MI earnings conference call or presentation 24-Jul-19 5:00pm GMT

Half Year 2019 Moncler SpA Earnings Call

Milan Jul 29, 2019 (Thomson StreetEvents) -- Edited Transcript of Moncler SpA earnings conference call or presentation Wednesday, July 24, 2019 at 5:00:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Luciano Santel

Moncler S.p.A. - Executive Director

* Paola Durante

Moncler S.p.A. - IR & Strategic Planning Director

* Remo Ruffini

Moncler S.p.A. - Chairman & CEO

* Roberto Eggs

Moncler S.p.A. - Chief Marketing and Operating Officer & Executive Director

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Conference Call Participants

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* Anne-Laure Bismuth

HSBC, Research Division - Analyst

* Elena Mariani

Morgan Stanley, Research Division - Executive Director of Luxury Goods and Brands

* Janet Joseph Kloppenburg

JJK Research Associates, Inc. - President

* John William George Guy

MainFirst Bank AG, Research Division - MD

* Melanie Anne Flouquet

JP Morgan Chase & Co, Research Division - Head of European Luxury Goods and General Retail

* Paola Carboni

Equita SIM S.p.A., Research Division - Analyst

* Susy Tibaldi

UBS Investment Bank, Research Division - Associate Analyst

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Presentation

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Operator [1]

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Good evening. This is the Chorus Call conference operator. Welcome, and thank you for joining the Moncler First Half 2019 Financial Results Conference Call. (Operator Instructions)

At this time, I would like to turn the conference over to Ms. Paola Durante. Please go ahead, Madam.

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Paola Durante, Moncler S.p.A. - IR & Strategic Planning Director [2]

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Thank you, and good afternoon, good evening, everybody. Thank you for joining our call today Moncler First Half 2019 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 Santel, Chief Corporate and Supply Officer; and Roberto Eggs, Chief Marketing and Operating Officer. Before starting the presentation, I need to remind you that this presentation may contain certain statements that are neither reported financial results nor other historical information.

Any forward-looking statements are based on Moncler's current expectations and projections about future events. By their nature, forward-looking statements are subject to risks, uncertainties and other factors that could cause results to differ even materially from those expressed in or implied by the statements, many of which are beyond the ability of Moncler to control or to 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.

In addition, given the later starting of this call, I anticipated that we would make our best efforts to conclude it within 1 hour. Therefore, I ask all participants to limit to 2 questions at time.

Finally, remind -- I remind you that the 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.

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Remo Ruffini, Moncler S.p.A. - Chairman & CEO [3]

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Good evening, everyone, and welcome to Moncler's First Half 2019 Results Conference Call. There are many things I would like to discuss with you tonight, starting from the result, that even this semester have been above markets, in my own expectation. But in order to make our call focused and productive, I will concentrate on few important points. Our Moncler Genius project continues to give us very positive result and insights. It increases brand attraction, support traffic in store underline and attract new customers.

Also for the Genius customer are new clients. They represent an important asset on which we have to leverage, in order to make them loyal clients. This is a focus for the organization, not only for the retail, CRM, marketing and digital but also for design and the merchandising team. We already have evidence that we are moving in the right direction. We are also starting to think to several ideas on how to leverage the project. It should help us to reinforcing our community, the Moncler community.

As our new advertising campaign said, "genius is born crazy." How crazy we were when we decided to create a jacket from a sleeping bag or an Icon product from down jacket or when we first launched our Moncler Genius project. Maybe, we were a bit crazy but always with a clear vision and a great rigor in the execution.

Few days ago, we had the first Moncler Hackathon, a 24 hours innovation marathon that brought together more than 450 employees from several nations, divided on a different age, which we're able to design not only innovative but also actionable project. I was really impressed by the quality of them.

In Moncler, we are learning how to invent our future, how to be extraordinary, how to find a new way of working together to encourage the creativity, the talent and the energy in use, that is in all of us. I strongly believe that this, along with our strong capacity to deliver on goals, will make our company and our brand even more unique.

Finally, on the result, let me only highlight that 18% growth in revenues in Q2, net percent comps is towards growth in the semester. All economics results, up double digit, representing another very good achievement. But beside the number, what is important and what you don't see, the quality of people that work in Moncler, their energy, passion, commitment, competence, their culture of innovation and ability to work across functions.

I know that there is still a lot to do. The next 6 months are, as usual, very difficult, but I believe that path is clear and well traced.

Let me now leave the floor to Roberto and Luciano for some more comments. Thank you very much.

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Roberto Eggs, Moncler S.p.A. - Chief Marketing and Operating Officer & Executive Director [4]

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Good evening. I am Roberto Eggs. I will commence the results that we have achieved starting by the breakdown by region. There's been a very good second quarter that has been in acceleration with a plus 18% bringing the total result of H1 at EUR 570 million, which is a plus 13% in acceleration compared to the first quarter that was at plus 10.6%.

Italy showed a very positive trend in the Q2, accelerating strongly from the first quarter and with a strong double-digit organic growth in the retail channel. EMEA rose by 15% and had a growth that was double digit in both distribution channel, led by U.K. in acceleration and Germany and as well as France overperforming.

Asia and Rest of the World continued to register outstanding results led by the Chinese market, Mainland China; the Japanese market; and the Korean markets. Japanese and Korean markets accelerating strongly in the second quarter. Americas delivered positive results, positive performance in Q2 in both distribution channels, wholesale and retail and in both markets, main market, which are Canada and U.S. markets.

If we look -- if we go on the following chart, which is the revenue breakdown by distribution channel, we see that both channel have been performing very well. You see that retail has been accelerating from plus 10% in the first quarter to plus 20% in the second quarter. This has been strongly pushed by the comp sales, rose that -- rose by 9% in H1.

Online strongly outperformed during this first semester and has been growing at more than twice the retail price. Wholesale revenues rose double digit at plus 12%. Second quarter has been also second -- growing on double-digit growth with the plus 10%. This growth has been leaded by the shop-in-the-shop openings and airports performance, as well as the Moncler Genius launch in the different channels.

If we look at the mono-brand store network evolution, we see that the total retail store is now at 196, which is 3 net opening. The 3 net openings has -- have been providing -- basically, we've been opening 5 new stores. We have had 1 conversion in wholesale, which is a small store that we had in the northern part of Germany, and 1 temporary closure of Deutsche München Airport. We still plan to open our 15 DOS this year with plus -- with a 6 DOS opened in -- that are planned for the Q3 and another 6 stores that we plan to open in the last quarter of the year.

Mono-brand wholesale store and shop-in-the-shop are now at 16, which is a plus 5 new openings in the first semester this year, and we plan another 10 openings. Also, they're balanced. 5 in the third quarter and another 5 in the last quarter of the year, bringing the total number at around 70 for the wholesale and 208 for the retail channel.

I leave the floor to Luciano Santel. Thank you.

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Luciano Santel, Moncler S.p.A. - Executive Director [5]

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Okay, thank you. Thank you, Roberto, and good evening, everyone. And thank you for attending our call today. As you know, for the first time, we report our financial results under the new IFRS 16 accounting principle, which changes the way companies recognize their lease obligations. However, for the sake of clarity, consistency and continuity in the way we comment our business results, we will still comment H1 results, excluding the IFRS 16, providing in the slide at Page 8 a reconciliation table that shows the impact of IFRS 16 on our income statement. The impact on balance sheet and cash flow statement is reported in separate slides in the appendix of the presentation. So I'm not going to comment Page 8, but I'm more than happy to answer your questions on this topic, if any.

So we can move now to Page 9, where again we report our income statement, excluding the IFRS 16, that shows the top line of EUR 570 million, with the growth rate of 16% at the current FX. And remarkable, let me say that, the gross margin of 76.6%, higher than the 76% we reported same period last year, in part because of the channel mix, but also because each distribution channels reported gross margins last year. Retail channel, particularly, gross margin was better than last year also because our regular stores performed and are still performing better than our outlets.

Selling expense is 37%, slightly higher than last year but totally in line with our plan. G&A, 12.6%, substantially in line with the 12.5% we reported last year. And they include all of the investments we keep making in our organization. Of course, we are working to make our structural organization stronger and stronger for all the projects we have in our pipeline.

Marketing, 7.5%, slightly higher than last year but only because of a timing effect. We still expect, for the year-end, the same 7% we reported last year. Stock-based compensation, 2.9% higher than the 2.5% but, again, only because of a timing effect. We expect, for the year-end, this year, to spend more or less the same amount we spent last year in the region of EUR 30 million with, of course, hopefully, a lower impact on our revenues.

EBIT, EUR 94.6 million, with 16.6% margin, a little bit lower than the 17.4% we reported last year but, of course, with the timing impact of the 2 items, I told you before, it would have been very, very close to the 17% -- 17.4% we reported last year.

Net income, EUR 71.3 million, with the same margin, 12.5% than last year. And the last but not least, our EBITDA, which is a metric that probably is becoming meaningless in the future, under the new IFRS 16, but it is still an important metric for the management team and I believe also for the market. EBITDA, we reported, under the EUR 143.6 million with a 25.2% margin against the 25.1% we reported last year.

Let's move now to next page, Page 10, where we report CapEx. CapEx at the end of June this year, we spent EUR 41 million, increasing the amount as compared to last year, when we reported EUR 34.5 million. But something important to highlight again, the allocation of the budget is more and more allocated to our corporate investments. I mean we still spent EUR 70 million in our retail network, but in increasing number. An increasing amount of our CapEx is allocated in what we call corporate, which includes, as you know, information technology, logistics and the important new e-commerce website we implemented in Korea, as you know, the project started last year, and the new website in Korea is up and running since June. So it started about 1 month ago. So very, very good results.

Important to highlight and to anticipate that we are spending much more in the second half than what we report for the first half, and we expect for the year-end a total CapEx amount in the region of EUR 115 million, about EUR 115 million.

Okay. Let's move to know Page 11. Net working capital, which reports a 5.5% on revenues. It's slightly higher than the 4.8% we reported last year. Still, I can say very, very healthy net working capital with a very good credit control and very good inventory management. Nothing to add.

Let's move now to Page 12, where we see our net financial position that is positive for EUR 395.7 million, and which includes a cross cash of EUR 490.5 million. Of course, important to highlight, the impact of the new IFRS 16 that is about -- it is EUR 562 million, which makes the net financial position negative for EUR 166.2 million.

We can now move to Page 13, where honestly I don’t have any comment on balance sheet, unless, of course, you have questions.

Last slide, with a few comment, is at Page 14, the cash flow statement, where we report a free cash flow of EUR 71 million, higher than the EUR 66 million we reported last year and with a net cash flow negative for EUR 54 million impacted by the -- over EUR 100 million dividend distribution and the buyback program we implemented in the late January of this year.

So I'm done with the representation, and we are now ready to answer your questions. Thank you.

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Questions and Answers

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Operator [1]

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(Operator Instructions) The first question is from Elena Mariani with Morgan Stanley.

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Elena Mariani, Morgan Stanley, Research Division - Executive Director of Luxury Goods and Brands [2]

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So I'm going to limit myself to 2 questions. The first one is on your like-for-like trend in the second quarter. I calculate a high teens like-for-like in Q2. I hope it's correct. And I guess this is partly due to an easier sales then to be comp-based in the second quarter, but could you perhaps elaborate a little bit more on the underlying drivers? Was it Genius and Palm Angels attracting a lot of traffic to your stores? Was it more contribution from your a spring/summer products? Any sort of color would be highly appreciated.

And perhaps, also, a bit of help on how to think about the like-for-like profile through the rest of the year, given the difference in sale density across the different quarters? And also, maybe on current trends as well, what you've been observing in the third quarter so far?

And my second question, probably, is for Mr. Ruffini and Mr. Eggs. I was hoping to get their opinion on this large and big debate we have in the market around the large conglomerates in luxury, winning against the mono-brand's. This is a very clear trend probably because of the ability to attract talent or to leverage investments across several brands, but Moncler seems to be an exception. Could you tell me your opinion about why Moncler is an exception in your view? And do you see a future also for mono-brands in this industry?

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Roberto Eggs, Moncler S.p.A. - Chief Marketing and Operating Officer & Executive Director [3]

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Good evening, Elena. It's Roberto speaking. I will give you some flavor on what happened in terms of like-for-like for the second quarter. As you rightly mentioned, we have seen an acceleration in Q2 also because, Q1, we had a very, very high, based on comparison. The second quarter was also a high but not as high as the first one. I think we have many reasons to explain. It's a mix of these elements that have been showing this acceleration.

First of all, very good results for those spring/summer sales that we had both in wholesale and also, of course, in retail if we talk about comp. We are going to finish the spring/summer collection with the highest sell-through we have had -- since I joined the company since the past 4 years.

Of course, we have been helped also by having Genius collection, that was present in Q2. While last year, we just had the start in June, so this year we benefit from the Genius launch both in April and in May. This has clearly helped also driving traffic to the stores. And the third element is the calendar effect of Easter that has been slightly penalizing to month of March, and that has helped the results of the month of April.

So with the mix of these 3 elements, you have -- these 3 elements combined explains the acceleration of the like-for-like in Q2. To give you some flavor on the Q3, we are currently in line with the comps that we've had for the first semester. And with the stronger launches in terms of June that are planned for the months to come. So we remain confident.

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Remo Ruffini, Moncler S.p.A. - Chairman & CEO [4]

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Honestly, talking about the big group around the world, especially in our industries, I understand they are very strong. But we talked many time here when we make meeting around the table, but we really feel very confident to stay alone. We really feel our strategy is very different than any other company. We feel we are quite unique, and our uniqueness has for sure helped us to talk with our customer.

Having said that, I don't feel we can have big advantage to go to being part of the big group, except maybe in some real estate, but I think it's more the good strategy. They have every brand part of this group. We feel, as we say, the uniqueness we feel that will change our business more than in the last couple of years, and we feel very good, honestly.

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Operator [5]

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The next question is from Susy Tibaldi with UBS.

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Susy Tibaldi, UBS Investment Bank, Research Division - Associate Analyst [6]

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Congratulations for the amazing results. So can I ask one more thing on the like-for-like, actually? So Q2 was really strong, and I was wondering if there was any specific product or category, which you think that's really helped to drive this growth?

And then secondly, I wanted to understand a little bit better on the OpEx because you have been very clear in flagging since, I would say, at least 6 months ago that Q1 -- sorry, H1 last year, obviously, the like-for-like was amazing, so you cannot reasonably expect to have the same level of leverage. And that was very clear.

But still if I look at the selling cost, specifically, I can see that they -- in H1, they were going faster than the pace of the retail sales. So I was wondering if there was any sort of -- something to keep in mind like any phasing or it -- was it on the rent on the personnel or anything that you can comment on that will be very helpful.

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Roberto Eggs, Moncler S.p.A. - Chief Marketing and Operating Officer & Executive Director [7]

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Good evening, Susy. Regarding the like-for-like and the growth per category, as you know, the spring/summer is less dependent on the outer world. We have the other category that are usually -- especially for the men working much better, the cut & sew, what we call the T-shirt and the polo are clearly categories that are performing, and that are helping also to increase the unit per transaction that we have.

The good performance we've had this spring/summer, and we always say that we see room during the second quarter to further grow in the future has been -- is part of the explanation of the growth of this category. The fact that we have also now putting the bestsellers in the cut & sew. I saw the T-shirt and the polo in outer replenishment has helped also to improve the total sell-through of the spring/summer collection and has helped overall the like-for-like.

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Luciano Santel, Moncler S.p.A. - Executive Director [8]

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Susy. About your second question of selling expenses. I mean, as you stated, last year, our selling expenses were particularly good, particularly low, and this was because our top line growth was driven mostly by a very strong retail organic growth, which made our strong start to productivity to be particularly, particularly strong. So the main difference is on productivity, but again, this year is okay. Last year was unusually very, very strong.

In other impact, which is minor but important to highlight, is that in our selling expenses, we report also the impact of D&A, depreciation, amortization of all our construction costs. And this year, the impact is higher than last year because of the important CapEx we have reported over the past few years. So this is the explanation. But again, 37% is not in line with our plan. And the gain, 36.2%, you may remember, if you look back at first half of 2017, last year, was lower than the year before, which is honestly quite unusual.

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Susy Tibaldi, UBS Investment Bank, Research Division - Associate Analyst [9]

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And so for the rest of the year, can we expect -- is there anything that we have to keep in mind or can we just expect sort of in line with last year for H2?

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Luciano Santel, Moncler S.p.A. - Executive Director [10]

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In line with last year H2, yes...

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Susy Tibaldi, UBS Investment Bank, Research Division - Associate Analyst [11]

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In terms of percentage of sales. Yes. Okay.

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Luciano Santel, Moncler S.p.A. - Executive Director [12]

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Yes. Yes, I think it's a good guess.

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Operator [13]

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The next question is from Janet Kloppenburg with JK Research (sic) [JJK Research].

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Janet Joseph Kloppenburg, JJK Research Associates, Inc. - President [14]

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Congratulations on a great quarter in retail. I was just wondering if you could give us a little bit more of the metrics, but for like-for-like, it sounds like the UPT was nicely. I was wondering about AUR trends. And also, overall, as we look forward, what placing might look like? You anticipate that there will be a lift in your average selling price as we go into the fall season.

And secondly, I was wondering if you could talk little bit about the U.S. market. You had a nice gain there but the smallest of all the regions, and I think it's been volatile. Perhaps, you could give us an outlook for the region, both on wholesale and retail basis looking forward.

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Roberto Eggs, Moncler S.p.A. - Chief Marketing and Operating Officer & Executive Director [15]

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Thank you for your question. I don't know if I correctly understood your first question regarding the like-for-like and the different metrics that we have. But basically, we have seen positive metrics on all elements. The (inaudible) of the store has increased in middle-single digit. We have had an increase also of the conversion rates...

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Janet Joseph Kloppenburg, JJK Research Associates, Inc. - President [16]

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Wait. There are some noises. I don't know...

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Roberto Eggs, Moncler S.p.A. - Chief Marketing and Operating Officer & Executive Director [17]

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No. I think now it's back to normal. Average selling price has been in line with the result of the first H1 of last year. This is explained by the fact that having a much higher level of nonouterwear, we are happy to have these results in terms of average selling price that has increased then -- basically then is their unit for transaction that has been driving the higher comp.

We are now overall for the first H1 at EUR 1.41 billion coming from EUR 1.04 billion in 2015. So year after year, semester after semester, we have consistently increased our average transaction, usually the -- sorry, the UPT -- usually, the UPT is going slightly down in the second semester having more sales driven by your higher selling price from the outerwear and a little bit less of the other category. But we expect here also for the full year an increase compared to last year.

Regarding the result of the American market. As you know, there is some turmoil on this market, regarding especially with American department store. There we have had some positive results driven by the fact that we have started conversion of Bloomingdale's, and we had the first conversion in June this year, with 2 new openings ground floor that are planned for the second half of the year.

So this is sticking out a little bit, especially during the second semester. We'll see some business shifting from wholesale into a retail business, where we think, we believe, that we can probably provide better results by managing that directly. We have 2 other openings with Bloomingdale's that are forcing for this year, and we are currently actively working with Holt Renfrew in the Canadian market to drive some conversion during the first semester 2020.

The results on the wholesale has been also impacted by the current news that we've had on Barneys, we don't know if they are going to file or not the Chapter 11. So here, we have had some discussion internally and to the right measure to protect our sales and our investments. So in terms of credits, we are fully covered, but this has -- been resulted, especially in the months of June and some delays in the delivery of the fall/winter season, both with them and with Neiman Marcus, that are probably showing some slowdown in the results were expected in June, but we hope that we can recover these results in July -- and in July and August.

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Janet Joseph Kloppenburg, JJK Research Associates, Inc. - President [18]

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Does the impact of that change your outlook for the wholesale business in its entirety for the second half of the year?

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Roberto Eggs, Moncler S.p.A. - Chief Marketing and Operating Officer & Executive Director [19]

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The second half, what we have is 1 Shift, which is the store that is in New York on the 59th Avenue. So it's a shift of part of the business that are now going to have a positive impact on the retail revenues and the 2 openings that are foreseen in the last quarter of the year. So I think that we are going to see positive impact for the North American market more on the first half of next year with already some -- probably some acceleration by the end of the year. But it remains market with much higher volatility than the other one.

And also, the political tension with China are not helping to drive tourism in the U.S. So it has become more local market than in the past, and we are benefiting less from the traffic from -- especially from the Chinese.

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Operator [20]

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The next question is from Anne-Laure Bismuth with HSBC.

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Anne-Laure Bismuth, HSBC, Research Division - Analyst [21]

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Anne-Laure Bismuth from HSBC. I have 2 questions. So the first one is on the contribution from new space. So in Q2, is it fair to assume that it was around 2%, 3%, based on the comments you made on the like-for-like performance for H1 and also for Q2?

And also, is it fair to -- or should we think about the space contribution for the full year? I know that in the past, you mentioned high single-digit contribution, but could it be a big deal, given the low conversion from new spacing that we saw in H1?

And the second question is about the performance in Hong Kong. Have you been impacted by the protest in June? And if you can give us some comments about the situations there?

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Luciano Santel, Moncler S.p.A. - Executive Director [22]

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This is Luciano. I mean the space contribution in the -- for the first half, space contribution was about 6%, I mean, a little bit lower than what, as you correctly stated, we normally plan. We anticipated for the year-end.

Honestly, I believe that we will improve the space contribution the second half of the year. And so we still maintain our indication for the year-end of high single-digit space contribution.

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Roberto Eggs, Moncler S.p.A. - Chief Marketing and Operating Officer & Executive Director [23]

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I -- maybe add some flavor to what Luciano just commented. As you know, we, on purpose, plan our expansion, refurbishments, relocation of stores and opening of stores usually on the third and the fourth quarter, because it's where we think we have the better starts having the fall/winter collection in place.

So if I look at this year, we've had roughly 30% of the openings during the first half of the year, we'll have 2/3 of the opening, and the relocation during the third and the fourth quarter of the year. Some of these openings or relocations are major. I'm thinking about the flagship store of Munich, Maximilianstrasse, that is going to open in November this year. Some other relocations on very important stores. On the Japanese market, we see (inaudible) and Matsuya where we finally signed an agreement with their -- them to double the space or (inaudible) or (inaudible) in Japan.

We did -- we have another one when we are finally going to get ground floor in Hong Kong in Sogo. So I think this positive news and elements are comforting us on the fact that we can achieve the results that Luciano just explained.

Regarding Hong Kong, we have had an acceleration of the sales on our Hong Kong market in the second quarter of this year. And I must say that with the opening of the Sogo ground-floor store, we are confident for the result of the year and a small impact on the traffic, a small slowdown in traffic, linked with the political protest that we have seen lately but, overall, a positive growth on the Q2 from Hong Kong.

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Operator [24]

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The next question is from John Guy with MainFirst.

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John William George Guy, MainFirst Bank AG, Research Division - MD [25]

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So one for Roberto, please, just to start with, in terms of e-commerce engagement. I'm thinking about what you've done on social media. Certainly, looking at some of our metrics, you had a very, very strong uptick in terms of Instagram engagement. Google trends were very supportive as well. So what have you been doing to drive -- besides obviously Genius, is there anything else that you can point to, in particular, where you think you've had an exceptional success in driving social media and traffic, either on -- through your e-commerce platform or certainly into the stores via that particular channel?

And Remo, if I could ask you a question just with regards to -- not necessarily being part of a larger group in the future, but whether or not you believe there are some other brands out there that you find interesting whether it's -- especially in [dine in] or outerwear or where they do something maybe slightly better or equivalent because your expertise I'm thinking Stone Island is one example. Are these the type of brands that if you're looking to potentially leverage the kind of expertise and know-how that you have already, could make strategic sense.

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Roberto Eggs, Moncler S.p.A. - Chief Marketing and Operating Officer & Executive Director [26]

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Good evening, John. First on the e-commerce part and the digital social media part. I think the changes we have seen have been mainly brought by the launch of Genius in June last year. As you know, social media is -- in a way, it's a battle of content. You need to have something to say on a regular basis, almost on a daily basis. We have changed the way we are getting prepared. We're leveraging much more on each launches. We go on behind the scene. I think also that the new campaign, featuring Will Smith, is also going to give us some additional visibility and acceleration on that matter.

And finally, we have been really shifting now the media spend that we have where we have had an increase of plus 50% on the digital media investment. And on top, we brought in house now a Chief Digital Officer, that is also technically helping us improve and we're learning every day on this.

The impact has been very good on Instagram, which is the focus we're having on the social media. But if I am looking also on the e-commerce side, we have seen an acceleration compared to last year where we have seen higher conversion rates, lower bounce rates so people are staying longer on our website. And we have had less returns.

So overall, all the metrics on e-commerce are a positive. We think also that the experience and the knowledge and the know-how we are currently acquiring with the launch of the current market are going to have further positive impacts on the culture and the know-how internally in Moncler, regarding both social media and e-commerce. But it's clearly a very strong focus that the company has now. And I think referring to what Remo was saying at the beginning, the Hackathon has been another accelerator of developing this internal culture and the digitalization of the company.

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John William George Guy, MainFirst Bank AG, Research Division - MD [27]

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Roberto, just on that, is it also fair to say that the success of Genius is also driving, obviously, first-time traffic into store but also on having engaged to maybe bought something via Genius, they're coming back. And the loyalty is also being driven now towards your -- some of your mainline collection, so you're getting almost a double benefit, if you like, in terms of driving that?

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Roberto Eggs, Moncler S.p.A. - Chief Marketing and Operating Officer & Executive Director [28]

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I think you're completely right. I think the purpose of -- we always say that for us, Genius is the first digitally native project of the company. It has been thought to be at the same time, something that is containing -- developing content for the communication, but not only for the brand but also for the store. They have something to say now on the weekly basis. They are -- we have really accelerated the number of events. Within the store, the appointments we have that are driven by our client adviser, and clearly, this is helping to improve further the metrics of the store, the traffic to conversion but also the loyalty that continues to improve.

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Remo Ruffini, Moncler S.p.A. - Chairman & CEO [29]

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John. Yes, I think there is few companies that are still in the market. I don't see many, especially on the reasonable size. The one you mentioned, for example, Stone Island, I think is a very good brand. But I always say, especially in the last 12 months, 15 months, I always say, I really feel Moncler is like any start-up company. We really changed the model of business. We really changed the approach basically in every area in this company, starting for supply chain, go to the market and then retail. We really feel a lot of energy in this brand, and we really feel that we have many things to do. We really feel we can build one of the modern company in this market. And I want to really be very concentrated, and we really feel very good, honestly, to continue to develop this new idea, this new way to work, to improve energy, ensuring the people in the company while ensuring to improve energy also to our customers. We feel we are quite unique in the luxury world. We want to continue to develop this idea.

Having said that, at the moment, we don't see anything, honestly, interesting for us, but the doors are open. We will always watch around the market.

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Operator [30]

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The next question is from Paola Carboni with Equita SIM.

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Paola Carboni, Equita SIM S.p.A., Research Division - Analyst [31]

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I have a very short questions. One is in terms of nationality if you can provide us a bit of color on what you have seen specifically in Q2.

And secondly, in terms of current trading, you mentioned for July, a trend similar to the H1 in terms of comps. So something similar to plus 9%. I just wanted to be sure I correctly understood. And if so, I just wanted to elaborate in case you've seen any slowdown in the last few weeks compared to the start of Q2?

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Roberto Eggs, Moncler S.p.A. - Chief Marketing and Operating Officer & Executive Director [32]

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Good evening, Paola. One point regarding nationalities, they are pretty balanced. As we say, Chinese remain the #1 nationality. We've seen a slowdown in Chinese on the American market, but at the same times, the Mainland China is -- which is the bulk of our Chinese customer, is continuing to perform very well, higher than the average of Moncler in H1. We have seen also an acceleration of the Chinese in Europe, in -- especially on the Italian markets and in England; a slowdown on the French market because as you know when we have this type of event that is -- like the one, the yellow vest.

Now the market is quiet since a couple of months. It usually takes between 3 to 5, 6 months for the Chinese to go -- Chinese traffic or Chinese travelers go back to normal. So at the end, it's something that is balanced.

The Japanese market continues to perform very well. We have seen an acceleration for the South Korean markets. And the local markets in Europe are performing very well. So this is something that is very balanced and still a very strong demand from the Chinese market.

Regarding the current trading, honestly, the big part of the year is in front of us we see a trend that is not slowing down, but as we usually say, the mountains stops from September to -- the peak season is in September till the end of the year, so we are confident, but there is still a lot of to do till the end of the year.

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Paola Carboni, Equita SIM S.p.A., Research Division - Analyst [33]

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Yes. Sorry, and just a follow-up, I forgot. Another question, actually on Genius. I wanted you to comment if possible on how the June launch performed, which was the first chance to compare with last year, basically, to annualize this Genius project? So if you can elaborate a bit on what you've seen in June...

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Remo Ruffini, Moncler S.p.A. - Chairman & CEO [34]

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So Paola, you're not following the rules of the -- 2 questions, but still I will be pleased to answer your third question regarding Genius. I think it will be a mistake to compare year-on-year the different launches because each launch has different targets. And we know that even when we launched our couture collection with the Pierpaolo that we are not expecting the sales that we have with Hiroshi when we sell fragments.

So we'll comment more on the fact that if the latest launch has been successful on autumn, we've had 2 lately: one is the one of Simone Rocha where we had a launch and then event, both in Paris and in Seoul in Korea; and the other one with a very strong launch that we had the month before with Palm Angels. And I must say that if we think about Palm Angels, which was a volume driver, we've been -- we've had the results that have been above expectations.

So strong results with the target, again, completely different if we see these 2 late Genius launch. Something much more sophisticated for Simone Rocha, more in line with what we had in the past or similar to what we had in the past with Gamme Rouge. And something very energetic, younger generation, very successful, we have seen crowd that we usually didn't see in Moncler since many years. And with a strong performance, both on the outerwear and the cut & sewn, where most of the items regarding Palm Angels, they have been sold out within the first week. So we are confident about the further launches that are foreseen for this year. And we will continue now with an agenda that is really full.

And we will bring back all the collection of the spring/summer and fall -- of the fall/winter season in November this year on the 7th, where we will have -- these not 2 but 3 houses of Genius: one in Omotesando in Japan; another one, for the first time, with Galleries Lafayette on the Champs-Élysées; and the third one, here in Galleria in Milano, where we'll then -- in the year after, we will open our flagship store. And this will be reinforced also by around 10 shop-in-the-shop in department store and in wholesale partners, supported with e-commerce. So again, it's very strong energy that is expected this year, and what will change, will slightly change the timing of the household Genius. Last year, there were October till December. This year, we'll bring with them from the 7th of November until the end of January so even more on the peak season for us.

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Operator [35]

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The next question is from Melanie Flouquet with JPMorgan.

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Melanie Anne Flouquet, JP Morgan Chase & Co, Research Division - Head of European Luxury Goods and General Retail [36]

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I have a first question, actually, sorry, it's just a clarification. You're mentioning space growth in H1 was 6%, but you've given a like-for-like, it's known at minus or the -- that implies the calculation at 4%. So I'm just trying to clarify that this 6% related to the true space growth, and that the 4% include -- It's just not exactly the same -- telling the same story because of the outlets, et cetera, included in it, but I'm just trying to understand what we're talking about when you talk about 6% against 4% whether we have the wrong rounding in the like-for-like and the total organic retail sales. So that's my first question.

Actually, the second question I had is, when I look at your D&A, as you rightly pointed out, it's going up due to the CapEx spend of the previous years. And also, the nonrecurring -- the former nonrecurring charge is going up, which is your long-term incentive plan. How should we think about those lines moving forward as you sort of reached -- we should expect it to grow more in line with sales if that continues to weigh on the profitability, and you're compensated elsewhere.

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Luciano Santel, Moncler S.p.A. - Executive Director [37]

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Melanie, about the space growth contribution, I mean, the 4%, I mean, is the difference between the tangibles and the comp. But of course, that the comp is related only to diverse stores. Outlets are performing less -- well, still fairly well but less than regular stores. So the real spacial contribution is what I said, it is 6%, which, again, is lower than what we normally plan for the year-end. And we still plan to do better in the second half, so we still maintained the high single digit. So this is the explanation.

About your second question, I mean the D&A are higher. The impact of D&A is higher in the first half, and it will be higher in the second half and than in the year-end, than last year. And last year was higher than the year before. I mean this is something that is totally incorporated in our plans because, as I said before, and as you correctly stated, our CapEx -- the CapEx, I mean, we made -- over the past few years are having an impact on our D&A, which is growing. Of course, not materially, honestly, but of course, I'm talking about the selling expenses that incorporate the D&A of all the investments we made in our retail network.

Of course, in that specific item, there is an impact that is not a big impact, but when I answer the question before, I highlighted this small impact about the stock-based compensation. I mean the timing in this item is very particular, but I mean not to make the long story short, as I said, we expect, for this year, to spend exactly the same, about EUR 30 million, which is the same amount we spent last year.

Of course, the impact of the EUR 30 million this year on our expected sale size will lower and, again, lower than last year and probably lower than 2%. Not sure, if I answered your question, but...

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Melanie Anne Flouquet, JP Morgan Chase & Co, Research Division - Head of European Luxury Goods and General Retail [38]

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Yes. You did perfectly.

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Luciano Santel, Moncler S.p.A. - Executive Director [39]

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Okay. Thank you.

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Operator [40]

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(Operator Instructions) Gentlemen, there are no more questions registered at this time.

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Paola Durante, Moncler S.p.A. - IR & Strategic Planning Director [41]

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Perfect, actually. So we thank you, everyone, for participating to this late call. And I'll just give you a quick reminder, Q3 2019 Interim Management Statement will be released on October 24, and our quiet period will start on September 25.

Yes. I don't have much more to say, just say if you have a follow-up questions, we are ready tonight, tomorrow, any time. And for sure, we wish you a very nice summer break. Thank you to everybody. Bye.

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Operator [42]

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Ladies and gentlemen, thank you for joining. The conference is now over, and you may disconnect your telephones.