Moncler sales seen rising despite luxury concerns, warmer weather

Italian luxury group Moncler is expected to post a healthy rise in quarterly sales thanks to a strong brand and despite the warmer weather, although growth will be slower than in the first half.

With 2023 on track to be the hottest year since at least 1940, analysts are wondering about the impact on a group still best known for puffy duvet coats, despite diversification helped by expanding its product range and the acquisition of the Stone Island streetwear brand almost three years ago.

The Italian group will report results on Thursday, coming after sales at French luxury conglomerate LVMH showed a slowdown in growth earlier this month, stirring concerns among investors about the prospects for luxury and fashion groups.

French luxury group Kering reported on Tuesday a bigger-than-expected drop in third-quarter sales, adding to the jitters.

Moncler sales are expected to rise by around 8% at constant exchange rates in the third quarter, to 670 million euros ($711 million), according to a company provided consensus. Revenues rose 24% at constant exchange rates in the first half.

Growth will be driven by the Asia-Pacific region, while sales in the Americas are expected to weaken further, also due to the conversion of some U.S. stores from wholesale to retail, analysts at Barclays said.

“The exit rate for the third quarter is likely to have been weaker due to hot weather. Therefore we think comments about the start of October will be more meaningful to assess underlying trends,” UBS analysts said, adding that the brand momentum is still strong.

Given the importance of coats and winter products, Moncler’s retail sales are more concentrated in the first and fourth quarters.

“The third quarter is less important than others for Moncler, it would be more serious if mild temperatures were recorded in October, November and December,” Flavio Cereda, co-investment manager luxury brands at GAM, told Reuters.

He added that Moncler is certainly less linked to seasonality than in the past, but the DNA of a company founded as an Alpine mountain goods company remains its outerwear.

Moncler is preparing to face more extreme climate events and increasingly unpredictable weather.
In its last conference call in July, Moncler Business Strategy Chief Roberto Eggs said that the group has an offer of light and warm products for both spring/summer and autumn/winter collections.
“We are working also on multilayering, which is something that is adding functionality to our outerwear,” he added.