LONDON, United Kingdom — Last year marked one of the toughest years on record for the global luxury market. Sales of personal luxury goods remained flat at €249 billion ($267 million), as consumers held back their spending on the back of uncertainty surrounding the US presidential election, terrorist attacks and Brexit. BoF sat down with Moncler’s chief executive and chairman Remo Ruffini to discuss how the company is outperforming the overall luxury market, and what he thinks will drive its future growth.
Earlier this month, the Italian luxury outerwear brand posted results that beat analyst expectations, showing revenue had risen by 18 percent on the previous year, exceeding €1 billion for the first time with net profits of €196 million.
The company saw strong growth across all its markets, particularly Asia —which accounts for around 40 percent of its revenue — where demand from stores in China and South Korea helped the region post a 23 percent rise in turnover. The US also grew at the same rate, helped by new store openings and good performance in its wholesale business.
“Moncler is one of the few growth stories available in the luxury goods sector at the moment,” said Mario Ortelli, head of the luxury goods sector at Sanford C. Bernstein. “The company still has further opportunity to develop its offering into different products from outerwear as well opening stores, shifting their revenues from wholesale to retail.”
Its success comes as activity in the outerwear market is heating up. On Wednesday, fellow goose down coat-maker Canada Goose’s initial public offering on the New York Stock Exchange priced 20 million shares of the company at C$17 each, raising C$340 million for the company according to reports.
“Brands like Moncler and Canada Goose are benefitting of the rising trends of casualisation, offering for example a good alternative to formal coats and activewear, thanks to the performance and technical content of their products,” said Ortelli.
Ruffini attributes the success of the brand to a clear and consistent strategy by selectively opening new stores in new markets where its wholesale accounts have performed well, collaborating with key brands and collaborators to keep the classic styles of goose feather-filled jackets up-to-date and focusing its efforts on digital innovation to target younger consumers.
“Our strategy is always very important,” Ruffini told BoF. “We try to be contemporary and modern, to always respect the past with new technology, new ideas and a new way of life. But respectful to the DNA of the brand.”
We try to be contemporary and modern, to always respect the past with new technology, new ideas and a new way of life.
Moncler’s positioning as an authentic outerwear brand and a viable fashion offering is unique. The company has remained true to its heritage while high-profile collaborations with the likes of Giambattista Valli, Thom Browne and Virgil Abloh have helped amplify the jackets’ must-have status.
“They have built up a brand with global awareness and consistent positioning across the world and so far they have been able to offer a product with an appealing style for the consumer and with good technical features thanks to their investments in research and development,” said Ortelli. “They have also successfully launched capsule collections in collaboration with external designers like Alexandre Mattiussi, selected iconic products in collaboration with other brands like Leica and Rimowa, and a successful eyewear licence, which contribute to brand building and also generates additional revenue.”
Since BoF last spoke to Ruffini in 2014, Moncler has grown significantly, more than doubling its revenue, a significant milestone for a company whose core business is centred around its goose down coats, which account for 75 to 80 percent of sales.
“I think if you specialise in something very consistently, your customers really trust you, for me, I feel like it’s a good strategy,” said Ruffini.
But even the most successful outerwear brand cannot live off the profits of goose down jackets forever.
Looking forward, Ruffini believes maintaining the brand’s perception is key in the coming years to keep Moncler’s momentum in the market, with a strong digital focus. “The most important issue in our work [in the long-term] is brand perception,” he said. “You have to keep the brand perception very high. It’s not only a question of communication or new projects or new ideas."
Further growth, said Ruffini, will come from a mixture of different areas in the business from opening new stores to further expanding categories like knitwear, shoes and soft accessories. The company aims to open 10 to 15 stores a year in new markets like Dubai, Melbourne and Stockholm, as well as expanding some existing locations in Milan and Hong Kong. Its new product categories also represent longer-term opportunities for the brand.
“The other categories are growing and they are growing fast,” said Ruffini. “With knitwear, we see a lot of interesting numbers and I think in the future, we can have the possibility to do the same with soft accessories. People ask for gloves, hats, scarves. I think it could be a very interesting number for us in the near future.”
The next five years will also see Moncler make a more radical shift towards digital, away from its traditional print advertising strategy, which last year accounted for 85 to 90 percent of its media spend.
“Digital is super important and we work a lot on that,” said Ruffini. “In the next five years, we will change this dramatically. Now we have to make ideas, content, projects every month, talk with our customers and give energy to understand that the world is changing, that you are at least contemporary. We want more and more to accelerate this process in the future.”
When asked about the uncertainty in the market from events like terror attacks in Paris, the UK’s Brexit and the surprise outcome of the US presidential election, Ruffini said there was no way to pre-empt how to manage these headwinds but instead to focus more on the demands of each market and respond accordingly.
“Honestly, you cannot manage against terrorism attacks, against Brexit. I think the strategy is to be as we are, more or less, all around the world to reduce the risk,” he said. “Another important thing is logistics, which is now very important. You need the right moment in the right location”, he continued. “It’s really a question of understanding what’s happening in China, what’s happening in France, you have to match goods where there is demand.”