Both Moncler S.p.A. and Hermès credited Asian markets and digital initiatives for turning results around as a year defined by the coronavirus pandemic came to a close.
Moncler saw 2020 results improve in the second half of the year on the back of strength in China and online sales.
The Italian firm said in 2021 it plans to continue to work to “maintain an agile, flexible and reactive organizational structure.” Initiatives include selectively growing core international markets through its retail mono-brand stores network and the strengthening of its digital channel. In addition, the integration of Stone Island will develop a “new luxury” segment targeting a younger consumer.
“2020 will remain marked in the world’s and in Moncler’s history….I think it is important to acknowledge those crucial moments when you act with courage amid uncertainty. This has been the strength that has guided us through these past months, especially in the last key weeks of 2020,” Remo Ruffini, chairman and CEO, said.
Net income for the year ended Dec. 31 fell 16 percent to 300.4 million euros ($363.9 million) on a 12 percent decline in revenue to 1.44 billion euros ($1.74 billion). That compares with net income of 358.7 million euros (434.5 million) on revenue of 1.63 billion euros ($1.97 billion). All calculations are based on current exchange rates.
Although comparable store sales were down 18 percent for the year, that improved to down 9 percent for the second half, Moncler said.
Retail volume for the year fell 12 percent at constant exchange to 1.09 billion euros ($1.32 billion), while wholesale sales were down 5 percent to 350.9 million euros ($450.1 million), reflecting the impact of store closures.
Fourth quarter retail sales rose 5 percent, while double-digit growth of 31 percent was recorded in period, driven by product reorders and different timing in shipments for Fall/Winter collections. Strong results from digital channel partners also helped.
For the quarter, the luxury brand said revenues were equal to 675.3 million euros ($818.1 million), or up 8 percent at constant exchange rates. Despite restrictive anti-virus measures, growth in the quarter was mainly driven by the “strong expansion of the Chinese market, the growth of Korea and Japan and the excellent performance of the online channel,” it said.
By region, Moncler said Asia posted a 26 percent increase in the fourth quarter, and a 2 percent increase for the year at constant exchange rates. Mainland China led the performance in the region, followed by Korea and Japan. In Europe, the Middle East and Africa, excluding Italy, revenues fell 18 percent at constant exchange rates for the year, and improved slightly to down 13 percent for the fourth quarter. “This was supported by good local demand which partially offset the lack of tourists, despite the temporary closure of some stores. Germany, Scandinavia and Russia recorded the strongest performance of the year and also in the fourth quarter, with excellent results in both channels,” the company said.
Italy posted a 34 percent revenue drop for the year and in the fourth quarter, the result of stringent measures undertaken to curtail the pandemic that resulted in a limited inflow of tourists and a prolonged closure of stores. “These impacts continued in the last months of the year when the main Italian stores were closed for several days during November and December, which are important months for Moncler’s business,” it said.
In the Americas, revenues fell 15 percent for the full year at constant exchange rates, but were up 5 percent in the fourth quarter, also at constant exchange rates, with positive performance at both channels.
During the quarter, Moncler inked a deal on Dec. 6 to acquire a 70 percent stake in Sportswear Co. S.p.A., the owner of the Stone Island luxury skiwear brand, for $1.4 billion. The transaction is expected to close by March 31.
Hermès credited the flexibility of its network for enabling it to rapidly roll out “omnichannel solutions to its customers” when Covid-19 closed stores and stymied tourist travel. Digital success was seen across regions, it added, noting the ongoing deployment of a new e-commerce platform in the Asia and Middle East regions.
“Our highly integrated craftsmanship model and balanced distribution network, as well as the creativity of our collections and our customers’ loyalty give us confidence in the future. The group remains highly committed and active, and gradually adapts measures to those taken by health and public authorities,” it said. “In the medium-term, despite the economic, geopolitical and monetary uncertainties around the world, the group confirms an ambitious goal for revenue growth at constant exchange rates.”
For the year ended Dec. 31, 2020, net profits were down 9 percent to 1.39 billion euros ($1.68 billion) from 1.53 billion euros ($1.85 billion). Revenues were down 7.2 percent at current exchange to 6.39 billion euros ($7.74 billion) from 6.88 billion euros ($8.33 billion).
Hermès said it saw revenue growth in the second half, with an acceleration of up 16 percent in the fourth quarter. Revenue in its stores were down 2 percent for the year. The luxury firm said wholesale revenues were down 32 percent, hurt by the lack of travel and tourism due to the pandemic.
For the three months, Hermès said revenue at its stores were up 21 percent due to “remarkable performance in Asia and in Japan.”
By region, Asia, excluding Japan, posted strong growth in the fourth quarter at up 47 percent, driven by sales activity in Greater China, Korea and Australia. A new digital platform in Asia for Hong Kong, Macao and Korea generated “very high growth in e-commerce sales,” Hermès said.
In Japan, the brand credited the loyalty of local customers for sparking a recovery that began in June. Sales were strong on the brand’s Japanese online platform, as well as at a new Osaka store that opened in September.
Sales in America were down 21 percent, but gradual recovery was seen in the second half, ending with a slight growth rate in the fourth quarter. Sales in Europe, excluding France, were down 20 percent, while sales in France fell 29 percent. Both were hurt by store closures in November in several countries, as well as the introduction of new restrictions in mid-December. “The reduction in tourist flows was partly offset by the loyalty of local customers and by the strong increase in online sales,” Hermès said.
Demand for leather goods and saddlery resumed growth in the second half, and accelerated in the fourth quarter. Ready-to-wear and accessories grew 12 percent in December, while the silk and textiles business, as well as perfumes and beauty, posted declines as travelers stayed home.