Moncler hopes for rebound from coronavirus fallout in second half

Italy’s Moncler hopes to limit financial damage from the coronavirus crisis with a strong rebound in the final part of the year, a crucial season for its trademark puffer jackets, after sales fell 18% in the first quarter.

National lockdowns have forced Moncler, in common with rivals, to shut stores and production sites.

Chief corporate and supply officer Luciano Santel said the company hoped to “maintain a reasonable top line, a reasonable profitability” in the full year despite an expected significant decline in earnings and sales due to the outbreak.

“Because of the seasonality of our products, it could have been a lot worse if this had happened in September or October.”

Analysts on average expect Moncler’s sales to fall by 6% in 2020, better than most rivals, according to a consensus forecast on the company website.

However, Santel struck a cautious note about the recovery already under way in mainland China, where stores have reopened and business is picking up.

“I would lie if I said we are seeing strong double-digit recovery in China... Business is recovering nicely, better and better every day, but not huge numbers also due to our seasonality,” he said.

After years of strong growth, which made the brand one of the best performing luxury groups, Moncler said it would scrap its dividend payments for 2019.

It is also shelving all non-essential projects including some advertising campaigns to achieve a 30% reduction in total capital spending, although it is sticking to plans to open around a dozen new stores in 2020.

“What is most important is – we believe – that Moncler will have time to organise, given that its next big quarter is going to be 4Q20,” Bernstein analyst Luca Solca said, noting that Moncler makes 40% of annual sale in the last three months of the year, compared to 12% in the second quarter.

Revenues in the first three months fell to 310 million euros ($336 million), a touch above an average analyst estimate of 304 million euros, according to Refinitiv data. That marked a 18% decline both at constant and current exchange rates.

On a comparable basis, revenues fell by 24.5% in Italy and by 23% in Asia and in the Americas, with the rest of Europe outperforming the other regions.

Other luxury goods companies have either scrapped or cut their dividend payments. Prada said earlier on Wednesday it would no longer pay a dividend on 2019 results, as did Tod’s last month.

French giants Kering and LVMH have cut their respective dividend payments by 30%.