Coronavirus hurting Moncler's sales from China

The French-Italian retailer heavily relies on sales from Asia

Luxury apparel company Moncler S.p.A has seen an 80 percent plunge amid the coronavirus outbreak, which has greatly impacted travel from Chinese tourists – a demographic that has contributed to the French-Italian brand’s growth in recent years, according to a report from Reuters.

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Moncler executives warned analysts on Monday that its sales have taken a serious hit from the Asian market since there have been travel bans, flight and cruise cancelations imposed on China over the virus.

Rome, Italy - April 25, 2015: Side view of Moncler store at Fiumicino Airport in Rome, Italy. Moncler is a French-Italian apparel manufacturer and lifestyle brand founded in 1952 by René Ramillon.

In an official statement, the company said the outbreak is having “a significant impact on footfall and revenues in all shopping malls in China where Moncler is present and on Chinese tourism around the world.”

With Asia being a top market and accounting for 40 percent of the luxury puffer coat brand’s total revenue, as well as China, being the world’s second-biggest economy, Moncler could not escape the epidemic unfazed.

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“The business impact in China in the last two weeks was very, very serious, right now the situation is critical,” said Luciano Santel, Moncler’s chief corporate and supply officer.

Conversely, the brand reported better than expected fourth-quarter sales growth, which amounted to $1.78 billion for the full year while retail comparable-store sales rose seven percent.

Industrialism is the source inspiration for the new Moncler 1017 Alyx 9SM collection. (Moncler)

Moncler CEO Remo Ruffini acknowledged that the company has put forth a contingency plan across its divisions to remedy the issue. Additionally, the company will postpone investments as the coronavirus continues to spread – making sure to prioritize essential projects amid this time of uncertainty. The business will put a hold on about 20 percent of Moncler’s capital expenditure for the year.

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“Today it is impossible to forecast how long it will last,” Ruffini said optimistically.

The company has been able to offset declining sales in the Asian market before. Last year, Moncler offset a sales plunge that resulted from the tumultuous protests in Hong Kong. However, this was mainly achieved by strengthening its sales growth in mainland China over the special administrative region of the People's Republic of China.

Moncler was founded in 1952 by René Ramillon and André Vincent. The brand's name originates from an Alpine town near Grenoble, France. (Moncler)

It is not clear how Moncler will course-correct this time with neighboring Asian countries being affected by the outbreak as well.

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Under Ruffini, Moncler reported 13 percent sales growth at constant exchange rates in the fourth quarter of 2019, which was an improvement from the 10 percent sales growth observed in the company’s third quarter.

Reports in December speculated that Moncler may merge with fellow Italian brand Gucci, however, Ruffini said there was “nothing on the table” as of Monday.

Moncler will explore the introduction of a loyalty share scheme to secure its leading shareholders.

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