Will Canada Goose Be A Competitor To Moncler?

The industry has been monopolized by oligopoly, and the way to break it is probably to build a new oligarch.

According to the world clothing shoes and hats net, Italy luxury feather brand Moncler chairman and CEO Remo Ruffini is expected to become "Italy version of Bernard Arnault", and Moncler will become the next LVMH luxury luxuries.

In 2017, Michael Kors group and Coach Group acquired Jimmy Choo and Kate Spade respectively, and then changed the group name to Capri and Tapestry respectively, which marked the trend through M & a strategy.

The development of luxury group has triggered the intention of the two groups to become the next US version.

Discussion.

The reason why the industry regards LVMH as a benchmark is, on the one hand, the effect of its size. On the other hand, it aims at the business layout mode represented by it, that is, multi brand strategy and coordinated pace.

The era of big capital in the luxury industry is going back to 1988.

This year, the French Bernard Arnault finally became the largest shareholder of the company after joining the LVMH group merged by luxury brand Louis Vuitton and MOET & CHANDON Hennessy group.

Under a series of crazy acquisitions led by him, LVMH has become the world's largest luxury group.

During the thirty years, luxury giants occupied the battalion through acquisition, merger and incubation, and began to penetrate from the European center to the global market, thus making the world map of luxury goods clear.

If Michael Kors and Coach have already become the ambition of the US version of LVMH, then the single brand group Moncler, which has a market value of 7 billion 700 million euros, may be far from the LVMH of 130 billion euros.

As for why Moncler, the reason given by analysts is that if Remo Ruffini wants to build the first Italy luxury oligarch, now is a good time.

According to Refinitiv data, luxury brands in Italy are relatively fragmented and valuations are at the lowest level in history. Five years ago, the industry's expected return was 28 times, and now it is 25 times.

Embarrassment of "mid-range" luxury brands

In the past two years, the luxury industry in Italy is in the bottleneck stage, and many brands are being sold.

Salvatore Ferragamo has been sold for three degrees.

In a report last September, Mergermarket revealed that Salvatore Ferragamo had approached private equity funds because of its sluggish performance and plans to seek sale or delisting.

Although the group spokesman denied the news immediately, the swing of the brand is now the consensus of the industry.

In early 2018, EQuita Group, a global business consultancy, once boldly predicted in a report that the next goal of Kai Yun group or Salvatore Ferragamo.

Giuseppe Marsella and Luca Solca, a bank analyst in Paris, France, believe that the gradual pformation strategy of the brand is too slow, if new management fails to make effective decisions, or will be forced to sell.

In addition, in October 2018, the group passed away from a shoe shoe company in Italy to the soul of the luxuries Empire, and the death of Mrs. Wanda Ferragamo may also be shaking her heart.

In August 2017, Salvatore Ferragamo appointed Gucci veteran Micaela Le Divelec Lemmi as chief executive officer.

According to fashion headline data, the group's sales in the first three quarters increased by 3.9% to 298 million euros, ending 8 consecutive quarters of decline, but sales in the first 9 months still fell 3.3% to 972 million euros, while net profit dropped 17.5% to 65 million euros.

Another brand that has tardy yet to improve is Tod's.

Italy media reported last October that Tod's Diego Della Valle, the chairman of luxury group, is reorganizing its business, or intends to sell it. But then Diego Della Valle denied the news and stressed that the pformation of Tod's is proceeding according to plan. The new strategy of improving the new frequency rate and focusing on developing traditional products is coming into effect. It is expected that the performance will be able to recover quickly after 6 months.

Due to the slow progress in performance, Tod's group has repeatedly heard the news that it will be sold since last year. The market value is only 1 billion 500 million euros, and the industry is in a key structural pformation period. The instability of Greater China has cast a shadow over the recovery of Tod's.

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Italy's luxury brand Valentino, which performs well, is also a hot target for mergers and acquisitions.

In October 2018, sources said that the Mayhoola private equity fund of Qatar Royal Holdings has resumed talks with Kai Yun group on the acquisition of Italy's luxury brand Valentino.

It is reported that Marco Bizzarri, CEO of Kai Yun group's core brand Gucci, launched Mayhoola's proposal to buy Valentino last year, but was rejected because it failed to reach a consensus.

Capital is still optimistic about Valentino, according to Italy consulting firm Pambianco and British Barclays Bank released the "Le Quotabili 2018 (Italy) the most list of potential enterprises" list, fashion is still the most listed potential Valentino, the brand as early as last year to replace Armani ranked first, followed by Furla in 2018.

However, Valentino's performance also showed signs of slowing down to a single digit growth. In 2017, the group's sales grew by 5% to 1 billion 160 million euros, and in 2016 it was 1 billion 110 million euros, and the profit before interest tax depreciation and amortization decreased by 7.7% to 190 million euros from 206 million euros in 2016.

In addition, Italy leather brand Furla, which is considered to be a light horse, has also attracted the attention of buyers from the United States and China.

The brand was founded in 1927 by Aldo Furlanetto in Bologna, Italy, and last year passed the brand 90th anniversary, which is still owned by the Furlanetto family.

In the first half of 2018, sales of the group began to slow down, up 5.8% to 252 million euros compared with the same period last year.

In May 2016, Furla announced the launch of the IPO plan, but decided to postpone the IPO plan last year, and announced that the group will focus on improving production efficiency and scale at this stage.

With the development of luxury brands, consumers are more inclined to choose top luxury brands or fast fashion brands. The market share of mid-range luxury brands is divided, and their market dominance is no longer in place.

However, although the interest migration of luxury consumers is an important reason for the loss of mid-range brands, what is more noteworthy is that the mid-range brands in these dilemmas are mainly Italy family brands, which means that the limitations of Italy family business in the current global luxury industry have begun to appear.

In fact, Italy's luxury brand Versace, which was bought by Michael Kors of the us light luxury group last September, has sounded the alarm for Italy's luxury industry, which has caused Italy people's dissatisfaction.

However, Donatella Versace, creative director of Versace, said in an interview that the Michael Kors group will increase more employment opportunities in Italy after the completion of the purchase agreement between the brand and Michael Kors group, that is, helping the brand expand its store network.

Donatella Versace also revealed that Italy had never been quoted by the investors in the entire sale process, and buyers were from France and the United States.

The scattered and self governed situation of family businesses makes Italy luxury brands fail to form a multi brand group that can compete with the three luxury tycoons in the long history of development. Therefore, it lacks competitiveness in today's oligopoly era.

Nowadays, the embarrassing situation of Italy's "mid-range" brand or making Baotuan become a new solution.

Why Moncler?

In contrast, Moncler has no burden to pform family businesses and is more flexible in adapting to the new trend of luxury industry.

Moncler, founded in 1952, originally focused on outdoor mountaineering products such as tents and sleeping bags.

In 2003, after being acquired by Remo Ruffuni, a fashion family, it gradually became fashionable and formally entered the luxury industry. At that time, the brand had annual sales of only tens of millions of euros.

Since taking office in 2003, Remo Ruffini has really revitalized Moncler.

According to fashion headline data, Moncler's gross revenue rose 18% to 873 million euros in the first three quarters of this year.

During the period, the sales growth of Moncler in Asia and the rest of the world, including China, was the most significant. It recorded 32% to 339 million 100 thousand euros, accounting for 39% of total sales. It has become the largest market of the brand, mainly due to the strong sales performance in the mainland of China, while the Korean market has extended double-digit steady growth.

Its sales in the Americas and Canada surged 10% to 138 million euros over the same period last year.

Behind the Moncler is the rise of the entire luxury feather category.

Luxury goods are not ordinary commodities. Most of the time they satisfy not only the functional needs of consumers, but the psychological needs, so their pricing includes a large number of brand premium.

As a functional product, the feather down products become a very special category in the market after being added to the luxury property, which is less affected by the weather changes than the ordinary down garments, and is more resistant to the weather instability.

When consumers buy luxury feather products, they are not entirely from the practical demand point, which is the same as people who drive Land Rover in the city and buy hermes bags.

The success of Moncler also benefited from the brand making the down jacket closer to the high fashion.

In 2006, Remo Ruffini invited the original creative director Alessandra Facchinetti of Valentino to launch the high-end product line Moncler Gamme Rouge Line for the brand. In 2009, the high-end men's wear Gamme Bleu was formally launched.

In order to get more recognition from fashion people, Moncler frequently shows up in Paris fashion week and Milan fashion week.

Since then, Gamme Rouge and Gamme Bleu have entered the regular schedule of Milan fashion week and Paris fashion week. Although the group did not disclose the specific sales data of the two series, in 2015, Moncler performance exceeded market expectations many times, stimulating the stock price to rise by 50% in the first four and a half months. The majority shareholder Eurazeo sold Moncler3.34% shares, earning 188 million euros.

In 2016, Remo Ruffini also reduced its cash holdings. It has proved that the capital market has gained substantial returns from the rise of Moncler and luxury feather.

In order to cater for the young consumers' sense of novelty, Moncler abruptly decided to cancel the high-end fashion series Gamme Bleu and Gamme Rouge in November 2017 instead of its new cooperative project "Moncler Genius", released in Milan fashion week in February this year.

The designers involved in the project include Teng Yuan Hao, Pierpaolo Piccioli, Craig Green and Francesco Ragazzi, 8 gifted creative talents. They designed 8 different series for Moncler respectively, creating great exposure and flow for the brand.

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Some analysts pointed out that the launch of Moncler "Genius" broke the seasonal shackles of down jacket products to a great extent. Even if it was sold in the off-season June, consumers would once miss or would be hard to obtain, and virtually lengthening the period of concern that had only been winters in the winter to a whole year.

For Remo Ruffini, he is not satisfied with the success of Moncler. His personal focus has been on other potential brands in the industry.

In October last year, he bought the Italy women's clothing brand Attico through the name of Archive Vehicle.

Archive Vehicle is an independent company controlled by Ruffini Partecipazioni Holding.

Although Moncler down garments are still popular with consumers, the Remo Ruffini, which is rich in business, can not be unaware that the trend of luxury down can not be eternal. Buying leather goods or watches can withstand volatile tastes.

In addition, Moncler's good economic status and independent status also provide a solid foundation for the group to make efforts to acquire energy.

If Remo Ruffini can overcome the internal competition in Italy's luxury market and defeat buyers from abroad, such as Kai Yun group, which is eyeing Italy brand, then he may step out of a new way to become a Italy version of Bernard Arnault.

Who is the competitor of Moncler?

On the way to build the Italy version of LVMH, Remo Ruffini's rival may be the current chairman of Italy OTB group and Renzo Rosso, the founder of Diesel brand.

OTB is the abbreviation of Only The Brave, founded by Renzo Rosso.

After Diesel was founded in 1978, Renzo Rosso fully controlled the brand in 1985.

In 2000, Renzo Rosso indirectly acquired Dsquared2, Just Cavalli, Marni Men, HISTORY Maison Maison and Staff brand licensing and production license through the acquisition of Staff International.

In 2002, Renzo Rosso became the major shareholder of Maison Margiela. After 6 years, it bought the designer brand Viktor&Rolf, and in 2013 and 2016, it won the luxury brand Marni and Paula Cademartori.

This means that OTB owns both the high street trend brands such as Diesel and Dsquared2, and the senior designer brand. The layout of the group has gradually stabilized.

Now Renzo Rosso also intends to acquire another Italy luxury brand Roberto Cavalli through its holding OTB group.

Besides OTB, there are 9 other potential buyers who are interested in Roberto Cavalli.

At present, the restructuring of Roberto Cavalli has basically been completed and plans to introduce new investors to accelerate global expansion.

Sales of Roberto Cavalli last year were about 152 million euros, according to sources. In the first half of Roberto Cavalli2018, revenue has increased, and the breakeven is expected throughout the year.

The brand was acquired by Italy private equity fund Clessidra SGR in 2015. The founder and designer, Roberto Cavalli, has retained 10% of the shares and is now out of fashion.

In fiscal year 2017, OTB group's pre tax profit jumped 4 times to 21 million 500 thousand euros over the same period last year, only 5 million 100 thousand euros in the last fiscal year. Net profit was flat at 3 million euros compared with the previous fiscal year. However, group sales fell 2.4% to 1 billion 520 million euros compared with the previous fiscal year, and 1 billion 580 million euros in 2016 fiscal year.

Marni's revenue grew by two digits last year. The sales performance of Maison Margiela was double digit growth by the active promotion of Paris design review exhibition.

OTB's multi brand layout is an advantage on the one hand, but on the other hand, its brand positioning is uneven. It is difficult for high street brand and designer brand to form synergy and scale effect.

Coupled with group business including mass production and distribution licensing agreements, to a certain extent, the group spirit is dispersed.

In addition, Renzo Rosso has a relatively wide range of interests and has yet to show its ambition to build a luxury empire.

At the beginning of last year, he invested in the professional model appointment website Ubooker Worldwide Ltd through his family investment company Red Circle Investments.

Back to Moncler's business itself, the rival of the brand is still the Canada Goose, which is also a luxury feather brand. The competition between the two is becoming white hot.

In the more complex global market competition, emerging markets are becoming the next battleground of luxury brands.

At the moment, Canada Goose has introduced the war to the most important growth engine of Moncler, the Chinese market.

Last October, Canada Goose also opened the first store in Greater China in Hongkong international financial center, and officially entered the Chinese market.

Canada Goose, the first flagship store in mainland China, opened in Sanlitun, Beijing in December 28th last year, which prompted a 9% jump in share price opening.

Although the store opened for 13 days due to the HUAWEI incident, the sales performance of the shop seems to be unaffected by related events on the day of its opening. All men's products were sold out at 4 p.m. on the opening day, reflecting consumers' enthusiasm for the brand.

To avoid overcrowding, the store also took a batch purchase measure, although the average waiting time was about half an hour and the outdoor temperature was below zero, but the number of queues at the door was as high as 120.

Since its successful landing in New York and Toronto stock exchange in 2017, Canada Goose has become the most popular feather down brand besides Moncler, and it is also known as the "down garment industry Hermes".

According to the latest data released by Tmall, as a newly arrived brand, Canada Goose has achieved remarkable results on its platform, and has gained 340 thousand fans in just 3 months, while its account for nearly 6 years in Instagram has only 490 thousand fans.

A quarter attracted more than 4 million 300 thousand people to shop, and the total number of pactions has been broken.

At the end of November 2018, the new Approach series launched by Canada Goose in Tmall sold out in three days. On the day of "double 11", Canada Goose Tmall flagship store had more than 71 tens of millions of pactions and 500 thousand visitors, equivalent to 3/4 of Vancouver's population.

It is not hard to see that Canada Goose expands much faster than other luxury brands in China, and Moncler has just opened a flash store on Tmall luxury platform Luxury Pavilion, which has not yet been formally settled, and its attitude is still relatively conservative.

In search of a bigger breakthrough, Canada goose bought Canadian outdoor shoe company Baffin in November last year for 32 million 500 thousand Canadian dollars (about 170 million yuan) to further deepen the "moat" matrix of outdoor apparel.

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No matter in the brand matrix and the layout of the incremental market, the action of Moncler seems to be slightly slower. In the face of Canada Goose's step by step, if Moncler can't take countermeasures in a short time, it will probably be farther and farther away from the dream of luxury empire.

Some analysts believe that future luxury brand competition is no longer a single market competition, nor is it a single product competition. Product mix and layout of the global market are becoming more and more important.

In the face of the fierce growth of Canada Goose, Moncler has to keep the Chinese market on the one hand. On the other hand, the luxury feather down brand is weakening the seasonality of products, enhancing the brand's fashion attributes, consolidating product mix outside feather products, thus expanding the world in different climatic zones, and suppressing the Canada Goose, which is still relatively single product line at present.

At the end of 2013, Moncler was listed on the Milan stock exchange.

Investors who bought Moncler shares had doubled their total returns, beating all listed peers, including Hermes.

However, the performance of Canada Goose in the capital market is equally fierce. Since its listing in March 2017, the share price of Canada Goose has risen about 4 times from the original 12.78 US dollars to 46.75 US dollars today, with a market capitalization of about 5 billion 100 million US dollars.

Just like Louis Vuitton is the lifeblood of LVMH, if you want to build a luxury Empire, Moncler as a core brand must stabilize its dominance in the industry. Perhaps this is the most important step.

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