Moncler Looks Beyond Ski Slopes to Repeat Cucinelli IPO Success

Moncler Looks Beyond Ski Slopes to Repeat Cucinelli IPO Success

Moncler’s $1,220 quilted polyester jackets have been a hit with wealthy skiers for decades. Whether the luxury clothier can prove as popular with investors this week may depend on attracting more non-Alpine customers. Moncler, which today starts investor presentations for an initial public offering in Milan, gets about three-quarters of sales from winter apparel, a reliance that makes it a riskier investment proposition than peers like Brunello Cucinelli SpA (BC), according to Rahul Sharma, managing director of Neev Capital, a London-based consulting company.“It’s inherently risky,” Sharma said of Moncler’s dependence on cold-weather clothing. “In the summer, there’s nothing to really go into their boutiques for.”

Moncler is seeking to repeat the IPO success of Cucinelli, the maker of $3,195 cashmere cardigans, and Salvatore Ferragamo SpA (SFER), which sells $675 patent-leather platform heels. Shares in both companies have almost tripled since they were listed in Milan in 2012 and 2011, respectively, encouraging Moncler’s owners to make a second attempt at an IPO in as many years.

Moncler, which aborted its 2011 listing in favor of a sale to French private-equity firm Eurazeo SA (RF), plans to offer a 25 percent to 30 percent stake to the public, according to Chairman Remo Ruffini. The IPO may raise as much as 1 billion euros, a person familiar with the matter has said, making it Italy’s largest since Enel Green Power SpA sold 2.5 billion euros ($3.3 billion) of stock in November 2010.

Without a broader product range, Moncler may be a tougher sell than its peers. The narrowness of the brand — Moncler has sold mostly skiwear since being founded in a French Alpine town in 1952 — means there’s a greater risk of the label going out of fashion, said Luca Solca, an analyst at Exane BNP Paribas.

Lacking Identity

“If Moncler does not manage to get outside of this core category meaningfully, and continues to rely on its core product to drive growth, the consequence could be trivialization,” said Solca, who covers the European luxury-goods industry.

Ruffini is aware of the dangers. A decade ago, Moncler had slid from a maker of the must-have jacket that the chairman and his friends wore on wintry days as teenagers to a has-been label lacking an identity, he said in an interview in Paris.

He re-engineered the “piumino” jacket, originally designed for the sub-zero climes of the Himalayas, to be less bulky and collaborated with designers such as Junya Watanabe and French fashion house Balenciaga. (KER) Ruffini also added runway collections and opened Moncler shops, winning customers from the slopes of Gstaad to the streets of Ginza.

“I didn’t have a final customer in mind,” Ruffini said. “I wanted to make a jacket that was as good for a kid on a snowboard as a woman going to La Scala.”

Snakeskin Dresses

Looking ahead, the executive plans to capture a larger slice of the $101 billion designer clothing market, a strategy he said may include acquisitions. Moncler will enlarge its selection of $995 boots and $495 wool and acetate sweaters, while expanding its collection of $200 polo shirts and other summer apparel “without betraying the brand,” Ruffini said.

For spring 2014, Moncler will offer snakeskin dresses and silk jodhpurs under its Gamme Rouge line.

“Opening stores around the world and having a product that can appeal to clients in different markets helps diversify risk,” said Ruffini, who bought control of Moncler in 2003 and still owns 32 percent of the company. Eurazeo has a 32.3 percent equity interest, while Carlyle Group Inc. holds 17.8 percent.

The skiwear maker has about 100 of its own outlets and also distributes its products in department stores as well as online. It plans to open about 20 stores a year, including in Russia, the Americas and Asia, according to Ruffini.

Dilution Risk

The expansion is aimed at maintaining growth that’s outpacing rivals — even Cucinelli. Sales rose 35 percent to 489 million euros in 2012, while revenue at Florence, Italy based Cucinelli increased 15 percent to 279 million euros.

Upscale clothiers are benefiting as luxury makers from Louis Vuitton to Gucci retrench from apparel amid slowing sales. Prada SpA, (1913) whose down ski jackets were a must-have a decade ago, got 17 percent of sales from clothing in 2012 versus 20 percent in 2011. Meanwhile, high-end fashion is outperforming less-expensive alternatives, advisory services firm Bain & Co. says.

Moncler should follow Burberry Group Plc, which has diversified its product range and pricing without diluting its brand, according to Fflur Roberts, head of luxury goods at researcher Euromonitor International.

“Moving into footwear would probably be very successful or more accessories or even clothing or apparel in general,” Roberts said. Should Moncler fail to diversify “there is a risk that people will get bored of just having their jackets.”

To contact the reporter on this story: Andrew Roberts in Paris at

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (, the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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