Moncler S.p.A. (MONC) Earnings Call Transcript & Summary

Good evening. This is the Chorus Call conference operator. Welcome, and thank you for joining the Moncler First Half 2020 Financial Results Conference Call. [Operator Instructions] At this time, I would like to turn the conference over to Ms. Paola Durante, Strategic Planning, Intelligence and Investor Relations Director of Moncler. Please go ahead, madam.

Thank you, and good evening, everybody. Thank you for being with us tonight for our first half 2020 financial results conference call. First of all, as usual, let me introduce you to the executive team on today's call. Our Chairman and CEO, Mr. Remo Ruffini; Luciano Santel, our Chief Corporate and Supply Officer; and Roberto Eggs, our Chief Marketing and Operating Officer. Before starting the presentation, as always, I need to remind you that this presentation may contain certain statements that are neither reported financial results nor other historical information. Any forward-looking statements are based on Moncler's current expectations and projections about future events. By their nature, forward-looking statements are subject to risks, uncertainties and other factors that could cause results to differ even materially from those expressed in or implied by these statements, many of which are beyond the ability of Moncler to control or to estimate. Let me also highlight that given the nature of our business, interim results can be influenced by seasonal effects and, therefore, cannot be taken as a proxy for full year trends or results. [Operator Instructions] And finally, as usual, there are press invited in this conference in a listen-only mode. Let me now hand over to our Chairman and CEO, Mr. Remo Ruffini.

Good evening, everyone, and thank you for attending Moncler first half results conference call. Tonight, it is a bit later than usual, so I will try to be short and focused in order to leave all the time you need for questions. But given the current situation, it is important and needed to provide you with an update on our strategy. It is not easy for me commenting on our results. It is the first time since the amazing journey started that Moncler reported negative results, a direct consequence of unprecedent situation the world is facing in this month. We have learned that things might not always be planned in life and also in business. We have worked together to redefine our priorities. We have outlined what needed to be done and what could be left for tomorrow. We understood, once more, that being agile, flexible, being able to evolve continuous and, most importantly, being digital are crucial pillar of our future success. We are an agile and flexible company, and I ask my people to push this to the limits in order to cope during this difficult time, know our path to evolve continuously and to become a digital-oriented company and understood that the speed of this evolution needed to be accelerated. And I felt this had to be now or it could have been never. I truly believe that over these years, also thanks to the important partnership with WinApp, we have reached many important targets. Now I feel Moncler has to evolve. As I already told you, crisis can bring progress, but to make that happen, you need the right people in the right organization. Over these difficult months in Moncler, we have been working altogether to find how the crisis could make us stronger. So during this time, when attitudes to shopping may be changing and habits may become even more online, I felt we needed, not only an evolution, but a revolution in our digital culture. For this, we decide to create a new digital organization and to internalize the e-commerce business while working on the new website that will start to operate next year based on a complete innovative concept, designed on a totally different and personalized customer journey. Omni-channel and customer journey are important. Fantastic word, but I feel in this day maybe sometimes misused. How can we create a seamless experience for our Moncler client among all channels, among all touchpoints? How should it be different and unique? How can we create our own content using the same tools, but making them very Moncler? The answer to this critical question will define the Moncler of tomorrow, will support our success, will make us stronger. The fact that Moncler launched Moncler Fragment with a live streaming in Weibo with 32 million viewers the first day, a record number in the luxury has made me even more convinced that our house has a robust foundation. We need now to build more floor. I have spent most of my time during this month trying to understand the sector evolution and working to ensure that Moncler can be a leader in it. This pandemic might change people, might change attitude, might change customer behaviors, but the desire for beauty and uniqueness will never change. What thing might change is how and where people will expect to find this inner beauty. Our clients always have to feel unique with interacting with [indiscernible] any place they are. [Audio Gap] any touchpoint, our [ unique ] experience has to support it. Our innovations capacities to provide the tools. Our clienteling has to make all our existing and prospective clients feeling part of a unique experience of the Moncler world, also being able to use the big data in a smart way. I know that I demand a lot. We set challenging targets. We want to double the weight of the online business over in the next 3 years. Challenging, but I feel achievable because we are creating the right team with them. The next months [Audio Gap] the result will be impacted by the pandemic. But if I look at Moncler in 2022, I see a company bigger, stronger and able to create something even more unique. Now let me leave the floor to Roberto and Luciano for more comments on our results. Thank you very much.

Thank you, Remo. Let me bring you -- I'm Roberto Eggs, let me bring you to the results, the revenue breakdown by region, will comment further results along the presentation. This is on Page 5. the result of the first semester of 2020, globally, we reached EUR 403.3 million, which is a 29% decrease compared to H1 2019 with a stronger decrease in Q2 linked, as we will see later on the fact that we had most of our store -- more than half of our store closed during the second quarter. Results in the first half have been severally impacted by the measure adopted by the different governments worldwide to limit the COVID-19 pandemic. Italy recorded a 39% decline, particular in Q2. Retail underperformed to store closure and the lack of traffic, especially on the travel retail side. EMEA results were slightly better with revenue decreased by 23%, especially with Germany, Scandinavia, and would like to add Switzerland, that outperformed in Q2. Asia and Rest of the World reported a 27% decline in H1. In Q2, Japan, Hong Kong and also Macau underperformed compared to the rest of the region, while Mainland China reported a double-digit growth, especially the month of June was good and very good in China. In Korea, the group performance remains solid during the quarter and since beginning of the year. Americas reported a 41% decline with similar results, both in Canada and U.S. and in both channels, here, also, with a strong improvement in -- during the month of June. Let me bring you to the following chart on Page 6, where we have the revenue breakdown by distribution channel. We passed the mark of EUR 100 million for the wholesale business, which reported a decline of 21% during the first half of the year while retail declined by 32% during the first semester, with the Q2 at minus 57%. This is, of course, as I was mentioning, incorporating the effect of more than half of the network being closed for around 2 months, mainly in April and May. The comp store growth was down 38%, while online outperformed with double-digit growth during the first semester. Let me bring you to Page 7 with the mono-brand store network evolution. We reached 213 stores at the end of the semester. We started the year with 209. We had one closure that was already planned for Italy with the closure of our Enfant store in Spiga. This was something that was planned and as well as the doubling of the space that we have in Esentai or compensating for the closure of the dedicated store in Spiga. We had also the opening of new country, this was during the first quarter with SiS. And just now recently, we opened early July a store -- a beautiful store in Capri. Regarding Asia, we had one closure in Hong Kong, that was also planned. It was the end of the lease that we didn't renew in Lee Garden. While the increase you see on the U.S. market is driven by conversion of offering through shop-in-the-shop that we have in wholesale that are in our retail stores in Calgary, Vancouver and Toronto as well as the opening of one retail store in Valley Fair with Bloomingdale's on the one floor at the entrance of the department store. Regarding the rest of the year, we have, in total, 10 openings that are planned. I will just mention 2 that are more important for me than others. One is opening of a new country with a retail approach, which is Barcelona. This is meant to be also at the end of the year, probably in December, as well as the -- our flagship store in Paris on the Champs-Élysées between Vuitton and Dior. I would like to mention also one relocation that we had early June, which is a relocation in [indiscernible] [ Haussmann ] because it's the first time that we have been able to open a ground-floor location in a European department store. This will be followed during the months of August with an opening with the KaDeWe Group in Alsterhaus in Hamburg. We will have also there a beautiful store on the ground floor. By the way, also, KaDeWe is going to be the group, who was one of the last important group department store where we were with a wholesale model that we will transform and convert into concession during the summer. So we plan to have 2 stores opening half the house in concession and convert a store we have in KaDeWe Berlin in concession as well as an opening and conversion in other [ openings ] in Munich. Regarding wholesale mono-brand, we are now at 63. You see 1 decrease. This is mainly due to the fact that we had this 4 conversion on the Canadian markets. But in the meantime, we also had some new openings. One is the Airport of Taipei, terminal 2. We opened also with DFS in Cairns, Australia and an opening of a dedicated shop-in-the-shop for the Enfant in Moscow [indiscernible]. We move to the following page where I'll let you go through the detailed analysis of the impact of the COVID that we are reporting. I will just go through the main headlines. February, we had 5 store closed that were all located in China. In March, the number of closure went up to 111, as you see Italy and all Europe was closed as well as Americas and some selected closure in China and in Hong Kong. In April, we had 123 closures. Again, Italy was still completely closed, and we start with few reopenings in Europe. Japan and Singapore at the time became closed as well as the store in Americas. May was the month where we had more openings, more than 80 stores we opened. In Italy, some stores were still closed, but the majority was reopened as well as France. Japan also reopened in the months, Canada and a few store in the U.S. U.K. reopened only in the months of June. At the end of the month, we still have 9 stores that are closed, 3 in Italy. These are the stores that are in the airport, from Fiumicino, Malpensa that are now opened and a store in Padua. We have 3 other stores in Europe in Istanbul, Saint-Germain and in Printemps Louvre in Paris. And the last one that we are still closed in U.S. was San Francisco, Atlanta and Costa Mesa, and all the stores are now open. Regarding the action that were taken during the last few months, there was a strong effort that was done in terms of communication to refocus digitally in terms of communication on the values of Moncler that we started communicating last year. There was also a fantastic event that Remo just mentioned with Weibo in China, our first digital event with the launch of one of the collection of Genius, the one we fragment with Hiroshi Fujiwara, that drove more than 32 million views. This is now still the record for luxury brands on Weibo. And regarding clients, we implemented a project that we call new locals. This is our way to reactivate or activate travel retailers when they are traveling around the world. And the fact that now with the pandemic, they cannot travel anymore. So we have a strong project to reactivate them. So Mainland China and in Europe to activate these people that are used to buy aboard to try to convert them and bring them buying into their country of origin. I think we can move to the next 2 picture. One I wanted to mention is an opening that took place during the quarter in Wuxi Center in China is in Center 66, this is part of the Plaza 66 group in China and another opening that took place just at the end of June. We cheat a little bit because I think it was early July, but I wanted to show you that the store is really beautiful, and this is the smallest but probably the cutest store that we have and it opened in Capri. I pass the word to Luciano.

Okay. Thank you. Thank you, Roberto, and good afternoon, everybody. Thank you for attending our call today. We are now at Page 12, where we report income statement. And just technical information to start. We report for the first time the full set of results under IFRS 16 only. And we also report our stock-based compensation that we used to report separately in a separate line, now it is embedded in each item in each line of the income statement, selling and G&A, respectively. We also report on the side of the chart an explanation and the indication of the amount of both of the stock-based compensation this year and last year and the impact on our operating margin of the IFRS 16 application. So let's start with the business results, top line of EUR 403 million, down 29%, already fully explained by Roberto. Gross margin, 69.3%, down against the 76.07% we reported in the first half of last year. The decrease of gross margin was totally due to an extraordinary write-down of inventory for about EUR 30 million, additional write-down because we normally include in our cost of goods sold, let's say, physiological write-down that in the first half of this year was about EUR 80 million. But on the top of the EUR 80 million, we provided for additional EUR 30 million mostly allocated to the current Spring/Summer 2020 collection. Because, as you know, as you may remember, I mean we already discussed the last time we met after the lockdown -- during the lockdown, we immediately took action to cut our production plan for the Fall/Winter season. But for the Spring/Summer season, the 95% of our production was already completed. And so again, we took actions also to carry over some items from Summer '20 to Summer '21. So a very surgery activity, very complex activity implemented by our merchandising team, together with product development, supply chain that mitigated significantly the impact of the leftover. But again, EUR 30 million is the last number that came out and that was included in the cost of goods sold and, consequently, impacted gross margin. Selling are lower than last year in our share value today. But of course, the percent is higher due to the fixed cost portion of our retail business mostly and mainly rents, even though we also on this specific item of rents, we immediately implemented that. Also, we opened discussion table to renegotiate our rents, our leases with the landlords. Results are fairly good, honestly. Honestly, also less than what we already planned, but this cash has been very tough. And honestly, I would say that at the end, we got some good results. Second important fixed cost is D&A, depreciation and amortization, that where definition is fixed, but this year is even higher than last year due to the important CapEx we have implemented over the past few years. Honestly, we didn't say that much on the payroll item because, as you know, as we said many times, we set as a priority the protection of our people. First, from the health point of view during the lockdown, but second, also from the economical point of view. In fact, you may remember, we paid them 100% of their compensation, even during the lockdown even when the stores were closed. So overall, a fairly good result, considering the situation. G&A more or less the same-store. G&A are lower than last year, but still on a percentage basis higher also because, I mean, as you know, we have invested a lot over the past few years in our organization and, last but not the least, because this is part of our communication today, in the digital part -- in the digital department of our organization also in view of the sourcing of the online business. Marketing, important to highlight that we included in the marketing expenses, if you want, inappropriately, but this is accounting principle. The -- over EUR 10 million, almost EUR 11 million charity, we did for the city of Milan. Without that EUR 10 million and over EUR 1 million charity, marketing would have been more or less in line with the first half of last year. For the year-end, on marketing, last year, you see in the chart, we reported a 7% for this year, we expect a number that will be closer to 6%. At the end, operating margin EBIT, EUR 35 million negative. But let me say that without the EUR 30 million plus EUR 10 million, over EUR 40 million extraordinary items that would have been slightly positive. Financial, EUR 11 million for the vast majority due to the lease liabilities. Tax rate of 32% positive, of course, because we take advantage of the tax credit, and at the end, the net results are negative EUR 31.6 million. As you may see, we don't report EBITDA. We decided not to report EBITDA any longer because under the new IFRS 16, EBITDA is not a metric we use as management team, and we don't believe EBITDA is meaningful metric any longer. But for your information, we reported Page 19 of the appendix, the reconciliation between EBIT-reported and EBITDA-adjusted before the application of IFRS 16. Okay. We can move now to Page 13, where we report the CapEx, EUR 36.7 million against the EUR 41 million last year. But with a plan, a revised plan, for the year-end to spend much more than last year. Honestly, we expect about EUR 90 million, EUR 91 million.

It's less.

Much less.

This is much more.

Sorry, much less capacity to spend about EUR 90 million, EUR 91 million last year. As you can see, we spent EUR 120 million, EUR 121 million. This decision was made after the pandemic problem. We decided to cut our CapEx of about 30%. The CapEx we spent in the first half are more or less equally distributed between retail network and infrastructure and mostly information technology logistics and, last but not least, again, the CapEx, information technology platform spent for our online business, the resources -- using of the online business. Okay. Let's go now to Page 14, where we report net working capital, which is fairly good, 6.8% as compared to 5.5% last year, not bad. Credit, I will say, pretty good, pretty well under control, even though, of course, much higher if you consider that EUR 267 million are net of the EUR 30 million additional write-down we talked about before. So inventory problem pretty, pretty important in this period. Let's move to Page 15, a net financial position of EUR 595 million positive, excluding these liabilities, EUR 200 million better than 1 year ago. Of course, in part, thanks to the nondistribution of dividends because, as you know, we decided not to distribute dividends this year. Let's move now to Page 16, balance sheet. Nothing to say, unless you have question. Cash flow statement. Page 17, we changed a little bit the format of the cash flow statement. We start now as a first line from EBIT. Of course, we had D&A, the other location adjustment that are related to stock-based compensation, the IFRS impact. And all the other lines, I mean, we already discussed about with the only exception of a change in other assets, which is negative. Much higher than last year, mostly due to the tax credit we reported in the jurisdictions where we reported a tax loss. Again, free cash flow, of course, EUR 74 million negative as compared to EUR 71 million positive last year. And net cash flow impact mitigated by the fact, as I said before, that we didn't distribute dividends this year. Okay. So we are done with the presentation now, and we are open to answer your questions. Thank you.

[Operator Instructions] The first question is from Anne-Laure Bismuth with HSBC.

So I will stick to one question. So regarding the performance in retail, which was down 32%, and given the fact that retail like-for-like was down 38%, it will imply the other contribution from this space of 6%, but given the fact that your new 4 stores in Q1, the contribution should be less significant. You should just clarify this point and also help us to understand what we should expect in terms of contribution from new space for full year.

Okay. Thank you, Anna, for your question. I mean you're right, more or less, the space contribution was 6%. Of course, first half for a couple of reasons included seasonality. Not only the breakdown is not a meaningful 100% for the second half of the year, it should be higher, the space contribution, so we stand with our overall guideline of about 8% for the year-end.

The next question is from Elena Mariani with Morgan Stanley.

I will speak to one question as well. Would it be possible for you to elaborate on your exit rate? And on the trends you have observed in recent weeks globally and perhaps with a stronger focus on Mainland China? I just would like to know how, in your opinion, we should think about Q3 and Q4 and whether it makes sense to assume that your sales will most likely remain in negative territory until the end of the year, given the lack of tourist flows. I mean I know it's difficult to tell, but perhaps your feeling based on how you've seen the business evolving. And if this is a good assessment, also how we should think about the evolution of gross margin and OpEx, taking into account the write-down you recorded in inventory and also your expectation on the evolution of the cost base?

Elena, it's Roberto. You started well, but you ended with 2 questions at the end as usual. But certainly let me -- let's say, it's one question each between myself and Luciano. As you know, we do not comment results on a monthly basis, but I can give you maybe some flavor on how we have seen the evolution during the quarter 2. Of course, the worst months in the last quarter was April -- well, most of our stores were closed, and then gradually we reopened. So what we have seen is an improvement of the performance in all the region. Some are more affected than others and some are exiting from the crisis in a faster way. China, that was locked down in March and it was gradually reopened in April, did well. It was a double-digit growth, and we have seen an acceleration on the Chinese market. In April, May and June was, by far, the best months with a strong double-digit growth, also helped by the program that we had with -- as I was mentioning, the new local so driving -- to drive the sales of travelers that are usually buying growth into the Chinese market. Korea did well and was not -- never really completely closed, so we have been continuously operating there. And despite the fact that 1/3 of the business now, it's duty-free business. We have been registering positive. The semester was positive for the Korean market. Japan had also a recovery, but a little bit slower than the Korean market. Americas, different problems. We started by the lockdown, as you know, and then we had some riots where we had 9 stores that were closed, 3 of them really damaged and took us 2 to 3 weeks to have them being reopening again. But I must say that the exit of the month of June in the start, and we are now on the same trend was pretty good so very encouraging so a faster recovery than what we have been experiencing in Europe. In Europe, we said the northern part of Europe with Scandinavia, with Switzerland, with Germany, with Austria, to a lesser extent because there is still a strong aspect of travel retail in Austria but have been doing fine. Germany was even positive in the last 2 months. While the southern part of Europe is suffering more, especially the -- I must say the 2 cities that are the most effective are Milano and Paris that are heavily dependent from travel retail. Now to give you a flavor for the end of the year, I think it's really difficult because everything will depend on the recovery of the travel retail that, honestly, for the long haul, we don't expect to have in the course of 2020, but probably more a gradual improvement throughout the beginning of 2021. While we expect probably a little bit of what we call the travelers, but are the local travelers. So the German traveling to Paris, the German traveling to Italy and so on so or the Chinese starting to travel to Korea and to Japan is we see more opportunities for this business to restart and everything will be linked to the restart of the locals. I think one of the travelers -- sorry, one thing that you need to bear in mind is that globally, semester 1 for Moncler accounts usually around 30 -- 34% to 35%. So 2/3 of the year is in front -- of the result of the year is in front of us. And usually, what we have towards the end of the year, the last quarter, is a predominance of local buyers compared to travelers. So travelers are very strong in Q2 and Q3, to a lesser extent. So we are less relying on travelers in Q4.

Elena, and about your question on profitability on gross margin. Gross margin in first half of the year, as you said, was heavily impacted by the additional extraordinary EUR 30 million write-down based on the visibility we have now and consider that, as we said before, we took limited actions to cut our production plan for the current Fall/Winter season. We don't expect now any additional need to write-down inventory in the second half of the year. Having said that and considering at the first half of the year sales represent about 1/3 of the total, the impact on gross margin for the year-end should be significantly lower and mitigated because the EUR 30 million should not be higher and the sales should be much higher. About operating margins, you know that, I mean, our sales, as I just said, in the first half, represent 1/3 of the total, but our OpEx represent much, much more, less than 50%. But again, the weight of our organization overall is much higher because it's not available, it's mostly fixed. Having said that and based again on our current visibility, also operating margins because of the impact of OpEx should be better, of course, much better in the second half. I can't tell you any number. But of course, this is the thinking process in our mind.

Operator. Sorry, I'll just take a question from the web. Julian is asking, can you please explain what are the incremental costs related to the digital internalization, both CapEx and OpEx? And how will you manage to minimize this option risks? So I leave it to Luciano, I think.

Okay. So I'll take the first part of the question. I mean the CapEx is something we said in the past, and we confirm that we are spending for the new online platform about EUR 15 million, 1-5, excluding the second phase of the project that will be implemented next year that relates to China Mainland because all the world where we have the online business will be under the Salesforce platform. And the cost altogether, not only Salesforce, of course, reported in our CapEx is EUR 50 million. Of course, we started to spend last year. We have spent a lot -- reported a lot of this EUR 50 million last year, another important portion this year. And the last part of this CapEx next year. About OpEx. OpEx -- available OpEx are consequent to the concession fee we will pay for Salesforce, but the majority of OpEx will relate to the organization we just discussed about before because, of course, we have been building this organization starting last year, even in 2018. And of course, the cost of this organization is quite important. We never disclosed any number, but it is quite important. Having said that, of course, we aim and we plan to maintain and to protect the online business profitability we have now. Of course, the most important reason why we source this business is not profits -- to further increase profits that are already very good, but to take advantage of the huge opportunities we see in this channel. Roberto?

Okay. And the minimization of the disruption risk let me say that we started this project with a pilot on the Korean market already more than 1 year ago because the kickoff of the e-commerce on Korea took place at the beginning of June 2019, based on exactly the same weeks as the website that we are -- in the other country. I remind you that Korea was not part of the deal we had with YOOX Net-a-Porter. So we were free to launch this market and operated ourselves, so it has been now 1 year of test that we have been doing. We have then been discussing, assessing the possibility to further develop the culture internally. And we have been investing both in terms of supply chain, but also in terms of talents that we have recruited. We are now in place -- we are putting in place a new digital organization within Moncler that we'll cover. At the same time, the digital part, the engagement and all the transformation parts, so including also the part related to innovation and the CRM part as well as the social media. And we are now pretty confident that we have the setup that is ready. So we have now been working on the plan to internalize the e-commerce part. And basically, we have 2 streams that are running in parallel. One is the internalization that we start with the U.S. and Canadian market by October this year. This is the agreement that we have. So we will start moving and internalizing the immigration with a go-live that is expected to start at the beginning of Q4. In parallel, we have already started a phase of design of the MR market that is by far the more complex because we are in more than 30 countries with different VAT level, and we want to be able to provide a full omnichannel service from the beginning. So here we plan to -- we have already started and put the team in place for the EMEA, then that will be followed by Japan. And at the end, the launch of the Chinese market that is requiring a specific organization that will be locally -- that will be located in Shanghai that will be working in strong connection here with the [ HQ ]. In parallel, there is another stream that is started already at the end of last year, which is the new UX we designed. So the new website we designed that we want -- where we want to bring a little bit of the, let's say, the fare of the entertainment industry and also give more [ freedom ] in the way you navigate throughout the website. And this is running in parallel with the objective there to launch this new website by the end of the H1 2021, beginning of H2 2021.

The next question is from Thomas Chauvet with Citi.

I have just a quick follow-up question for Roberto on e-commerce and then a question on Genius. Just, Roberto, on the press release you made earlier, you said you expect the share of e-commerce to double in 3 years. Do you mean direct e-commerce, which I think is around 5% of your sales or your total online business with the third parties?

If you want me to answer to the first part, yes, we mean the full business. This is both what we are managing directly that we will be managing directly through our own website, through own e-commerce and also the one that we have through the e-retailers and the different partnerships now with department store and other websites that are selling Moncler. So basically, we want to move from 10% to roughly double the weight, so 20% by 2023.

Okay. And my main question is on Genius. Have you made any major change in recent weeks, months to the timing or the depth of the collaboration plan for the rest of the year? And within your EUR 30 million of inventory write-down, was this relatively broad-based across Genius and the Moncler collection through the respective share of each business or was there a bigger weight maybe for Genius within that write-down?

No. Regarding Genius, yes, we had to review the calendar of the different launches linked to the fact that at a given point in time. As you know, our reason is more or less one launch per month. And when we had 2/3 of our network that was closed, obviously we decided to postpone the launch because the way we leverage Genius is not only online or digitally, but it's always a combination with the omnichannel between the retail store and the online store. So we had a month we thought we got launch, and now we are -- we have restarted with Fragment also in terms of base of comparison. The month of June last year, we had a strong launch with Palm Angels, and we didn't have any this year. So there will be a little bit more launches in the last 4 months of the year linked to this pandemic issue and the fact that we had the lockdown in most of the country. There is no more write-down on Genius than in the past, it is something that is similar. And for the launch of Fragment, we haven't seen a difference in terms of, let's say, weight of the sales. Also driven by the fact that Japan and China and Korea were back to normal. Of course, a little bit of an impact in Europe because in Europe, when we sell, we sell both to local clients, but also to travelers that were not present.

The next question is from Susy Tibaldi with UBS.

So given that Q3 is your most important quarter for the wholesale channel. I just wanted to check what are your expectations there, given your current quarter visibility.

Just let me reexplain which quarter is important for which channel. Q3 is usually the month -- the quarter, where we do the results of the wholesale part because it's where we are shipping the Fall/Winter season. So this is something that has started. That is obviously made a little bit difficult in some of the areas like the U.S. by the fact that the department stores are under pressure, but with most of them, we have find an agreement and a coverage that is ensuring that we can continue -- to have business continuity with them. Then Q4 is the quarter of the retail. Q3 for the retail is a little bit more important than Q2, more or less at the same magnitude of Q1. So it's important, but not as important of the last quarter where we do 45% of the sales. So the efforts that we have in terms of product launch and so on are really concentrated in the last 4 months of the year regarding Genius. And of course, we have now started to sell the Fall/Winter season. The decision we have been taking in discussion with the wholesale partner that we have and with our region was to extend the presence of the Spring/Summer season a little bit longer to give opportunity to our consumer to buy to our clients because, of course, with the 2 months of closure that didn't really have the time. So we have now in July, a month where we are selling still something very balanced between the Fall/Winter and Spring/Summer while last year, we were already selling at 70% of Fall/Winter. So -- but this will be back to normal. We have a catch-up in terms of Fall/Winter distribution. And by beginning of August, we will be back to comparable figures and number compared to 2019.

The next question is from Luca Solca with Bernstein.

Yes. If I may, I would like to ask you a question on like-for-like, calculated differently. If we are to compare oranges to oranges, we need to consider that many of the stores were actually closed during the first half. What would be the like-for-like growth number if you just took sales of the stores in existence last year for the days that they were opened this year, year-on-year?

Yes. Luca, I mean, of course, it's difficult to give you a precise answer. What I can tell you -- what we can tell you is that, of course, the result would have been better. But to be honest, with you after we reopened the stores, if I look at June, I mean, as we said before, as Roberto said, June, of course, was better, much better than May and even better than April. But still with a very low traffic in some regions, not in all of them, because China very well, I mean, everything that we said before, but still on an aggregate basis, June was still a negative comp.

Luca, let me give you some additional flavor that will not completely answer to your question, but the effect of the pandemic is not only, as you know, on the fact that the store is open or not. It's linked to the fact that there is confidence for the consumer to go back and buy. There is also the fact that the travelers are not trolling anymore and they are buying more locally. This is an example. I'll give you -- 2 examples, China with very strong months of June, very strong double digit. If we had to calculate the comp sales there, it will be also -- it has the positive effect of the pandemic and not having people traveling. So there, we have had the sales density that is higher than last year. Similar to the Swiss market where the Swiss were also used to buy and go abroad to buy, and they are now staying. So the results we are currently having on the retail store in the ski resort are really excellent. We are doing figures that are similar to what we do usually in the winter season, and we have to ship more product to the -- what we call internally the ski resort of [indiscernible] in the summer. Some others are completely affected by the fact that there is a lack of travelers. And as I was mentioning, if you look at the like-for-like for Paris and for Milano, it's really, really negative.