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 9 Months 2020 Interim Management Statement Conference Call. [Operator Instructions] At this time, I would like to turn the conference over to Ms. Paola Durante. Please go ahead, madame.

Thank you. Good afternoon -- actually, good evening, everyone. Thank you for joining Moncler 9 Months 2020 Interim Management Statement Conference Call. We know today is a busy reporting day, so we will keep this call as short as possible. As usual, today, you have for Q1 and Q3, you have myself and our Chief Corporate and Supply Officer, Luciano Santel. Let me also remind that before our comments, this presentation may contain specific statements that are neither reported financial results nor other historical information. Any forward-looking statements are based on Moncler's current expectations and assumptions on future events and are subject to various risks and uncertainties that could cause actual results to differ materially from those projected or implied by these statements and from historical trends. Let me also remind you that interim results can be influenced by seasonality and cannot be used as proxy for year-end results. And that, as usual, media has been invited to participate in a listen-only mode. Let's now move to the presentation, Page 3, revenue results key highlights. I will comment only constant currency trends, if I don't say otherwise. But commenting on 9 months and Q3 results, I would like to make 3 quick comments. Even if 2020 results continue to be impacted by the COVID-19 pandemic, in Q3, we started to see clear improvements with revenues declining by 14% compared to the minus 52% in Q2. Improvements were driven particularly by the outstanding performance in China, but also Korea and the online continued to significantly outperform. The positive signs were enforced further in October even if uncertainty remains very high, while we face the most important weeks of the year, as you perfectly know. Let's move to Page 4, revenue breakdown by distribution channel. Both channels showed improved performances, thanks to store reopenings and better domestic traffic. Particularly, retail revenues declined by 18% in Q3, with Mainland China and Korea the best performing markets. Online grew sound double-digit in acceleration compared to the first 6 months of the year. Wholesale recorded a good -- very good performance in the quarter, mainly thanks to the good acceptance, a good reception of the Fall/Winter collections and the strong domestic demand in some markets, particularly in North Europe, Middle East and in APAC. E-tailers also in this channel continue to grow double-digit. Let's now move to Page 5, revenue breakdown by region. As I already highlighted before, recovery in the third quarter has been largely driven by China, followed by Korea and the Americas. China particularly showed outstanding strong, I would say, double-digit growth in Q3, recovering partially the loss of Chinese travelers. On the other side, EMEA and Italy actually and particularly continued to suffer due to the lack -- to the lower international travelers, which, as you know, are important in the third quarter. And let's go to Page 6 for a deep dive on our EMEA region. In this case, I will comment EMEA, including also Italy, as usual. In the first 9 months, EMEA reported -- including Italy, reported a 25% decline, 21% in Q3, with the wholesale outperforming retail thanks to the very good domestic demand. The retail performance on the other side has been penalized by the decline in international travelers, which, in EMEA in Q3, accounts -- in a normal year can account up to something around 70% of revenues. In Q3, we saw improved performances, particularly in Germany, Russia and in the other European markets. Going now to Page 7 and commenting on the Asia performance. You know that Asia in Moncler includes APAC, Japan and Korea. In the third quarter, Asia was down 4%, significantly less than the minus 38% we recorded in Q2, as you remember. This performance has been supported by the strong double-digit in China, but also Taiwan and Korea grew double-digit in the quarter. And this largely offset, not entirely, but largely offset the negative performance in the rest of the other APAC markets, particularly the negative -- the still negative performance in Hong Kong SAR. The positive trend in China has continued even stronger in October, boosted, as you know, by the very -- by a very good Golden week. Japan last -- finally, Japan particularly has been penalized in August and September by the challenging base of comparison. In October so far, so the first few weeks, a few days in October, we are seeing some clear improved performances. Finally, let's move to the last -- Page 8, the last region, Americas. Revenues in Americas decreased by 13% in the quarter with similar performance above -- among the 2 main markets. The trend has improved significantly during the quarter month after month, August better than July and September better than August. Retail outperformed, driven by the very solid local demand, and I would say a very good positive consumer sentiment and the strength of our brand in the market. Online also performed well, and we are very happy with the internalization of our North American online business, which occurred in October. And I leave that after Luciano to provide you with some more colors and comments on this. Finally, Page 9 of the presentation, let me comment on our store network, which at the end of September was at 217 units, 2-1-7. In the quarter, we opened 4 stores. During Q3, we have also relocated some important stores, and we have enlarged our flagship in old Bond Street that you see some features in the presentation, a very nice store even if I haven't seen it. In Q4, we expect to open 2 doors, 2 further doors to get to around 10 for the year as we were anticipating. While for next year, so far, we have secured around 15, 1-5, stores, with a large focus on Asia. I leave now the floor to Luciano to comment on some of our main strategic projects and actions to face the current scenario, and then we are open and ready for all your questions.

Thank you, Paola, and good afternoon, everybody. Okay. A quick update comment on the current situation related to the pandemic. Starting from people, you know that under the situation, people was and still is our first priority, the protection of our people, first from the health point of view. Early September, we started working again regularly in the offices for the majority of our employees. Unfortunately, right now, the situation in Italy not only is getting more and more serious. So we are planning next week, unfortunately, to get back to a higher percent of remote working. But we are getting used to work remotely and, in fact, we organized -- early in October, we held for the first time our business regional summit totally digital. Of course, we are implementing regularly testing swabs for all our people. We continue the production of surgery masks. Projects. As you know, we set priorities this year more than ever in order to select only the most important and essential projects for the business, for the brand. And one of this project, probably number one project, was and still is the in-sourcing of our e-commerce business. As expected, as we already planned, we started October 6, early October in North America, I would say with very, very good results, not only from the business point of view. Business online in North America is doing very well in October, but also we are very happy about, I mean, all the infrastructure, all the machine because you know that we started last year in Korea, but I mean a business -- e-commerce business in North America is very big and bigger than Korea. Of course, we still take under control our expenses, all the expenses. Something to add about rents, as you know -- I mean, as we already said at the end of the first half of the year, we implemented negotiation and discussions with the landlords, very tough discussions, but at the end, we reported at the end of June pretty good results. And the negotiations are going ahead with additional good results that are coming. So this is the situation right now. And I think that we are ready now to answer your question. Thank you.

Operator, you can open.

[Operator Instructions] The first question is from Susy Tibaldi with UBS.

So my first one would be on the trends by channel. I would like to dig a little bit more into what's driving the strength in the wholesale channel, and if there was any timing effect or any anticipation of deliveries from Q4 into Q3? Because I think it is quite unusual to see the wholesale outperforming retail by this extent. And especially because in the previous quarters, you had talked about being -- taking a more cautious approach to wholesale. So can you maybe discuss a bit which markets are seeing higher levels of delivery? And most importantly, are you comfortable with such levels of products in the market, given all the ongoing uncertainties? Or is this a sign that Q4 is expected to be particularly strong? And then one question on potential pent-up demand because arguably, your Q3 being weaker than peers is also due to the type of product that you sell. And as there was no tourism this summer, is it reasonable to expect that some of the sales may have shifted from Q3 to Q4 as people will buy winter jackets when it's actually cold. So I was wondering if this is something that you are witnessing, and are you expecting to see some of this pent-up demand? Or is there also an element of risk that perhaps due to lack of international travel, those customers that live in warmer climates, maybe they will not be buying these jackets this year and this year could be lost? And very, very short one on gross margin. If you can give some indication on the key moving parts relative to last year in terms of price mix, but also in terms of channel mix, given the outperformance of wholesale? And if there is any reason why gross margin will be below H2 last year?

Okay. Thank you, Susy, for your question about wholesale. Wholesale is doing well. Of course, the numbers that we report are based on deliveries, but there is not any particular shift in deliveries from Q2 to Q3. Our anticipation of Q4, honestly, wholesale is doing well. And just to make it clear, before making any comments, we still have a very, very prudent approach in all the channels, of course, but in wholesale, more than the others because we tend, as you know, to ship only product that we expect our customers can successfully sell out. So wholesale is doing well for several reasons. One is the very good acceptance of Fall/Winter collection. That is driving very good reorders, honestly. And another point is that, I mean, as compared to the retail business, the wholesale business is less -- not all the wholesale business. I mean, wholesale is a variety of different sub-channels, but normally wholesale business is less exposed to travelers, is much more local, think of Italy, Europe, Japan, even United States where the big department stores have stores in minor cities, less -- much less touched by travelers. And because the business with local is doing well, but this is another story, I mean, we are doing very well with locals in retail, too, I think that this is one reason why wholesale is doing well. And about Q4, of course, needless to say, our wholesale business in Q4 is not particularly material because you know that wholesale is a business in Q1 and Q3 mostly. But based on the current trend, I mean, we are pretty confident about our wholesale deliveries in Q4. So again, wholesale is good, very good. About your elaboration, let's say, of the current -- of the trend that we reported in Q3 and whether or not we can expect some kind of shift, if I well understand your question, from Q2 to Q4, I think you are totally right. I think you're right because, I mean, the current situation is, to some extent, increasing a little bit our seasonality. I mean people, under normal circumstances, last year, for example, started buying our product in summer, much more than what they did this year. In Q4, of course, it's still very early and premature to predict, but based on October, I mean, we have just 20 days behind us. I can tell you that October is doing very well, probably also because the weather is particularly good for our product. It is pretty cold, better than last year. But I think that -- I mean, you are right. Our, let's say, curve maybe considered a little bit shifted from Q3 to Q4. You mentioned international travelers. Of course, this is a risk by definition because we lost the vast majority of international travelers. I have to tell you, on the other hand, that the tourism outside the region -- I mean the international tourism in Q3 is much more important than in Q4. I mean, as Paola said, in Q3, travelers -- international travelers represent up to 70% number, very high. In Q4, it's the other way around. I mean, the locals are more important than international travelers. But I mean, this is a risk. I will say that, unfortunately, it's more than a risk right now than the lack of international travelers. On the other hand, another point important to highlight is that because the international business is coming in Europe, but not only, mostly from Chinese customers, we are implementing in all the regions, but specifically in China, business actions to capture these people that are not traveling any longer, what we call a new locals, by implementing activities to contact them and to call them to come to visit our stores in their local market, in this case, specifically in China Mainland. Third question is about gross margin. Gross margin in the second half of the year, honestly, more or less, should not be different from last year. One reason important, we already said that, but important to update you about the write-down of our inventory that was very heavy, very important in the first half of the year. Remember, EUR 30 million. But in the second half of the year until now -- but I mean, of course, let me cross my fingers. But based on the current visibility we have, we don't see any reason to totally write-down inventory. So without any depreciation of our inventory or extraordinary depreciation of our inventory, I think that the gross margin in the second half of the year should be in line with last year. You are right, the wholesale maybe for the year-end, a little bit better than retail, but again, we are not talking about a significant impact on gross margin.

The next question is from Louise Singlehurst with Goldman Sachs.

Just a couple of questions for me, and one following up from the prior question. Just in terms of the domestic consumer, we've obviously been hearing some fairly strong anecdotes over the last kind of 2 or 3 weeks or so. But I just wondered if you could help us, I think, Paola, you mentioned Northern Europe. You also mentioned the Middle East and APAC, obviously. But are any of the like consumer clusters turning positive towards the end of the period? And any color for October? Obviously, you said that that's generally starting well. And then my second question is just about product initiatives for Q4. We've obviously seen a delay on Genius understandably this year, but we've seen new content from Rick Owens and Jonathan Anderson coming. If you could just talk us through the pipeline for the fourth quarter, that would be really helpful.

Yes. I mean, about domestic demand, overall, I mean, in Q3 was good. I mean much better than, of course, the demand coming from tourism. September much better than July and August. So the trend was progressively improving in September, better than the 2 months before. And the exit rate was very good. In fact, as I said, October is doing now very well and much better than September. This is in all the different -- all of the different regions. Honestly, starting from, unfortunately, the weakest region now, which is Europe. But notwithstanding, Europe is suffering a lot of -- about the lack of tourism, but the local, the domestic demand is very good and is up against last year. China, needless to comment because we already said that. Korea, another market which is driven mostly by domestic demand and now more than ever because the only stores that in Korea is not doing well, not at all, unfortunately, are the duty-free stores, which are doing business only with the tourists, with the Chinese tourists. So these stores are not doing well at all. But the lack of business in these stores is offset by the other stores. So the domestic demand is doing pretty well everywhere. Japan, in Q3, the demand, I mean, which normally is mostly local demand, was not good. I mean, Japan was down in Q3. September was also negative, but there was a reason. Last year, September was particularly strong in Japan because many people, in anticipation of the VAT increase, which started October 1, Japan in September was very strong. So the base of comparison was very tough. So September, Japan was heavily negative. However, in October, when the base of comparison is much easier, Japan started again to be positive and to do pretty well. Domestic demand, U.S. was the same. I mean, U.S. in Q3, U.S. and Canada in Q3, if we take out Hawaii, and the business in Hawaii is 90% -- 80%, 90% made with customers coming from Japan, normally. This year, of course, without tourism, these stores, 2 stores, very big stores are very -- are not doing at all the business they did last year. But taking out Japan, North America overall in Q3 was pretty good. And again, most of the demand in North America is local domestic demand. About -- and other question was about Genius. I mean Genius -- I mean, we have been able so far -- and I think that there is no reason why we couldn't respect our time line, which is very, very intense, honestly, this year, notwithstanding the situation. But we have delivered with some delay only in June -- June or July, if you remember, but we were able to deliver all the collections. The most recent collections were JW Anderson...

And the Rick Owens.

Yes, JW Anderson was 10 days ago. And that today, exactly today, we delivered -- I mean delivered, I mean you can find in our stores, Rick Owens. Next will be Grenoble, and then in December, ALYX as planned, as expected. So again, notwithstanding the situation, I think that the Genius project this year is doing very well considering the situation.

The next question is from Luca Solca with Bernstein.

I was wondering about product availability. There's a possible scenario where you face in the fourth quarter significant growth from all nationalities. And you are seemingly seeing the pent-up demand and the recapture of that demand in the fourth quarter. It must be very difficult to be planning in these days. But I wonder, in case that scenario materializes, would you have enough products to be satisfying that demand trend and a positive year-on-year growth? Or would you be short of products because you haven't necessarily planned for this kind of context? As a second question, the progress you are achieving in digital in the U.S. seems to be very reassuring and potentially bringing forward a similar progress in China. I wonder where you stand in developing your digital distribution in China, and how much of an opportunity you see there. And last but not least, you have been on the forefront, inventing a new way of presenting new collections through the Genius party event. I wonder how you're thinking about making the Genius event COVID-19-compliant and possibly in the other world, generating the same amount of buzz and positive momentum for the brand.

Okay. Luca, let me, for a second, to joke about the availability of product because we strongly hope to face this problem. I think that we shouldn't have a problem, notwithstanding, as you remember, we implemented a very important [indiscernible] in our production plan. But I don't think we will face this problem seriously also because -- I mean we have implemented over the years some flexibility -- better flexibility in our supply chain that may allow us to react to the demand. Of course, not for some specific particular seasonal product, but for all the products, we have materials in-house that are most of them. I mean, if we have the fabrics and the components, we can react in a few weeks. So again, seasonally, I think that this is not a problem. And about digital, of course, I mean, we are very happy with North America, but again, not only for business because we are talking about just 15 days that are meaningless, but because when you start with the new platform, it's very difficult to protect the business because technically, behind the screen, there is a different machine. And so the fact that even with a completely different machine, we protected the traffic of our customers and the business, which is doing even better than before, makes us a very -- I mean, very satisfied. And this was a success of our team -- of our teams, I mean, in North America, in headquarter, and our people, again, that made it happened. About China -- and not only because U.S. is the first very important step, but the most important step will be next year in May when we expect May and June -- I mean, it's not well-defined yet, but when we will in-source Europe. Europe, as you know, is much more complex than North America for tax, for duty, for currencies, whatever, is much more complex. And also from the business point of view, it is by far, right now, the most important reason for the online business. After Europe and Japan, because Japan is the other reason that will start in May, June of next year, we expect for the end of second half of next year to implement our platform in China. The project -- this is a project for China has already started. It's a completely separate project because from the technology point of view, from a social point of view, from many, many different points, China requires a completely different project. And this is something the 2 separate teams of China in the headquarter are working very hard to make it happen next year. For the time being, I mean, needless to say how important is digital in China also because, I mean, it's important and it's a big opportunity because, I mean, we are doing really something more than 0, but not so much. And so we have huge opportunities. We are implementing -- I mean, we have opened the TikTok account. We are implementing shortly the mini program with the WeChat. And so I mean, the machine is moving, but I think that on one side, we are very, very weak in China from the digital point of view. But on the other side, we see really huge opportunities also because the machine is moving and the organization now is very focused on China.

The last question was on Genius evolution, but I think we will surprise them.

Yes. I mean this is something we can't -- we cannot disclose, Luca. It is something that you have to wait. And you will see something, as usual, amazing.

The next question is from Anne-Laure Bismuth with HSBC.

Yes. So I have 2 questions, please. I just want to come back to the performance in the U.S. So you flagged in the presentation that the results have been strong since August and further accelerated in September, meaning that you are back in positive territory in the U.S. Is it possible to understand the magnitude of the improvement in the U.S.? And more generally speaking, regarding your comments about the performance in October, which is very encouraging, is it back to positive territory? And finally, so I have 2 other questions, sorry. Is it possible -- is it fair to assume contribution from new space in Q3, which is a [ broad listing lock to H1 ] that is to several 3 -- or for 3 years, 6%? And my last question is about the store openings for full year 2021. So you have already secured 15 store locations, with a big focus in Asia. Is it possible to move any of your stores? Or do you plan to open there out of the 15 planned in 2021?

The first question was on the acceleration magnitude in the North America market in the quarter. Clearly, the months -- August, as I mentioned, Anne-Laure, August was better than July and September better than August, so -- but I cannot provide -- we cannot provide further comments on that. So for sure, we are happy and -- with what we have seen, but we need to wait. As we said, the most important weeks are ahead of us. So it's important to understand how the business will develop now in this following weeks. The second question, and this I leave it to you, is the new space contribution. Is it fair to assume a 6% in Q3?

Of course, Anne-Laure. I mean, we don't report these numbers. I mean, we just give a general guideline for the year normally. I think that for Q3, honestly, is an accurate -- a reasonable estimate, is a reasonable estimate, I think. And the other question was about new openings for 2021. And yes, your assumption is correct. I mean, we are opening some stores, probably more than -- for sure, more than this year in China, but there are 2 stores that I want -- I would like to mention because are 2 stores that we expect to become a flagship. One is on [indiscernible], which will be a 2-floor store, very big, very visible and what we consider a flagship. And the other one is in Chengdu, Swire, another store that will be a flagship and others, but this is the 2 most important. Also among the 15 stores, there are 2 important openings in Europe. One is Milan Galleria, which, I mean, is a project we already mentioned in the past, but we have in the next year, again, a flagship. And the second store after Barcelona in Spain, which will be Madrid. Of course, a very, very important, a very visible store in Calle Serrano. And these are the most important openings of next year. But again, in China, as I've said, we have 2 important openings and other minor, but one in -- another one in Dalian. So China, of course, is an important market also for some new openings.

I just want to come back to the performance in October, sorry. I know that the 2 most important months are ahead of you, namely November and December. But just going back on October, given the comment that you made about a very good performance, does that mean that you are already back in positive territory?

As I was saying, I was referring to U.S., but it's same event for October in general. We cannot comment on single month's performance in detail. So the signs are good, but the 15 -- the 11, sorry, weeks that we have ahead of us are very tough. And the environment overall remains very, very uncertain. So no further comments on the October. Happy, yes. We are happy, but we know that there is still 2 very important months ahead of us.

The next question is from Omar Saad with Evercore.

Congratulations on the nice results. We understand it's a very difficult operating environment. My first question, I wanted to follow-up. I believe you said tourism represents 70 -- represented 70% historically, 70% of EMEA in the third quarter. How does that evolve as we move into the fourth quarter? Is it more or less dependent than the third quarter? Or are there different call-outs as we think about the tourism effects and the lack of travel in different regions and the seasonality around that? And I'd also like to ask a question on kind of what your outlook is for the backdrop for the outer -- broader outerwear category? Do you have any insights into outdoor activities? Ski resorts, do you expect them to be open in -- the ski resorts to be open in Europe and North America and other markets where you see a lot of the winter activities that's so important to your brand?

Yes, Omar, about the tourism outside the region, the number that Paola mentioned, I mean this is associated with the summer period, with Q3 specifically, which is up to 70%, very high. But in Q4, the percent, the contribution is much lower. On the other hand, the local demand is much higher. So I mean, we have 3 months, I mean, 2.5 months ahead where the local demand is more important than the tourism outside the region. So your assumption is accurate. And about...

With respect to evolution, new results.

Yes. I mean, about the -- I mean, the Grenoble, the Grenoble line, of course, this is not only a part of our DNA, but also, I mean, you know that we have invested a lot in this line over the past few years, not only from the style point of view, but also from a technical point of view to protect and to develop more and more a very technical credibility in this field for our brand. I mean, something important to highlight about ski resort is that we are opening -- we are relocating actually shortly the store of [indiscernible] and Kitzbühel, and both locations are really amazing. A much bigger, much more visible, [indiscernible] particularly is really an amazing location. So the ski resorts are important, more, more important more than ever. And -- I mean, we keep investing because they represent also the credibility of our brand, not only for business, but also because they represented the DNA of our brand. No. Omar, I think I answered your question, but probably you asked also if they will be open, the stores for -- I mean, we hope so, of course, but I mean, the future, this year more than ever, is very uncertain. But I mean, we strongly hope so.

The next question is from Thomas Chauvet with Citi.

I have 3 questions, please. The first one on e-commerce. I know it's only 2 weeks of trading, but any lessons you can share on the internalization of e-com in Canada and the U.S.? Any difficulties on the integration? Anything that surprised you in terms of maybe a change in the merchandising mix? And are you still sticking to your schedule for next year for Europe and Asia rollout? Secondly, on the wholesale performance, I guess, within that minus 6%, you said E-tailers outperformed, I guess travel retail underperformed. And then you had positive reception of Fall/Winter and reorders from maybe some of your multi-brand retailers. Should we take that, in light of your minus, I don't know, 25% like-for-like maybe, is that a positive reception of Fall/Winter, effectively a very good indicator, you think, for the fourth quarter? Does that give you actually confidence about November, December to have seen maybe a surprisingly strong or less bad than expected performance in the wholesale channel? And finally, on the Asia growth, I'm trying to reconcile the country mix. You had China, Korea at double-digit, Taiwan positive. Is it fair to assume that Japan was down 25%, 30% in the period, and as you said, Luciano, up low single-digit maybe in October given the depressed comp?

Okay. Thomas, about your first question, e-commerce, I mean, [indiscernible] a lot, but again, honestly, it is still premature to get to significant conclusions about product mix and merchandising for the regions. That should start next year. The most important key learning again is about the capability of our organization to make it happen, which, again, is something important and something that makes us more, let's say, optimistic because, I mean, the project is still long and very complex. About wholesale...

Wholesale is -- will that be the big indicator of a good reception of our...

Yes. I mean, this is what we look at. I mean, of course, the business may be better, maybe worse. I mean, we may have the help of the climate, the weather, but at the end, what makes us confident is the results of our collection, of our product, the strength of our brand. So again, wholesale did well and better than retail. Retail is doing, in October, as we said, well. And so these are all encouraging signs for the future. As Paola said, and let me say it again, I mean, it's very difficult -- I would say that it's totally impossible to predict the future. Normally, it's impossible, and this is what I normally say in October every year, but this year more than ever. I mean, you know that the situation overall is very, very critical. We are happy, yes, we are happy because notwithstanding whatever happened in the last months and whatever may happen, hopefully not in the future, but I mean, our brand is strong, our product is good. People, when they can, come to visit our stores. And so again, overall, we are happy, yes, but without any particular indication on the aggressive expectation for the year-end also because -- I mean, results are important, but again, we look at the brand for the future, not just for this quarter. About Asia...

Japan, yes.

Yes. Overall, I mean, China Mainland are number one by far. Korea, again, as I said, as you highlighted well, very well. On the other hand, Hong Kong, a disaster. Macau, a disaster. Macau is getting a little bit better now in October, but if I have to comment that Q3, Hong Kong and Macau are disaster. Taiwan, fairly well. Japan, in September, negative. I mean double-digit negative. But again, October that -- October is positive. If I can say that it is positive also because, as I said before, the base of comparison is much, much easier. But in any event, I mean, we are very confident about the possibility, the capability, the potential of Japan. Of course, Q3 has been heavily impacted not only by the base of comparison with last year, but by the pandemic. I mean Japan, in Q3, was still in a very serious, very serious situation. So again, any expectation, any forecast is, more than ever, very, very difficult now, but what we can say for sure is that -- I mean, the signs are good. The brand is very strong and the collection, which is very important, is -- received a very good acceptance by our customers.

The next question is from [ Manu Colon ] with [ Erasmus ].

I have one, if I may. I was just thinking about the link in Q4 between winter holidays and going skiing with someone and buying Moncler, especially in Europe. I mean, I would say, the strong link, what could be the size of the impact if people can go on winter holiday due to a second wave worsening?

Sorry, your question was what's the impact if the resorts are not going to open in winter. So I mean, the resorts are open, but clearly, maybe the skis loops there will not be opened.

No, no, no.

No, no. The impact is, as Luciano was saying before, and I think maybe he was saying that the ski resorts are very important for the brand, for the strength of the brand, our DNA. So it's important. They are critical for us, but not as much in terms of contribution to business, not even in Q4. So there's no big impact if they're not going to be open. Of course, if they are open, everything helps, but otherwise, it's not going to have a big impact, if this was your question.

Yes. I was thinking about the sales in ski resort, but also just about buying a jacket before going skiing, so not only the sales in ski resorts. I was just thinking, maybe people are buying a Moncler jacket because they know they are going on winter holidays, and they might not do it if they don't. I was just thinking about the link between these 2.

You know our Grenoble collection, which is the ski collections account, we normally say single-digit of our revenues. So this is -- so of course, we have -- you can also buy products of the main collection used for skiing. This is something that can happen. But otherwise, I would say it's not going to be so -- such a big impact on our revenue. As we were saying, of course, we hope they would be open because it will be much, much better, but more for a general environment than really for a big impact or an important impact on our revenues.

Okay. And if I may squeeze in one. You said that Q4 sales from travelers were lower than Q3, so lower than 70%. But can we have an idea of the percentage in Q4?

Sorry, we couldn't really understand the question. Can you repeat because there is the line that goes -- and it's not regular. So we don't really get all your words. If you can repeat?

No, excuse me. So I was -- so you said that the travelers account for 70% of the sales in Q3 and then you said that Q4 is lower. Can we have an idea of the percentage in Q4?

Yes. Travelers in EMEA, we were specifically mentioning, not travelers overall.

I know, yes, correct, because, I mean, a travel in EMEA are very important. 70% in summer in Q3, less than 50% in Q4. I mean, in the region of 40% -- 30%, 40% in Q4 in EMEA, as Paola said, okay?

The next question is from Paola Carboni with Equita SIM.

I have a few questions. First of all, looking to the in-sourcing of your e-commerce activity now that part of the project that is already up and running in the U.S. and Canada, I was wondering whether you can share with us a bit more of color in terms of the impact this project might have in terms of profitability? And as a broader question, looking maybe to next year or whenever you will have regained 2019 revenues, would you expect profitability as well to come back to your 2019 levels? Then another question is about your marketing budget. As I presume, and I understand you are going to be more vocal with your marketing activities in the winter season. Now I was wondering how we should look at your marketing costs in the second half of the year compared to last year. Then a quick question, if you can, on the travel retail channel. Like, do you have any different thoughts now on this channel because of the situation in terms of your development strategy there? And the last one in terms of the mix of clientele you are seeing in the most recent month or so with the restart of winter sales, so that there are more, let's say, more in tune with your core offering. I was wondering if you can share with us anything about the -- I mean, the evolution of the age cluster with the current situation rather than, for example, the evolution of the price/mix with the current situation. What are you seeing in -- since the start of full winter sales?

Paola, about e-commerce, I mean, everything we said about America is important for the future. To be honest with you and even if as -- in my role, I should look as I do normally at the profitability. But right now, profitability of this channel is not on the top of our priorities. What is on the top of our priorities is to become a strong -- able and stronger in driving this complex machine from all the different points of view. And this is also the strategic reason why we decided to resource this business. This business may be profitable even more than before in theory, but everything is still now. When the machine will be up and running in all the different regions and when we will comment 1 year from now, more or less, the result of all the other regions, we may start to look also at profitability. For the time being, in our plan, we maintain the same profitability we currently have or we had before and currently have with the wind-up. But again, the strategy is -- behind this project is different. But I mean, your point is correct, but right now is, honestly, premature. About the marketing budget, second half will be lower than last year, of course. I mean, we expect for the year-end, a marketing budget in the region of 6%. Last year was 7%. And you know that -- I mean, we included in that budget also charity activities, actions we did in the first half of the year. So for sure, marketing activity this year is and will be a much, much lower than last year. You asked a question about price/mix...

Travel retail, travel development, the way we think about...

I mean, travel retail, I mean, right now is the channel which is suffering the most. I mean, with -- I mean, we still have a few stores still closed, and all of them are in airports. So one is Hong Kong, the other one is Istanbul.

[indiscernible]

Melbourne, yes, but I mean, 2 of the 3 are in the airport. And the stores in airports that are open, unfortunately, are suffering a lot. I'm thinking of Inchon, Korea and all the others. So travel retail, right now is suffering. Nevertheless, I mean, we still believe that we have a retail business. We wanted to hope that our retail business will be important again in the future. For the upcoming year, we have a project, only one. I mean, the one important is Sydney, Sydney airport, where we plan to open a store. And then we have, yes, a couple in China, in Shanghai and Guangzhou. And again, not so many, but I think that this channel, after this unfortunate situation, will be, again, a very important channel if people, as we all believe, will start again to travel and to enjoy in traveling and shopping abroad. And one question was about price/mix?

Yes. The initial indication on this for winter collections in terms of average price, customer.

Yes. I mean, we've seen some regions more than others. Some are younger customers, for example, in North America, which is encouraging, of course, because, I mean, it means that we developed a collection which is looking not only at our existing loyal clientele, but also at a younger and new customers. Price, I mean, right now, is more or less in line, but probably a little bit higher because we are selling now more outerwear. But I mean, not big differences, honestly, not at all. Yes. I mean, additionally, if we look at the retail metrics, this is very important to highlight because, I mean, all our stores, no exclusions, I mean, except China suffering of a lack of a -- I mean lower, much lower traffic. But on the other hand, we are offsetting, not completely, but in part the lack of traffic with a much higher conversion rate and with higher and increasing units per transaction. So these 2 metrics are doing well, not as much to totally offset traffic, I mean, not in Q3, of course, but again, these are very encouraging signs of the capability of our store people to convert business.

Operator, I don't know if there are follow-up or other question. I think, if any, we can get the last one.

There are no more questions registered in the queue.

Perfect. Fantastic. So thank you all for participating in this call. Clearly, as usual, myself and the IR team are here with me at your disposal if you have any follow-up for tonight or tomorrow. Also, I remind you that, I don't know if you have seen, we published today our 2021 financial calendar. So full year results -- full year '20 results are going to be published on February 18. And the silent period will start on January '20. I wish you a very good evening and speak to you very soon. Bye. Ciao.

Ladies and gentlemen, thank you for joining. The conference is now over, and you may disconnect your telephones.