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 2024 Interim Management Statement Conference Call. [Operator Instructions] At this time, I would like to turn the conference over to Ms. Elena Mariani, Strategic Planning and Investor Relations Director of Moncler. Please go ahead, madam.

Thank you, operator, and thank you all for joining our call today. The Interim Management Statement Call is hosted by Luciano Santel, Chief Corporate and Supply Officer; and by myself. I will start providing a brief overview of our results and then Luciano and I will be happy to take your questions. Before starting, 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 group 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 the group to control or 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. Finally, I remind you that the press has been invited to participate to this conference in a listen-only mode. Let's now move directly to Page 3, where we briefly comment the group 9-month revenue development, focusing on growth at constant FX. In the first 9 months of the year, the group generated EUR 1.87 billion of revenues, up 6% year-on-year, with Q3 at EUR 636 million, down 3%. The Moncler brand was up 8% at constant FX in the first 9 months and down 3% in Q3, which remains the largest wholesale quarter in the year, so the one with the channel mix mostly skewed towards wholesale. Stone Island revenues were down 5% at constant FX in the first 9 months and down 4% in Q3, with a strong double-digit positive DTC and a negative wholesale channel as our focus remains on elevating the quality of our distribution network. Now moving to Page 4 of the presentation. I would like to highlight some key Moncler brand initiatives launched during the course of the third quarter? First, the collaboration with LoveFrom, which marked the first ever outdoor product creation by Sir Jony Ive, the historical Apple designer. We're very proud to have worked with him, a true design legend, and the products have been extremely well received, particularly in the U.S. The collection included 3 very sophisticated shell jackets that connect to a central Moncore down jacket with the help of a magnetic button, the symbol of the collaboration, which you can see in the picture. Secondly, the launch of the Fall/Winter 2024 Moncler Collection accompanied by a very strong campaign shot in Paris. The products, the fabrics, the textures are bringing a clear sense of sophistication, capturing the essence of Moncler's wide range of timeless offerings. Moving on to Page 5, let's focus also on Moncler Grenoble as we always try to balance the 3 dimensions of the brand. As you might recall, Moncler Grenoble is now an all-year-round dimension. In fact, this year, we launched our second Pre-Fall Collection inspired by outdoor lifestyle trekking and hiking activities. Finally, we launched the first Eyewear Collection for Fall/Winter '24 under the exclusive licensing agreement with EssilorLuxottica which we had signed in November 2023. This partnership, as you might remember, encompasses the design, production and global distribution of Moncler eyewear. So this is the first of many future launches in partnership with them. Moving on to Stone Island on Page 6. Let me highlight a couple of important initiatives launched in Q3. First, we unveiled the next chapter of the community as a form of research project as distinctive members from the Stone Island Global Community were captured in archival icons and signature items from the new Fall/Winter collection. In the new campaign, we featured personalities from the worlds of music, entertainment, sports and art, including Liam Gallagher, Philippe Starck and even Peggy Gou, our first-ever female ambassador. We're very happy about this campaign that has been enhancing the brand's visibility globally. Secondly, over summer, we introduced the new Stone Island website, fully aligned with the brand DNA and its philosophy. The site was entirely rebuilt to create a truly authentic Stone Island experience, and all the technical capabilities and operations were brought in-house. So all the aspects of our e-commerce business are now fully internalized in line with our ongoing efforts to take control of our distribution channels. Now let's focus on revenues, starting with the Moncler brand on Page 7, where we analyze the performance by region. The first consideration is that in all the 3 geographies, the DTC channel continued to outperform the wholesale channel. So this is true for Asia, EMEA and also Americas. Starting with Asia that, as you know, includes APAC, Korea and Japan. Revenues in this region decreased by 2% in Q3 due to more challenging macro conditions affecting consumer confidence in the whole region and also a normalization of tourist flows into Japan following the appreciation of the local currency. In EMEA, revenues were down 3% in Q3, mainly due to a decline in the wholesale channel. The DTC channel instead remained in positive territory, but it was impacted by a sequential deceleration in tourist inflows into the region and also by a weak direct online channel. And finally, the Americas region was down 6% in Q3, where the sequentially weaker performance compared to Q2 was entirely due to the wholesale channel, while DTC trends remained broadly aligned with what experienced in the previous quarter. So moving on to the revenues by channel on Page 8. The DTC channel in Q3 was flat year-on-year, impacted by more difficult macro conditions that affected consumer confidence in several markets, but also impacted by a relatively weak performance of the direct online channel, which underperformed the physical retail channel in all regions. The Wholesale channel instead was down 9% in the quarter, with Americas being the weakest region. Here, revenues were impacted by challenging market trends in the wholesale channel, but also even more importantly, by the ongoing efforts to upgrade the quality of our distribution network. I also wanted to stress that the guidance for the year in terms of development of the wholesale channel is unchanged. We continue to expect for the Moncler brand a decline of the wholesale channel in the region of high single digits, somewhere between minus 8% and minus 9% at constant FX. And as mentioned earlier, Q3 is still the most significant wholesale quarter in the year. So the quarter where the share of wholesale is the largest. However, if you look at the big picture and at the development of the channel mix for Moncler, you can notice that compared to last year, in the first 9 months, we have gained further 3 percentage points in the mix in favor of DTC, and we expect the positive channel mix to continue. Now moving on to Stone Island regional trends on Page 9. You can see that Asia revenues grew by 17% in Q3, driven by a continued strong performance of Japan, boosted in particular by local consumption. When looking at Korea trends improved compared to Q2 but remained relatively soft. And finally, China and the rest of APAC slowed down sequentially due to a more difficult macro backdrop. EMEA revenues were down 6% in the quarter, but this marks a very different performance of the 2 channels. DTC continued on a very solid double-digit growth trajectory, while the wholesale channel declined due to the actions taken to improve the quality of our distribution. And same for Americas, which saw a decline of 28% in Q3. The positive performance of DTC, which accelerated sequentially compared to Q2, was more than offset by the ongoing decline in the wholesale channel. Looking at trends by channel on Page 10, you can see more clearly the different development of wholesale versus DTC. In Q3, DTC was up 28% for Stone, with revenues up double digits in all regions, with Asia outperforming in particular. Wholesale instead was down 19% in the quarter, negative in all regions and impacted both by the still difficult market trends in this channel, but also even more importantly, by the very strict volume control, which we adopt to continuously improve the quality of the network. Also for Stone Island, the guidance for the year in terms of development of this channel is unchanged. We continue to expect a high-teens decline in wholesale revenues for fiscal year '24, just a touch less than minus 20% at constant FX. And let me take one second to highlight also for Stone Island, the ongoing evolution of the channel mix with DTC now accounting for 46% of revenues, gaining more than 10 percentage points, compared to the first 9 months of last year. Finally, let's briefly examine our store network on Page 11. At the end of September, the Moncler U.S. store network reached 285 units, a net increase of 8 units compared to the end of June, including the opening of Suzhou Matro and Wuhan [ SKP ] in China as well as the relocation of our Royal Hawaiian store in Honolulu. And for these last 2, you can see some beautiful pictures on Page 12 and 13. The Stone Island network instead counts 91 stores. And this quarter, we would highlight, in particular, the opening of the Shanghai Taikoo Li QianTan store for which you can see some pictures on Page 14. I'm going to stop here now, and I will hand over to the operator for your questions. [Operator Instructions] Operator , feel free to open the line Thank you.

[Operator Instructions] The first question is from Melania Grippo of BNP Paribas.

This is Melania Grippo from BNP Paribas. I've got 2 questions. The first question, you reported flattish trends in retail. I was wondering if you could tell us what do you see after the start of Q4 in terms of current trading? And my second question is on the Chinese Mainland China. How has the Chinese cluster down in Q3 and also Mainland China?

Melania, thank you for your question. About the trend of our DTC channel in Q3. I mean we reported a flat result that honestly, of course, is quite disappointing. And it's due to a -- I mean, in the month of July that was, let me say, not bad, substantially in line with the second quarter, but the business started to deteriorate, significantly deteriorated by the end of July. And the deterioration continued through the month of August and September. September, a little a bit better, but only because of comparison with last year was easier. But again, in all the different regions, the business was not particularly strong. The only exception, important to comment was Japan. Japan was positive, but it was much better in July, quite strong in July, good in August, but much, much less in September because the price gap that was about 5% in July and the beginning of August due to the revaluation of the Japanese yen became flat. So in September and right now there is no price gap between Japan and China. And of course, this made less convenient shopping in Japan, than before -- than in July. Talking about the current trend, of course, there are no significant comments, honestly. And -- because there are no significant variation as compared to Q3. The only comment I think is important to make is about China, the Golden Week, the very first week of October that was good and better than last year. Of course, we were talking about 1 week after -- 1 week out of the 30 weeks of the quarter, so totally meaningless from the business point of view, but again, quite important for us because it's, once again, demonstration that our brand in China is very, very strong. And talking about China specifically, business in China in the quarter was slightly negative, honestly, not that much, but the Chinese cluster was positive. So Chinese cluster grew in Q3, was not as much as in the previous quarter, but it was positive, thanks to customers -- Chinese customers shopping in all the different regions including Japan, as I said before, and contributing to the good performance of Japan, mostly in July and August, but not only Japan, also Korea and also Europe, less than what we expected, less than what we hoped after the very strong performance of Chinese customers in Europe in Q1, but better than last year. So overall, Chinese cluster fairly good.

The next question is from Chris Huang, UBS.

It's Chris from UBS. I have 2, please. The first one, just to come back on the comment you made on the Chinese cluster. If I got it correctly, your comment was that the Chinese cluster globally was still positive, still growing in Q3. So my first question would be and how about the other clusters, excluding the Chinese. Because if I looked at my model, it's kind of suggest that the other clusters are probably in negative territory? And can you kind of help us understand which kind of clusters slow the most? Is in the Europeans or the Americans? That's my first question. And then secondly, I know you don't like to comment on a quarterly basis the breakdown between like-for-like and space. But if I looked at the retail store network of your Moncler brand, it seems like this pace of opening picked up a little bit in Q3 compared to H1, especially in Asia. So are there any maybe qualitative color you can give around the kind of like-for-like and space breakdown for Q3? And kind of related to that, I think your previous guidance for space for this year is going to be around mid-single digit to high-single digit. So wondering if you have any update on that as well.

Okay. Thank you for the question. Because actually, I commented the Chinese cluster that was positive, but other clusters were not. Korea cluster was negative and the Japanese cluster was negative. Japanese cluster, notwithstanding the good performance of Japan. But again, the business in Japan was driven in part, but significantly by Chinese customers coming to Japan and again, mostly in July and August because September, for the reasons I said before, the inflow of Chinese customers was much, much lower. So overall, Japanese cluster was slightly negative. Europe, I mean the European and Americas more or less flattish, nothing to comment, no better than worse than last year. About, yes -- like-for-like space, of course, I mean you said so I'm not going to say it again. We don't report the like-for-like by quarter, but of course, reporting a flat result in the DTC channel considering that there is Space contribution, whatever it is. I'm not going to tell you what it is, but of course, assuming Space contribution, of course, it implies a like-for-like -- negative like-for-like for the quarter, even if, again, don't ask me how much it was, but I mean this is implied in the numbers. So talking about Space contribution that is not relevant, honestly, not at all in a single quarter. But I mean, we tend to look at it on an annual basis. We confirm our, let me say, overall guidance. that is expected to be in the region of mid- to high single digit.

Okay. That's very helpful. And if I can just clarify a little bit, like, is it fair to say that your Space contribution in Q3 kind of, was a little bit faster than in H1 in general or not really?

Chris, we just commented on the fact that we don't talk more specifically about this and the indication for the full year is unchanged, as I think it's probably enough.

The next question is from Laure Bismuth, HSBC.

I have 2 questions, please. The first one is about the recent Genius event that happened in Shanghai in October, so recently. Do you have some statistics about the event itself to share? Have you seen some kind of pickup in store traffic or more customer engagement in China post event and also on a global scale? And my second question is in terms of margin. So for full year, the consensus is at 29.3%, implying an EBIT margin in H2 of 34.7%. So depending on where Q4 sales will end, do you see it still a reasonable assumption?

Okay. Thank you Laure, for the question about the Shanghai event. I would like Gino Fisanotti to here because I'm sure he could provide a much, much more color than what I can. But at event, I was there and so I can tell you that the Shanghai event was literally monumental, was literally extraordinary. Any time, every time we hold an event, a Genius Event, Grenoble, whatever, we keep saying this is the best ever. And I have to say that with all the due respect of the previous event, this has been in my opinion, but not only the event is the best ever. Talking about, I mean, some more color with some numbers, not numbers, but again, some results. From the quality of the event, I can tell you that it was a very Chinese event and very global event. We put Shanghai at the center of the world, raising our voice on creativity and innovation, spreading it out around the globe. So again, this is something that I perceived, but I mean, all people attended that event had the same perception. From the results point of view, I'm not talking about the business results, of course, but the impact, the mediatic impact was very, very phenomenal. So this year, of course, we achieved the results that we wanted to achieve before the event. Of course, the event was a brand event, with a long-term return on the event is not something we except the day after to see business results becoming very, very strong. But again, it was some kind of tribute to that market, to the Chinese customers that have helped our brand a lot over the past many, many years. The second question you asked was about margins. Of course, operating margins, I mean, needless to say totally depend or mostly depend on our top line. So again, based on the current trend, it is very, very difficult to match the operating margin we reported last year. The margin implied in consensus, which is in the region of 29% is something we consider reasonable, but very, very difficult to predict. Because, again, as I said before, we still have the 2 most important months of the year, the 2 months that last year did best November, December were very strong last year. So the comparison is very, very tough. So again, we are very, very prudent. But based on the current trend, we believe that, I mean, the operating margin implied in the consensus is something challenging, but not impossible.

Next question is from Oriana Cardani, Intesa Sanpaolo.

Two questions. The first one regards to the pricing policy for next year. What price actions have you already taken? Or do you plan to take in 2025? And my second question regards the Grenoble collection. How it is evolving compared to other collections? And what is its current impact on total sales?

Okay. Oriana, thank you for your question. Pricing policy, talking about Moncler for next year, we expect the price increase in the region of mid-single digit, totally driven by inflation. Unfortunately, our production costs keep growing, not as much as 2 years ago, but in the region of mid-single-digit, as I said before, due to the increase of labor cost that is, let me say, the most important driver of such increase for Stone Island, Just to let you know, this increase will be a little bit lower, let me say, mid- to low-single digit and also for Stone Island totally driven by inflation. Talking about Grenoble. Grenoble, first of all, the contribution of Grenoble is slightly growing season after season, and this is due to the fact that the winter collection is becoming more and more impactful, but also because, as we said, as you know, I'm sure you do, we introduced last year the spring/summer collection. And this collection is covering some demand for that season or outdoor activities like hiking, biking and whatever, and is doing very well. So overall, we are very happy about Grenoble that now represents about high-single digit of our total business. Let me also comment the fact that on Sunday, there was the first Ski Word Cup race and for the first time ever, we dressed Lucas Braathen, that is former Nordic -- Norwegian athlete, now running for Brazil, and his performer was literally amazing. So we are also very, very happy, very proud of his performance.

The next question is from Chiara Battistini, JPMorgan. The next question is from Luca Solca, Bernstein.

Traditionally, I remember the third quarter is very dependent on tourists, especially tourists buying the winter products in Europe. So I was wondering, when it comes to Europe, if the impact of lower tax-free spend than we had in the past is possibly one of the reasons why the quarter was not as brilliant as one could have thought. Always talking about tourists, and looking at Japan, I wonder if you could potentially dissect how much of a professional daigou exposure you had? Because you said that, in fact, you were exposed to Chinese tourists visiting Japan. I wonder if there's a way for you looking at who is actually buying to get a sense of how much of this was sort of genuine tourists coming to Japan? And how much this was professionals organizing a parallel market, which could explain, I guess, why as the Japanese yen has rebounded, this portion of the business has slowed down quite significantly. And then my second question is on nationalities. You've been kind enough to give us a sense of how different nationalities have performed. You mentioned the Chinese, the Koreans being on the back foot of being negative, the American and the European being sort of flat. I wonder if you could remind us of their weight in terms of the sales or at least the importance of the different nationalities or the most important nationalities in your sales?

Luca, thank you for your 3 questions. I will start with the last one because it's the easiest one, and then I will leave Luciano answer the other 2. But as you know, we've typically verbally reported practically only the Chinese cluster, which is about 1/3 of retail revenues. Then in terms of color, I can tell you that probably, we are slightly more exposed than others to Koreans and Japanese and a little bit less to U.S., probably in line in terms of Europeans, but this is typically what we comment, Luciano, I will leave the other 2.

Yes. Luca, talking about tourist in Europe, talking about the first Chinese customers in Europe, our -- as I said before, our hope more than expectation, but after the first quarter and after the Chinese New Year, we saw a lot, a lot of Chinese people, Chinese customers coming to Europe and shopping in our stores. So our hope was to continue -- was this trend to continue. Fortunately, this was not the case. But overall, tourism in Europe has been positive as compared to last year and driven by, not by Chinese a little bit because Chinese were better than last year, but also by other nationalities. Talking about Japan. In Japan, the impact -- the contribution of Chinese customers for the business was quite important as compared to the past. Let me say that much more important than ever because, in the past, the contribution of tourism was not material at all. And again, it deteriorated after the price gap disappeared and the difference of the price gap was flat. And about daigou, I have to tell you that the price gap between Japan and China was -- the maximum price gap was 5%. So honestly 5% is not such a price gap to generate this kind of traffic of daigou. Second point, important to highlight because we have a policy in place, retail policy that is effective in all the different regions, including Japan, but also Europe, because also in Europe, in the past, there was this kind of question. Our policy is to limit the amount of products that people can buy. And this, of course, is limiting and mitigating any daigou risk. So long story short, I don't believe that daigou has never been a significant issue for Moncler.

And Luca, the other small thing I would add when it comes to Europe, is that remember the impact of the Olympics games. At least for what concerns us, we mentioned this already back in July, there was some impact because we have seen less tourist, at least the type of tourists that we typically see in our stores. And also, we've seen less locals in Paris. And perhaps, compared to other brands, we have not recaptured that much in other parts of France. And so this was another element that needs to be taken into account when looking at the European performance.

The next question is from Edouard Aubin, Morgan Stanley.

Luciano, if I understood correctly at the beginning in the prepared remarks, I think you mentioned the online as one of the main reasons, or one of the key reason why share of sales at DTC at Moncler were quite weak. Could you be kind enough to tell us why was that the case? And remind us what's kind of the share of online in DTC? So that would be number one. And then number two, in terms of -- I know you guys track many different metrics in terms of trying to assess your desirability, or the desirability of the brand. I mean, what makes you confident that the desirability of the brand is still on the way up? And that's kind of the shortfall in Q3 is just a commercial issue, and it's not related to a weakening of the desirability of the brand?

Yes. Important question because it gives me the opportunity to talk about online that impacted, as Elena said before, the DTC results in the third quarter. Also, of course, the online business is a business particularly important in Europe. In Europe that was -- I mean, we said before more or less flattish, slightly positive. That business in Europe was impacted by what Elena said before, I mean, the Olympics in Paris, but also was impacted by a very, very weak performance of the online business that again, in Europe is particularly important. Why is that? I think that the online business is facing evident difficulties for everyone in all the different aspects. I mean, companies that are pure online business, I mean, have been struggling. Some of them have disappeared, other are in serious troubles. And this is because, I mean, it's not something new. It is because, evidently, they lost an important part of their customers that may or may not be aspirational customers, for sure customers that we are looking more for enterprise. But in any event, I mean this is a situation that I believe is quite common in the industries -- in our industry. And again, we are not, I believe, was or maybe better, but for sure, not worse than others. So this is the situation. Situation started about 1 year ago because until July of last year, our online business was growing very strongly, double-digit in July. All of a sudden, business started to slow down. And the right now, again, Q3 was particularly disappointing. But I mean, overall, the trend is quite volatile, a little bit up, a little bit down, but again, for sure not positive.

And one small thing, Ed. In terms of contribution, online sales, I mean we disclosed it on a [indiscernible].

So the desirability of the brand. I mean, we have several metrics that we use to monitor the desirability of the brand. But also, again, I mean having 285 stores and having our people talking with our customers every single day, all the day long is the best metric to understand the interest of the brand. And this is the main reason why we believe that desirability is still good. Of course, in some regions, I talked about China before. We are quite sure that in China, the brand is particularly strong, notwithstanding the current business trend. So to answer your question, for sure, it is commercial trend. It is the slowdown of the economy, but not a lost or slowdown in interest about the brand. But this is something we touch, we perceive in all the different regions. Genius, I mean, we talked about that before was a demonstration, I mean 8,000 people coming to that event, I mean, it was a tangible demonstration of the interest for the brand.

Next question is from Charles Scotti at Kepler.

I have 2. The first one, just coming back on your performance in the wholesale channel. Some wholesalers are struggling and trying to liquidate product, especially in Asia, which is also fueling parallel markets. Do you need to further accelerate the wholesale rationalization, especially at Moncler? And if you could also remind us that the retail penetration of Moncler by region, this would be helpful. And secondly, some of your competitors are dealing with large inventory makeover. If I remember correctly, you were quite cautious on volume growth in 2024 at the beginning of the year, which proved true because I suspect then volume probably turn negative high single digit or low double digit, negative in Q3. Could you confirm that inventories and working capital are under control and that the sell-through rate is still holding up well?

Yes. Okay. I mean, about your first question, wholesale and risk of parallel. Of course, this is a risk, but for Moncler, honestly, I think that our business policy, our business strategy in this channel has been very clear and very selective since ever. So we tend to sell to our wholesale customers not more than what we believe they can sell out. Of course, this is not a 100% mitigation of the risk, but for sure, is the best way to mitigate, significantly mitigate the risk of parallel. Honestly, I mean we don't see the parallel to be particularly strong problem anywhere in the world. But on the other hand, you are right. For many reasons, also other reasons, we are -- and we keep implementing a distribution strategy that is focused more on the DTC channel than on the wholesale channel, also because we keep selecting, we keep, let me say, in housing the wholesale distributor, selecting only the best stores. So this is something that we have implemented since ever but we keep implementing this strategy that will further move the contribution of DTC business up and the contribution of wholesale down. About inventory, of course, when there is a slowdown in business, there is a potential risk of inventory. Honestly, again, the way we play in our DTC business is since ever very prudent. And of course, I mean, I'm sure you do, but let me say it again. We normally plan the DTC business very prudently. And then if the market demand is higher than what we plan, we have the supply chain that is able to react up to a 10% of the total demand. This year, of course, considering the performance of the third quarter, we have not reacted so we have an inventory that is based on our original assumptions that were, as I said before, are very prudent. So no risk at this time of too much inventory.

And just one small clarification on the wholesale exposure by region. Basically, if you look at the average of the group, even if we think about 2023, you can consider that the Asia exposure to wholesale is very, very minimal, while the other 2 regions, obviously, are slightly higher. Maybe one interesting fact to notice is that Americas used to be the region with the highest exposure to wholesale. Now it's not the case anymore, particularly after the conversions we have performed.

The next question is from Thomas Chauvet, Citi.

I have 2 questions, please. The first one on your retail footprint for next year given the rapid change in the global demand environment you saw in your key markets. Are you tempted to scale down your store opening plan for the Moncler brand next year? Can you comment on what will be the major flagships? And how much would you expect that to contribute to Moncler's sales growth next year compared to the mid- to high single-digit space contribution this year? And secondly, Luciano, coming back to your comment on the group EBIT margin decline this year. Are you expecting a decline for both brands? I know you don't disclose them, but directionally? And with regards to Stone Island profitability, I was wondering whether you expect EBIT margin to expand from here. I mean I know there are a lot of investments in retail, infrastructure, people, et cetera, but sales are stable this year, around EUR 400 million. You've got significant change in channel mix towards DTC in geographic mix towards Asia. So I guess some of that could be quite supportive to profitability. If you could give us an update on where you are versus your ambitions for Stone Island profitability in a stable year?

Thank you, Thomas. About our retail footprint and our plans for the future, honestly, at least for 2025, we are not changing our plans. Of course, the number of stores that we expect to open will still be in the region of what we did in the past, more or less 15 new stores. There will be an equivalent number of projects of expansion and/or relocation. Of course, still under our policy, our strategy that has been since ever very, very selective. So only in locations, new openings, only locations where we believe that Moncler store is missing, and we can generate good business and also we can enhance the image of the brand. But for the time being, considering that mostly in some regions and I'm not talking about North; America, but I mean, you know that our footprint -- retail footprint in North America is very, very light, let me say, light, so there are many opportunities. And independently on the current business trend, I think that is good for the brand, is good for the future business to continue to implement discipline. Yes, the other question was about margin. I mean, of course, we want to report the margins by brand. But needless to say that at this stage of the development of Stone Island, we are investing more in proportion than what we are investing in Moncler. Needless to say that this year, for the first time, we invested very well, I would say, but also a significant amount of money in the advertising campaign that is visible around the world. That in my opinion very effectively and properly expresses the identity of the brand. So it's money that we are very, very happy to spend, but of course, it's not only the money we spend in advertising, but also the money we spend to make the organization stronger than what it was in the past. Because when we talk about expansion in the DTC business and that expansion requires the growth and the development of a strong retail culture, of course, we are talking about training, but not only, we are talking also about the people we need to inject in organization. So long story short, profitability in Stone Island for sure is lower than Moncler now, now but is to be considered an investment for the future growth. As we said in the past, and I'm saying that again, there are no reason, no structural reason why profitability in Stone Island could be different in the future from Moncler because the business model -- brands are totally different, but the business model is prospectively in the future will be similar to Moncler. So again, I hope I answered your question.

The next question is from Louise Singlehurst, Goldman Sachs.