After the pandemic, luxury will never be the same. This is what the recent distanced or virtual fashion shows have highlighted. And this is what two different realities in terms of size confirm, the Italian queen of down jackets, Moncler, and the giant Lvmh hit in the heart by the violence of a "completely unimaginable" crisis, as Bernard Arnault himself underlined, as he was about to celebrate the milestone of 50 billion in turnover. In both cases, the stock exchanges acknowledged this morning that the storm hit hard, perhaps more than expected.
The Italian company deals with a discount of 4% after announcing that it halved revenues in the second quarter of the year (-51%), with a 56% drop in own-brand stores and 37% in wholesale. Slightly smaller than the decline in profits (-36%) to 279 million also because Remo Ruffini, to safeguard the brand, wrote down the unsold item to zero, with a negative impact of 30 million. CCO Luciano Santel ruled out new inventory write-downs in the second half. According to COO Roberto Eggs, there should be a gradual improvement especially from the beginning of 2021 thanks to the resumption of short-range travel.
Different dimensions but similar therapies for Lvmh: revenues fall (27% to 18,4 billion dollars, -38% in the second quarter) which was partially covered with a sharp decline in bonuses, profits on a like-for-like basis amounted to 1,67 billion (-68%), around half a billion less than expectations for an operating margin of 9%. Numbers that justify a robust drop in the -4% share that many interpret as a buying opportunity, pending the purchase of Tiffany, still blocked by the US Antitrust.
The decline in turnover was particularly marked in the sectors most exposed to travel, especially Chinese tourists, the first buyers of jewelery and watches but also of Sephora cosmetics. But on this front, judging by the June data, the recovery has already begun. The e-commerce paper will also help make ends meet, the secret weapon of both Moncler and Louis Vuitton.
The development of the leading luxury group in China, explained Arnault, will proceed only through the electronic channel: Lvmh will no longer invest a single euro to open stores in the 120 cities with a million inhabitants or more. “Our e-commerce sites – explains the financial director Jean Jacques Guiony – will replace the growth of physical poles thanks to the appeal towards younger consumers”. “Digital – replies Remo Ruffini remotely – will be the language that will inspire our products. To be in the future we must be reborn digital”. It is the obligatory development of a disenchanted vision in a future in which, for a long time, we will travel less and compete more than yesterday on prices. This is why Moncler has decided to internalize e-commerce, until now managed through Yoox.
It will not be the shop near the house that will benefit, but the virtual mega outlets, with robust recourse to testimonials and personalized narrations. Solutions that tend to favor the largest and, consequently, the mergers. But, Ruffini reiterates, Moncler is not for sale. Tonight, with the bag closed, the replica of Kering alias Gucci.
