When the industry focuses on the competitive relationship between the three companies, people often overlook the symbiotic relationship of the down jacket industry.
Editor’s note: This article is from WeChat public account “LADYMAX” (ID: lmfashionnews) By Drizzie. Reprinted with permission.
In the week that just ended, there were many early snowfalls. Sudden cooling brought relief to down jacket companies.
According to Fashion Business News , the National Climate Center stated earlier that the probability of cold winter is almost zero, However, it does not rule out that there are fluctuations in the temperature during the period, and the winter temperature in most areas is close to or higher than normal. The news, like a warm water bomb, has sparked concern among retailers.
Weather is the heart of all retailers. The relationship between temperature and retail is often underestimated by the outside world, but the former is considered by the industry as one of the three major external drivers affecting performance. On Double Eleven Day, Bosideng Tmall flagship store sales exceeded 650 million yuan, an increase of 58% over the same period last year. The brand broke the billion in only 7 minutes, and the sales exceeded 414 million yuan in 78 minutes, surpassing the whole day last year, making the brand’s single store sales of Tmall’s flagship store ranked first among Chinese clothing brands.
However, surprisingly, just after Bosideng’s double eleventh sale, the company’s stock price plummeted by nearly 10% in a single day. Some analysts believe that although the sales results are considerable, they are lower than market expectations, mainly due to the warm winter. This may also mean that, although the down industry continues to heat up, the weather factor is still the sword of Damocles hanging on the head of the down industry. The essential attribute of the down industry is to balance uncontrollable weather factors with controllable brand power.
In the past few years, seasonal clothing brands represented by down jackets and cashmere have worked hard to get rid of seasonal labels, claiming to defeat the weather with fashion, especially the rise of the luxury down section has become a significant trend that the industry is closely following.
Among them, Italian luxury down brand Moncler Alliance, Canada down jacket brand Canada Goose, Canada down goose, Chinese down apparel giant Bosideng, these three companies are listed in Milan, the New York Stock Exchange and the Toronto Stock Exchange, and the Hong Kong Stock Exchange. The company has become the most representative corporate target.
It is significant that the three companies have a clear step-by-step delivery and catch-up effect.
Moncler, which was first recognized by the luxury fashion industry through fashionization, creatively opened up the luxury down category. The rising star of Canada Goos, which is functional and has gained popularity among young people with the help of social media celebrity marketinge benchmarked Moncler, and benefited from Moncler’s widespread consumer awareness. Immediately afterwards, Chinese down jacket giant Bosideng took the first two dominated downhill rides and cooperated with the corresponding measures focusing on down and brand upgrades, becoming one of the best performing Chinese apparel companies in the past two years.
According to data released by Suning at the end of October, down jacket sales have increased by more than 1.5 times from the previous month, and prices have risen to varying degrees. Taking Bosideng as an example, the average price of down jackets last fall was between 700 and 800 yuan, and this year has reached 1,100 to 1,200 yuan. Canada Goose, Moncler and other foreign down jacket brands have accelerated their deployment in the Chinese market, which has raised the psychological price of consumers to a certain extent and stimulated the growth of Bosideng.
Since this year, with the outbreak of the down jacket industry, the market’s comparative analysis of the three companies has continued to emerge. Bosideng, Canada Goose, and Moncler have respectively released quarterly financial results for the past 30 months. Behind the industry boom, some alarming factors are beginning to emerge.
Moncler pioneered the luxury down category, relying on fashion to balance the weather factor
Moncler: Early pioneers
According to Fashion Business News , Moncler’s third-quarter revenue increased at a fixed exchange rate of 10%, Sales in the first nine months soared 12% to 959 million euros, but fell short of analysts’ estimates of 990 million euros. During the reporting period, Moncler’s sales in Asia including the Chinese mainland and the rest of the world increased by 15%, sales in the Italian local market increased by 4%, and revenue in the rest of Europe increased by 7%.
It is worth noting that Moncler has become one of the most prominent victims of the deterioration of the retail environment in Hong Kong. CEO Remo Ruffini said in an interview that the brand ’s sales in Hong Kong accounted for 6% to 7% of total revenue. Due to the recent unstable market environment, he is cautious about Moncler ’s performance this year.
However, the critically acclaimed Moncler Genius project has created imagination for Moncler’s long-term development, And even provided inspiration for innovative models for the entire fashion industry. This not only enhances the brand’s product diversity, but also indirectly strengthens the brand’s right to speak fashion, and further controls the risk of the down category.
The new model shows that each brand has more than one creative director and one creative direction. Leveraging the energy of multiple designers to empower the brand, Moncler Genius can break through the potential problems of aesthetic fatigue caused by a single creative director and reduce the quality of the brand design due to the ultra-fast pace, providing consumers with freshness.
Overall, as a pioneer in the luxury down category, Moncler has taken the lead in achieving a balance of weather factors. The problems it faces are more generally the economic environment and geopolitical uncertainty faced by luxury brands. Instead, the label of the down category provides recognition and special sense for Moncler’s role in the market.
In March this year, private equity fund Eurazeo sold the remaining 4.8% of its shares for 445 million euros, eight years after it acquired the luxury down brand Moncler. The total return from its investment in Moncler is 1.4 billion euros, which is 4.8 times the initial investment. The current industry focus is that Moncler boss Remo Ruffini can become the “Italian version of Bernard Arnault (LVMH Group boss)” and build Moncler into the next luxury empire like LVMH.
Canada Goose’s single and seasonal business burden or one of the biggest obstacles to long-term brand development
Canada Goose: Crossroads in Luxury Down
If Moncler pioneered the luxury down category, it ’s known to everyone as Canada Goose, regarded as a winter “uniform” in North America and Asia, which benefits to a certain extent from brand sales Social identity and group belonging.
Like Moncler, Canada Goose also failed to survive the slump in retail sales in Hong Kong, with Hong Kong accounting for 2 of the 19 directly operated stores worldwide. CEO Dani Reiss acknowledged in the conference call after the earnings report that the deterioration of the retail environment in Hong Kong has affected brand performance and will take corresponding actions based on new assessment results in the future, such as renegotiating with landlords. Or forControlling Hong Kong market risks, the brand opened new stores in Shanghai and Shenyang in the second half of this year.
In the second fiscal quarter ended September 29, Canada Goose revenue surged 27.7% year-on-year to C $ 294 million, well above analysts’ expectations of C $ 267.3 million. Benefiting from increased orders for department stores for coats and jackets, revenue from its wholesale business surged 22.2% to C $ 219.8 million, while revenue from its retail and online business surged 47% to C $ 74.2 million.
However, after the earnings report, Canada Goose’s stock price still plunged 10.84%. This is mainly due to the large risks of brand inventory and wholesale business.
Besides Beijing and Hong Kong, Canada Goose recently opened stores in Shanghai and Shenyang
In fact, the second-quarter wholesale business surpassed expectations mainly due to early shipments to channel dealers, and overdraft of wholesale revenue for the next quarter will affect the wholesale forecast for the next quarter. Dani Reiss also warned that the shipment of the brand’s parkas and jackets would be earlier than usual, which would reduce wholesale business revenue by about 15% in the third quarter.
CFO Jonathan Sinclair also believes that despite Canada Goose’s strong performance in the first half of the fiscal year, the trend may not continue into the second half. In addition, as the performance of the US retail department store continues to deteriorate, or it will reduce the number of orders, this is bad news for Canada Goose, which has a large wholesale network, and its brand performance will be hit.
At the same time, Canada Goose’s inventory turnover days reached a record high, reaching 248 days. This is mainly due to the seasonal nature of down jackets. Because Canada Goose products are relatively single and do not have a multi-level product matrix, compared to Moncler, product fashion and diversity are insufficient. Therefore, Canada Goose is stocking for the third quarter, the winter down sales, all year round. However, the days of inventory turnover is an important manifestation of the company’s liquidity. Long-term high inventory and low turnover will be a big burden on Canada Goose to improve its operating efficiency.
In the long term, Canada Goose ’s prospects for countering seasonality with its brand power remain uncertain. Perhaps to avoid similar risks, Canada Goose is actively expanding its product range beyond winter products, increasing