When Moncler reported its earnings on Tuesday, the Italian luxury brand showed significant growth. Its sales rose by 27% in the last year to reach a total of $2.75 billion. Notably, over $1 billion of that revenue was earned in the fourth quarter alone.
On the earnings call on Tuesday, Moncler’s chief corporate and supply officer, Luciano Santel, said the revenue growth was due to the company developing categories including footwear in order to become a “year-round brand.”
Moncler announced the relaunch of the footwear category last August and the first release, a set of Trailgrip sneakers, came out in September. The Trailgrip shoes were Moncler’s biggest footwear launch ever and have made footwear a double-digit percentage of both direct and wholesale revenues since they were introduced, Santel said.
Unlike Moncler’s winter runway collections, which are focused on outerwear, its newly developed footwear category is meant to bring in consistent revenue all year. Prior to the Trailgrip launch, Moncler’s footwear only offered winter boots and sandals, both highly seasonal. But the Trailgrips are the brand’s first attempt at sneakers that can be worn all year long. Moncler declined to comment for this story, deferring to the statements made on the brand’s earnings call.
Over the last three years, brands focused on products that are specific to a certain time of year have increasingly launched product categories that can make money all year long. Easing the headache of a tangled global supply chain has been one motivation. Canada Goose and Lululemon have made it a core part of their recent strategies. Canada Goose grew non-parka sales by 46% in the second quarter of its fiscal year 2023, ending in October, after putting more marketing into its spring and fall collections. If you can sell a product any time of year, you can order more raw materials ahead of time, and late deliveries are less of an issue.
“The supply chain is a major challenge for everyone right now,” said Andrea Kelly, divisional merchandising manager at Columbia Sportswear. In response, Columbia leaned more into categories that sell all year, like shorts. “Winter jackets showing up in May is not a good thing,” she said.
But Moncler’s approach, while successful last year in driving revenue, does come with higher associated inventory costs. Santel admitted on the call that Moncler’s inventory levels at the end of 2022 were “significantly higher” than the year before, which he blamed on the increased production of more products at the end of 2022 made to be sold throughout 2023. While seasonless inventory is safer to have on hand, any drop in demand — which Moncler experienced in Asia in the last quarter — can still leave that inventory unsold.
“For the last five years, brands have talked theoretically about seasonless, but it’s really hard to actually shift over completely,” said Matt Field, founder of MakerSights, an inventory planning company that works with brands like Madewell. “The production calendar, the wholesale buyers, the consumer expectations all reinforce seasonality so it’s not always easy.”
Santel, speaking on the earnings call, was confident that the increased inventory cost of this new strategy will be overcome once demand returns in China.
“The good news is, that considering the stronger business trend in all the regions — especially China in January, February — inventory is not a problem,” he said.