Kering, the French luxury group that controlled Puma for a while, has held “preliminary discussion” about a potential takeover of Moncler, according to Reuters. Born in the French Alps as a producer of sleeping bags in 1953, the Italian luxury outerwear brand is more profitable than Puma, and it is growing as fast as some of Kering's luxury brands, including Gucci, Yves Saint-Laurent and Balenciaga.
The report sent Moncler's stock market capitalization up by 12 percent, to a new record of about $10 billion, as observers felt that Kering's digital capabilities and its powerful real estate bargaining power could help accelerate the growth of its direct-to-consumer operations, closer to the levels enjoyed by its fashion brands. Kering's strength and know-how in footwear and other sectors may also help Moncler to diversify its product range, similarly to what Canada Goose is planning to do following its recent takeover of Baffin.
A combination with Moncler would also help Kering to use its large treasure chest to diversify into a more technical segment of the fashion market, close to outdoor and skiwear, without the dilution that Puma had exerted on its accounts.
Currently, Moncler's retail network consists of 199 own-stores, including concessions in department stores, shops in airports and outlets. In China alone, Moncler has 49 stores. Its retail operations already make up nearly 70 percent of its turnover, but its online sales represent just about 8 percent of revenues.
The report about Kering's interest in the brand has not been completely denied. Moncler's chief executive, Remo Ruffini, who took over the brand in 2003, said that he has maintained frequent contacts with investors and other “sector participants,” including Kering, about potential strategic development opportunities. However, he stated that there is no concrete offer under consideration. Still, his comments sent Moncler's stock further up to nearly €10.7 billion.
Directly and indirectly, Ruffini is Moncler's largest shareholder, with a stake of about 22.5 percent. Reportedly, he had already spoken with Kering about a deal at the time when he and other investors placed Moncler on the stock exchange six years ago.
In 2018, Kering generated total revenues of €13.67 billion, of which 77 percent came from its offline and online stores, and the company booked an operating margin (Ebit) of 28.9 percent. Moncler achieved sales of €1.4 billion, and they are expected to hit €1.7 billion this year, generating a similar operating margin.