Moncler notes signs of recovery in China as annual result tops expectations

© Reuters.

By Scott Kanowsky

Investing.com -- Shares in Moncler SpA (BIT:MONC) surged by as much as 8.5% on Wednesday after the Italian fashion house reported better-than-expected annual income and pointed to signs of an ongoing recovery in its key Chinese market.

The company known for its puffy down jackets posted a more than 32% year-on-year jump in its net result to €606.7 million (€1 = $1.0667) in 2021, above Bloomberg consensus estimates of €558.3M (NYSE:MMM). Meanwhile, adjusted earnings before interest and taxes also grew to €774.5M with a margin on revenues of 29.8%.

Sales in Asia of Moncler's eponymous brand grew by almost a sixth at constant currencies to €1.03 billion, driven by strength in Korea and Japan that was augmented by a rebound in store traffic in China in December following the lifting of strict COVID-19 containment measures. Revenue in the region made up 46.8% of the division's total full-year top-line figure of €2.2B.

Group-wide revenue, which includes the Italian luxury clothing unit Stone Island, rose by 25% to €2.6B.

Looking ahead to 2023, Moncler flagged that global macroeconomic uncertainties remain, particularly from recession risks, inflationary pressures, and geopolitical volatility.

But the business noted that performance in China has been "encouraging" in the first few months of this year despite concerns over an "unstable" health situation in the country.

Analysts at Barclays said that Moncler, like peer Hermès International SCA (EPA:HRMS), outperformed the broader luxury sector in its latest results and enjoyed a faster pace of recovery in China.

In February, Paris-based Hermès posted higher-than-anticipated sales in the fourth quarter thanks to resilient Chinese demand. The return stood in contrast to rivals LVMH Moët Hennessy Louis Vuitton SE (EPA:LVMH) and Kering SA (EPA:PRTP), which both reported a quarterly slowdown in China, the world's second-largest luxury market behind the United States.