Moncler - borsaitaliana.it · moncler – november 8, 2013 important disclosures appear at the back...

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Moncler ITALY / Luxury

IPO

ANALYSTS Paola Carboni - +39 026204287 – [email protected] November 8, 2013 # 355

GROWTH BASED ON EXCLUSIVENESS

The Moncler brand is leader in luxury outerwear and boasts a

superior track record of growth and profitability. More remarkably,

this success was built on exclusiveness and uniqueness, thus

enhancing – and not diluting – brand’s potential for future long

lasting growth. We expect a 3-Y CAGR of +15% for sales and +20% for

net profit in 2014-16, driven by retail and further internationalisation.

� The Moncler brand’s roots: strong heritage and international vocation

The Moncler brand’s roots date back to the 1950s, when it equipped the

Italian Himalayan expedition. In the 1970s it became a symbol of an elite

skiing, worn by stars like Brigitte Bardot and Alain Delon during their snow

holidays. The link with skiing and with the snow tourism - which fuel an

international customer base by definition – give the brand a high international

vocation (60% of flagship stores’ sales in Western Europe come from tourists).

� Brand repositioning in luxury: uniqueness and exclusiveness

Mr Ruffini, present chairman and creative director, acquired the Moncler

brand in 2003, and since then he started a complete repositioning process:

- Wider assortment: the original alpine jacket was transformed in a versatile

garment, with a unique casual/chic style, conjugated in different lines and

collections, with increasing incidence of Spring/Summer items.

- Exclusiveness: higher pricing, no mark-down policy, lower importance

of the logo, thus overall increasing consumers’ perception of scarcity.

- Distribution: more selective (downsizing the multibrand channel and

starting development of a monobrand network) and global (contribution of

the Italian market down from 52% of FY08 brand’s sales to 26% in 2012).

� Strong track record of growth with best in class profitability

Moncler has posted a +29% const. curr. sales 2Y CAGR in 2011-12,

significantly above the +18% of main peers and in spite of its relatively

higher exposure to wholesale and to the Italian market at the end of 2010.

Actual 2012 numbers have even exceeded our past IPO estimates (June

2011) by more than 20%, thus proving management strong execution skills.

Moncler also ranks at the top of the sector in terms of profitability (33%

EBITDA margin in FY12, second only to Hermès and Prada) and cash

generation (unlevered FCF/EBITDA at 38% in 2012), which stem from

group’s high pricing power and strong retail skills (we estimate full-price sell-

through >85%, above 30k sales/sqm, stores at break-even in few months).

� 3Y net profit CAGR +20% driven by retail and internationalisation

We expect 2014-16 3-Y CAGR of +15% in sales driven by

- Expansion of retail: +22% CAGR, of which +8% SSS growth and

+14% space effect (+20 new openings a year), leveraging on current

underpenetration of the brand (only 122 stores as of September 2013).

- Internationalisation: growth in Asia (+15% CAGR) and in Americas

(+26% CAGR) is expected to explain 60% of the total revenue bridge,

with the remaining 40% coming from EMEA (+17% CAGR exp.).

Sales mix and volume growth should offset rising fixed costs (store network

+ corporate structure), while earnings should benefit from deleveraging,

thanks to accelerating FCF. 9M13 earnings were already up by +19% YoY.

� Valuation hints

We expect the market to reward Moncler with multiples above sector’s

average, following its high quality equity story and its faster than peers

growth prospects (2014-15 EPS CAGR of +21% vs. +14% for peers).

Moncler – November 8, 2013

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Moncler ITALY / Luxury

IPO

MAIN METRICS 2012 2013E 2014E

Revenues 489 573 666

EBITDA 162 189 215

Net income 82 94 114

Adj. net income 82 95 114

INDEBTEDNESS 2012 2013E 2014E

NFP -229 -171 -96

Debt/EBITDA 1.4 x 0.9 x 0.4 x

Interests cov 9.4 x 9.4 x 16.5 x ANALYSTS Paola Carboni - +39 026204287 – [email protected] November 8, 2013 # 355

GROWTH BASED ON EXCLUSIVENESS

The Moncler brand is leader in luxury outerwear and boasts a

superior track record of growth and profitability. More remarkably,

this success was built on exclusiveness and uniqueness, thus

enhancing – and not diluting – brand’s potential for future long

lasting growth. We expect a 3-Y CAGR of +15% for sales and +20% for

net profit in 2014-16, driven by retail and further internationalisation.

� The Moncler brand’s roots: strong heritage and international vocation

The Moncler brand’s roots date back to the 1950s, when it equipped the

Italian Himalayan expedition. In the 1970s it became a symbol of an elite

skiing, worn by stars like Brigitte Bardot and Alain Delon during their snow

holidays. The link with skiing and with the snow tourism - which fuel an

international customer base by definition – give the brand a high international

vocation (60% of flagship stores’ sales in Western Europe come from tourists).

� Brand repositioning in luxury: uniqueness and exclusiveness

Mr Ruffini, present chairman and creative director, acquired the Moncler

brand in 2003, and since then he started a complete repositioning process:

- Wider assortment: the original alpine jacket was transformed in a versatile



- Exclusiveness: higher pricing, no mark-down policy, lower importance

of the logo, thus overall increasing consumers’ perception of scarcity.

- Distribution: more selective (downsizing the multibrand channel and

starting development of a monobrand network) and global (contribution of

the Italian market down from 52% of FY08 brand’s sales to 26% in 2012).

� Strong track record of growth with best in class profitability

Moncler has posted a +29% const. curr. sales 2Y CAGR in 2011-12,

significantly above the +18% of main peers and in spite of its relatively

higher exposure to wholesale and to the Italian market at the end of 2010.

Actual 2012 numbers have even exceeded our past IPO estimates (June

2011) by more than 20%, thus proving management strong execution skills.

Moncler also ranks at the top of the sector in terms of profitability (33%

EBITDA margin in FY12, second only to Hermès and Prada) and cash

generation (unlevered FCF/EBITDA at 38% in 2012), which stem from

group’s high pricing power and strong retail skills (we estimate full-price sell-

through >85%, above 30k sales/sqm, stores at break-even in few months).

� 3Y net profit CAGR +20% driven by retail and internationalisation

We expect 2014-16 3-Y CAGR of +15% in sales driven by

- Expansion of retail: +22% CAGR, of which +8% SSS growth and

+14% space effect (+20 new openings a year), leveraging on current

underpenetration of the brand (only 122 stores as of September 2013).

- Internationalisation: growth in Asia (+15% CAGR) and in Americas

(+26% CAGR) is expected to explain 60% of the total revenue bridge,

with the remaining 40% coming from EMEA (+17% CAGR exp.).

Sales mix and volume growth should offset rising fixed costs (store network

+ corporate structure), while earnings should benefit from deleveraging,

thanks to accelerating FCF. 9M13 earnings were already up by +19% YoY.

� Valuation hints

We expect the market to reward Moncler with multiples above sector’s

average, following its high quality equity story and its faster than peers

growth prospects (2014-15 EPS CAGR of +21% vs. +14% for peers).

Moncler –November 8, 2013


BUSINESS DESCRIPTION

The Moncler Group is leader in luxury outerwear (85% of

FY12 group revenues) with a unique positioning and strong

international vocation.

The group insources the higher value-added phases of the

production process (design and product development, sales

campaign, sourcing of raw materials, quality control,

communication and marketing) and outsources manufacturing

activities – all located in Europe.

The brand is distributed in 66 countries, both through

wholesale (49% of FY12 revenues) and retail (51% of FY12

revenues). As of September 2013, the monobrand distribution

network consisted of 98 DOS stores and 24 shop-in-shop

wholesale.

The group has raised its penetration abroad in the last few

years, with Italy now accounting for only 26% of 2012

revenues.

MAIN FIGURES € mn 2011 2012 2013E 2014E 2015E 2016E

Revenues 364 489 573 666 768 872

Growth 29% 34% 17% 16% 15% 14%

EBITDA 112 162 189 215 254 291

Growth 23% 45% 17% 14% 18% 15%

Adjusted EBITDA 114 162 187 215 254 291

Growth 26% 41% 16% 15% 18% 15%

EBIT 102 146 168 188 221 252

Growth 20% 43% 15% 12% 18% 14%

Profit before tax 89 129 148 175 213 251

Growth n.a. 44% 15% 18% 22% 18%

Net income 56 82 94 114 139 164

Growth n.a. 47% 14% 21% 22% 18%

Adj. net income 58 82 95 114 139 164

Growth n.a. 43% 15% 20% 22% 18%

MARGIN 2011 2012 2013E 2014E 2015E 2016E

Ebitda Margin 30.7% 33.0% 32.9% 32.2% 33.0% 33.4%

Ebitda adj Margin 31.5% 33.0% 32.6% 32.2% 33.0% 33.4%

Ebit margin 28.0% 29.8% 29.3% 28.2% 28.7% 28.9%

Pbt margin 24.6% 26.3% 25.8% 26.2% 27.7% 28.8%

Ni rep margin 15.4% 16.9% 16.4% 17.1% 18.1% 18.8%

Ni adj margin 15.9% 16.9% 16.5% 17.1% 18.1% 18.8%

VARIOUS - € mn 2011 2012 2013E 2014E 2015E 2016E

Capital emloyed 394 421 455 470 502 524

FCF 26 49 54 72 108 142

Capex 35 26 34 34 35 35

Trade working capital 18 37 56 82 104 122

INDEBTNESS - €mn 2011 2012 2013E 2014E 2015E 2016E

NFP -270 -229 -171 -96 -17 90

D/E 2.18 x 1.19 x 0.60 x 0.26 x 0.03 x n.m.

Debt/EBITDA 2.4 x 1.4 x 0.9 x 0.4 x 0.1 x n.m.

Interests cov 9.0 x 9.4 x 9.4 x 16.5 x 33.4 x 224.2 x

REMUNERATION 2011 2012 2013E 2014E 2015E 2016E

ROE 45.0% 42.9% 33.2% 30.4% 28.7% 26.7%

ROCE 16.2% 22.2% 23.5% 26.0% 28.7% 31.5%

Source: EQUITA SIM estimates and company data FCF calculated as: change in NFP plus dividends distributed during the period



TABLE OF CONTENTS

INVESTMENT SUMMARY ............................................................................................. 6

HIGH QUALITY, FOR BOTH CONSUMERS AND INVESTORS ............................... 12

GROUP’S ORIGINS AND PRESENT SHAREHOLDER BASE .................................. 13

THE IPO ........................................................................................................................ 13

REPOSITIONING IN THE LUXURY ARENA: UNIQUENESS AND EXCLUSIVITY .. 14

THE MONCLER BRAND TODAY: “THE GLOBAL DUVET JACKET” ........................ 17

A SUPERIOR TRACK RECORD OF GROWTH ….. ................................................... 22

… WITH BEST IN CLASS PROFITABILITY ................................................................ 24

VISIBLE GROWTH PROSPECTS ............................................................................... 27

SEASONALITY OF RESULTS ..................................................................................... 31

9M RESULTS LARGELY UNDERPIN OUR FY13 ESTIMATES ................................ 33

2014-2016 ESTIMATES: +20% CAGR IN EARNINGS, DRIVEN BY RETAIL AND

FOREIGN MARKETS ................................................................................................... 37

SWOT ANALYSIS ......................................................................................................... 42

VALUATION HINTS ...................................................................................................... 43

STATEMENT OF RISKS .............................................................................................. 46

APPENDIX 1: STILL POSITIVE LONG TERM PROSPECTS FOR LUXURY ............ 47

APPENDIX 2: MONCLER’S OPERATIONS ................................................................ 50

APPENDIX 3: STRONG AND LOYAL MANAGEMENT TEAM ................................... 54



INVESTMENT SUMMARY

MONCLER’S HISTORY: STRONG HERITAGE AND REPOSITIONING IN LUXURY

The Moncler brand’s roots date back to the 1950s, when it equipped the Italian

Himalayan expedition, as a high performance technical jacket born for Alpine use. In

the 1970’s it became a symbol of an elite skiing, worn by stars like Brigitte Bardot

and Alain Delon during their holidays in the midst of the snow.

The story of the Moncler brand then became a story of fast growth (3-year

sales CAGR = 30% in 2010-12, based on 2009 divisional data) and

internationalization (74% of sales outside of Italy in FY12), thanks to the

remarkable success of the restyling and repositioning process undertaken by the

present chairman and creative director, Remo Ruffini, who acquired the brand in

2003. Since the beginning, Mr. Ruffini’s strategy was centred on brand’s

exclusiveness, through

- A wider assortment: the original alpine jacket was transformed in a versatile



- Greater exclusiveness: higher pricing (€ 800-1000 for the Autumn/Winter

collection), no mark-down policy, lower importance of the logo, thus overall

increasing consumers’ perception of scarcity. As a further luxury statement, the

Main Collection has been flanked by two haute couture collections presented

at the main European fashion weeks (Paris and Milan).

- More selective distribution (downsizing the multibrand channel and starting

development of a monobrand network) and more global presence (contribution

of the Italian market down from 52% of FY08 brand’s sales to 26% in 2012).

THE MONCLER BRAND TODAY: THE “GLOBAL DUVET JACKET”

The Moncler brand now rightfully forms part of the luxury arena by virtue of its

strong heritage, exclusiveness, very high quality, high price positioning, strong

recognisability and iconic products.

In our opinion the strength of the Moncler brand lies in:

- the uniqueness of its proposition and positioning. Moncler has managed to

win leadership in outerwear thanks to an across-the-board style – which we

can define as casual/chic, informal but refined at the same time – that, in its

various conjugations and lines - make it suitable for different occasions and for

different consumers; a contemporary style, designed to survive fashion

- its strong international vocation, thanks to the link with skiing and with the

snow tourism, which, by definition, fuel an International customer base. This

has been a key success factor for the rapid international expansion of the

brand outside its domestic market. As a matter of fact, 60% of revenues in

group’s Western European flagship stores are generated by tourists. Light

duvet jackets for example are a key success factor for the brand vis à vis

customers from warmer regions such as Brazil, Middle East, Hong Kong.

DISTRIBUTION PLATFORM LEVERAGING ON RETAIL AND WHOLESALE

The retail channel accounted for 51% of Moncler’s 2012 revenues.

Sales in this channel are generated by a network of 98 free standing DOS (as of

September 2013), of which 56 are in the Emea region (of which 17 in Italy), 6 are

in the Americas (US), and 36 are in Asia (of which 15 in Mainland China).

The chart below summarizes the estimated contribution of each single

combination of channel/region to Moncler’s revenues, based on FY12 numbers.

As one can see, the most important revenue sources for the group are the retail

channel in Asia and the wholesale channel in Emea.

CHANNEL BKD 2012

Source: Company data

Wholesale49%

Retail51%



MONCLER: MAIN CONTRIBUTORS TO TOTAL SALES


A SUPERIOR TRACK RECORD WITH UNTAPPED GROWTH POTENTIAL

MONCLER: HISTORICAL TREND IN SALES AND EBITDA MARGIN (€ mn)


Two years after the past IPO attempt of June 2011 (which ended with the entry of

Eurazeo in the company’s share capital), Moncler comes to the market today boasting:

- a clearer equity story, offering a pure bet on luxury, thanks to the disposal of

the “Casual Brands” division (four brands positioned in the medium/high-end

casual wear segment), which has been just signed (closing on November 8th).

- an even stronger brand positioning, with an enhanced sales mix in terms of

distribution channels (retail up to 51% of revenues vs. 27% in 2010, growing at

+82% 2Y CAGR) and geographies (Americas and Asia up to 42% of revenues

vs. 24% in 2010, growing at +73% 2Y CAGR), consistently with the strategic

guidelines highlighted by management two years ago.

- a superior track record of growth, with +30% 3Y sales CAGR in the 2010-

2012 period, significantly above the +11% CAGR of the global luxury market as

a whole and the +18% of main listed peers. The company has also beaten our

past IPO estimates by more than 20%, whereas the other main listed luxury

peers have exceeded 18-month-earlier consensus estimates by only 6%.

- best in class profitability, with Ebitda margin of 33%, at the top of the sector,

second only to Hermès and Prada which however can rely on a much stronger

exposure to leather goods and retail. We mainly attribute the superior

profitability of Moncler to its higher mark-ups (we estimate 10% above the

sector average, particularly abroad) and to its strong retail skills (full-price sell-

through that we estimate at 85-90%, no mark-down policy, best-in-class sales

densities - we estimate above € 30,000/sqm -, stores at break-even usually a

few months after inauguration).

15%

12%

24%8%5%

27%

5%5%

�� Emea

�� America

�� Asia

��Italy

dark = retail pale = wholesale

221

283

364

489

29%

32%31%

33%

25%

30%

35%

40%

45%

50%

0

100

200

300

400

500

600

2009 2010 2011 2012

Sales



- High FCF generation: in 2012 the group showed good cash generation

capacity, with FCF of € 49 mn, i.e. 30% of EBITDA, which rises to € 61 mn

(38% of Ebitda) in terms of unlevered FCF, i.e. excluding financial costs. This

is close to sector’s average (34% FCF/Ebitda, excluding Brunello Cucinelli

which reported a negative FCF in 2012).

- A still untapped growth potential, with only 122 monobrand stores as of

September 2013, a relatively limited presence in high potential markets like

US, China, Eastern Europe, as well as plenty of room to penetrate new

markets such as Canada, Brazil and Middle East.

VISIBLE GROWTH PROSPECTS

Management intends to continue pursuing a strategy of reinforcement in

retail and international expansion, although still maintaining a disciplined

approach in terms of financial performance and brand’s positioning.

We attribute reasonably good visibility to this strategy, as it can rely on:

- consistency with the growth drivers implemented in the past

- strong management track record, as just commented

- group’s specific strength in retail, as already detailed

- a relatively safe store opening process.

The company is targeting a 70% incidence of retail in the next three-four

years, leveraging on new store openings (about 20 per annum, as it has been

the case in 2011-12), an increase in the size of new free standing stores (from

the current 90-110 sqm average to approximately 200 sqm of new openings and

relocations), development of the travel retail channel, conversion of

wholesale shop-in-shop into retail concessions.

In the meantime, SSS growth trend is expected to remain in the mid/high-

single digit range, of which about +5% driven by the price/mix effect.

On the other side, wholesale is expected to grow close to mid-single digit,

reducing its incidence on total revenues to about 30%, as a result of:

- a stable number of accounts, following a further selection in Europe but a

continued expansion in the US and Canada, within top tier department stores

- a focus on order per door, consistently with the historical trend.

Group’s international expansion will target the Emea region (particularly Russia,

Eastern Europe and Middle East, mainly leveraging on retail), Asia (strengthening

penetration in Great China and consolidating presence in Japan, mainly through

retail), and the Americas (leveraging on a growing retail presence - only 6 stores

in the US as of September 2013 - but with also further expansion in the wholesale

channel for both US and Canada).

MONCLER: SALES BRIDGE BY REGION


MONCLER UNDERPENETRATION

Source: Companies data - # of stores from latest available annual report.

489

872

0

100

200

300

400

500

600

700

800

900

1000

2012 Italy Emea Asia & RoW Americas 2016

Brunello Cucinelli

Moncler

Miu Miu

Bottega Veneta

Tod's brand

Prada brand

Hermes

Gucci brand

LV

Burberry

Ferragamo

0 100 200 300 400 500 600 700



With outerwear still accounting for 85% of revenues, the company has also clear

growth opportunities in other product categories. Focus will be mainly on

knitwear, which is more consistent with the brand’s heritage. Offering is also

being widened in leather goods (still at 4-5% of revenues, mainly shoes), as well

as in accessories such as eyewear or suitcases, with recent specific product

initiatives. However, we see these drivers simply as a further support to

revenue growth, without factoring in any drastic acceleration in the

incidence of non-outerwear: management is in fact committed to remain

consistent with group’s DNA and heritage, focused on winter jackets.

9M RESULTS LARGELY UNDERPIN OUR FY13 ESTIMATES

Sales and EBITDA grew by +17.5% and +16% YoY respectively in 9M13, with

EBITDA margin slightly down to 29.5% vs. 29.9% in 9M12, and net profit up by

+19% YoY. 3Q in particular was up by +17% YoY in revenues (+22% YoY at

constant currency), with a slight improvement in EBITDA margin (+40 bps).

These results largely underpin our FY13 estimates, which might even turn to be

conservative: in particular we are factoring in:

- FY revenues up by +17%, or +22% at constant currency

- FY adj. EBITDA up by +16%, with EBITDA margin down -40 bps (following a

negative forex impact which we estimate in excess of 100 bps)

- FY adj. net profit up by +15%.


FOREIGN MARKETS

We expect 3-year 2014-2016E CAGR of +15% for sales, +16% for EBITDA, and

+20% for earnings, primarily driven by:

- The retail channel, with its share of group sales increasing from 51% in 2012

to 68% exp. in 2016E.

- International markets, with the incidence of the Italian market decreasing

from 26% in 2012 to 17% exp. in 2016E.

These are also the most profitable businesses: we therefore expect EBITDA margin to

improve by almost 100 bps in the period compared to our FY13 estimate, in spite of

about 50 bps further negative impact from forex expected in 2014 and of the underlying

increase in G&A costs envisaged to strengthen the corporate’s structure. In the

meanwhile, EPS should benefit from deleveraging, thanks to accelerating FCF.

MONCLER COSTS STRUCTURE (€ mn)

2011 Margin 2012 margin 2013E margin 2014E margin 2015E margin 2016E margin

Sales 364 100% 489 100% 573 100% 666 100% 768 100% 872 100%

increase 29% 34% 17% 16% 15% 14%

Gross margin 244 67.0% 341 69.7% 406 70.8% 477 71.7% 558 72.6% 638 73.2%

increase n.a. 40% 19% 18% 17% 14%

Selling expenses (77) -21.2% (115) -23.5% (144) -25.1% (175) -26.4% (206) -26.8% (238) -27.3%

G&A costs (41) -11.3% (51) -10.5% (61) -10.7% (72) -10.8% (81) -10.6% (89) -10.2%

Marketing (21) -5.8% (29) -5.9% (35) -6.1% (42) -6.3% (50) -6.5% (58) -6.7%

Adj. Ebit 105 28.7% 146 29.8% 166 28.9% 188 28.2% 221 28.7% 252 28.9%

increase n.a.

Non-recurring items (3) 2

Reported Ebit 102 28.0% 146 29.8% 168 29.3% 188 28.2% 221 28.7% 252 28.9%

increase 20% 43% 15% 12% 18% 14%

Net profit 56 15.4% 82 16.9% 94 16.4% 114 17.1% 139 18.1% 164 18.8%

Increase n.a. 47% 14% 21% 22% 18%

Adjusted net profit 58 15.9% 82 16.9% 95 16.5% 114 17.1% 139 18.1% 164 18.8%

Increase n.a. 43% 15% 20% 22% 18%

Depr (10) -2.7% (16) -3.2% (21) -3.7% (27) -4.1% (33) -4.3% (39) -4.5%

Adj. Ebitda 114 31.5% 162 33.0% 187 32.6% 215 32.2% 254 33.0% 291 33.4%

increase 26% 41% 16% 15% 18% 15% Source: EQUITA SIM estimates & company data



In parallel with EPS growth, we expect an on-going improvement of FCF, up

to about € 140 mn in 2016E, turning NFP positive at the end of the period, as a

result of increasing EBITDA, stable capex at around € 35 mn (in line with the

last few years average, being the pace of new openings also similar), a dividend

pay–out of 25% (this is our assumption), and a rising incidence of working capital

(with a 7% incidence on revenues in 2012, working capital was at an exceptionally

low level compared to 19% average for peers).

MONCLER: FCF GENERATION (€ mn)

2011 2012 2013E 2014E 2015E 2016E

Net profit 58 85 94 114 139 164

Depreciations 10 16 21 27 33 39

Change in Wkc 3 -19 -19 -26 -22 -18

Cash flow provided by Operations 72 82 96 115 150 185

Capex (35) (26) (34) (34) (35) (35)

Others (10) (7) (8) (8) (8) (8)

Total FCF 26 49 54 72 108 142

Other investments

Disposals 6 27

Distribution of Dividends (153) (8) (2) (24) (28) (35)

Capital Increase

Total Change in cash (127) 41 58 75 79 107

Opening net debt (143) (270) (229) (171) (96) (17)

Closing net debt (270) (229) (171) (96) (17) 90 Source: EQUITA SIM estimates & company data

The increase in the incidence of working capital should be mainly the result of ever

earlier purchases of raw materials (with the aim of accelerating the production

process and shortening time to market), which translate into a lower level of

payables at the end of the year compared to the past. We nevertheless expect this

dynamic to become gradually less important as long as the company achieves its

ideal time to market in the production process.

IPO STRUCTURE

The offer will be only secondary, which we justify with the group’s sound financial

structure (2012 D/EBITDA = 1.4x) and strong cash generation ability (unlevered

FCF/EBITDA at 37% in 2013E): we in fact expect the company to become cash

positive in 2016. Free float will be about 30%. We expect Mr. Ruffini not to be

among selling shareholders.

Listing will serve mainly to give a further boost to internationalization via:

1. Greater international visibility and higher standing of the group

2. Attraction and motivation of quality management

3. Greater transparency and managerial discipline.

VALUATION HINTS: QUALITY AND EXTRA-GROWTH DESERVE SOME PREMIUM

In our view, Moncler represents one of the best quality and fastest growth

story in the luxury sector today.

In terms of quality, in particular, Moncler boasts some features which are common

to other few luxury peers trading at premium vs. the average. In particular:

- Strong retail skills, similarly to Prada. This, together with underpenetration,

provides visibility to the company’s retail expansion plan.

- A disciplined approach to growth, both in terms of product expansion

strategy (always very consistent with the brand’s DNA), and of retail expansion

(20 stores per annum, without acceleration compared to the past, in spite of

the brand’s huge potential for greater penetration). These features are

common to Brunello Cucinelli, and ensure higher sustainability of group’s

growth prospects.

MONCLER: SHAREHOLDING STRUCTURE

Source: Company data GoodJohn & Co. refers to Mr. Sergio Buongiovanni (member of the board)

Eurazeo45.00%

Carlyle17.76%

Brand Partners 24.99%

Ruffini Partecipazioni32.00%

GoodJohn & Co.0.25%



- A low fashion content, which is a strong loyalty building element for

consumers. This feature recalls Brunello Cucinelli and Tod’s products.

- Highly recognizable and iconic products, which can be changed in few

details or in fabrics and colours - offering consumers always new occasions to

buy – while remaining always recognizable and up to date (similar to Tod’s).

- Best in class profitability (Ebitda margin at 33% on revenues, similarly to

Prada, compared to a 27% average for the sector) and high FCF generation

(37% unlevered FCF/Ebitda exp. in 2013E).

- Pure luxury play status, compared to other leading global brands such as

Gucci or Louis Vuitton, which are within big conglomerates.

MULTIPLE COMPARISON

Price Perf. EV/EBITDA Ebitda margin Sales growth P/E EPS Cagr Asia

€ 3M 2013E 2014E 2015E 2013E 2014E 2015E 2013E 2014E 2015E 2013E 2014E 2015E 2014E-15E Ex-Jap

Hermes 255 -2% 19.1 16.9 14.7 36% 36% 36% 9% 11% 12% 32.9 29.5 26.1 12% 32%

Brunello Cucinelli 23 9% 27.7 23.6 20.1 18% 19% 19% 14% 13% 13% 54.7 45.1 38.4 19% 12%

LVMH 140 1% 10.0 8.6 7.9 25% 25% 25% 8% 12% 9% 19.1 16.3 14.7 14% 28%

Richemont 93 0% 13.0 11.5 10.1 28% 29% 29% 8% 10% 9% 19.1 17.0 15.3 12% 41%

Tiffany 78 -4% 11.0 9.8 8.8 24% 24% 25% 5% 8% 9% 21.6 19.1 16.9 13% 21%

Burberry 1,494 -4% 10.4 9.2 8.2 26% 27% 24% 16% 14% 19% 17.8 15.5 14.1 12% 31%

Kering (luxury) 165 -8% 9.9 8.6 7.7 29% 29% 29% 1% 7% 9% 16.0 14.7 13.1 10% 31%

Swatch 575 3% 11.8 10.2 8.8 28% 29% 30% 12% 10% 9% 18.1 16.1 14.4 12% 49%

Tod's 124 -9% 14.1 12.7 11.1 26% 26% 27% 4% 7% 10% 25.2 22.5 19.7 13% 25%

Prada 77 7% 14.8 12.1 10.2 34% 35% 36% 12% 15% 13% 25.6 21.1 18.2 19% 36%

Ferragamo 25 -2% 15.5 13.3 11.0 22% 22% 24% 10% 11% 11% 28.6 24.5 20.5 18% 37%

Average 14.3 12.4 10.8 27% 27% 28% 9% 11% 11% 25.3 22.0 19.2 14% 31%

Average ex-BC & RMS -2% 12.3 10.7 9.3 27% 27% 28% 9% 10% 11% 21.2 18.5 16.3 Moncler 33% 32% 33% 17% 16% 15% 21% 16% Source: Bloomberg consensus and EQUITA SIM estimates. Closure prices of Nov 7th , 2013

Moncler also deserves a premium in our view for its faster growth prospects,

with expected EPS CAGR in 2014-15 of +21% vs. 14% average for the sector.

For this reason, we would focus valuation on 2015 rather than on 2013-14, in

order to try to capture most of the company’s extra-growth potential.

Overall, for all the reasons just mentioned, we think the company should

merit a multiple above the luxury sector average.

The following table shows an analysis of the valuation’s sensitivity to the various

multiples applied and the corresponding percentage of premium or discount vs.

the average of peers we have identified.

We have excluded from the calculation of the sector’s average the two outlyiers,

featuring the lowest stock liquidity, i.e. Hermès (because of its small free float) and

Brunello Cucinelli (with its peculiar long term project of “sustainable growth”, which

explains a relatively stable “shareholders’ club”).

SENSITIVITY OF VALUATION

EV/EBITDA P/E

Equity (€ mn) 2013E 2014E 2015E 2013E 2014E 2015E

2,000 11.6 9.8 8.0 21.1 17.6 14.4

Premium (discount) vs. peers -5.2% -8.4% -14.6% -0.5% -5.2% -11.8%

2,200 12.7 10.7 8.7 23.3 19.3 15.8

Premium (discount) vs. peers 3.5% 0.4% -6.2% 9.5% 4.2% -3.0%

2,400 13.8 11.6 9.5 25.4 21.1 17.3

Premium (discount) vs. peers 12.3% 9.1% 2.3% 19.4% 13.7% 5.8%

2,600 14.8 12.6 10.3 27.5 22.8 18.7


2,800 15.9 13.5 11.1 29.6 24.6 20.1


3,000 17.0 14.4 11.9 31.7 26.4 21.6

Premium (discount) vs. peers 38.5% 35.4% 27.7% 49.3% 42.2% 32.3% Source: EQUITA SIM estimates



HIGH QUALITY, FOR BOTH CONSUMERS AND INVESTORS

The Moncler brand’s roots date back to the 1950s, when it equipped the Italian

Himalayan expedition, as a high performance technical jacket born for Alpine use. In

the 1970’s it became a symbol of an elite skiing, worn by stars like Brigitte Bardot

and Alain Delon during their holidays in the midst of the snow.

The story of the Moncler brand then became a story of fast

growth (3-year sales CAGR = 30% in 2010-12, based on 2009

divisional data) and internationalization (today 74% of sales

are generated abroad), thanks to the remarkable success of

the restyling and repositioning process undertaken by the

present chairman and creative director, Remo Ruffini, who

acquired the brand in 2003. Since the beginning, Mr. Ruffini’s

strategy was centred on brand’s exclusiveness, working on both product

offering (style, materials, overall brand’s architecture) and distribution (careful

selection in the wholesale channel, internalisation of licenses, start of a

monobrand presence consistent with the brand’s new image).

Today the Moncler brand not only rightfully forms part of the luxury arena

(strong heritage, exclusiveness, very high quality, high price positioning, strong

recognisability and iconic products) – but it also holds:

- a unique positioning as leader in luxury outerwear, with a contemporary

casual/chic style conceived to survive fashion, conjugated in several lines and

collections, suitable to a variegated public and different occasions for use.

- a strong international vocation, thanks to the link with skiing and with the snow

tourism, which, by definition, fuel an International customer base. As a matter of fact,

60% of revenues in group’s Western European flagship stores are generated by

tourists, with most of that coming from Non-European customers.

Two years after the past IPO attempt of June 2011 (which ended with the entry of

Eurazeo in the company’s share capital), Moncler comes to the market today boasting:

- a clearer equity story, offering a pure bet on luxury, thanks to the disposal of

the “Casual Brands” division (four brands positioned in the medium/high-end

casual wear segment), which has been just signed (closing on November 8th).

- an even stronger brand positioning, with an enhanced sales mix in terms of

distribution channels (retail up to 51% of revenues vs. 27% in 2010, growing at

+82% 2Y CAGR) and geographies (Americas and Asia up to 42% of revenues

vs. 24% in 2010, growing at +73% 2Y CAGR), consistently with the strategic

guidelines highlighted by management two years ago.

- a superior track record of growth and profitability (see the table below),

beating our past IPO estimates by more than 20%: the group has closed 2012

with € 489 mn revenues and € 162 mn Ebitda, with Ebitda margin of 33%, at

the top of the sector, second only to Hermès and Prada which however can

rely on a much stronger exposure to leather goods and retail.

- a still untapped growth potential, with only 122 monobrand stores as of

September 2013, a relatively limited presence in high potential markets like

US, China, Eastern Europe, as well as plenty of room to penetrate new

markets such as Canada, Brazil and Middle East.

Moncler represents in our view one of the best quality and fastest growth


MONCLER MAIN NUMBERS (€ mn)

2010 Margin 2011 Margin 2012 Margin 3Y CAGR

Sales 283 100% 364 100% 489 100%

Increase 28.1% 28.7% 34.5% 30%

Adj. Ebitda 91 32% 114 31% 162 33%

Increase 41.1% 26.3% 41.2% 36%

Adj. Net profit n.a. n.a. 58 15.9% 82 16.9%

Increase n.a. n.a. 42.7% n.a. Source: Equita SIM estimates and Company data

CHANNEL BKD 2012


GEOGRAPHICAL BKD 2012


Wholesale49%

Retail51%

Italy26%

Emea ex Italy32%

Asia and RoW32%

Americas10%



GROUP’S ORIGINS AND PRESENT SHAREHOLDER BASE

To pass from the historical Moncler brand to the group that controls it today it is

necessary to go back to 2003, when the Italian entrepreneur Remo Ruffini -

present chairman and creative director - purchased the Moncler brand from the

Finpart group, within which he had made his mark as the creative director of the

subsidiary Pepper Industries (holding company for the brands that used to be part

of the “Other Brands” division, before their recent spin-off).

Purchase of the brand was followed by the purchase of operations. In 2005, with

the financial support of the Italian merchant bank Mittel, Mr. Ruffini in fact

purchased 100% of Pepper Industries, thus creating a whole group and initiating a

process of evolution and restyling of the main brand, Moncler.

In 2008, with entry as a shareholder of the Carlyle private equity fund, the relaunch

and internationalization plan initiated by Mr. Ruffini underwent acceleration,

particularly as regards strengthening of the retail strategy.

In June 2011, when the first IPO process took place, the sale to a third private

equity firm was finally preferred instead of the equity market: Eurazeo thus

entered the Moncler share capital with a 45% stake which it bought from:

- Carlyle (down from 48% to 17.76% today)

- Mittel (which, through its vehicle Brand Partners 2, went down from 13.5% to the

current 4.99%)

- Mr. Ruffini himself (through its holding company Ruffini Partecipazioni, which

went down from 38% to 32% today).

This is still the company’s current shareholding structure (see chart on the left).

When Carlyle entered the company in 2008, it valued Moncler Group (i.e.

including the “Other Brands” division) € 470 mn EV (i.e. 9x EV/EBITDA).

When Eurazeo entered the company in 2011, it valued the Moncler Group

(still including the “Other Brands” division) € 930 mn equity and € 1.2 bn EV

(following € 150 mn dividends distributed by the company just before the entry of

Eurazeo). The implied multiple at that time was 16x P/E or 10.2x EV/EBITDA,

based on our past estimates for 2011.

Most recently (August 2013), also the Investment Company Tamburi

Investment Partners acquired an indirect stake in Moncler (buying 14% of

Ruffini Partecipazioni from Mr. Ruffini), with an implicit valuation that we

estimate close to € 2 bn equity or € 2.17 bn EV. This would imply a 2013 P/E of

21x and EV/EBITDA of 11.6x (based on our 2013 estimates). An earn-out

mechanism has also been envisaged in favour of Mr. Ruffini.

THE IPO

The offer will be only secondary, which we justify with the group’s sound financial

structure (2012 D/EBITDA = 1.4x) and strong cash generation ability (unlevered

FCF/EBITDA at 40% in 2013E): we in fact expect the company to become cash

positive in 2016.

Free float will be about 30%. We expect Mr. Ruffini not to be among selling

shareholders.

Listing will serve mainly to give a further boost to internationalization via:

1. Greater international visibility and higher standing of the group

2. Attraction and motivation of quality management, including managers already

present in the company. A stock option plan up to 3% of company’s share

capital will be in place after the listing.

3. Greater transparency and managerial discipline.

MONCLER: SHAREHOLDING STRUCTURE

Source: Company data GoodJohn & Co. refers to Mr. Sergio Buongiovanni (member of the board)

Eurazeo45.00%

Carlyle17.76%

Brand Partners 24.99%

Ruffini Partecipazioni32.00%

GoodJohn & Co.0.25%



REPOSITIONING IN THE LUXURY ARENA: UNIQUENESS AND EXCLUSIVITY

In the 1980s the original Moncler duvet jacket had become a metropolitan

garment, in glazed nylon and flashy colours (blue, yellow, orange and green), with

a well visible logo on the front, immediately establishing itself as a must-have for

teenagers: a real fashion phenomenon. However, after the 1980s “explosion”, the

brand gradually lost its sparkle.

We now review the main steps of the repositioning and internationalization

process started by Mr. Ruffini in 2003, which has instead made of Moncler the

leading luxury sportswear brand as we know it today.

MONCLER BRAND REPOSITIONING


� Wider assortment: beyond the historical sporty winter jackets

1) Wearability and materials: while maintaining and revisiting the historical

roots of the original alpine garment, on which the brand’s strong heritage is

based, at the same time Mr. Ruffini and his team have transformed it, with the

aim of making it an across-the-board brand, capable of being conjugated in

different occasions and for different consumers. In this way the duvet jacket

has become more feminine, slimmer and more chic – and also more versatile,

elegant and contemporary, suitable no longer just for the mountains and sport,

but also for towns and for the various moments of everyday life.

2) Overall architecture of the brand: Moncler Main Collection, the best known

and widest spread, has been developed in several lines with different styles

and price positionings (Première, Sport Chic and Archive), and new product

categories have been added to flank outerwear. The Main Collection has also

been joined by Grenoble, a technical/outdoor sports collection with a total look

proposition. At the same time, as a further luxury statement, the Main

Collection has been flanked by two haute couture collections (Gamme Rouge

for women, launched in 2006, and Gamme Bleu for men, launched in 2009),

designed by internationally famous stylists and presented at the main

European fashion weeks (Paris and Milan).

3) Deseasonalization: the weight of the Spring/Summer collections has steadily

increased in both channels, thanks also to innovative products such as the

“long saison” jacket (an extremely light down jacket, which can either be used

as a summer jacket or as an under-jacket for the colder days. Spring/summer

items now account for 30% in the wholesale channel and 15% in the retail

channel (the incidence is lower in retail as new stores are usually opened in

the F/W season, and also because the selling period of the S/S season is

usually shorter in group’s DOS, carrying winter items at full price also during

the January/February period).



4) Introduction of other complementary product categories, towards a total

look approach (mainly knitwear, which is the category most consistent with

brand’s roots, but also shoes and bags). As of today, non-outerwear accounts

for 15% of revenues up from 8% in 2006.

THE MONCLER REPOSITIONING STORY: BEYOND THE HISTORICAL SPORTY WINTER JACKET


� Exclusiveness: raising brand’s standing

1) Style: reduced presence of glazed nylon and lower importance of the logo,

both in terms of weight on sales (tangibly rationing its presence in stores) and

of visibility on garments (a smaller logo than the historical one, and no longer

on the front of the garment but on the sleeve) in order to prevent its rapid

spread from diluting the brand. Today sales with the logo account for 70% of

the total, which goes down to 30% if we exclude items with a less visible logo

in dark leather.

2) Price positioning: the Moncler brand has steadily gone from the medium

price range to the medium-high range and high-end (average price of € 800

for a winter jacket), with an annual price increase in the last few years that we

estimate in the high single digit range. At the same time the company has

adopted a no-markdown policy in its stores, helping to increase

consumers’ perception of scarcity and exclusiveness.

3) Communication: the communication strategy and the guidelines for

advertising campaigns have been redefined with the aim of emphasizing the

brand’s uniqueness and exclusiveness. The fashion shows of Gamme Rouge,

Gamme Bleu and Grenoble at the Milan, Paris and New York fashion weeks

are also a key component of the brand’s communication strategy. These are

joined by one-off events in target markets, VIP endorsement and editorials.



� Distribution: more selective and global

1) Downsizing of wholesale network of multibrand stores, which decreased

from about 2,800 stores in 2008 to about 1,850 as of today, with more

stringent selection above all in Italy and Japan were the wholesale presence

was most spread. Since the beginning, focus has shifted from the sports

product channel to that of apparel boutiques. The choice of stores now meets

specific criteria of consistency with the brand’s image in terms of choice of

assortment, store location and Moncler’s products visibility.

2) Development of a monobrand network to help strengthen the Moncler brand’s

image and accompany its internationalization. The first sky resort boutique was

opened in 2006, and in 2007 the first urban store. Today (as of September 2013),

the Moncler brand has 122 monobrand stores, of which 98 directly operated

(DOS), located in the main international cities and in some of the most

exclusive skiing localities.

3) Control of distribution, with the internalization in 2009 of licenses for the

Japanese market and for children’s wear, through the creation of two

dedicated joint ventures, 51% and 50.1% owned by the group, respectively

(the JV for the Enfant business has also been recently terminated and

Moncler will fully control the business as from January 1st, 2014).

4) Increasing penetration abroad, in particular in Asia but also in North America

and in the rest of Europe. The brand is now distributed in 66 countries around

the world. The incidence of the Italian market, in fact, has gradually

decreased, particularly in the last few years, going down from 52% of Moncler

brand revenues in 2008 to 26% in 2012.

MONCLER GROUP: EVOLUTION OF THE SALES MIX

GEOGRAPHICAL


BY CHANNEL


MONCLER GROUP: SUCCESSFUL PRODUCT EXPANSION

BREAKDOWN BY PRODUCT (2012)


BREAKDOWN BY SEASON (2012)


87% 83%73%

62%49%

13% 17%27%

38%51%

2008 2009 2010 2011 2012

Wholesale Retail

Outerwear85%

Non Outerwear15%

Fall/Winter77%

Spring/Summer23%

52% 50%42%

34%26%

34% 33%34%

33%32%

9% 13%18%

25%32%

5% 4% 6% 8% 10%

2008 2009 2010 2011 2012

Italy Emea ex Italy Asia and RoW Americas



THE MONCLER BRAND TODAY: “THE GLOBAL DUVET JACKET”

Thanks to the excellent work done by Mr. Ruffini and his team since 2003 to date,

the Moncler brand is now able to count on:

- Unique positioning in the luxury arena, with high international vocation

- A varied and structured proposition

- Multichannel and global distribution, efficient and consistent with the

brand’s positioning.

� A unique positioning in the luxury arena

Today the Moncler brand rightfully forms part of the luxury arena by virtue of its:

- Strong heritage, due to its historical reputation as a high-performance alpine

garment, associated with the important achievements of professional

mountaineers.

- Exclusiveness, fuelled by the high price positioning (as for outerwear, we

estimate an average price of € 800-1000 for the Autumn/Winter collection and

of € 400-500 for the Spring/Summer collection), by the company’s no-

markdown policy, by the presence only in select stores and by the Group’s

efforts to avoid inflation of the famous logo.

- Very high quality: (1) selected raw materials, sourcing of which is directly

managed by the company, (2) constant and directly managed quality checks

throughout the production process (fully outsourced), and (3) production

totally made in Europe (mainly Eastern Europe) with some items even

handmade in Italy (Gamme Rouge and Gamme Bleu collections).

- Strong recognisability, thanks to its easy visibility (outerwear is always

visible by definition) and to its iconic products (evergreen account for 20% of

Moncler’s revenues). Moncler has in fact become synonymous of duvet; its

brand awareness has always been very strong not only in its domestic market

but also in Japan, and has recently increased considerably in China and in the

US.

- a strong international vocation, thanks to the link with skiing and with the

snow tourism, which, by definition, fuel an International customer base. This

has been a key success factor for the rapid international expansion of the

brand outside its domestic market. Suffice it to say that 60% of revenues in

group’s Western European flagship stores are generated by tourists (similar

to more international brands such as Prada and Salvatore Ferragamo, and

above the 30/40% incidence we estimate for less international brands, such

as Brunello Cucinelli or Tod’s). Most of tourists purchases are generated from

Non-European customers. Light duvet jackets for example are a key success

factor for the brand vis à vis customers from warmer regions such as Brazil,

Middle East, Hong Kong.

In our opinion the strength of the Moncler brand lies in the uniqueness of its

proposition and positioning. Moncler has managed to win leadership in

outerwear thanks to an across-the-board style – which we can define as

casual/chic, informal but refined at the same time – that, in its various conjugations

and lines - make it suitable for different occasions and for different consumers.

Mr. Ruffini often explains this valuable versatility very effectively: the Moncler

duvet jacket must “dialogue with a variegated public, from the grey-suited manager

to the boy on a scooter, from the skiing enthusiast to the lady attending the first

night of La Scala’s opera season”.



� A structured proposition, conjugated in different collections and lines

The overall brand architecture that management has developed since 2003

exactly reflects the across-the-board positioning that is its hallmark.

In effect, the Moncler proposition is organized in several lines and collections,

covering the various segments of the luxury pyramid comprehensively and in a

structured manner, while at the same time meeting different needs in terms of use.

All the collections in turn comprise two seasons: Autumn/Winter (which, overall,

accounts for about 77% of the brand’s total sales in FY12) and

Spring/Summer (23% of the total).

Some collections also feature product categories other than outerwear (about 15%

of 2012 sales, of which we estimate about two thirds is knitwear and about one

third are accessories, mostly shoes).

The proposition is also balanced in terms of gender: excluding the children’s

segment (which we estimate accounted for some 5-10% of FY2012 sales) the

respective weight of the collections for men and women is in fact similar.

MONCLER BRAND: COLLECTION STRUCTURE


Main Collection: easy to wear

The Main Collection is the most important collection (we estimate it accounts for

some 85-90% of sales). It is also the one most accessible in terms of price

positioning and more versatile in terms of use and wearability. It also includes a

select offering of products other than outwear – in particular knitwear and cut &

sewn items, but also accessories (footwear and, to a lesser extent, bags).

The Main Collection in turn is organized in several lines:

- Première (for women only): the most elegant and refined, and thus also the

most expensive

- Sport Chic (for men and women): it embodies a sober, contemporary style, for

metropolitan use

- Archive (for men and women): based on the brand’s historical roots, with

models taken from the archive and revamped, mostly showing the typical

logo

- Enfant (for children).

1,500 €

1,000 €

800 €

300 €

Avg Price



Grenoble: a sporty/active concept

This is the collection with the greatest technical content, designed for outdoor

sport and evoking the brand’s main historical products.

In this case the proposition is a total look, with a complete outfit, which includes

trousers, t-shirts, pullovers, coordinated accessories (above all footwear) and, of

course, the strong point, outerwear.

Fashion content is nevertheless in the forefront. This collection is in fact presented

during the New York fashion week.

Grenoble is sold only in DOS and by a few select multibrand retailers.

Gamme Rouge/Gamme Bleu: Haute Couture collections

These are the highest end collections of the Moncler

brand’s proposition, made in Italy, tailored and hand-

made, almost entirely dedicated to outerwear and

designed by famous international stylists.

The first of the two, the Gamme Rouge collection for

women, was launched in 2006. Designed first by

Alessandra Facchinetti and then by Giambattista Valli, it

embodies a sophisticated, modern and refined

interpretation of the duvet jacket.

The second one, the Gamme Bleu collection for men, was launched in 2009. Still

designed by the stylist Thom Browne today, it is a proposition that combines

sartorial quality and a sporty core.

Both collections are shown during the main fashion

weeks (Gamme Rouge in Milan and Gamme Bleu in

Paris), contributing to underpin brand positioning

and image on a global scale.

Retail distribution is highly selective for these two

collections. They are sold only in few select DOS and in

the most exclusive multibrand boutiques (around 250

stores in total).

Special Projects & Capsule Collections

Capsule collections are highly innovative collections realised through

collaborations with avantgarde designers, which give freshness and energy to the

brand and might become source of inspiration for Moncler’s other lines.

The same is true for some special projects like the one launched with Rimowa for

a multi-wheel cabin trolley.

Eyewear

Consistently with its strong attention to product quality and brand positioning, the

company has decided to pursue its growth in the eyewear segment directly and

not through a license, as it is instead typical in the industry.

Moncler has in fact recently signed a Joint-Venture with the eyewear producer and

distributor Allison (51% Moncler and 49% Allison): the first sunglass collection has

been presented at the latest Mido fair in May, and also a prescription collection

has recently been launched at the Silmo fair at the beginning of October.



A global distribution platform leveraging on retail and wholesale

The chart below summarizes the estimated contribution of each single

combination of channel/region to Moncler’s revenues, based on FY12 numbers.

As one can see, the most important revenue sources for the group are the retail

channel in Asia and the wholesale channel in Emea.

MONCLER: MAIN CONTRIBUTORS TO TOTAL SALES


The retail channel accounted for 51% of Moncler’s 2012 revenues.

Sales in this channel are generated by a network of 98 free standing DOS (as of

September 2013), of which 56 are in the Emea region (of which 17 in Italy), 6 are

in the Americas (US), and 36 are in Asia (of which 15 in Mainland China).

MONCLER: DOS STORE NETWORK (as of Sept. 2013)


15%

12%

24%8%5%

27%

5%5%

�� Emea

�� America

�� Asia

��Italy

dark = retail pale = wholesale

8

11

1517

16

24

31

39

12

22

31

36

34

6 6

0

5

10

15

20

25

30

35

40

2010 2011 2012 Sept. 2013

Italy Emea Asia Americas



Free standing stores can show different formats:

- Flagship stores: located in top luxury streets, these stores are the most

representative of Moncler’s image and positioning. Thanks to their size (400

sqm on average) - they are also the ones carrying the widest assortment of the

brand’s collections and product range. Main flagship stores are Milan (via

Montenapoleone), Paris, New York, Tokyo, Beijing, Shanghai, Hong Kong.

- Urban boutiques: they are located in the main cities (including Milan, Paris,

Munich, Zurich, London, Los Angeles, Chicago, Osaka, Tokyo, Shanghai,

Beijing, Hong Kong) and their size is in the 90-250-sqm range (we estimate 150-

160 sqm on average). Thanks to their large size, they usually carry a wide

assortment.

- Ski resort boutiques: they are located in the best-known

and most exclusive ski resorts (St Moritz, Cortina,

Courmayeur, Crans-sur-Sierre, Megève, Courchevel,

Aspen, Gstaad, Verbier, Kitzbuhel, and Zermatt) and have

a smaller average size than urban boutiques (in the 35-100

sqm range, with the exception of the flagship in St. Moritz,

recently reopened with a 200 sqm surface – see picture on

the left). These stores have a specific assortment, different

to that of urban boutiques not only for reasons of space, but

also in order to give more emphasis to more technical

products, thus expressing the link with Moncler’s heritage

and DNA.

- Concessions: these are corners located in the main department stores and run

directly by the company. They have an assortment similar to that of urban

boutiques but narrower because of the smaller spaces (between 20 sqm and 65

sqm). The company was running 26 concessions as of September 2013.

- Outlets: they take the unsold stock of the retail network or any production

surplus to the wholesale backlog. The company does not produce on purpose

for the outlet channel. These stores are always located in the main outlet malls

worldwide. The company was running 12 outlets as of September 2013, of

which 3 in Italy. Outlets’ sales account for about 8% of total group’s revenues

On the other side the wholesale channel, accounting for 49% of the Moncler

brand’s sales in 2012, is organized in:

- Multibrand stores: about 1,850 independent boutiques worldwide as of

September 2013 (of which about 50% in Emea and about 30% in Italy),

meticulously selected to assure consistency with brand positioning. As a

reference, the Moncler’s wholesale presence in Italy is below that of the Tod’s

group in terms of number of accounts (about 500, vs. close to 600 for Tod’s).

This network is almost exclusively dedicated to the Main Collection since, as we

have seen, Grenoble and Gamme Rouge/Gamme Bleu have even more

exclusive distribution.

- Shop in Shop: 23 as of September 2013. These are corners in selected top tier

department stores (including Bergdorf Goodman, Bloomingdale’s, Neiman

Marcus, Harrods, Tsum, Harvey Nichols and Shinsegae). Size of these spaces

ranges between 20 and 65 sqm. On top of the 23 corners, the group also has

one franchised store in Seoul (Korea).



A SUPERIOR TRACK RECORD OF GROWTH …..

Following the successful repositioning of the past years, the brand has been

achieving very strong growth, with sales CAGR in the 3-year period 2010-2012

of +30% (based on 2009 divisional data). This is significantly above the +11%

CAGR of the global luxury market as a whole.

In particular, in the last two years, 2011 and 2012, with repositioning

substantially completed, growth has continued to run at + 32% CAGR, or +29%

constant currency vs. +18% of main luxury peers.

The quality of this performance is demonstrated by:

- the healthy contribution in terms of SSS growth: +11% CAGR in the two

year period, in line with main soft luxury peers reporting this metric (Prada,

Ferragamo, Burberry, Tod’s), which however boast on average a higher

exposure to the fastest growing region, i.e. Asia Ex-Japan (estimated at 16% for

Moncler at the end of 2012 vs. 32% avg for soft luxury peers, excluding Brunello

Cucinelli).

- the double digit growth in average per-store sales of the wholesale

channel. This channel in fact managed to achieve a 7% CAGR in the period in

spite of an underlying -6% CAGR in the number of accounts, as a result of the

selection and upgrade of the network.

MONCLER: HISTORICAL SALES GROWTH

SALES BRIDGE 2010-2012 2012MONCLER SSS GROWTH VS. PEERS


The overall group’s performance is even more remarkable when compared

with players with similar exposure to Italy and to wholesale, the two recently

weakest market combinations in the sector. We think in particular to Tod’s:

starting with 49% of 2010 sales in the wholesale channel (vs. 73% for Moncler)

and 54% in Italy (vs. 42% for Moncler), Tod’s showed a 2011-12 CAGR for

revenues of +10.6% vs. +32% for Moncler.

And this overpeformance of Moncler has been confirmed also in the 1H of 2013,

with +22% in revenues for Moncler vs. +2% for Tod’s.

Last but not least, actual 2012 numbers of the company have exceeded our

past IPO estimates by more than 20%, thus proving management’s strong

execution skills.

-10%

-5%

0%

5%

10%

15%

20%

25%

30%

FY09 FY10 FY11 FY12 1H13

Prada Ferragamo Tod's (const. forex)

Burberry (calendarized) Moncler Avg (ex Moncler)

283

489

0

100

200

300

400

500

600

2010 SSS growth New openings Wholesale Forex 2012



As for Moncler, the comparison with past estimates must refer to the old group’s

set-up, which used to include also the recently disposed casual wear division

(three proprietary brands - Henry Cotton’s, Marina Yachting, Coast+Weber+House

- and the licensed brand 18CRR81 Cerruti). This was in fact the structure of the

Moncler group at the time of the past IPO attempt.

Actual numbers are reported in the Moncler Group’s 2012 consolidated annual

report, and we have compared them with past estimates in the table below.

MONCLER GROUP: STRONG BEAT OF PAST IPO ESTIMATES (€ mn)

2010 2011E 2012E 2011A 2012A BEAT OF 2012

Sales 429 488 550 513 624 13%

Increase 15% 14% 13% 20% 22%

Adj. Ebitda 102 117 134 123 170 27%

Increase 33% 15% 15% 20% 39%

Adj. Net profit 52 60 70 58 76 9%

Increase 44% 16% 17% 12% 31%

Moncler brand revenues 283 342 403 364 489 21%

Increase 28% 21% 18% 29% 34%

Other brands revenues 146 146 147 149 135 -8%

Increase -4% 0% 0% 2% -10% Source: EQUITA SIM estimates & company data

The brands included in the “other brands” division used to be much more exposed

to wholesale and to the Italian market, and they have in fact performed below

original expectations.

On the other side, the Moncler brand alone, which comes to the market

today, significantly exceeded original expectations both in terms of sales

and EBITDA. Beat in net profit, still at 9%, would have been even stronger should

the company not have distributed the € 150 mn dividend at the end of 2011, which

was not included in our estimates as of May 2011; this in fact entailed higher

financial costs compared to our original projections.

If we instead look to the other main listed luxury peers, actual 2012 numbers

have exceeded 18-month-earlier consensus estimates by only 6%, as an

average between some virtuous examples (Hermès, Burberry, Prada) and some

disappointments (mainly Tiffany and Tod’s, the latter being affected by its

particularly high exposure to Italian Wholesale).

ACTUAL VS. CONSENSUS EPS OF PEERS (€)

2012E 2012A Beat/(miss)

Hermes 5.3 7.0 32%

LVMH 6.9 6.7 -3%

Richemont 3.5 3.7 3%

Tiffany 3.8 2.5 -34%

Burberry 68.6 88.0 28%

Tod's 5.1 4.8 -6%

Ferragamo 0.6 0.7 3%

Prada 0.2 0.2 22%

Average +6% Source: Bloomberg



… WITH BEST IN CLASS PROFITABILITY

EBITDA margin has topped the 33% mark in 2012, up from 29% in 2009, with

3Y CAGR of +36% mainly driven by:

- Growing weight of retail: the retail channel in fact boasts a higher profitability

compared to wholesale both at gross margin level (80% for retail vs. 60% for

wholesale) and also in terms of EBITDA margin (we estimate 5-7 percent

points higher). The gap is instead less significant at EBIT level.

- Price effect and improved collection mix, thanks to the brand repositioning

strategy and to the increasing presence of more sophisticated collections/lines.

- Increasing exposure to foreign markets, where mark-ups are higher (2.6x

in Europe, 3.2x in US, about 3.5-4.0x in Asia) and profitability is also above

that of Italy and Europe.

Forex have also been of help, particularly in 2012 (we estimate about +100 bps

impact on profitability) and in 2010 (we estimate +50 bps impact), as most of

company’s COGS are denominated in Euro (the company does not use any

hedging policy).

MONCLER: HISTORICAL TREND IN SALES AND EBITDA MARGIN (€ mn)


With its 70% gross margin, 33% EBITDA margin and close to 30% EBIT

margin, Moncler ranks at the top of the sector also in terms of profitability

(see the charts below), which is even more striking in the light of the Moncler’s less

favourable sales mix (lower exposure compared to peers to the usually highest

margin category, leather goods, and to the highest margin channel, retail; see

charts on the following pages).

MONCLER: PROFITABILITY AT THE TOP OF THE SECTOR….

GROSS MARGIN EBIT MARGIN


10%

15%

20%

25%

30%

35%

Average (ex. Moncler)

50%

55%

60%

65%

70%

75%

80%

Average (ex. Moncler)

221

283

364

489

29%

32%31%

33%

25%

30%

35%

40%

45%

50%

0

100

200

300

400

500

600

2009 2010 2011 2012

Sales



….. IN SPITE OF A LESS FAVOURABLE SALES MIX VS. PEERS

PRODUCT MIX CHANNEL MIX


We attribute the superior profitability of Moncler to:

1) Its higher mark-ups compared to peers, particularly in Non-European markets

(we estimate average mark-up for the sector is about 2.3-2.5x for Europe, 2.7-

3.0x for US and 3.0-3.5x for Asia). This is mainly reflected by the high group’s

gross margin.

2) its strong retail performances:

- full-price sell-through that we estimate at 85-90%

- no mark-down policy

- best-in-class sales densities (we estimate above € 30,000/sqm)

- break-even usually a few months after inauguration (stores are mainly

opened in the 2H of the year, which is the period of highest seasonality for

the brand).

- Pay-back period of less than two years on average (€ 6k per sqm is the

average capex for a new store).

MONCLER: BEST IN CLASS SALES DENSITY

SALES PER SQM (€ k) SALES PER STORE (€ mn)


If we consider how recent is the development of the group’s retail network, we can

also imagine how much room is left for further improvements, for example in

terms of replenishments, which have still a marginal weight.

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Leather Goods Shoes Apparel Others Average (ex-BC; ex-Moncler)

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

retail Wholesale Others Average (ex-BC; ex-Moncler)

0

5

10

15

20

25

30

35

Ferragamo Burberry BrunelloCucinelli

Tod's Prada Group Moncler

-

5.0

10.0

15.0

20.0

25.0



As of now, the company has already all its stores connected through the internal

ERP system, with a daily monitoring of SSS growth trends; on top of this, a buffer

of finished products is kept at group’s four regional warehouses (Piacenza for

Europe, New Jersey for Americas, Tokyo for Japan and Hong Kong for the rest of

Asia) in order to meet possible request of additional products from the stores

during the selling season.

However this only happens for some best-selling carry-over items, in order to

maintain a low inventory risk: this is mainly the consequence of the company’s

long production lead-time (approximately one year from design to the start of the

retail sales season).

We expect a gradual further evolution of the supply chain in the coming

years, which might lead to a shorter production lead time and an increasing weight

of replenishments also for more innovative items, possibly translating into

additional sales opportunities.



VISIBLE GROWTH PROSPECTS

As we have seen thus far, past growth, although very strong, has not eroded

the brand’s exclusiveness and potential. On the contrary, analysis of the

various thrusts of this development, comparing them with the other soft luxury

peers, shows that the growth path is only in the early stages.

Management in particular intends to continue pursuing a strategy of

reinforcement in retail and international expansion, although still maintaining a

disciplined approach in terms of financial performance and brand’s positioning.

We attribute reasonably good visibility to this strategy, as it can rely on:

- consistency with the growth drivers implemented in the past

- strong management track record, as just commented

- group’s specific strength in retail, as already detailed

- a relatively safe store opening process.

� Retail expansion

The Moncler brand had 100 monobrand stores at the end of 2012 (83 DOS + 15

shop in shop and 2 franchised stores). The chart below shows that Moncler is

still considerably underrepresented in terms of single-brand stores in

important geographical areas, not only compared with larger peers but also with

brands more similar in terms of size, such as Tod’s, Miu Miu, Brunello Cucinelli or

Loro Piana. This leaves the company plenty of room to at least double (but likely

even triple) its monobrand store network going forward.

MONCLER STORES: UNDERPENETATION VS. MAIN COMPETITORS

TOTAL MONOBRAND STORES EUROPE NORTH AMERICA

JAPAN ASIA EX-JAPAN MAINLAND CHINA

Source: Companies data, from latest available Annual Report

In addition, the retail channel, with 83 stores at the end of 2012, still accounted for

only 51% of sales, one of the lowest incidence in the soft luxury segment, as seen

in the previous paragraph.

Brunello Cucinelli

Moncler

Miu Miu

Bottega Veneta

Tod's brand

Prada brand

Hermes

Gucci brand

LV

Burberry

Ferragamo

0 100 200 300 400 500 600 700

Bottega Veneta

Moncler

Miu Miu

Brunello Cucinelli

Tod's brand

Gucci brand

Louis Vouitton

Prada brand

Hermes

Burberry

Ferragamo

0 20 40 60 80 100 120 140 160

Moncler

Brunello Cucinelli

Tod's brand

Miu Miu

Bottega Veneta

Hermes

Prada brand

Ferragamo

Burberry

Gucci brand

Louis Vouitton

0 20 40 60 80 100 120 140

Brunello Cucinelli

Burberry

Moncler

Miu Miu

Tod's brand

Prada brand

Hermes

Bottega Veneta

Gucci brand

Ferragamo

LouisVouitton

0 20 40 60 80 100

Moncler

Brunello Cucinelli

Miu Miu

Bottega Veneta

Hermes

Tod's brand

Prada brand

Louis Vouitton

Gucci brand

Ferragamo

Burberry

0 50 100 150 200 250

Miu Miu

Moncler

Brunello Cucinelli

Hermes

Prada brand

Tod's brand

Bottega Veneta

Louis Vouitton

Gucci brand

Ferragamo

Burberry

0 10 20 30 40 50 60 70 80



Management is targeting a 70% incidence of retail in the next three-four

years, leveraging on:

- New store openings (about 20 per annum, as it has been the case in 2011-12),

in the urban or flagship formats. The key targets are the premier high street

locations in Europe and Japan for flagship stores (for a footprint consolidation

on historical group’s markets), plus a growing penetration in US and China as

well as a starting presence in new markets (such as Russia, Eastern Europe,

Middle East, Canada, Brazil).

- An increase in the size of new free standing stores, from the current 90-110

sqm average to approximately 200 sqm of new openings and relocations, in

order to adequately accommodate in the stores all lines and product categories,

including knitwear and accessories.

- Development of the travel retail channel, which as of today consists of one

store only (in Fiumicino), with a target of further 5-6 openings in the next few

years.

- Conversion of wholesale shop-in-shop into retail concessions.

- Growth of the e-commerce revenues. The www.moncler.com website was

launched with the F/W 2011, in partnership with Yoox, the leading global

internet retailer, already the partner of numerous top international brands for

management of their respective monobrand sites. As of today, online sales

account for 1-2% of total brand’s revenues, a size similar to a flagship store. The

site has been launched in EU, US and in China (2012); a mobile platform is also

expected to be launched by year end.

Execution of this retail expansion strategy also appears relatively safe for

Moncler in the light of:

- The group’s disciplined approach in terms of financial performance: all

stores are budgeted to reach break-even within one year and to have a payback

period of less than three years. Actually, stores opened are usually in advance

compared with these objectives.

- The relatively small size of new stores, with 200 sqm for urban stores and 60-

80 sqm for concessions and travel retail stores.

- The attention to prevent any possible brand dilution: as a way of example,

in Mainland China, where the group currently operates 15 DOS, management

intends to open only further 8-10 stores in the next few years, just targeting 1st

and 2nd tier cities.

- The advance visibility on new locations: as a way of example, as of today the

group has already secured 18 stores out of a total of 20 new openings

envisaged for the next year.

- A relatively “controlled” pace of new openings (20 per year): this is in fact in

line with the last couple of years, without requiring any acceleration.

Management has already proven to be able to execute such a store opening plan.

In the meantime, SSS growth trend is expected to remain in the mid to high-

single digit range, of which about +5% driven by the price/mix effect. The

company is in fact always committed to rise the quality and material content of the

product: accordingly, management is also targeting the creation of a production

engineering team to search for innovative and technological solutions, materials

and weights.

On the other side, wholesale is expected to grow close to mid-single digit,

reducing its incidence on total revenues to about 30%, as a result of:

- a stable number of accounts, following a further selection in Europe but a

continued expansion in the US and Canada, within top tier department stores

- a focus on order per door, consistently with the historical trend.



MONCLER: SALES BRIDGE BY CHANNEL

Source: Equita SIM estimates

� Geographical expansion

Group’s international expansion will target:

- The Emea region, and in particular Russia, Eastern Europe, Middle East,

mainly leveraging on new retail openings (for example, the company has just

signed for a new location in Moscow).

- The Asian markets, aiming to strengthen penetration in Great China and to

consolidate its presence in Japan. Also in this case, retail will be the priority.

- The Americas, leveraging on a growing retail presence (flagship free standing

stores – only 6 stores in the US as of September 2013 - and concessions

within main luxury malls) but with also further expansion in the wholesale

channel (for both US and Canada), plus starting retail penetration in Brasil.

Management looks particularly confident on the potential of the US market,

thanks to a strong momentum of the brand and a rising appetite for luxury and

quality from the American consumer.

Overall, the Americas is expected to be the fastest growing region but Emea and

Asia will actually be the main contributors to group’s growth due to their relatively

larger size. Overall Italy, keeping a slightly positive trend in revenues, is expected

to further reduce its incidence on total revenues to about 15-20% vs. 26% at the

end of 2012.

MONCLER: SALES BRIDGE BY REGION

Source: Equita SIM estimates

489

872

0

100

200

300

400

500

600

700

800

900

1000

2012 Italy Emea Asia & RoW Americas 2016

489

872

0

100

200

300

400

500

600

700

800

900

1000

2012 SSS growth New openings Wholesale Forex 2016



� Opportunities in non-outerwear

With outerwear still accounting for 85% of revenues, the company has clear

growth opportunities in other product categories.

Focus will be mainly on knitwear, which is more consistent with the brand’s

heritage: sweaters in cashmere or wool, often combined with down in order to

state the link with Moncler’s DNA. Management is also targeting the creation of an

industrial platform dedicated to knitwear, in order to strengthen know-how and

innovation skills, as well as quality.

Offering is also being widened in leather goods (still at 4-5% of revenues, mainly

shoes), as well as in accessories such as eyewear or suitcases, with recent

specific product initiatives. At the same time the group will exploit an increased

presence of the Grenoble line, which proposes a complete outfit.

However, we see these drivers simply as a further support to revenue

growth, without factoring in any drastic acceleration in the incidence of non-

outerwear: management is in fact committed to remain consistent with group’s

DNA and heritage, focused on winter jackets.

The same in fact apply for the Spring/Summer season: this could potentially rise

its incidence up to 30% of revenues (as it is already the case for the wholesale

channel alone), but actually we expect an only marginal and gradual increase

going forward.

We have also to bear in mind that pricing for non-outerwear is about 30-40% that

of outerwear, while the average price of Spring/Summer garments is

approximately half that of Autumn/Winter garments. However, given the envisaged

consistency of the sales mix for the future, we expect an only marginal dilutive

effect on average group’s price and gross margin.



SEASONALITY OF RESULTS

The group features strong seasonality both of earnings and of cash generation.

Overall, we calculate that the 2H – were sales of the Fall/Winter season are

concentrated – accounts for almost 70% of the group’s full-year sales.

This depends on

- the seasonality of the product proposition. We recall the fact that

Fall/Winter collections account for 85% of Moncler’s revenues.

- the particular strategy of the company in developing the retail channel, with

new openings always concentrated in the 2H of the year, being this the period

of strongest seasonality for the brand and for retail in general.

Moreover, the strategy of retail expansion – with growing incidence of this channel

on total revenues - combined with such a strong sales seasonality, means that

growth rates are not evenly spread during the year, with stronger growth in 4Q

(where retail is concentrated) compared with the trend anticipated by earlier

quarters – with this being true both for sales/EBITDA and for cash

generation.

� Seasonality of sales and EBITDA

The third quarter is the most important one (about 35% of revenues and we

estimate about 40% of full-year EBITDA), as it is the one in which sales to

wholesale for the most important Fall/Winter season are concentrated.

It is followed by the fourth quarter (more than 30% of revenues and we

estimate about 40% of fully-year EBITDA), as this is generally the most

important quarter for the retail channel – particularly for the Moncler brand which

concentrates its sales in the winter season. The fourth quarter in fact accounts for

approximately 50% of the group’s FY retail sales.

MONCLER: SEASONALITY OF REVENUES (2011-2012)


The first quarter accounts for around 20% of full-year revenues and we

estimate a bit less in terms of EBITDA: deliveries to wholesale for the

Spring/Summer season are usually concentrated in this period, whilst retail is still

selling Fall/Winter garments at full price (no-discount policy in group’s direct

stores, even during the end-of-season sales period).

1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12

Wholesale Retail

% quarterly contribution:

22% 9% 41% 28% 22% 10% 36% 32%



Lastly, the second quarter is the weakest one, with only 10% of revenues and

likely slightly negative EBITDA. Deliveries of the Spring/Summer season to

wholesale are in fact lower here than in 1Q; at the same time, group’s direct stores

are only selling the Spring/Summer collection, clearly less important in terms of

sales volume compared to the Fall/Winter. Therefore, overall, total volume sold are

unable to assure adequate coverage of fixed costs.

We in fact remind readers that 32% of costs ex-D&A are fixed, and this

explains the even higher seasonality of EBITDA compared to revenues.

� Seasonality of net debt and cash generation

In this respect, the third quarter is the weakest one. This is in fact the key quarter

for wholesale sales, which leads to a peak in receivables and therefore also in

working capital and net debt.

The fourth quarter is instead the quarter featuring maximum cash generation,

thanks to the concentration of retail business and to collection of the wholesale

receivables generated in 3Q. Net debt in fact hits a minimum at the end of 4Q.

Overall, we estimate the average net financial position for the full year is aligned

with that of the beginning of the period.

MONCLER: SEASONALITY OF NET DEBT AND WORKING CAPITAL (2011-2012)


Dec Mar Jun Sept Dec Mar Jun Sept Dec

net debt working capital



9M RESULTS LARGELY UNDERPIN OUR FY13 ESTIMATES

Sales and EBITDA grew by +17.5% and +16% YoY respectively in 9M13, with

EBITDA margin slightly down to 29.5% vs. 29.9% in 9M12 and net profit up by

+19% YoY. 3Q in particular was up by +17% YoY (+22% YoY at constant

currency), with a slight improvement in EBITDA margin (+40 bps).

These results largely underpin our FY13 estimates, which might even turn to be

conservative: in particular we are factoring in

- FY revenues up by +17%, or +22% at constant currency

- FY adj. EBITDA up by +16%, with EBITDA margin down -40 bps (following a

negative forex impact which we estimate in excess of 100 bps)

- FY adj. net profit up by +15%.

� Sales up +17.5% YoY in 9M, with acceleration in SSS growth

The sales trend of the first 9M confirms the growth drivers on which our

estimates for the next 3-year period are based. Sales were in fact driven by:

- Retail (+42% YoY vs. +3% YoY for wholesale). The SSS growth was

particularly noteworthy, running at +18% over the 9M and even

accelerating compared to the +16% of the 1H, as opposed to the signs of

slowdown highlighted by some other soft luxury peers (e.g. LVMH in its

Fashion&Leather division, Kering at its luxury division, Tod’s in its retail

division). We estimate the company has benefited also from an improving time

to market of lighter F/W items, usually a strong selling item of the August-

September months.

The cumulative SSS growth figure at the end of each period is calculated as

the constant currency growth in revenues for stores opened at least 12

months. Therefore, over the first 9M13, the new DOS opening effect relates to

the 37 new stores opened since January 2012, compared to the 61 existing

stores as of December 2011.

In particular, the company has opened 15 stores in the 9M13 period, with

further 7 already signed for the 4Q. This is consistent with the pace of about 20

new openings per year targeted by management.

On the other side, the +3% growth of the wholesale channel continues to be

encouraging in the light of the on-going selection of the network, and of the

underlying weakness of the Italian market (see below), where about 30% of the

company’s wholesale accounts are located.

- Foreign markets (+25% YoY vs. +0.6% for Italy). Americas have been the

strongest region, driven by the US, whilst Asia was the region most affected by

the unfavourable forex movements (Japanese Yen in particular).

MONCLER GROUP: 9M SALES GROWTH DRIVERS (€ mn)

9M12 % 9M13 % FY12 FY13E

Wholesale 208 63% 214 55% 238 49% 245 43%

Increase n.a. 3% 5% 3%

Retail 124 37% 175 45% 252 51% 328 57%


Italy 105 32% 105 27% 128 26% 129 22%


Rest of Europe 113 34% 143 37% 157 32% 185 32%


Asia and Row 84 25% 101 26% 155 32% 195 34%


Americas 29 9% 41 10% 49 10% 64 11%


Total 331 100% 389 100% 489 100% 573 100%

Increase 27% 17% 34% 17% Source: EQUITA SIM estimates & company data



The revenue performance of the first 9M would apparently mark a sharp

slowdown compared to the +32% CAGR of the 2011-12 period, but we have to

bear in mind:

- The different impact from forex: -5% YoY in 9M13 as opposed to +4% reported

in 2012 and +1% reported in 2011.

- The additional contribution stemming in 2012 from the conversion to DOS of

the two big franchised stores located in Hong Kong, with the additional mark-

up on the respective volume sold accounting for about 4% of the 2012 reported

growth rate.

Having said that, the 9M sales trend fully underpins our +17% estimate for

the FY, with 4Q implicitly keeping the pace of the previous 9M.

Our estimate might even turn to be conservative: 4Q should in fact theoretically

mark an acceleration simply because of the seasonality peak of retail, which is the

fastest growing channel.

However, for the sake of prudence, we have taken into consideration:

a) The particularly challenging comparison base, with 4Q12 up by +55% YoY vs.

+27% YoY of 9M12 and +18% YoY of the 3Q12 alone.

b) The likely even heavier negative forex impact to be suffered in 4Q, as the

strongest depreciation is relative to Japan, where most of revenues are in the

retail channel and therefore concentrated in 4Q.

c) The lack of advanced visibility on a quarter with 80% of revenues driven by retail.

d) The signs of slowdown surfaced by some luxury players at the end of 3Q. Our

SSS growth estimate of +15% for the FY prudently allows for a similar

slowdown also at Moncler (we actually do not know the 2012 comparison

base by quarter for the SSS growth figure, which might also possibly play

against 4Q this year). As a matter of fact however, the exit speed of 3Q and

the month of October have been consistent with the +18% trend of the

first 9M.

� Profitability improving in 3Q (EBITDA margin +50 bps)

EBITDA posted a +16% YoY growth in the 9M13, with a slight margin dilution,

which resulted from:

- An improving gross margin, thanks to the evolution of the channel mix (with

growing weight of retail and of foreign markets). The negative forex effect

(which we estimate at about -120 bps) was partly offset by the price lists hikes

implemented by the company as from the F/W season, particularly in the

Japanese market (prices up by +8%).

- A growing incidence of selling expenses (+29% YoY), linked to the

development of the store network.

Based on the 9M margin performance, our FY estimate might again appear

somehow conservative, with -40 bps adj. EBITDA margin, implying a 4Q

trend similar to the 9M.

Following the seasonality of the retail business already commented, not only

revenue growth but also the progress of profitability is in fact usually more skewed

towards the 2H and 4Q in particular.

The growing weight of retail in the group’s sales is in fact dilutive for margins

in the first part of the year (EBITDA margin was actually down by -130 bps in

1H13) - as this is the period of lowest seasonality for the stores - whilst it become

strongly accretive in the period of highest seasonality, i.e. the 2H (were Fall/Winter

sales are concentrated) and in particular the fourth quarter. EBITDA margin was in

fact already up by +50 bps in 3Q13.



However, also in this case, for the sake of prudence, we have taken into

consideration:

a) The heavier forex impact expected in 4Q

b) The possibly more challenging comparison base, consistently with the revenue

trend of 4Q last year

c) Our prudent assumption of a slowing SSS growth in 4Q

d) An expected acceleration in the increase of G&A costs in 4Q, where we

assume strengthening of the corporate structure has been concentrated, with

addition of key management (in the financial and retail department, as well as

for direct management of Moncler Enfant).

MONCLER GROUP: 9M AND 4Q IMPLICIT P&L ( € mn)

9M12 Margin 9M13 Margin 4Q12 Margin 4Q13E Margin

Sales 331 100.0% 389 100.0% 158 100.0% 184 100.0%

increase 27% 17% 55% 17%

Gross margin 224 67.6% 269 69.2% 117 74.2% 136 74.0%

increase n.a. 20% n.a. 16%

Marketing (74) -22.5% (96) -24.8% (41) -12.3% (47) -12.2%

Selling expenses (38) -11.3% (43) -11.0% (14) -4.1% (18) -4.7%

G&A costs (24) -7.3% (29) -7.5% (5) -1.5% (6) -1.5%

Adj. EBIT 88 26.5% 101 25.9% 58 36.7% 65 35.2%


Non recurring (1) 3 Reported EBIT 88 26.5% 100 25.7% 58 36.7% 68 36.8%

increase n.a. 14% n.a. 17% Fin. Charges (13) (14) (4) (6) Pre-tax profit 75 22.6% 86 22.2% 54 34.2% 61 33.3%


Taxes (28) (31) (16) (20) Minorities (3) (3) 1 () Net profit 44 53 38 24.1% 42 22.7%


Depr (11) (14) (5) (7) Adj. Ebitda 99 29.9% 115 29.5% 62 39.6% 72 39.2%

increase n.a. 16% n.a. 15% Source: EQUITA SIM estimates & company data

Net profit of the 9M benefited from a slightly lower tax rate compared to last year

(36% vs. 37% of 9M12) but FY tax rate is expected to remain in the 34-35% range

(FY12 = 34%), which is what we have factored into our model.

Our FY estimate for reported net profit also include two non-recurring items

which should be posted in 4Q:

- € 3 mn positive non-recurring item above EBIT resulting from the sale of the

group’s store in Paris - relocated to a larger space

- € 2/3 mn negative non-recurring item among financials. These are the one-off

renegotiation costs just borne by the company to renew its existing term loan

while reducing the amount from the previous € 180 mn to the current € 120 mn

(maturity June 2018, with € 30 mn annual repayments on average from

December 2014 till June 2018).



� FCF generation improving, underpinning our FY expectations

FCF was a further positive message of Moncler’s 9M13 results, with an

improvement of € 23 mn which largely underpins visibility on our FY

expectations (we expect FCF up to € 54 mn for FY13 – 29% of EBITDA – vs. €

49 mn in FY12 – 30% of EBTIDA).

The slight increase in capex in particular is consistent with our FY estimate (€ 34

mn capex vs. € 26 mn in FY12).

MONCLER GROUP: 9M FCF GENERATION (€ mn)

9M12 9M13

Opening net debt (270) (229)

Net profit before minoriteis 47 55

Depreciation 11 14

Capex (22) (24)

Change in Working capital (62) (44)

Dividends (2) (2)

Others (8) (12)

Closing net debt (306) (242)

FCF (34) (11) Source: EQUITA SIM estimates & company data

The trend in working capital was instead apparently better than anticipated - with

incidence on T12M revenues down from 19% as of September 2012 to 15% as of

September 2013. However this trend was favoured by a timing effect (later

sourcing of raw material, with a consequently still high level of payables), whilst a

deterioration in the incidence of working capital has still to be expected on a

FY basis due to a growing weight of inventory, mainly as a consequence of retail

expansion. We therefore confirm our estimate of a 220 bps worsening for working

capital on a FY basis.

However, also in the case of FCF as it is for sales and EBITDA, our estimates

might appear too conservative, with an implied FCF in 4Q13 down by about €

17 mn vs. 4Q12: should retail exceed our prudent SSS growth expectations, this

would also strongly boost FCF in the quarter.




FOREIGN MARKETS

We expect 3-year 2014-2016E CAGR of +15% for sales, +16% for EBITDA, and

+20% for earnings, primarily driven by:

- The retail channel, with its share of group sales increasing from 51% in 2012

to 68% exp. in 2016E.

- International markets, with the incidence of the Italian market decreasing

from 26% in 2012 to 17% exp. in 2016E.

These are also the most profitable businesses: we therefore expect EBITDA margin

to improve by almost 100 bps in the period compared to our FY13 estimate, in spite

of about 50 bps further negative impact from forex expected in 2014 and of the

underlying increase in G&A costs envisaged to strengtheng the corporate’s

structure. In the meanwhile, EPS should benefit from deleveraging, thanks to

accelerating FCF.

MONCLER P&L ESTIMATES (€ mn)

2011 margin 2012 margin 2013E margin 2014E margin 2015E margin 2016E margin 3-Y CAGR

Sales 364 100% 489 100% 573 100% 666 100% 768 100% 872 100% 15%

Increase 29% 34% 17% 16% 15% 14%

Gross margin 244 67.0% 341 69.7% 406 70.8% 477 71.7% 558 72.6% 638 73.2% 16%

Increase n.a. 40% 19% 18% 17% 14%

Reported Ebit 102 28.0% 146 29.8% 168 29.3% 188 28.2% 221 28.7% 252 28.9% 14%

Increase 20% 43% 15% 12% 18% 14%

Net profit 56 15.4% 82 16.9% 94 16.4% 114 17.1% 139 18.1% 164 18.8% 20%

Increase n.a. 47% 14% 21% 22% 18%

Adjusted net profit 58 15.9% 82 16.9% 95 16.5% 114 17.1% 139 18.1% 164 18.8% 20%

Increase n.a. 43% 15% 20% 22% 18%

D&A (10) -2.7% (16) -3.2% (21) -3.7% (27) -4.1% (33) -4.3% (39) -4.5%

Other non recurring costs (3) 2

Adj. EBITDA 114 31.5% 162 33.0% 187 32.6% 215 32.2% 254 33.0% 291 33.4% 16%

Increase 26% 41% 16% 15% 18% 15% Source: EQUITA SIM estimates & company data

Sales CAGR of +15% in the period, driven by retail and foreign markets

� Retail

Our model incorporates a +22% 3Y CAGR for retail as the effect of:

- New openings: about 20 openings/year, close to the pace of previous years,

and an increase of average store size (+3/4% per annum), leading to an

overall increase in total selling surface at +19% CAGR in the 3Y period

- +8% SSS growth CAGR, prudently below the +12% 3Y CAGR of 2011-2013E,

and should stem from:

1) Growing volume (about +3/4%), particularly in the larger stores which, as

they handle a more complete assortment, can also count on a greater

number of selling opportunities.

2) Price/mix effect (about +4/5%), driven by rising product value in terms of

quality and materials, plus an increasingly favourable geographical mix,

with new openings concentrated in foreig markets (particularly Eastern

Europe, US and Asia), where mark-ups are higher.

- On the negative side, a negative currency impact, which we estimate at

about 5% for retail in 2014, based on current forex rates.

As already mentioned, the SSS growth figure is calculated as the constant

currency growth in revenues for stores opened at least 12 months. This

means, for example, that SSS growth at the end of 2014 applies only to stores

opened before the end of 2012, with a consequent new space effect relating to the

new openings of both 2013 and 2014.



MONCLER: SALES BREAK-DOWN BY CHANNEL (€ mn)

2011 % 2012 % 2013E % 2014E % 2015E % 2016E % 3-Y CAGR

Wholesale 226 62% 238 49% 245 43% 254 38% 265 34% 275 32% 4%

Increase 9% 5% 3% 4% 4% 4%

Retail 138 38% 252 51% 328 57% 411 62% 504 66% 597 68% 22%

Increase 81% 82% 31% 25% 22% 19%

SSS growth 9% 13% 15% 10% 8% 7% 8%

new openings 22 22 22 20 18 18

Final # of stores 61 83 105 125 143 161

Total sales 364 100% 489 100% 573 100% 666 100% 768 100% 872 100% 15%

Increase 29% 34% 17% 16% 15% 14% Source: EQUITA SIM estimates & company data

� Wholesale

For this channel, we estimate a +4% CAGR, mainly driven by per-store sales,

whilst the number of multibrand customers should remain almost unchanged as a

result of further minor rationalization in Italy/Europe (the process has instead

already been completed in Japan) offset by new accounts in markets still

underpenetrated such as US, Canada, Eastern Europe.

Also this channel, as well as retail, will benefit from the brand’s strategy of

enlarging product offering. On top of this, wholesale usually can rely on narrower

assortment, more focused on best-selling items. However, for the sake of

prudence, we are assuming a per-door performance below the like-for-like growth

of DOS due to possibly less effective retail management and store format.

The historical double digit growth rates in per-store sales between 2011 and 2012

(and even more so in the previous 2009-10) were temporarely fuelled by the

process of upgrading and enhancement of the network of multibrand customers.

This process, however, can be considered substantially completed.

MONCLER: FUTURE EVOLUTION OF THE SALES MIX

Source: Company data and EQUITA SIM estimates

Adj. EBITDA 3-Y CAGR +16% in 2014-16.

We expect EBITDA margin to increase by almost +100 bps in the 3-year

period (with a flat EBIT margin) in spite of about 50 bps negative impact from

forex expected in 2014 and in spite of the underlying increase in G&A costs

envisaged to strengtheng the corporate’s structure: this is thanks to the expected

positive impact from the sales mix which will be driven by retail and foreign

markets.

26% 22% 20% 18% 17%

32% 32% 33% 34% 35%

32% 34% 35% 35% 34%

10% 11% 12% 14% 15%

2012 2013E 2014E 2015E 2016E

Italy Emea ex Italy Asia and RoW Americas

49% 43% 38% 34% 32%

51% 57% 62% 66% 68%

2012 2013E 2014E 2015E 2016E

Wholesale Retail



MONCLER COSTS STRUCTURE (€ mn)

2011 Margin 2012 margin 2013E margin 2014E margin 2015E margin 2016E margin

Sales 364 100% 489 100% 573 100% 666 100% 768 100% 872 100%

increase 29% 34% 17% 16% 15% 14%

Gross margin 244 67.0% 341 69.7% 406 70.8% 477 71.7% 558 72.6% 638 73.2%

increase n.a. 40% 19% 18% 17% 14%

Selling expenses (77) -21.2% (115) -23.5% (144) -25.1% (175) -26.4% (206) -26.8% (238) -27.3%

G&A costs (41) -11.3% (51) -10.5% (61) -10.7% (72) -10.8% (81) -10.6% (89) -10.2%

Marketing (21) -5.8% (29) -5.9% (35) -6.1% (42) -6.3% (50) -6.5% (58) -6.7%

Adj. Ebit 105 28.7% 146 29.8% 166 28.9% 188 28.2% 221 28.7% 252 28.9%

increase n.a.

Non-recurring items (3) 2

Reported Ebit 102 28.0% 146 29.8% 168 29.3% 188 28.2% 221 28.7% 252 28.9%

increase 20% 43% 15% 12% 18% 14%

Depr (10) -2.7% (16) -3.2% (21) -3.7% (27) -4.1% (33) -4.3% (39) -4.5%

Adj. Ebitda 114 31.5% 162 33.0% 187 32.6% 215 32.2% 254 33.0% 291 33.4%

increase 26% 41% 16% 15% 18% 15% Source: EQUITA SIM estimates & company data

Relying on external production, Moncler features a flexible cost structure,

with fixed costs equal to about 22% of sales and 32% of total operating

costs, excluding D&A.

Specifically:

- Cost of sales (30% of sales in 2012)

- Marketing costs, stable at 6% of revenues in 2011-12 and forecast to show a

slight increase in the future, although remaining in the 6-7% range.

- Selling costs (23.5% of 2012 sales, including D&A equal to 3% of revenues).

These are explained by fixed costs for the retail store network (rents, personnel

and depreciation&amortization, estimated to account for 80% of this cost line)

and by selling costs for the wholesale network (the remaining 20% of the total).

About 60% of these costs are fixed (fixed rents, personnel for both wholesale

and retail, and D&A), whilst the remaining 40% is variable (variable rents, mainly

in China and for concessions within department stores).

- G&A costs (10% of 2012 sales), relating to the corporate set-up. They have

increased by 10 mn in 2012, and we expect a similar trend for the future, as

the company keeps on strengthening its corporate structure to accompany

overall growth of the business.

� Gross margin

We estimate a 240 bp increase of gross margin in the 2014-16 period.

Our assumption takes into consideration two important positive drivers, i.e.

- the expected growing exposure to retail, featuring a higher gross margin

- the geographical mix of new openings, with a steady increase of stores

operating abroad, where mark-ups are higher (taking the retail price in Europe

as 100, the price for the same article is 115-130 in the UK-USA, 130-150 in

Asia and up to 170 in Japan).

….. but also:

- the negative forex effect still expected in 2014 (-50 bps). This is because

most of company’s COGS are denominated in € (75% of raw materials come

from Europe, and all workshops for production are located in Europe).

- A modest negative impact from widening of stores’ selling surfaces with

greater presence of non-outerwear items, which – as already commented –

feature a lower average price and a possibly lower sell-through, thus with a

marginal impact on the currently outstanding 80% retail gross margin (we say

marginal impact as we have already highlighted the fact that management

remains committed to the brand’s DNA in outerwear and does not envisage a

material increase in non-outerwear incidence on total revenues).



� Selling expenses

For the part of selling expenses relating to the internal sales force, we have

incorporated growth a bit less than proportional to group’s wholesale sales.

As instead regards the part concerning the stores’ costs (personnel, rents), we

have factored in a CAGR of about 21%, consistently with the expected increase in

total selling space following the expansion of the network and the increase of the

average per-store area.

Overall, we expect the impact of this cost line on sale to grow continuously, albeit

at a gradually declining rate, thanks to gradual normalization of new openings

(which normally takes place within 2-3 years after inauguration).

Bottom line +20% CAGR expected in 2014-16

Our earnings estimates assume:

- An average cost of debt stable at about 7% in the period. The cost of the new

term loan is expected to remain in line with the previous financing (Euribor +

spread), at about 7%.

- A tax rate stable at around 34-35%, which management has indicated as

sustainable (34-35% was also the tax rate in 2011-12)

- Marginal incidence of minorities (0.1% as from 2014), down vs. 0.5% of 2012

and 2013E following the termination of the JV with Altana for Moncler Enfant

effective as from January 2014.

We therefore expect that estimated EBIT growth will be magnified at bottom-

line level by the steady decline of finance expenses, thanks to the FCF

expected for the group in the 3-year period.

Average annual Free Cash Flow generation above € 100 mn

Company’s debt is mostly the result of the € 150 mn dividends distributed in 2011,

before the entry of Eurazeo. Already in 2012 the group showed good cash

generation capacity, with FCF of € 49 mn, i.e. 30% of EBITDA, which rises to € 61

mn (38% of Ebitda) in terms of unlevered FCF, i.e. excluding financial costs. This

is close to sector’s average (34% FCF/Ebitda, excluding Brunello Cucinelli which

reported a negative FCF in 2012).

Our 2013 estimate also points to a healthy FCF of € 54 mn, i.e. € 69 mn unlevered

(37% of Ebitda), in line with sector’s average (still excluding Brunello Cucinelli,

which is expected to report a negative FCF also in 2013E).

For the 3-year period we expect an on-going improvement of FCF, up to

about € 140 mn in 2016E, turning NFP positive at the end of the period, as a

result of:

- increasing EBITDA

- stable capex at around € 35 mn, in line with the last few years average, being

the pace of new openings also similar. Capex in fact consist almost entirely of

investments in the store network, with marginal IT & Corporate investments.

Production is entirely outsourced and warehouses too are owned by third

parties, meaning that industrial capex is virtually absent

- dividend pay–out of 25% (this is our assumption as the company has not yet

decided on the matter)

- rising incidence of working capital.

Working capital incidence in 2012 was 7%, in line with the sector’s best

practice (vs. average for all peers of 19%). However this was already up by +270

bps vs. the 2011 figure, and we have factored in a similar deterioration also in

2013, as already commented, with a further worsening going forward (working

capital at 14% on sales in 2016E).



This is mainly the result of ever earlier purchases of raw materials (with the aim of

accelerating the production process and shortening time to market), which

translate into a lower level of payables at the end of the year compared to the

past. We nevertheless expect this dynamic to become gradually less important as

long as the company achieves its ideal time to market in the production process.

At the same time, a negative impact on inventory at year-end also comes from

expansion into retail, as group’s stores still carry some stock of Fall/Winter

products at the end of December to be sold full price during the months of January

and February (opposite to wholesale revenues, for which credit collection is mostly

completed within the end of the year).

MONCLER: FCF GENERATION (€ mn)

2011 2012 2013E 2014E 2015E 2016E

Net profit 58 85 94 114 139 164

Depreciations 10 16 21 27 33 39

Change in Wkc 3 -19 -19 -26 -22 -18

Cash flow provided by Operations 72 82 96 115 150 185

Capex (35) (26) (34) (34) (35) (35)

Others (10) (7) (8) (8) (8) (8)

Total FCF 26 49 54 72 108 142

Other investments

Disposals 6 27

Distribution of Dividends (153) (8) (2) (24) (28) (35)

Capital Increase

Total Change in cash (127) 41 58 75 79 107

Opening net debt (143) (270) (229) (171) (96) (17)

Closing net debt (270) (229) (171) (96) (17) 90 Source: EQUITA SIM estimates & company data

MONCLER: EVOLUTION OF TRADE WORKING CAPITAL (€ mn)

2011 2012 2013E 2014E 2015E 2016E

Receivables 52 71 82 92 102 112

Incidence on T12M sales 14.3% 14.5% 14.3% 13.8% 13.3% 12.8%

Inventories 50 60 73 88 106 124

Incidence on T12M sales 13.7% 12.3% 12.8% 13.3% 13.8% 14.3%

Payables (84) (94) (100) (99) (105) (114)

Incidence on T12M COGS -70.0% -63.7% -59.5% -52.2% -49.7% -48.9%

Total trade net working capital 18 37 56 82 104 122

Incidence on T12M sales 4.9% 7.5% 9.7% 12.3% 13.5% 14.0% Source: EQUITA SIM estimates & company data

Disposal of the Casual Wear division included in our estimates

Our estimates for NFP in the 2013-16 period also include the impact of the recent

disposal of the Casualwear division to the private equity group Emerisque Brands.

The deal has been signed on October 31st, with closing on November 8

th.

The agreement envisages a potential total consideration of € 22.1 mn to be paid in

three instalments of which two by the end of this year (€ 8.6 mn) plus a potential

price adjustment up to further € 13.5 mn next year, depending on certain P&L and

BS performance achieved by the disposed business in 2013.

Including the cost of the transaction and the fiscal advantage stemming from the

loss on the disposal value, the total net cash-in expected is of about € 5.6 mn

in 2013 and further € 17.2-26.6 mn in 2014 (depending on the price-adjustment

mechanism) – see the line “disposals” in our Cash Generation table above (our

estimates are factoring in the scenario of full price adjustment).

The total disposal consideration might be increased by a further earn-out

component to be paid in 2015, which however we are not including in our

estimates for the moment, for the sake of prudence.

The P&L impact of this transaction, which we have not illustrated for the sake of

simplicity, will be shown in company’s reporting as “discontinued operations”

below net profit.



SWOT ANALYSIS

Strenghts

- Strong positioning of the Moncler brand in the luxury arena: uniqueness,

strong heritage, exclusiveness, very high quality, strong recognisability and

international vocation

- Global and multichannel distribution network

- Best-in-class performance in retail

- Excellent track record of growth (3Y CAGR of +30% for revenues and +36%

for EBITDA in 2010-12), mainly driven by retail and internationalisation

- High margins (33% Ebitda margin in 2012) and cash generation (€ 61 mn

unlevered FCF in 2012, equal to 38% of EBITDA).

Weaknesses

- Low product diversification: notwithstanding the evident improvements of the

last few years, sales are still concentrated in winter outerwear, which is clearly

the historical core of the brand.

- High seasonality of the business, which make results more volatile as

influenced by weather conditions, either positively or negatively.

- Still high incidence of “logo” products, although decreasing. This is in fact the

riskier part of the offering for the sustainability of the brand positioning and

momentum in the longer term

- Still wide reliance on the wholesale channel in Italy/Europe, featuring

lower momentum.

- Long time to market, which reduces company’s degree of freedom in quickly

adjusting to market trends.

Opportunities

- Strong growth potential in terms of:

1) Expansion of retail (only 98 DOS stores as of September 2013)

2) Increased penetration of international markets, where new openings

will be concentrated

- Opportunities in non-outerwear, which still accounts for only 15% of

revenues, with leather goods in particular estimated at 5% on revenues.

- Opportunities to improve the supply chain: management focus will be on

efficiency and time to market, on a dedicated platform for knitwear and on an

engineering team to raise innovation and technological content of products.

- Slight improvement of profitability (EBITDA margin up from 32.6% in 2013E

to 33.4% estimate in 2016E, in spite of the further toll from currencies factored

in for 2014), driven by the more than proportional growth expected for the retail

channel and for foreign markets.

- Increase of cash flows, thanks to the expected growth of EBITDA and to

substantially stable capex: est. 2016E FCF of € 140 mn vs. € 49 mn in 2012.

Threats

- Risk of dilution of retail performance and lengthening of breakeven times with

the increase of average store size (and the introduction of new product

categories with a lower average price and possibly lower sell-through)

- Strong reliance on Mr. Ruffini, as Chairman, CEO and creative director of

the company. The company boasts a strong management team (see

appendix) which has shown its execution skills in the recent past; however,

when looking instead to the development of collections and to the product

strategy, we believe Mr. Ruffini is a key factor of group’s success, in spite of

the several people working in the design department (5 internal people and

about 20 external stylists and designers who collaborate with the group).



VALUATION HINTS

Luxury at fair valuations, with some risk on estimates; growing importance

of stock picking

Once more in 2013, the Luxury sector has outperformed the overall SXXP

Index thanks to better resiliency in estimates (earnings revision basically nil for

luxury companies YtD vs. -10% for SXXP Index companies), thus confirming its

anti-cyclical nature, as it has been the case since the 2008-09 downturn (see the

chart below). This is the result of:

- the sector’s strong underlying long term growth drivers (see appendix 1) -

particularly with the support of Asia-Pacific growth in 2008-12

- the relatively flexible costs structure of luxury companies compared to other

sectors

- the florid M&A context (Bulgari in 2011 and Loro Piana in 2013, both acquired

by LVMH, Brioni bought by Kering in 2011, Valentino sold to the Qatar

Sovereign Fund in 2012).

LUXURY SECTOR VS. SXXP INDEX

MARKET PERFORMANCE EPS GROWTH

Source: Equita SIM elaborations on Bloomberg & Companies data

In our view, the consistency and resiliency shown by the sector, together

with its still healthy growth prospects, will continue to drive investors’

appetite for luxury stocks, thus justifying a premium of the sector vs. the rest of

the market.

ABSOLUTE AND RELATIVE LUXURY SECTOR’S VALUATION

Source: Bloomberg and Equita Sim elaborations

-70%

-50%

-30%

-10%

10%

30%

50%

70%

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013 YTD

SXXP index

Luxury

-80%

-60%

-40%

-20%

0%

20%

40%

60%

80%

100%

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013E

SXXP index

Luxury

20%

40%

60%

80%

100%

120%

140%

160%

180%

200%

5x

7x

9x

11x

13x

15x

17x

19x

21x

1Q06

2Q06

3Q06

4Q06

1Q07

2Q07

3Q07

4Q07

1Q08

2Q08

3Q08

4Q08

1Q09

2Q09

3Q09

4Q09

1Q10

2Q10

3Q10

4Q10

1Q11

2Q11

3Q11

4Q11

1Q12

2Q12

3Q12

4Q12

1Q13

2Q13

3Q13

Today

P/E T+1 (LHS)

Hist avg P/E T+1

Premium to SXXP index (RHS)

Historical average



However history (2010-2011) tells us that this premium might be wider during

phases of economic downturn as the market factors in better visibility and lower

risks for luxury companies’ results; on the other side, we believe this premium will

likely remain below the historical 60% average level in the short term, as the

market is anticipating:

- a more general improvement in the overall economic outlook (switch to more

cyclical stocks)

- a risk of slowdown in luxury growth following some weakness signs in current

trading (several companies, including Tod’s, LVMH, Kering, and to a lesser

extent Prada and Ferragamo, have reported a softer sales trend in

September/October, in spite of a generally easier comparison base).

These are also in our view the reasons why the luxury sector has recently

slightly underperformed the rest of the market.

EUROPEAN LUXURY STOCKS LAST 3M PERFORMANCE VS. SXXP INDEX

Source: Bloomberg

Now looking to the near future, we see little room for the luxury sector to

outperform the market in the light of:

- fair absolute valuations, already close to the historical average of 19x P/E

T+1

- risk of downward adjustment in consensus estimates. As a matter of fact,

based on current forex rates, the consensus expectation of +9% reported

revenue growth for 2013 implies +11.5% at constant forex, with an implicit

acceleration in the 2H (+14% YoY after the +9% on average for the 1H)

theoretically underpinned by an easier comparison but now less realistic

following the weakness in current trading surfaced in 3Q reporting. The 2014

expected growth rate, at +12% constant currency implicit, also might turn to be

slightly optimistic.

Having said that, we believe stock picking continues to be highly important, as

already experienced in 2012-13, with a wide variance in companies’ results and in

their respective stocks’ performances (see the charts on the left).

As shown in the bottom chart, the market has been rewarding in particular

companies boasting faster growth momentum (Ferragamo) or greater

sustainability for the long term (Brunello Cucinelli), two key elements that we

also see in Moncler’s equity story.

STOCKS’ PRICES VS. EPS REVISIONS (2012)

Source: Bloomberg

STOCKS’ PRICES VS. EPS REVISIONS (2013)

Source: Bloomberg

Burberry

Hermes

LVMH

Tod's

Ferragamo

Prada

Kering

AVG

-10%

-5%

0%

5%

10%

15%

20%

25%

-10% 10% 30% 50% 70% 90%

2013 EPS (revision in the last year)

Stock performance (abs - 1Y to Februrary 14th, 2013)

Burberry

Hermes

LVMH

Tod's

Ferragamo

Prada

Kering

Brunello Cucinelli

AVG

-15%

-10%

-5%

0%

5%

10%

15%

0% 20% 40% 60% 80%

2013 EPS (revision year to date)

Stock performance (abs, YtD)



How to value Moncler: quality and extra-growth deserve some premium

In our view, Moncler represents one of the best quality and fastest growth


In terms of quality, in particular, Moncler boasts some features which are common

to other few luxury peers, which are in fact trading at premium vs. the average. We

refer in particular to:

- Moncler’s strong retail skills, similarly to Prada (very high full-price sell-

through, high sales densities, fast break-even times). This, together with

underpenetration, provides visibility to the company’s plan to expand its store

network.

- The company’s disciplined approach to growth, both in terms of product

expansion strategy (always very consistent with the brand’s DNA, and

therefore with a prudent approach to growth of non-outerwear and in particular

of accessories) and of retail expansion (20 stores per annum, without

acceleration compared to the past, in spite of the brand’s huge potential for

greater penetration). These features are common to Brunello Cucinelli, and

ensure higher sustainability of group’s growth prospects.

- The low fashion content of Moncler products: they are contemporary but

not fashion, and tend to represent an investment for consumers. Also this

feature, which is a strong loyalty building element for consumers, recalls

Brunello Cucinelli as well as Tod’s products.

- Highly recognizable and iconic products, which can be changed in few

details or in fabrics and colours - offering consumers always new occasions to

buy – while remaining always recognizable and up to date. This is a feature

common to Tod’s.

- Best in class profitability (Ebitda margin at 33% on revenues, similarly to

Prada, compared to a 27% average for the sector) and high FCF generation

(37% unlevered FCF/Ebitda exp. in 2013E).

- Pure luxury play status, compared to other leading global brands such as

Gucci or Louis Vuitton, which are within big conglomerates.

MULTIPLE COMPARISON

Price Perf. EV/EBITDA Ebitda margin Sales growth P/E EPS Cagr Asia

€ 3M 2013E 2014E 2015E 2013E 2014E 2015E 2013E 2014E 2015E 2013E 2014E 2015E 2014E-15E Ex-Jap

Hermes 255 -2% 19.1 16.9 14.7 36% 36% 36% 9% 11% 12% 32.9 29.5 26.1 12% 32%

Brunello Cucinelli 23 9% 27.7 23.6 20.1 18% 19% 19% 14% 13% 13% 54.7 45.1 38.4 19% 12%

LVMH 140 1% 10.0 8.6 7.9 25% 25% 25% 8% 12% 9% 19.1 16.3 14.7 14% 28%

Richemont 93 0% 13.0 11.5 10.1 28% 29% 29% 8% 10% 9% 19.1 17.0 15.3 12% 41%

Tiffany 78 -4% 11.0 9.8 8.8 24% 24% 25% 5% 8% 9% 21.6 19.1 16.9 13% 21%

Burberry 1,494 -4% 10.4 9.2 8.2 26% 27% 24% 16% 14% 19% 17.8 15.5 14.1 12% 31%

Kering (luxury) 165 -8% 9.9 8.6 7.7 29% 29% 29% 1% 7% 9% 16.0 14.7 13.1 10% 31%

Swatch 575 3% 11.8 10.2 8.8 28% 29% 30% 12% 10% 9% 18.1 16.1 14.4 12% 49%

Tod's 124 -9% 14.1 12.7 11.1 26% 26% 27% 4% 7% 10% 25.2 22.5 19.7 13% 25%

Prada 77 7% 14.8 12.1 10.2 34% 35% 36% 12% 15% 13% 25.6 21.1 18.2 19% 36%

Ferragamo 25 -2% 15.5 13.3 11.0 22% 22% 24% 10% 11% 11% 28.6 24.5 20.5 18% 37%

Average 14.3 12.4 10.8 27% 27% 28% 9% 11% 11% 25.3 22.0 19.2 14% 31%

Average ex-BC & RMS -2% 12.3 10.7 9.3 27% 27% 28% 9% 10% 11% 21.2 18.5 16.3 Moncler 33% 32% 33% 17% 16% 15% 21% 16% Source: Bloomberg consensus and EQUITA SIM estimates. Closure prices of Nov 7th , 2013

Moncler also deserves a premium in our view for its faster growth prospects,

with expected EPS CAGR in 2014-15 of +21% vs. 14% average for the sector.

For this reason, we would focus valuation on 2015 rather than on 2013-14, in

order to try to capture most of the company’s extra-growth potential.

Overall, for all the reasons just mentioned, we think the company should

merit a multiple above the luxury sector average.



The following table shows an analysis of the valuation’s sensitivity to the various

multiples applied and the corresponding percentage of premium or discount vs.

the average of peers we have identified.

We have excluded from the calculation of the sector’s average the two

outlyiers, featuring the lowest stock liquidity, i.e. Hermès (because of its small

free float) and Brunello Cucinelli (with its peculiar long term project of

“sustainable growth”, which explains a relatively stable “shareholders’ club”).

SENSITIVITY OF VALUATION

EV/EBITDA P/E

Equity (€ mn) 2013E 2014E 2015E 2013E 2014E 2015E

2,000 11.6 9.8 8.0 21.1 17.6 14.4

Premium (discount) vs. peers -5.2% -8.4% -14.6% -0.5% -5.2% -11.8%

2,200 12.7 10.7 8.7 23.3 19.3 15.8

Premium (discount) vs. peers 3.5% 0.4% -6.2% 9.5% 4.2% -3.0%

2,400 13.8 11.6 9.5 25.4 21.1 17.3


2,600 14.8 12.6 10.3 27.5 22.8 18.7


2,800 15.9 13.5 11.1 29.6 24.6 20.1


3,000 17.0 14.4 11.9 31.7 26.4 21.6

Premium (discount) vs. peers 38.5% 35.4% 27.7% 49.3% 42.2% 32.3% Source: EQUITA SIM estimates

STATEMENT OF RISKS

The primary elements that could negatively impact the stock include:

- Deterioration of brand awareness, or change in consumers’ tastes;

- Unsuccessful product innovation, with lower than expected sell-through for

non-outerwear or for the Spring/Summer collections.

- Lower than expected returns from investments in the stores network and in

advertising & promotion;

- Deterioration of the consumption scenario, implying lower sales and/or lower

profitability.

- Exceptionally warm weather at the beginning of the F/W seasons.

- Fluctuating exchange rates. We estimate about 47% of group’s revenues are

denominated in non-euro currencies. In particular, we assume about 25% of

revenues are denominated in US Dollar (or USD-related currencies) and

around 18% of revenues are denominated in Japanese Yen. The currency

impact on revenues is then partly mitigated by the costs exposure (linked to

DOS and, in the case of Japan, also to sourcing of nylon).



APPENDIX 1: STILL POSITIVE LONG TERM PROSPECTS FOR LUXURY

Luxury revenues are expected to continue to outperform the global GDP

trend, as happened in the past (average multiplier above 3x in 2007-12 – source

Altagamma & Bain - and even 4x for listed players only): Altagamma is anticipating

a 3-5% CAGR in 2014-16 for the whole sector, whilst consensus for main listed

peers is indicating a 10% CAGR (which is consistent with our own expectations).

GROWTH IN LUXURY REVENUES VS. GDP GROWTH

Source: Bloomberg consensus for main listed players, Bain&Co.- Altagamma for the whole sector

Sector’s growth should continue to be underpinned by a few long term drivers:

- The rising number of HNWI (+4.9% CAGR in 2005-12, vs. +2.4% for real

GDP), which even accelerated in 2012, helped by the global recovery in the

equity and real estate markets (source: World Wealth Report 2013, Cap

Gemini, June 2013). Global HNWI wealth is expected to grow by +6.5%

annually over the next three years (vs. +2.6% annual average since 2008),

still led by Asia-Pacific.

- The growth potential offered by new markets, such as Latin America,

Africa (Nigeria, Angola), Middle East (growing importance also as a tourist

destination for Russians, Indians, Africans), South East Asian Countries

(Indonesia, Malaysia, Thailand, Philippines), Australia (9th highest

concentration of HNWI’s with increasing appetite for luxury among young

generations).

- The potential offered by North America, with relative underpenetration of

main European luxury brands (particularly in 2nd tier cities), a growing appetite

for luxury from the local consumers, and the advanced stage of digital

integration achieved by main department stores (e-commerce penetration up

to 10-20% of total revenues vs. 5% for the luxury market overall). United

States are also the region with the highest HNWI population worldwide, and

also among the fastest growing (+12% in 2012).

- Sector high exposure to tourism (estimated to account for almost 40% of

luxury spending), still driven by a persisting price-gap, particularly between

Europe and Asia. If we look to the geographic breakdown of luxury spending

by nationalities, this will be much different from the breakdown by country (see

following page).

Tourists flows are clearly affected by currency movements (the strong yen

devaluation this year has redirected Japanese consumptions locally) or visa

procedures (UK and Spain are benefiting from a higher affluence of Chinese

tourists thanks to new simpler visa procedures), as well as by changing

travelling habits (Chinese people increasingly exploing new destinations such

as the US West Coast, South East Asia or Australia).

HNWI POPULATION BY GEOGRAPHY (2012)

Source: World Wealth Report 2013, Cap Gemini, June 2013

GROWTH OF HNWIs: FASTEST REGIONS (2012)

Hong Kong 36%

India 22%

Australia 15%

China 14%

Thailand 13%

United States 12%

South Korea 11%

Total HNWI 9% Cap Gemini (World Wealth Report 2012)

-10%

-5%

0%

5%

10%

15%

20%

25%

30%

2007 2008 2009 2010 2011 2012 2013E 2014E 2015E

Luxury growth const. curr. (main listed players)

Luxury growth const. curr. (whole sector)

World real GDP

Europe29%

North America31%

Japan16%

Latin America4%

China6%

Rest of Asia9%

Africa1%

Middle East4%



International passenger traffic is expected to continue to grow by about

4.5% per annum in the next three-four years (source ACI&DKMA,

Air4Cast), basically in line with the 1H13 trend (+4.7%). Europe remain the

main destination, with tax free shopping growing by +13% in the first 9M13

and expected to grow by a further 10% in 2014, headed by Chinese and

Russians (source Global Blue, October 2013).

THE LUXURY GOODS MARKET BY GEOGRAPHY

LUXURY SPENDING BY REGION (2013) LUXURY SPENDING BY NATIONALITIES (2013)

Source: Worldwide Market Monitor, Bain & Co. – Altagamma, October 2013.

Some help should come also from the sector’s high exposure to the faster

growing Chinese economy (China is 12% of world GDP – source World Bank -

but Chinese account for almost 30% of luxury spending).

The local Chinese market has certainly entered a normalization phase,

whereby luxury companies have already achieved an acceptable geographic

penetration and have now to focus more on customers’ loyalty and needs as well

as on the quality of their stores. The strong double digit growth rates most luxury

companies have achieved in the past 3-4 years are thus not replicable going

forward. As a matter of fact, according to Bain & Co. – Altagamma (Worldwide

Market Monitor, October 2013), the Mainland China luxury goods market has

shown a +3.5% growth at constant currency in 2013, vs. +5% for the global luxury

market (main lisited luxury players have clearly outpaced both these trends, but

still confirming the negative gap for Mainland China). This trend has been

outpaced this year for example by traditionally more mature markets such as

Americas (+7%) and Japan (+9%).

LUXURY GOODS MARKET- CONSTANT CURRENCY GROWTH BY REGION

2012 2013E

Europe 3% 3%

Americas 5% 7%

Japan -1% 9%

Mainland China 8% 4%

Rest of Asia Pacific 11% 6%

Rest of the World 3% 8% Source: EQUITA SIM elaborations on Bain & Co.-Altagamma (October 2013)

Having said that, Chinese consumers continue to be an important growth driver

outside of their domestic market: global Chinese luxury spending is estimated

to have increased by about +15% also in 2013 vs. +2% for the luxury market

overall (source Worldwide Market Monitor - Altagamma & Bain, October 2013).

We are also encouraged by the recent signs of improvement in the

macroeconomic outlook of Mainland China (Chinese GDP up by +7.8% YoY in 3Q

vs. +7.5% in 2Q, retail sales value keeping the pace of +13.3% growth also in

September in spite of a tougher comparison, Manufacturing PMI up to 51.4 in

October vs. 51.1 in September).

Europe21%

North America22%

Japan11%

Latin America2%

China29%

Rest of Asia11%

Africa1%

Middle East3%

Europe34%

North America30%

Japan8%

Latin America2%

China7%

Rest of Asia15%

Africa1%

Middle East3%



We therefore anticipate a mid to high single digit growth of main listed

luxury brands in China going forward.

In particular, we expect high-end and sophisticated luxury to have the

greatest growth potential.

The fast evolution of the Chinese luxury consumer has in fact led to a polarization

of luxury consumptions in this region, with:

- a growing preference for high-end and sophisticated luxury

- a decline of the aspirational segment in the middle of the luxury pyramid,

testified by the recent fatigue of the logo products

- faster growth of accessible luxury and premium brands, which should continue

to benefit from a rising new middle class: the number of affluent consumers

(disposable income between 20k and 1mn USD) is in fact expected to double

in China by 2020, with their spending growing fivefold (source: Boston

Consulting Group, November 2012).

We remain instead more sceptical about Japan: the surge in luxury

consumptions experienced in 2013 has resulted from the first year of “Abenomics”,

and has been mainly driven by older generations, whilst luxury brands are

apparently still struggling to capture younger generations. This makes recent

growth rates not replicable going forward and puts also some question marks on

the sustainability of current luxury spending levels in the medium term.



APPENDIX 2: MONCLER’S OPERATIONS

The production cycle – from design of the collections until the start of retail sales –

lasts about 13 months for each season, i.e. Autumn/Winter and Spring/Summer.

COLLECTION TIMETABLE


The group directly controls the most delicate phases of the value chain

(design, sales campaign and order collection, sourcing of raw materials, quality

control, communication and marketing), while it outsources logistics and the pure

production process (cut, make and finishing), albeit under close and constant

supervision.

The only partial exception is still the children’s collection (we estimate about

5-10% of FY2012 sales), which is licensed out to Moncler Enfant, the joint

venture 50.1% owned by Moncler with the remaining 49.9% owned by the partner

Altana, to whom Moncler Enfant outsources production. However, also the Enfant

collection will be managed internally as from 2014 as the company has terminated

the agreement with Altana.

We now analize the various phases, in the sequence in which they take place.

� Design

The creative directorate of the Moncler brand establishes the guidelines for the

collection, combining heritage and a spirit of innovation.

For the Gamme Rouge and Gamme Bleu collections, detailed development of the

collection is entrusted respectively to Gianbattista Valli and Thom Browne, always

under the supervision of the internal styling team in order to ensure consistency

with the brand’s heritage.



The same criterion is applied for the development of special projects in

collaboration with top international stylists, aimed to give freshness and energy to

the brand.

Overall, the design department, headed by Mr. Ruffini, includes further 5 internal

people but involves about 20 external designers offering their collaboration to the

company.

� Sales Campaign

For the sales campaign and collection of orders from the wholesale network, the

group uses a direct sales force who meet customers at the group’s showrooms,

located in Milan, New York, Paris and Munich.

The sales force is first appropriately briefed about the collection’s technical

content, in order to communicate it effectively to the network of wholesale retailers

and to the retail staff. At the same time the creative and merchandising

department defines a master order (80% of wholesaler customers and of DOS

stores budget) including the must-have items of the collection, with the aim of

conveying a unique image of the brand and piloting sales and mix according to the

strategy established by the group.

Order collection lasts about 4-5 months, approximately from June to October for

the next year’s Spring/Summer collection, and from November to April for the

Autumn/Winter collection.

� Sourcing of Raw Materials

Raw material procurement is managed directly by the group by means of a

dedicated team that selects the best down, yarns, fabrics and accessories.

The main procurement markets are Italy (above all for accessories), France

(above all for down) and Japan (above all for nylon).

Once they have been purchased, the raw materials go to the group’s warehouse in

Castel San Giovanni (province of Piacenza, Italy) for quality control, and are then

assigned to the various outside workshops that handle production.

LOGISTIC NETWORK




� Production

The actual production process is entrusted to about 20 core workshops, located

mainly in East Europe (in Italy in the case of Gamme Rouge and Gamme Bleu).

As indicated, the group provides them with the down, fabrics and accessories and

the workshops handle cutting, making and finishing.

Top ten producers account for about 15% of total COGS.

Quality control relies on an internal team of 14 people as well as on quality

controls made by workshops themselves.

Once the production process has been completed, the garments return from the

external workshop to the group warehouses in Piacenza for final quality control,

before being sent to the group’s other warehouses and then allocated to the other

end-user markets.

Production scheduling takes place based on analysis of past sales trends.

The first commitment for purchase of raw materials starts before the order

campaign starts, based on the Open To Buy approach for retail and on the

wholesale budget.

The first production shift starts after about two months of sales campaign, based

on the projections provided by the order backlog.

The second production shift is launched while the order campaign is still

underway, while the third and last production shift starts when the sales campaign

has been completed.

The lead time for each production launch is about five weeks.

This organization of the production process’s timing makes it possible to

minimize inventory risk, at least for production earmarked for the wholesale

channel, as it corresponds perfectly to demand, consisting of orders.

A marginal buffer of raw materials always remains at the group’s warehouse, for

any further production launches for best-selling items in retail. The impact of such

replenishments is in any case marginal. Given production lead time, it would in

fact be necessary to identify the best seller only 4-6 weeks after the start of the

retail selling season – but sales trends are unlikely to become sufficiently

indicative in such a short time.

MONCLER PRODUCTION PLAN




� Communication

The company invests about 6% of its revenues for Advertising & Promotion, with a

possible future increase up to 7% of total revenues, which is in any case

consistent with the average of mid-size peers (such as Ferragamo and Brunello

Cucinelli), with the exception of Tod’s (9% of revenues).

The fashion shows of Gamme Rouge, Gamme Bleu and Grenoble at the Milan,

Paris and New York fashion weeks are a key component of the brand’s

communication strategy. These are joined by one-off events in target markets and

VIP endorsement.

A further contribution to brand’s awareness, outside of the company’s budget,

comes from editorials, whose high return (up to 7-8x the amount invested by the

company vs. an average of 6x for the sector) testifies of the good momentum of

the brand.

MONCLER: MARKETING AND PROMOTION ACTIVITIES


Another important image-building

instrument consists of art-

contamination initiatives and

special, limited-edition collections in

collaboration with external artists or

designers, which help to endow the

brand with energy and freshness.



APPENDIX 3: STRONG AND LOYAL MANAGEMENT TEAM

Together with Mr. Ruffini, a solid management team is behind the group’s success

and its future growth strategy. Most of key managers also boast a long career

within the company.

Following the IPO, a stock option incentive plan will be in place, amounting

to 3% of total share capital of the company.

Sergio Buongiovanni. Mr. Sergio Buongiovanni serves as director since 2008.

Mr. Buongiovanni received a degree in economics and business from Università

Commerciale Luigi Bocconi of Milan. He later worked for six years as an auditor

with the Milan office of KPMG followed by three years at Pa.fin as supervisor of

venture capital activities. Mr. Buongiovanni also occupied a series of management

roles with Marina Yachting S.p.A. (as chief executive officer); at Best Company

S.r.l. (as chief executive officer) and at Industries (chief financial officer, operations

director and chief executive officer). Since 2008, he is also chairman of the board

of directors of the Moncler Enfant subsidiary. Additionally, Mr. Buongiovanni, is the

effective owner of 625,000 of Moncler Ordinary Shares through his participation in

Goodjohn & Co. S.r.l.

Luciano Santel. Mr. Luciano Santel serves as Chief Corporate Officer since 2013.

He holds a degree in economics and business from the Università Ca’ Foscari of

Venice. He began his career with audit firms Arthur Andersen and then Reconta

Ernst & Young and subsequently joined the finance and administration

departments of IVG and Rossignol. From 1996 to 1999, Mr. Santel was chief

operating officer of the Retail Brand Alliance. From 2001 to 2009, he was chief

corporate officer at Geox and in 2009, he was chief executive officer of Stefanel.

Monica Sottana. Ms. Monica Sottana, with the company since 1986, has been the

Director of the Moncler Division since 2003. Ms. Sottana received a diploma from

the Technical Institute of Venice. She has served in a variety of managerial

positions within the group, including Export Area Manager of our children’s division

and Brand Manager at Cerruti Jeans (part of the recently spun-off business). Ms.

Sottana is general manager of the company; she also holds the position of director

of the Moncler Division’s wholesale distribution network and serves as a manager

of marketing for the same division. In addition, she is the general manager and

director of the Moncler Enfant subsidiary, as well as director of Moncler Lunettes.

Andrea Tieghi. Mr. Tieghi obtained a degree in Business Administration from the

University of Evansville in Indiana, USA. He served as CEO of Wrangler Italia S.r.l

in 1994 and as Manager of the Retail division and member of the executive

committee of Victorian S.r.l. (Stefanel group) in 1996. In 1995 he co-founded

Freeland S.r.l., the first Italian company dedicated to the development of factory

outlets. He served as Director of Sales of the Coin group and then Director of retail

at the same group, between from 1999 and 2003. From 2004 until 2005, he served

as director of Industries (the recently spun-off business). He currently serves as

Director of the Group Retail network.



P&L 2011 2012 2013E 2014E 2015E 2016E

Revenues 364 489 573 666 768 872

Growth 29% 34% 17% 16% 15% 14%

Total opex -252 -328 -384 -451 -515 -581

Growth 31% 30% 17% 17% 14% 13%

Margin -69% -67% -67% -68% -67% -67%

EBITDA 112 162 189 215 254 291

Growth 23% 45% 17% 14% 18% 15%

Margin 31% 33% 33% 32% 33% 33%

Depreciation& amortization -10 -16 -21 -27 -33 -39

Provisions 0 0 0 0 0 0

Depreciation&provison -10 -16 -21 -27 -33 -39

EBIT 102 146 168 188 221 252

Growth 20% 43% 15% 12% 18% 14%

Margin 28% 30% 29% 28% 29% 29%

Net financial profit/Expenses -12 -17 -20 -13 -8 -1

Profits/exp from equity inv na na na na na na

Other financial profit/Exp na na na na na na

Total financial expenses -12 -17 -20 -13 -8 -1

Non recurring pre tax -3 0 -1 0 0 0

Profit before tax 89 129 148 175 213 251

Growth n.a. 44% 15% 18% 22% 18%

Taxes -31 -44 -51 -60 -73 -87

Tax rate 35% 34% 35% 35% 35% 35%

Minoritiy interests -2 -2 -3 -1 -1 -1

Non recurring post tax na na na na na na

Net income 56 82 94 114 139 164

Growth n.a. 47% 14% 21% 22% 18%

Margin 15% 17% 16% 17% 18% 19%

Adj. net income 58 82 95 114 139 164

Growth n.a. 43% 15% 20% 22% 18%

Margin 16% 17% 17% 17% 18% 19%

CF Statement 2011 2012 2013E 2014E 2015E 2016E

Operating Free Cash Flow 68 101 115 141 172 203

(Increase) decrease in OWC 3 -19 -19 -26 -22 -18

(Purchase of fixed assets) -35 -26 -34 -34 -35 -35

(Other net investments) 0 0 6 27 0 0

(Distribution of dividends) -153 -8 -2 -24 -28 -35

Rights issue 0 0 0 0 0 0

Other -10 -7 -8 -8 -8 -8

(Increase) Decrease in Net Debt -127 41 58 75 79 107

Source: Company data and EQUITA SIM estimates



INFORMATION PURSUANT TO ARTICLE 69 ET SEQ. OF CONSOB (Italian securities & exchange commission) REGULATION no. 11971/1999 This publication has been prepared by Paola Carboni on behalf of EQUITA SIM SpA (licensed to practice by CONSOB resolution no. 11761 of December 22nd 1998 and registered as no. 67 in the Italian central register of investment service companies and financial intermediaries)

In the past EQUITA SIM has not published studies on Moncler

EQUITA SIM intends to provide continuous coverage of the financial instrument forming the subject of the present publication, with a semi-annual frequency and, in any case, with a frequency consistent with the timing of the issuer’s periodical financial reporting and of any exceptional event occurring in the issuer’s sphere of activity. The information contained in this publication is based on sources believed to be reliable. Although EQUITA SIM makes every reasonable endeavour to obtain information from sources that it deems to be reliable, it accepts no responsibility or liability as to the completeness, accuracy or exactitude of such information. If there are doubts in this respect, EQUITA SIM clearly highlights this circumstance. The most important sources of information used are the issuer’s public corporate documentation (such as, for example, annual and interim reports, press releases, and presentations) besides information made available by financial service companies (such as, for example, Bloomberg and Reuters) and domestic and international business publications. It is EQUITA SIM’s practice to submit a pre-publication draft of its reports for review to the Investor Relations Department of the issuer forming the subject of the report, solely for the purpose of correcting any inadvertent material inaccuracies. This note has not been submitted to the issuer. EQUITA SIM has adopted internal procedures able to assure the independence of its financial analysts and that establish appropriate rules of conduct for them.

Furthermore, it is pointed out that EQUITA SIM SpA is an intermediary licensed to provide all investment services as per Italian Legislative Decree no. 58/1998. Given this, EQUITA SIM might hold positions in and execute transactions concerning the financial instruments covered by the present publication, or could provide, or wish to provide, investment and/or related services to the issuers of the financial instruments covered by this publication. Consequently, it might have a potential conflict of interest concerning the issuers, financial issuers and transactions forming the subject of the present publication.

Equita SIM S.p.A. participates, or has participated in the last 12 months, in the placement syndicate for financial instruments issued by MONCLER S.p.A. In addition, it is also pointed out that, within the constraints of current internal procedures, EQUITA SIM’s directors, employees and/or outside professionals might hold long or short positions in the financial instruments covered by this publication and buy or sell them at any time, both on their own account and that of third parties.

The remuneration of the financial analysts who have produced the publication is not directly linked to corporate finance transactions undertaken by EQUITA SIM.

The recommendations to BUY, HOLD and REDUCE are based on Expected Total Return (ETR – expected absolute performance in the next 12 months inclusive of the dividend paid out by the stock’s issuer) and on the degree of risk associated with the stock, as per the matrix shown in the table. The level of risk is based on the stock’s liquidity and volatility and on the analyst’s opinion of the business model of the company being analysed. Due to fluctuations of the stock, the ETR might temporarily fall outside the ranges shown in the table.

EXPECTED TOTAL RETURN FOR THE VARIOUS CATEGORIES OF RECOMMENDATION AND RISK PROFILE

RECOMMENDATION/RATING Low Risk Medium Risk High Risk

BUY ETR >= 10% ETR >= 15% ETR >= 20%

HOLD -5% <ETR< 10% -5% <ETR< 15% 0% <ETR< 20%

REDUCE ETR <= -5% ETR <= -5% ETR <= 0%

The methods preferred by EQUITA SIM to evaluate and set a value on the stocks forming the subject of the publication, and therefore the Expected Total Return in 12 months, are those most commonly used in market practice, i.e. multiples comparison (comparison with market ratios, e.g. P/E, EV/EBITDA, and others, expressed by stocks belonging to the same or similar sectors), or classical financial methods such as discounted cash flow (DCF) models, or others based on similar concepts. For financial stocks, EQUITA SIM also uses valuation methods based on comparison of ROE (ROEV – return on embedded value – in the case of insurance companies), cost of capital and P/BV (P/EV – ratio of price to embedded value – in the case of insurance companies).

MOST RECENT CHANGES IN RECOMMENDATION AND/OR IN TARGET PRICE (OLD ONES IN BRACKETS):

Date Rec. Target Price (€) Risk Comment

nil

DISCLAIMER The purpose of this publication is merely to provide information that is up to date and as accurate as possible. The publication does not represent to be, nor can it be construed as being, an offer or solicitation to buy, subscribe or sell financial products or instruments, or to execute any operation whatsoever concerning such products or instruments. EQUITA SIM does not guarantee any specific result as regards the information contained in the present publication, and accepts no responsibility or liability for the outcome of the transactions recommended therein or for the results produced by such transactions. Each and every investment/divestiture decision is the sole responsibility of the party receiving the advice and recommendations, who is free to decide whether or not to implement them. Therefore, EQUITA SIM and/or the author of the present publication cannot in any way be held liable for any losses, damage or lower earnings that the party using the publication might suffer following execution of transactions on the basis of the information and/or recommendations contained therein. The estimates and opinions expressed in the publication may be subject to change without notice.

EQUITY RATING DISPERSION AS OF SEPTEMBER 30, 2013 (art. 69-quinquies c. 2 lett. B e c. 3 reg. Consob 11971/99)

COMPANIES COVERED COMPANIES COVERED WITH BANKING RELATIONSHIP

BUY 44.9% 50.0%

HOLD 46.0% 44.2%

REDUCE 8.5% 5.8%

NOT RATED 0.6% 0.0%

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