How Wall Street Puffed Up Sales of Canada Goose And Moncler

Moncler, an Italian company known for sporty, shiny down coats, posted a 60 percent jump in revenue from 2011 to 2013. In the first nine months of this year, its sales climbed another 18 percent. Moncler has been a staple in Swiss ski lodges and the rest of the world’s snowy playgrounds for more than six decades. But it wasn’t until 2006 that the company introduced a haute couture line for women, and a high-fashion men’s line followed three years later. In the past year, Moncler has opened stores in dozens of conspicuously temperate places as part of a push to get its products into urban environments. It’s betting its future on Hawaii—where a Moncler store is already open for business—instead of the Himalayas.

Moncler Affton Coats Men's Down Coffee

The Carlyle Group, a Washington (D.C.)-based buyout firm, bought almost half of Moncler in 2008. Among other things, Carlyle’s capital helped bankroll a line of parkas for children, an expansion into Japan, and dozens of new retail stores. Eurazeo, a Paris-based investment fund, came around in 2011 to buy almost half of Moncler, including a chunk of Carlyle’s shares. At the time, Eurazeo Chairman Patrick Sayer called it “one of the best brands” in luxury.

The swell of capital helped both companies spread their marketing messages more widely and more lavishly. Canada Goose hands out hundreds of jackets every year to celebrities at cold-weather film festivals in Berlin, Utah, and near its Toronto headquarters while outfitting doormen at fancy hotels and fielding special requests from Hollywood. Moncler likewise now offers a line designed by Pharrell Williams and hired celebrity photographer Annie Leibovitz for a recent slate of print ads.

A down coat is generally based on a simple design. With the exception of some fabric innovation, the high-priced versions for Moncler and Canada Goose haven’t changed much since Italian mountaineers of the 1950s were first tackling the Himalayas and European ski culture first took hold in Aspen, Colo. That means when the weather starts to get warm, retailers of goose-down parkas don’t have to slash prices to clear out inventory. Last season’s stock, if stored in a warehouse for a few months, will likely sell again next fall at full price. “Maybe they change it a little bit technically,” says Bijoor, the wholesaler, “but you and I wouldn’t even notice that.”

A big, bulky coat also doesn’t flatter a silhouette, another counterintuitive feature that looks particularly attractive to supply-chain managers. Apparel companies can get away with fewer sizes, and customers are less likely to return a coat that doesn’t fit just so. There’s quite literally a lot of cushion between medium and large sizes.

These features allow down coats to carry puffy profits. When Moncler finally sold stock on the Italian exchange about a year ago, investors clamored for shares in part because the company pocketed 16¢ for every $1 in sales. It was one of the strongest debuts of all European companies in 2013. Inditex, the world’s largest apparel retailer, has a slightly slimmer margin of 14 percent. Fast Retailing, which is making a play for the down market with its Uniqlo coats, makes just 5¢ on every $1 of revenue.

The tricky thing for these companies will be keeping all that time spent around Manhattan catwalks from damaging their cold-weather cred. In a recent note to investors, Goldman Sachs analysts praised the prospects of Moncler. Alongside the coat maker’s narrow focus and room for expansion, the analysts specified “heritage” as a key asset. In short, the back story is critical to pushing these parkas.

That’s why Moncler has a new line commemorating an Italian expedition to K2 that it outfitted 60 years ago, with six new coats full of heat-sealed tape, Velcro closures, and pockets for CB radios. The publicity materials are careful to consider the less adventurous consumer: “As was the case then, the mountain experience also becomes the style experience.”

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