Moncler Opens the Door to a New House of Luxury

Luxury brand Moncler Spa has decided to not be a part of the biggest French luxury company, Kering SA and instead made its own first acquisition. It is all set to buy out the Italian casual fashion house Stone Island for 1.15 billion euros ($1.39 billion) in cash and shares from the family shareholders and Singapore’s state investor Temasek.

This indicates a new beginning for Moncler as it starts acquiring new brands. If everything goes right and in the same direction, it will also take on Europe’s dominant luxury conglomerate LVMH Moet Hennessy Louis Vuitton SE.

Moncler is currently valued at 11.5 billion euros and LVMH is at about 250 billion. The recent acquisition is the stepping stone towards this dynasty. Stone Island is known for its casual wear and will get a broader spectrum of garments with which to expand Moncler’s product lineup as well as a younger customer base. This is a decision taken after very thoughtful consideration as people under 45 could make up two-thirds of the luxury market by 2025.

This may bring to the questions to why Moncler is paying about 16.6 times 2020 Ebitda (an earnings measure) for Stone Island, slightly more than that of the other big fashion acquisition we saw this fall. Apparel maker VF Corp. paid about 15 times Ebitda for beloved streetwear brand Supreme last month. Moncler shares hit a record as they announced the deal and jumped the most in 33 years after it announced its surprise purchase. It seems investors are enthusiastic about these edgier forays.

Moncler can also help to elevate Stone Island’s certain elements which are not tired off such as hoodies and sweat pants. The skiwear maker has proved to be doing a good job of transforming the humble down puffer into a sought-after item. It has also led to creating a buzz over social media and also collaborated with guest designers to produce limited-release collections. Added investment into Stone Island could turn it into a true luxury outerwear and streetwear label.

There is also potential to expand Stone Island geographically, primarily in the U.S. and Asia. It has just 24 of its own stores — some 78% of the company’s sales are through department stores and other retailers — so there is room to increase its retail footprint.

Carlo Rivetti, the CEO of Stone Rivetti will also join the Moncler board and while his family has a 4% stake in the combined group. As the whole industry recovers from the pandemic, the bigger powers such as LVMH and Kering have been taking advantage of their geographic reach, digital prowess and marketing clout to capture most of the sales. On the other hand, the smaller companies will have to take important decisions like to sell out to a conglomerate or forge an independent future like Moncler. Not all will be in as good of a position as the Italian brand, which had net cash of 595 million euros at the end of its second quarter.

Hear, hear, there’s a new bling goliath on the block!