Moncler SpA

MIL:MONC

Earnings Call Analysis

Moncler Sees Strong Growth and Profitability

In 2023, Moncler's revenue soared to EUR 2.573 billion, marking a 19% uptick. The Moncler brand's Q4 growth accelerated to 17%, while Stone Island's full-year revenues reached EUR 411 million, up 4%. The company's Direct-to-Consumer (D2C) channel, representing 84% of total sales, was a significant growth driver with a 25% year-over-year increase. Gross margin stood strong at 77.1%, selling expenses remained consistent as a percentage of revenues despite D2C expansion, and net profit reached 20.5%, down from the previous year's 23.3%, influenced by a one-time tax benefit in 2022. The firm plans a dividend of EUR 1.15 per share, resulting in a EUR 311 million payout.

Strategic Growth and Brand Positioning

Stone Island, under new leadership for nine months, has emphasized its unique market positioning through expertise in material research and strong community engagement. The strategy hinges on three pillars: a distinctive brand image, a refined product strategy focused on its core and potential markets, and controlled distribution, particularly through direct-to-consumer (DTC) channels. Significant efforts in 2023 included the global partnership with Frieze Art Fair, unveiling a new advertising campaign, and events like Milan Men's Fashion Week to elevate brand visibility. The brand plans to highlight its signature Stone Island look, selective collaborations, and a focus on its main categories like outerwear, midwear, and subcollections like Stone Island Junior, emphasizing on sustainable practices with over 40% of recycled nylon.

Financial Performance

Moncler's full year 2023 revenues soared by 19% to EUR 2.573 billion, with a substantial 28% growth in Asia for Q4, demonstrating robust recovery post-COVID restrictions. The EMEA and the Americas also presented solid growth thanks to the direct-to-consumer (DTC) channels' performance. Conversely, Stone Island's revenues grew by 4%, achieving a record EUR 411 million. The DTC channel of Stone Island particularly stood out with a 19% increase to EUR 173 million for the full year, influenced strongly by Asia and EMEA performance.

Profitability and Efficiency

The company boasts a healthy gross margin of 77.1% and flat selling expenses, indicative of productive expansion presented by its DTC businesses. The general and administrative expenses were slightly up due to investments in the organization and marketing. With these efforts, the company achieved a 30% EBIT margin and net profit of 20.5%. They anticipate maintaining this level of profitability as an ambition for 2024.

Dividends and Capital Allocation

The shareholders may look forward to a dividend per share proposal of EUR 1.15, reflecting a robust net cash position even after a significant dividend payout of EUR 303 million. This position allows the company to remain open to investment and strategic opportunities to enhance brand value.

Future Outlook

The leadership exhibits confidence in the continued growth potential of both Moncler and Stone Island. With a focus on strategic brand perpetuation, product excellence, and meticulous control over distribution channels, they seek to unlock further potential. The next interim management statement is scheduled for release on April 24, post-market close, with the quiet period commencing on March 26.

Earnings Call Transcript 2023-Q4

[Operator]

Good afternoon. This is the Chorus Call conference operator. Welcome, and thank you for joining the full year 2023 Financial Results Conference Call. [Operator Instructions] At this time, I would like to turn the conference over to Ms. Elena Mariani, Strategic Planning, Intelligence and Investor Relations Director. Please go ahead, Madam.

[Elena Mariani, executive]

Good evening, everybody, and thank you for joining our call today on Moncler's Full year 2023 financial results. Let me introduce you to the speakers of today's call, Mr. Remo Ruffini, smaller Group Chairman and CEO, Roberto Eggs, Chief Business Strategy and Global Market Officer; Luciano Santel, Chief Corporate and Supply Officer; Gino Fisanotti, Moncler Chief Brand Officer. And exceptionally for today, we have invited to join our call Robert Triefus Island, the new CEO, who will introduce himself and the next chapter of evolution for the brand.

Before starting, I need to remind you that this presentation may contain certain statements that are neither reported financial results nor other historical information. Any forward-looking statements are based on group current expectations and projections about future events. By their nature, forward-looking statements are subject to risks, uncertainties and other factors that could cause results to differ even materially from those expressed in or implied by these statements, many of which are beyond the ability of the group to control or estimate. I also remind you that the press has been invited to participate to this conference in a listen-only mode.

Finally, I can ask you during the Q&A session to stick to a maximum of two questions per person to give all participants the opportunity to ask questions. Let me now hand it over to our Chairman and CEO, Mr. Remo Ruffini, who going forward will host exclusively our full year results presentation. Mr. Ruffini, over to you.

[Remo Ruffini, executive]

Good evening, everyone, and thank you for attending our call tonight. Let me start by saying that 2023 was an important and special year for us. It was a 10 years anniversary of our listing on the Milano Stock Exchange, and we are celebrating this milestone with an excellent set of results. The group reached almost EUR 3 billion of revenues, more than 5x the revenues of 10 years ago, a record EBIT of EUR 894 million with a 30% margin and over EUR 1 billion of net cash for the first time in our history. I'm proud of this number, but more, I am even more proud of what they represent, 10 years of thinking beyond conventions, a continued research for product excellence, a full focus on our customers and about all a brand-first strategy that continues to define our mindset. As we look ahead, our journey continues.

At Moncler, we will continue to focus on their on the 3 dimensions of our brand, collection, grab and Genius and to reinforce their perception with dedicated marketing efforts. Stone Island is starting a new exciting chapter that will allow it to express its full potential under a new brand and communication strategy that we have just launched. Robert will give you some more details around it later in the presentation. Sustainability remains key as we continue to integrate social and environmental elements into our business model. Our collections are including more and more recycled organic and other certificate material as we continue to collaborate with our supply chain to make larger scale improvements. Even if our efforts have been recognized externally by major global sustainability rating, we know that there is much more to achieve.

Looking at 2024, I see an operating environment that remains complex and unpredictable. So we will continue to remain agile and reactive and even more importantly, we will continue to invest in our organization, in our brand and in the exceptional talent within our group. Today, as our long-term vision, our emotion and our passion continue to drive us to push for higher peaks. We still have a lot of trims and many goals to achieve. I leave the floor to the rest of the management team for more comments on our results. Thank you very much.

[Gino Fisanotti, executive]

Thank you, Remo, and good afternoon to everyone. Before we get into the details of Q4 and without giving much details of what we will discuss probably during Q1 call regarding what just happened at [ San Maurice ] with our latest renewable experience. I want to go back in time and remind everyone that we just witnessed the first phase of our three branded mention strategy that we presented to many of you a bit more than [ 19 ] months ago.

Everything started with our event at [ Domo ] during the 70th anniversary campaign to elevate our Moncler collection strategy. Followed by the evolution everyone witness of Moncler Genius in early 2023 by creating a platform of co-creation, opening up the brand to new and more communities around the globe. Last but not least, of course, Moncler Grenoble and the opportunity we have to reclaim what is ours. An opportunity to become the most authentic luxury brand in the mountain at the intersection of high style and high performance.

But before we go any further than that, I want to invite everyone who is in front of the screen right now to take a look at what happened during 2023 for the Moncler brand to then get into the highlights and the details of the quarter.

[Presentation]

[Gino Fisanotti, executive]

Okay. I hope everyone was able to see this properly, but let's go into the details of Q4. Of course, we want to start with Moncler Grenoble. And again, this was for us, one very important season around Grenoble, of course, that we started with the collection launch around mid-November all the way to December and of course, part of Q1. For us, December was a very important moment because we were able to launch a global campaign across all different touch points. And this was important for us not only in terms of elevating the awareness and the visibility of -- and the meaning of Moncler Grenoble but we're able to do this across multiple executions that included e-tailers, activation across multiple regions, key city takeover on key markets and key cities, including digital executions.

We were able to take over resorts around the globe, especially in Europe, the U.S. and Aspen, Niseko so for the very first time, we were able to go and take over a resort in China. And then, of course, for us, Monaco remains a critical half, especially in terms of explaining the features of the product and have the chance to showcase and educate people about our product.

Last one not least, and in coincidence with everything you have been able to see around Grenoble and Roberto will mention this later, we opened up the very first Moncler dedicated Grenoble store in San Maurice in early December, and I'm sure you will get a bit more details later, but all that in composition make a very special season for us. And of course, we will continue this conversation as we go into Q1 as well.

If we move into the next part, of course, Genius for us is always an important aspect in terms of the launches we have in three important aspects of three important launches, I should say, here. The first one was with the Moncler Genius with Adidas originals. This for us was an important partnership in terms of the visibility that this provides to the brand in partnership working with, of course, with Adidas, but on top of that, the experience we were able to create in terms of digital platforms. This was a crossover experience across the two platforms, adidas.com and monkey.com, that we were able to connect with probably customers that we were not able to connect before. So it was an interesting process and learn from us.

Then, of course, [ Pimenges ], which is a long-term friend of the brand. We're still seeing really strong performance of this collection. We saw as well a strong performance in Asian markets for this new launch of managers as well. And then last but not least, reconstitute but it's very interesting to see the level of engagement that Rico and Moncler brings when they come up with a collection together. So really, really happy with the results there.

Last but not least, as we always talk about the 3 dimensions. We can talk about main collection around the idea of -- for the love of winter. This is mainly [ BPC ] centric effort we have done around mid-November and all the way into December and gifting period. This is a very critical moment for us, not only for business, but even for the brand, and we were very clear and try to ionize and having a very strong direction in this campaign in terms of how we can keep elevating our Moncler collection and create the desire and iconize our own products.

Last but not least, and I think this is not new news, but I think it's important to mention that in November, we announced an exclusive licensing agreement with Luxottica. And the entire process already started, and we are looking forward to have the first collection in the market in winter '24. Again, the timing will be confirmed in the coming calls, but will be in between September and October 2024, we will be more than excited to bring that collection together with Luxottica into the market.

So with that said, I want to pass into Robert Triefus, who will give us more details about Stone Island.

[Robert Triefus, executive]

Good day to everyone. Thank you, Gino. It's now 9 months since I took on the role at Stone Island, with my first 6 months dedicated to getting to know the company and the brand, both at home in Italy, but also in all of our regions around the world. that has helped inform me and the development of a brand and business strategy with the objective to unlock the full potential of this unique brand. What made Stone Island unique in the marketplace is its unparalleled reputation for the substance, quality and authenticity of its product. based upon its unmatched expertise in material research and innovation coming, of course, from the roots of the company in Emilia-Romagna, home to some of the world's most respected brands for industrial and product design.

This reputation is then complemented by Stone Island's remarkable capacity for community engagement. which has brought together an incredibly loyal customer base across eras, generations and geographies. I will now take this opportunity to go into a little bit of detail for you on the three strategic pillars of brand, product and distribution that really underpins the plan we are now well underway in executing to realize our ambition.

Starting with our new brand positioning strategy, which has been developed with the intent to capitalize on the strong values and reputation that I referenced earlier but in a highly distinctive and engaging way. While we began to raise the visibility of the brand in Q3 and Q4 of last year, for example, through our new global partnership with Frieze Art Fair, it was really on the first day of Milan Men's Fashion Week in January of this year that we effectively kicked off this next chapter with a signature brand event and the worldwide launch of our new advertising campaign which, for the first time, featured members of our community, including the [ Accent Data ] and the musician days, both of whom you can see here on this slide.

The new brand image also brings life to the full Stone Island offer, including our subcollections got, [ Starline ] and Marina as we further extend the brand's reach to engage different market segments. As you will gather from the sequencing of the free global partnership, our brand image event during Fashion Week and the launch of the new advertising campaign, all in close succession.

Our intention has been to significantly heighten the visibility and the presence of the brand. This is being powered by a full-funnel integrated media investment and the amplification we are, of course, achieving by involving members of our community organically in our brand engagement activations but always in a way that authentically reinforces the value of the brand. I am today speaking to you from Los Angeles where the free L.A. Art Fair begins today in coincidence with the fair, we have brought the largest Stone Island archive expedition that has ever traveled outside of Italy to be present at a dedicated locations for the next 5 days, and we will open this tonight. In this way, we are aiming not only to raise the visibility of the brand in the American market but also to establish a better understanding of the brand's legacy and its unique values.

Moving now to our product strategy. Here, we've been focusing on developing a defined and elevated collection architecture. This means that we've been concentrating our attention on establishing an offer that responds both to the existing and future potential of the brand. As we build on our existing customer base, while reaching new customer segments that I referenced also through our sub collections. We will double down on our core high-value categories of outerwear and midwear for which Stone Island is renowned, thereby emphasizing the unique DNA of the brand, and this will simultaneously drive further brand awareness and recognition. We will also become more intentional about capitalizing on the potential of the total Stone Island look as a distinctive brand signature.

Talking of a distinctive brand signature, Stone Island archive is, in fact, one of the most referenced within the fashion industry for its iconic shape functions and materials. This gives me great confidence in our future opportunity to develop icons over time in our offer. Meanwhile, the subcollection will each have their own 360-degree strategies to enhance their respective contributions as collection satellites.

And to this end, we will pursue a very selective approach to brand collaborations going forward as we focus on realizing the potential of got [ Selena ] and Marina instead. Not immediate priorities, but offering future potential, our shoes and accessories. We will continue our highly successful partnership with New Balance and we will progressively take advantage of accessories, concentrating on them as a traffic builder opportunity. For Stone Island Junior, we will optimize this collection through rationalization to sharpen its focus.

Moving now to the distribution pillar. As you know, it has been a clear strategic imperative over these last 2 years to take back control of the brand, both in terms of integrating distribution and with a growing focus on DTC over wholesale. Most recently, at the end of December, we completed the integration of our China business. with the establishment of our new APAC regional office in Shanghai. Meanwhile, we have continued to selectively roll out our new store concept with openings in Munich, Stockholm and Chengdu. Our intention in 2024 is to concentrate on driving the momentum behind the organic growth of our existing DTC footprint which currently numbers [ AT1 ] stores globally with just a few -- a handful of new openings.

On the wholesale front, a channel that still continues to be strategically important for Stone Island for the visibility and brand presence, it continues to provide in certain key markets. As we know, 2023 was a challenging year for the wholesale sector as a whole. We have nonetheless taken this opportunity to make bold choices as we follow through on our commitment to achieving a highly selective approach towards the choice of our partners also with a strict volume control.

This is now back by a selective distribution framework for our partners that we have introduced with the full winter '24 collection. Another extremely important step in taking control of our distribution will come in August of this year with the internalization of our website, which, as you know, is currently operated with [ map ] this will simultaneously see the launch of a new website, fully reflecting our new brand image and with a much enhanced customer experience.

This will meanwhile be backed by local warehouses that will allow us to have dedicated regional assortments for the first time. And with the internalization of the website complete, we will be able to truly implement an omnichannel mindset, offering services and harmonization that have not been possible until now.

I will conclude my brief overview of our brand and business strategy with a short video that brings to life our new brand manifesto. But before that, I would end by saying that I have great confidence in Stone Island's potential over the coming years. But as with the [ cars ] that Moncler has very successfully charted over the years, we will take no shortcuts, but we will methodically lay the foundation, building brand distinction and engagement through a compelling product offer and a highly controlled distribution. And in so doing, we will unlock that full potential. Thank you.

[Presentation]

[Roberto Eggs, executive]

The strategy of Stone Island. Let me come back on the detailed results for both brands separately. We'll start with Moncler Full year 2023 for Moncler brand reached [ EUR 2.573 ] billion, which is a plus 19% compared to 2022. Q4 recorded a 17% growth versus 2022, accelerating sequentially compared to Q3. Asia, which includes Asia Pacific, Japan and Korea in Q4 recorded plus 28%, accelerating compared to the third quarter, many thanks to a strong register of Chinese mainland was performance was facilitated also by, let's say, a comparison in Q4 2022 that was still affected by COVID restrictions. Japan, Korea and the rest of Asia Pacific continue to record a strong double-digit growth. EMEA increased in Q4 by 7%, slightly improving compared to the previous quarter. despite very high comparable base of Q4 2022.

This acceleration was driven by D2C channels with a positive contribution both from tourists inside and outside Europe, and by locals. The Americas grew 3% in Q4 with a positive D2C business offsetting the decline of the whole [ seed ] channel. The performance of the region in the channel was influenced by the conversion of Nordstrom that was in May 2023 and part of Saks from a wholesale to a D2C business model.

Let's go to the revenues of Moncler by channel. Well, first of all, on the D2C that represents now 84% in total and representing 94% of the sales of Q4. The D2C grew by 25% versus 2022 and a full year basis. Comparable store growth for the full year was at plus 19%. In the fourth quarter, D2C revenues grew 20% versus 2024 with both EMEA and Asia improving progressively compared to the previous quarter.

The direct online channel registered a positive performance in 2023. Wholesale revenues reached EUR 409 million in -- for the full year 2023, down 6% versus 2022. In the fourth quarter, revenues of the channel were down 15% mostly impacted by the conversion of Nordstrom and of Saks in the U.S. and by an ongoing efforts to upgrade the quality of our distribution network.

Let's come to the result of Stone Island, Stone Island for the full year 2023, brand revenues reached EUR 411 million, which is a record, plus 4% versus 2022. Q4 was at plus 7% compared with the same period of last year, led by a strong double-digit growth in the D2C channel. In Q4, EMEA revenues were up 3% with a solid double-digit performance on the D2C channel, offsetting the decline of the wholesale channel. Asia, here also, Asia includes Asia Pacific, Japan and Korea grew 22% year-on-year, mainly driven by the strong performance of Japan and Chinese mainland. The Americas saw a decline of 14% in Q4 as performance continued to be impacted by challenging trends mostly among department stores as well as by ongoing efforts to upgrade the quality of our channel.

To conclude on Stone Island with the revenues by channel. The revenues of the D2C grew at 100 to a total of EUR 173 million for the full year 2024, which is a plus 19% year-on-year. In Q4, revenues of this channel were up 16%, mainly driven by the very solid performance of Asia and EMEA. Stone Island recorded as revenues of EUR 238 million, representing a total of 58% for the full year with a minus 5% year-on-year. In the fourth quarter, revenues of this channel declined by 6%, primarily due to the strict volume control adopted by the management of the channel to continuously improve the quality of the distribution network.

In terms of a number of stores for the full network, I think Robert already preempted a little bit the evolution of Stone Island. We are now at the end of year [ EQ1 ] stores the U.S. for Stone Island with 4 net openings in the last quarter, including the conversion of Milano in [ Agent ] Amsterdam, the Bank of [ AnconK11 ] for Moncler. As usual, this was the strongest month -- the strongest quarter in terms of store opening. We have 7 net openings, including as explained by Gino, not further dedicated body for [ Granite's ] the largest one that we have in the network in the resort.

We have a total now of 15 doors in the mountains and is the first that is fully dedicated to [ run ] of collection. We are also the opening of Amsterdam, the [ Banco ] with ground floor location for the women and the first floor location for the men of Edmonton in Canada, [ cobrand ] with also additional important relocation and expansion that includes [ Vienna Colmar ] Amsterdam and Hamburg. The total of stores for Moncler is at 269 stores. You see here two pictures. One was the picture of [indiscernible] before that was opened on the sixth of December last year. Here, the opening of [ ] also in December last year, the largest store that we have in Central Europe with 700 square meter. And finally, the last picture I wanted to show you is the opening of the Stone Island new concept in Chengdu that have started to operate very successfully. I will leave the floor to Luciano for the financial figures.

[Luciano Santel, executive]

Okay. Thank you, Roberto. Good afternoon, everybody, and thank you for attending our call today. We are now at Page 25, where we report our profit and loss for the year. Top line already commented by Roberto, up 15% at current rates, it was 17% at constant rate with quite good gross margin of 77.1%, totally due to the expansion of our DTC business.

And something important to highlight, our selling expense is flat on a percentage basis as compared to last year, notwithstanding such important expansion of the DTC business. And this is because the expansion was mainly organic, and this allowed our stores to be more and more productive. G&A slightly higher than last year on a percentage basis, 11.1%, which include our continuous investments in the organization and marketing at 7%, which was still is for this year for 2024 our guidance.

And then a very nice 30% EBIT margin. Net profit, 20.5%. Last year was 23.3%. But again, as you may remember, it was positively impacted by the Stone Island brand value realignment tax benefit for EUR 92 million. Okay.

Let's move now to Page 26, where we report net CapEx. Net CapEx, EUR 174 million, 5.8% of revenues I mean, in line -- a little bit lower than last year, but in line with our guidance that also in this case, was still is 6% also for this year for 2024. You may see that a growing contribution, a growing component of our CapEx is allocated to what we call infrastructure that is made of infromation technology, logistics and production so not only distribution.

Let's move now to Page 27, where we report networking capital, 8% last year was slightly lower, 7.4%, but still, honestly, a very healthy percent, something important to highlight about inventory that is -- and the same comment we made, if you remember, at the end of the first half of the year, the resin inventory is totally due to the anticipation of our production cycle to better serve our markets. And another comment about receivables that are higher as compared to last year, but this is totally due to our concession business in December. As you know, in department stores and the shopping malls with cash our revenues the month after from the department store.

Page 28, net financial position, as our Chairman said, for the first time in our history. We touched and passed the EUR 1 billion cash, [ EUR 1.34 billion ]. after -- with a net cash contribution of EUR 215 million after the payment of EUR 303 million dividends talking about the dividends for this year, we are planning -- I mean, we are proposing to our shareholder meeting to distribute dividend per share of EUR 1.15 that will imply a cash out of EUR 311 million and payout 1%.

Let's move now to balance sheet. Obviously, I don't have any comment on balance sheet unless you have a question, I will be happy to answer your questions later. Cash flow statement honestly, also cash flow statement is quite self-explanatory, and it includes all the comments from EBIT to CapEx I already made. Just one comment about last year. last year, the income statement was positively impacted by the tax realignment by the tax bank benefit coming from the brand on brand alignment Cash flow was negatively impacted by the upfront tax payment for EUR 125 million. So that's why the difference of free cash flow is so important.

Let's move now to Page 31, where we report our sustainability commitment. And only some of the many achievements of the year 2023. I just wanted to make a couple of comments on some points like more than others. One is that in 2023, we used in our production cycle over 40% of recycled nylon last year was 15% and so quite an important jump. We keep recycling all 100% of manuscripts from our direct production sites, and we have extended the recycle of productional scraps also to our third-party production network, achieving 55% last year was about 10%.

And something important I'd like to remind is the last point, which regards a new Kindergarten. We opened in Romania in our Roma factory, last year for the employees' children that allows our employees to leave their children in this place while they work in our production facility. And we are also proud to offer an innovative education according to [ redo ] child approach.

Last slide, please, 32, where we report some important acquisitions for the year. Dow Jones needless to say, I mean, quite usual, the first -- the fifth time on the fifth year in a row, we achieved the first position in textile apparel not also important, for the first time, we got from MSCI, the top score, which is AAA and from another important achievement the top score, which is A. Okay. Thank you all, and we are ready for your questions now.

[Elena Mariani, executive]

We will pose for a few seconds to gather questions from the audience. As a reminder, I kindly ask you to speak to a maximum of two questions per person so that we could give all participants the opportunity to ask questions.

[Operator]

[Operator Instructions] The first question is from Melania Grippo, BNP Pariba.

[Melania Grippo, analyst]

Good evening, everyone. This is Melania Grippo from BNP Pariba. I have two questions. First, on retail. If you could please which trends you are currently seeing in retail compared to what you reported in Q4. If you have any significant changes in terms of geographies or cluster. And the second is on the Chinese cluster specifically. Could you please sell out how did it do in Q4 year-on-year and versus 2021? And also, if you can give us an idea of what he's doing now after the Chinese New Year?

[Roberto Eggs, executive]

Good evening, Melania. Thank you for the two questions. I think they are for me. It's Roberto speaking. On the retail trend that we have seen since the start of the year, I will say, very solid, and we are very happy about the result on the global D2C and this in all regions. All regions have the momentum, and we are very happy about the start of the year regarding the Chinese cluster. If you remember well, we are probably amongst the best-performing brands in 2022 in Q4 as we were flattish in Q4 despite the fact that most of the stores were closed in November and part of -- in October and part of November.

We recovered very well at the end of 2022. And the results for the end of Q4 were very positive. So we had a strong quarter with our Chinese cluster compared to 2021, so on the 2-year stack, we mentioned during the first 3 quarters of the year that we were up 50% compared to 2021. And for Q4, we remain at this plus 50% compared to 2021. So happy and our Chinese New Year, which is a little bit the embedded question that you have, the Chinese New Year, we have been experiencing over the past 8 weeks has been positive, positive with Chinese locally, so positive in the local market.

And I will say, especially positive outside of China in Japan, in Hong Kong, in Macau, and also in Europe, where we have seen a very good recovery of Chinese during the start of 2024.

[Operator]

The next question is from Luca Solca of Bernstein.

[Luca Solca, analyst]

Lucas Solca from Bernstein. I wonder if you could elaborate on retail performance by brand. We've seen a very healthy progression of D2C, both for the Moncler and the Stone Island brand. I understand that increasing retail space productivity is going to be an important element to drive the progress of Stone Island going forward. I remember from memory, that there was quite a significant gap in productivity between Moncler and Stone Island to the tune of 3 to 1, more or less in terms of Europe per square meter.

I wonder if this ratio has progressively reduced. And if you're happy with the retail space productivity that Stone Island is producing. Maybe as a second question, continuing on this real -- on this retail front, we've seen a number of high-profile real estate deals announced by major luxury groups in New York, in Milan, in Paris, [ Amagering ] Prada have all been quite active. Do you feel that because of these developments, you could potentially be drawn securing locations and could be pushed to invest in real estate as well? Or would you rather continue which would be my preference with a rental approach. Thank you very much, indeed.

[Roberto Eggs, executive]

Thank you for the two questions. Again, I think, there for me. First, on the retail performance by brand. I'm happy to announce that for Moncler, for the first time, we're able to have a record year, surpassing the record of 2019. So we reached EUR 38,000 per square meter. And as much as we are obsessed by the brands, I think we're also upset about the sales density. So this is a very important parameter for us in terms of performance of the brand is how much we perform in the existing stores.

Now to give you some more flares about the retail KPIs that we have had during the year, I think they were all positive so the average store surface increased by 2%. The traffic increased double digits. Of course, when you increase your traffic double digits, then I'm talking Moncler, of course. When you increase double-digit traffic usually you have an impact on the conversion. The conversion was lower than the increase in traffic.

So this results in additional tickets that we were able to invoice and the average ticket and transaction value went up double digit also during the year. So I will say all the retail KPIs are green for us, and they are performing very well. You mentioned figures on Stone Island that honestly we never disclosed. So we are not yet at the level where we want to start discussing about figures on the retail KPIs for Stone Island because we are still in this process of transformation, a big transformation, last big transformation that Robert mentioned is the Chinese market that we took over in December during this year, we have plans to expand the footprint that we have on the Chinese market, doubling down the number of stores that we have, some will be closed, some will be reopened.

We are going to launch -- we just recently launched a retail excellence project in the U.S. market. And of course, in the course of Q3 -- Q2, sorry, we launched a retail excellence porcelain also on the Chinese market. So we are still in the building and retail building phase. So I think it's a little bit premature to talk really about figures, but I will tell you that all retail KPIs improved install line during the course of 2023, and we are confident for the future.

Regarding real estate deals is not in the philosophy of the company. I think we have been able to secure very good location without having to buy them. So I think our intention is to continue this way and work on this unique proposal that we are bringing to landlords when we come with Moncler and Stone Island. And I think that so far, this is more than enough with no need to buy into the properties.

[Luca Solca, analyst]

Very much indeed, Roberto. If I may add a follow-up as Remo is on the phone, we saw the news about [ Reviving ] is holding from one company to Moncler. A lot of investors are asking what this means. So if you could provide your perspective, that would be very helpful. .

[Remo Ruffini, executive]

I think Luca, [indiscernible] first. And I think the exit of the [ Rebetti ] family was from my holding company, just a natural evolution of our agreement, which lasted like 3 years -- the journey continues as they will become direct shareholder of Moncler with a consultation agreement. There are no change in the governance structure of the group. I think it's really a natural evolution of what we say, 3 years ago.

[Operator]

The next question is from Edouard Aubin, Morgan Stanley.

[Edouard Aubin, analyst]

So just Roberto, just a small clarification on what you said on the start of the year. I think you said that you saw -- you're seeing a solid start to the year in almost all geographies, but your comp base is also getting a bit more difficult, right, in -- at the beginning of this year. So I'm not going to ask you, obviously, to quantify anything and compare it to the 17%, but are we still kind of talking double-digit type of growth for more clear retail year-to-date. So that would be one.

And then the second one for Luciano. So your gross margin was very healthy in the second half coming in higher than expected. Could you just come back, sorry, on the moving parts explaining the beat and what you're expecting for 2024 in terms of gross margin trajectory? That would be great.

[Roberto Eggs, executive]

You are right, the comp base that we had at the start of 2023, it's very high. We performed extremely well in Q1 last year. clearly, is why I'm saying that we are very happy, and we see a very solid D2C performance because the base was very high. But I would not like to comment on is it double digit or not, I think we will leave it for the Q1 results presentation. And by the way, it was positive in all geographies. And just as a reminder, is in all geographies.

[Luciano Santel, executive]

About the gross margin, gross margin in 2023 was very good, but again, totally driven by the channel mix and by the important -- very important expansion of our DTC business. And just to anticipate that in the fiscal year 2024, we do expect a further expansion, but again, totally due to the fact that our DTC business is expected to further expand in 2024.

And the wholesale business not at all. I mean the wholesale business -- as we said at the time, we talked with the market is expected to decline in 2024. So the expansion of the DTC business and the channel mix as a result, will allow us to deliver higher gross margin. Of course, after gross margin, I mean, to get down to the operating margin, of course, we will incur higher selling expenses, but this is part of the ETC business model, as you know very well.

[Edouard Aubin, analyst]

Right. And so you're still guiding for flattish EBIT margin at the end of the day in '24 versus 23 more or less?

[Luciano Santel, executive]

Flattish is a nice and, let me say, optimistic expectation. Honestly, I don't know. I can't tell you. I mean, the year just started, we are happy and the way the year started but again, it's premature to know how much we will end in the top line and operating margin. As you know, as we said, several times, the 30% EBIT margin is some kind of ambition. But I mean, for this year, we don't know, we don't know yet. So again, I'm sorry, but I can't answer your question. But again, 30% is something we have in mind. But we are not obsessed by this 30%.

[Operator]

The next question is from Erwan Rambourg with HSBC.

[Erwan Rambourg, analyst]

Congratulations for a great set of results. two things. First of all, you've done a lot of local events with global resonance over the past few years, the 70th anniversary 2 years ago, the London event last year, [ Conab ] this year, very visible events. Do you have any other events of that magnitude that are planned for later this year? And then secondly, maybe just a technical approach on retail growth, retail growth at Moncler brand was 20% in Q4. Can you break out maybe what was linked to the benefits of the conversion away from wholesale and into retail and any other buckets you can split out? And what should we expect for Q1 in terms of continued benefits from that conversion away from Nordstrom and parts of Saks.

And then -- so that was two questions. I don't have a third question, but I just wanted to check that I understood Roberto comment appropriately on $38,000 per square meter, that's for the Moncler brand?

[Elena Mariani, executive]

I can start answering the last question, and yes, it's 38,000 for Moncler.

[Gino Fisanotti, executive]

I go back to -- first of all, to everyone. So on your comment, yes, of course, we -- again, we will, as I mentioned at the beginning, I think Mr. Ruffini mentioned as well, of course, we will keep -- we will continue with our brand strategy. We just finalized the first phase of it on what you saw on [ San morat ]. And we will, of course, talk more when we go into the Q1 call. You should expect more from us in terms of the scale of what you have been asking on the second half of this year.

We will provide, of course, more details as the year goes by, but the answer is yes.

[Roberto Eggs, executive]

Yes, sure. Thank you, Gino. On your question regarding conversion, let me maybe clarify and give also some fair what we expect regarding the wholesale business in 2024, not only the retail business. First, on the conversion, Nordstrom happened in May last year, tax happened in October. And just for the store of Fifth Avenue, we are going to convert the online business during the course of Q2 this year. Basically, when you look at the results of the -- for wholesale of the last quarter and you take out the conversion factor Nordstrom in the Bank, we would have been broadly flattish on the last quarter.

And if we look just at the global impact of Nordstrom, it has been broadly neutral during the year. So what we lost in wholesale in Q2, Q3, where we usually delivered the, let's say, the fall winter collection to the stores have been compensating by the increase that we have had on the retail side. While for Saks, the global impact was slightly negative because we didn't have the delivery of the collection for winter collection because they were converted in October. So it was slightly negative overall. I think that if we look at the global conversion impact for 2024, and I will not give it by quarter, but I think that we can expect this, and this is embedded in our space contribution of 5% to 6% retail space for Moncler.

It will be more or less 1 point of impact for the full year. Let me take the opportunity maybe also to clarify what is our approach regarding wholesale for the full year 2024 and what we have started to implement when we had the campaign -- full winter campaign in December of this year. As you have seen, there have been some difficulties on the wholesale channel with some high volatility season that started quite late. There have been also some pressure on prices.

And we have taken the decision really to go even more qualitative on the approach that we have for our wholesale channel. So especially on the retail side for Moncler to reduce the volumes that we are selling to retailers and try to switch as much as possible of this business into our own dotcom and we expect a high single-digit negative figure for the wholesale for 2024.

Regarding Stone Island, I think this was highlighted by Robert during this presentation, we implemented a selective distribution agreement during the winter campaign that took place also in December this year. And there we have been even more stringent. Of course, there is the impact of the conversion that is higher for Stone Island, and this is also helping the result of the D2C business. But you need to count on high teens negative wholesale for Stone Island in 2024 becoming more and more qualitative and aligned with the brand repositioning that we are currently operating. So we feel very confident about the strategy. I think we are really looking to develop qualitative approach and we really think that our true brand barometer is the D2C and is where we want to push in the future.

[Operator]

The next question is from Chris Huang, UBS.

[Chris Huang, analyst]

Congratulations on the results. My first question is on Q4 transfer consumer nationality. You very kindly commented about the Chinese consumers around still 50% on a 2-year stack, but are you able to also comment on Americans and Europeans. What are the trends you saw among these nationalities in Q4? That's my first question. And secondly, on like-for-like. In the press release, you commented around 19% like-for-like for the full year. Can you maybe provide a breakdown on the split between price mix and volume? And how should we think about this heading into 2024?

[Roberto Eggs, executive]

Chris, thank you for your question. I will answer on the first one, and I'll leave Luciano for the second one. Regarding nationalities, I commented extensively on the Chinese. If we look at the performance of the other main nationalities, Korean have been broadly in line in terms of growth in Q4 compared to the third quarter where we performed pretty well.

The same for the Japanese, on top, Japan has been performing well. As you know, it has become a little bit the destination for many Asians traveling and that don't want to come to Europe or the Americas. So we have seen a huge increase of tourist outside region on the Japanese market, not only the Chinese, but also a lot of client from Southeast Asia, from Taiwan and from Korea. Japanese have been positive even if the inflation has had an impact. So they were positive during the quarter. But the performance of Japan was mainly driven by a double-digit increase on the tourists. And European have been positive. They have been -- they were a little bit down in Q3, they have been positive during Q4.

[Luciano Santel, executive]

So your second question, like-for-like in the first half of the year, you may remember, we said volumes represented at [ use ] and price 1/3. In the second half of the year, price was predominant and more or less the other way around to sell price and 1/3 volume, and we ended up more or less 50-50 with the price a little bit higher than volumes. The 2/3 volume on our price was and is for this year our current guidance.

[Chris Huang, analyst]

Okay. And just a clarification on the first question, coming back to the Americans. Can you also comment on the Americans in Q4? I think the Q3 comment was Americans globally was up single digit. Is it accelerating? Or is it kind of in line with what you saw in Q3?

[Roberto Eggs, executive]

Yes Sorry for in forecasting the very important Americans, they were flattish on the quarter with -- we have seen volumes increasing more in the U.S. and with a little bit down in terms of buying into Europe, but they were positive in the U.S. So overall, it was flattish.

[Operator]

The next question is from Oriana Cardani in Intesa Sanpaolo.

[Oriana Cardani, analyst]

I've got two questions,. The first one concerns external growth opportunities, considering your solid cash flow generation, are you open to the possibility of making a new acquisition after Stone Island in the medium term? And what type of assets might be ideal for you? And the second question regards the shoes. So what levels you reach as a percentage of sales in 2023? And what do you expect for this year?

[Gino Fisanotti, executive]

For the question. Honestly, I say many times that we are in the pipeline really to work very straight with Stone Island and with Moncler. We have, as I said in my speech at the beginning, we have a lot of ideas, a lot of dreams. And I think for the moment, we are very confident to continue with these two brands.

Oriana, thank you for the question. Regarding Footwear, a few comments again. I think we are repeating ourselves in the different quarters. But basically, of course, we are happy to see that footwear is one of the fastest-growing [ caters ] for us this year, up strong double digit versus last year and especially in Q4. I think I mentioned this we have been finding in the Trailgrip family encouraging results both across D2C and wholesale. But I think, as I said before, I think we need to keep reminding that we are in the early stages of this process. I think more importantly for us is to keep focusing on a stronger pipeline product creation as we come into the future.

That's what we are obsessing about. I think it's important for us to say that while we are putting efforts and we are obsessing to get better season after season. Our role -- or our goal is not to become a footwear player for us. We always discuss this area that we're a brand that came from the mountain to the city and backend we believe that being part of the journey, footwear is a very important aspect of it. But I think it's important for us that we are very focusing on bringing new products into the market that hopefully you will see as we go through the end of this year and next year. And then hopefully, we'll keep building the same success we have seen in the last year with the Trailgrip family.

[Operator]

The next question is from Thomas Chauvet, Citi.

[Thomas Chauvet, analyst]

I have two. The first one on pricing. Can you talk about the average price increase you've implemented on spring/summer '24 and whether there was some regional differences? And how do you think about Autumn/Winter '24 pricing? And when you look back at the fourth quarter, maybe the beginning of this year, are you seeing some resistance with certain price points with certain SKUs type of products that may -- where are you or on the contrary encourage you for the rest of the year?

Secondly, maybe for Luciano coming back to the profitability profile. I mean, one big difference in that 30% EBIT margin to the versus 2019 pre-COVID is that you had only one brand back then. You have two today. So given the different margin profile of each brand, that success Moncler brands EBIT margin is probably between 31.5%, 32%, today versus 30% back in 2019.

So nice margin expansion. Can you try to give us some idea of how much of that was driven by gross margin and give us some of the drivers there? How much was OpEx leverage? And do you see a cap to Moncler brands profitability in the future as you gain more and more and more scale advantage.

[Roberto Eggs, executive]

On the -- maybe on the first question, Thomas, on the pricing. You remember that in 2023, we had a price increase that was a double-digit increase and that we say for Moncler for 2024, we have a mid-single-digit increase. That is up there to cover the cost we have incurred linked to the inflation.

For Stone Island increase in 2023 was the same, and we don't intend to increase prices in 2024. You asked if the price increase is different by region. Yes, it is. We, of course, take into account how the -- let's say, the exchange rate is evolving but also our aim has been since the past 10 years to reduce the price gap between Asia, Americas and Europe. And I can say that the price architecture we have been working on for Winter 2024 is allowing us for the first time to be in the range of the plus 30 something, so below 40% between Asia and Europe.

This is already the case for Stone Island, but this was not the case for Moncler. So I think this also we have done another step in the direction of where we want to be in terms of pricing architecture between the region.

[Luciano Santel, executive]

About our operating margins by brand, of course, we don't report margins by brand, as you know. But of course, we have two brands and one, which is on Stone Island is a brand we totally believe in and we also know that we have to invest to make this brand an even stronger brand. So it will be a project that will take some time.

Of course, we are not in a hurry because we are not changing results. We are not changing volumes or shorter-term profitability. But right now, of course, we know that Stone Island is a brand we need to invest. We need also to invest in Moncler and when I'm talking about investments, as you know, I'm not talking only about CapEx or marketing. But again, as you know, we wanted to invest a lot in the organization to make our company and our two brands strong and solid for the future and able to deliver strong results for many, many years and not just for a few years. Having said that, long story short, I mean, Moncler is doing very well.

I mean we have this kind of ambition of 30%. But again, we are not obsessed by the 30%. We are offset by the strength of the brand, and that's why we continue we continue to invest. Talking about how we can achieve 30% or to your point, even higher. I mean the EBIT margin in our business model as much as in many other retail business models is mostly driven by the sales density. So it's not only gross margin. Of course, the gross margin is an important component and honestly, we are very happy with our gross margin, which does not depend only on our markup on our pricing power, but it depends also a lot on our capability to manage very efficiently our inventory. But the gross margin is not the only driver. The other most important driver is the [indiscernible] density.

So Moncler, again, as density is very high, and it is higher than last year. Stone Island, it is still behind but I mean it will take some time, but we are very confident. So I mean, long story short, I don't know if I'm giving you a satisfactory answer, but this is the way -- this is our thinking process, and this is the way we approach and we plan our business.

[Operator]

The next question is from Charles-Louis Scotti with Kepler.

[Charles-Louis Scotti, analyst]

I have two. The first one on your store network. Could you tell us if the granule stores are included into your guidance to open it to 10 to 15 U.S of the year? And what do you think is the long-term potential in terms of the staff network for Moncler Grenoble and also, if you plan to push Moncler in the wholesale channel and also one of the key takeaway from the Chinese New Year was apparently the growing popularity of ski trips and also travel to winter destinations, in China, do you see on the ground a growing appetite for outerwear?

And should we expect Moncler Grenoble to also open staff in Asia Pacific. The second question on online. I remember you said that the [ commercial ] was a little bit underperforming during the Q3 call. Could you tell us how e-commerce have has performed on a full year basis? And what was the contribution at the group level and for each brand? And also if you could give us the split between DTC and wholesale online, and this will be very helpful. And final question, which is a little bit technical, but -- can you confirm also that when you mentioned sales density figures, it includes your online DTC business?

[Roberto Eggs, executive]

Charles. On the store network, we ended the year at 269 stores from Moncler, one, dedicated first, dedicated store for Grenoble. Remember, as I mentioned during the call -- during the presentation that we have already 14 other mountain stores that are selling mainly grown up, but not fully dedicated. So yes, we already in the existing network, we are going to increase the share of part of the group in these 14 stores and we may have opportunities to expand further the presence in the resorts in the Americas, in China and in Japan in the years to come.

They are -- we are exploring and this number of stores that we have in mind will be included in the 15 stores that we gave as a guidance in terms of opening year-on-year. Regarding the total amount of stores that we may have in the future, I know that you like to fill the, let's say, the metrics trying to figure out what is the global potential of the brand, but honestly, we don't know yet. I think the fact that we are now refocusing even more for Moncler on the D2C part may have an influence on the number of stores we'll have in the future, but it's really premature for the moment to say this guidance that we have been giving on 15 openings and 15 relocation expansion is something that we have in mind for the next 3 years.

[Elena Mariani, executive]

Just one thing on your last question. So the sales density is just the physical retail stores.

[Gino Fisanotti, executive]

Just to -- Charles, just to be on what Robert was saying in terms of the opportunity as well in Grenoble. I think it's important for us that -- you mentioned what we've just done in China, I think we have definitely, we see an opportunity across the globe. I think we are activating both Europe, Japan, the U.S. and China, just to give you an example of what we just discussed. I think it's an important reminder as well in terms of the opportunity we're seeing with Grenoble as well. If like for the past now 16 months, we have a full offering that goes all year round as well.

We have spring/summer products with Moncler Grenoble. We have pre-full and then what is more traditional for us over the years, having the [ Presque ] and then, of course, the technical part that always coming between October and December. So now we're going full circle with Grenoble as a proposition for customers all year around, and that's another important opportunity that goes on top of what Roberto was saying about renewable. So hopefully, that's clear on that point. You mentioned online as well. I think the direct online channel registered a positive performance '23.

I think Roberto mentioned this briefly in his part. And it's true. I think we mentioned and we shared this together that we saw -- while we saw probably in the industry deteriorating in the performance at the beginning of last year, we saw the impact of that behavior changing in Q3, but we have a very strong first half of the year. And of course, we have trends improved into Q4, and we have, again, as we mentioned before, a positive year-end. So for us, again, important to keep seeing this for us is the middle teens of our total revenue in terms of the contribution.

And again, the explanation of why the deterioration, probably we can have some. I think we already discussed, I think, in the last quarter. And I think even Roberto mentioned this, about seeing a more promotional marketplace in terms of retailers that have been affecting a bit of the online business across the board. But again, I think for us, as we always mentioned, and I think both Mr. Ruffini and Roberto was mentioned for us about the approach in D2C in terms of our omnichannel experience for customers.

One important thing is maybe, Robert, you want to mention performance of online on Span Island just to complete that question, but I think that's what I can say from our side.

[Robert Triefus, executive]

Yes. Happy to do that. And again, just to underline that this year, we will see the internalization of the direct website. And in terms of the performance, we expect to see the contribution of total sales being comparable once we have to analyze. but we see a contribution of around 10%, in line with the previous year.

[Elena Mariani, executive]

And just I think you also asked how much is direct versus third parties. So as for Gino, as he mentioned mid-teens as a percentage of Moncler sales. and the vast majority is direct. And as a reminder, last year, it was 2/3 direct and the previous year was just 50%. And so that's the main focus that we have.

[Operator]

The next question is from Louise Singlehurst from Goldman Sachs.

[Louise Singlehurst, analyst]

I wondered if I could just ask a little bit more about the U.S. I'm quite interested in seeing this -- so the big improvement going from Q3 into Q4 on the DTC if we think excluding the wholesale. Do you think now we've turned the corner in the U.S. for more sustainable positive growth? I know, Roberto, you mentioned that all nationalities have started the year well.

So obviously, a positive implication so far. But I wondered if we're on track for more sustainable growth now in the U.S. And then my second question, just again, sticking with the regional data. And when you're looking across the consumer profiles, where do you see most sensitivity to spending as you think 2024 and more kind of medium term. And by the word sensitivity, I mean both maybe a little bit more caution, but also where you might be seeing some more bright spots. It sounds obviously a little bit more encouraging.

[Roberto Eggs, executive]

Louise, on the U.S., is this growth that we have seen at the start of the year being positive on the American sustainable, we hope, honestly, I would like to have a crystal ball and have -- and to read it more clearly. I think what we have seen is during the last part of the year, a repatriation locally. So a positive effect on the American cluster. Is it sustainable or not?

Honestly, we don't know. I think we still have the full year in front of us. So it's quite difficult to assess, but it's for sure that we see the Americas as a big opportunity for us. We are underpenetrated both for Moncler and Stone Island on the American market. And this is going to be one of the area of focus that we will have for both brands in the months and years to come. Regarding sensitivity on different parts of the globe, honestly, the momentum at the start of the year is good on the D2C part, which is where we consider again our brand barometer.

So we have not seen weaknesses for the time being. But again, is very early in the year. It's only 2 months, and we know how important Q4 is for us. So there is always a word of caution and not to take the first start of the year as being something that we can reference as a full year, but we're all very committed to make it work.

[Operator]

The next question is from [ Carl Daniel ], RBC.

[Unknown Analyst]

Okay. I'll keep it brief. My first question, if I could just clarify to the extent you can say if the Q4 Moncler brand retail like-for-like was low double digit. We estimate it to be around 12%. Any help there would be very helpful. And my second question is just around new customer recruitment and the demographic profile for Moncler brand again. Could you maybe just talk about how the new customer recruitment has evolved through the balance of 2023.

Obviously, we had some big events at the end of '22 and beginning of '23 to support the Genius relaunch and the 70th anniversary. So we envisage like a lot of new customer recruitment in the first half of the year. But how does that work out towards the end of the year? And sort of what is the -- or how do you think about the contribution of the growth -- the strong growth that you've seen in Q4 split across existing customers versus new customers? And what's your anticipation for 2024 in that regard?

[Roberto Eggs, executive]

I will answer shortly on very short on your first question because we don't provide guidance of figures regarding on growth per quarter. What I can tell you is that we have seen an acceleration in Q4 compared to Q3. I'm very happy about that, especially in November and December.

[Gino Fisanotti, executive]

In terms of customer base, I think, again, for us, and I think this is part of the decision when we start talking about the one brand with three dimensions is to have -- to really have a meaningful connection with complementary audiences, right? I think -- this is an important aspect that can probably go back to the question you were making about how we justify the current momentum of the brand. And as a consequence of that, the growth we're seeing in the business, it's because we're able to acquire different customers from different customer segments that they are complementary to each other.

The nature of why we have Moncler collection, Genius and Grenoble is because we see, of course, an opportunity for us to talk to different people in a more specific and meaningful way, and this is what attracting new audiences to us. I think the other important aspect, I think, that goes across everything, Roberto, myself and the team do is we are looking always an acquisition across everything that is omnichannel, right? I think of course, sometimes the balance between how much of the current audience versus new audience -- could change a little bit depending on the channel we are discussing. The reality is that we are always looking to be the very best brand possible to the current communities or the current audiences as much as the new people coming in.

As a little detailed factor, I think we were -- again, we are seeing traffic, of course, increasing in our retail doors as same as we saw a very important increase in digital as well. And that is helping us to understand that we have that demand and a meaningful connection with customers. which is, again, in a way, the acquisition plan that we're seeing. So the last comment, and I think is connected to one of the first questions we got about do we have another event.

I think for us, of course, the big events are an opportunity to explain and to share an experience with customers all around the globe, but it's the in between that for us is as important as the events we do in making sure that we have a strong tone of voice that we keep building that brand momentum, we can keep leveraging that as soon as a customer goes into any touch point, either a physical retail, either com, et cetera. So I think it's important for us to understand that one of the biggest evolutions we have done as a brand is not only the big moments, but it's say in between moments that is helping us to drive the results you are seeing.

[Operator]

The next question is from Andrea Randone with Intermonte.

[Unknown Analyst]

Thank you and good evening to everybody. The first question is about the use of cash. You already excluded a big state asset acquisition or a new company target acquisitions. So I wonder if you can confirm a dividend policy with a payout of 50%. And I wonder if you can consider an important buyback also to counter dilute the stake of Mr. Ruffini? And the second question is if you can provide us with an update on the project to partly internalize the production you discussed in the past months.

[Luciano Santel, executive]

Yes, one amount your first question, [ Sophie ] already answered the question about M&A. And again, we are not closed to M&A opportunities, but I mean, we don't have any plan. We are open to consider everything, but depending not on the cash we have, which is important. But on the beauty of the brand. And this was the case when in 2020, we integrated to Stone Island was not because we needed to allocate the cash, but because we strongly believe in the potential of that brand and also we'll have that brand [indiscernible]. So again, about the cash allocation, of course, dividends have been increased last year. a lot. We almost doubled dividends last year. This year, we keep increasing the dividend pay out a little bit. I think that we are doing in line, if not better, what in the industry or companies do. About buyback, we don't have any plan for the time being. We normally implement buyback only to the extent we need the shares for our performance share plan.

The last buyback was in 2022, as you probably know. For the time being, we don't have any plan. But I mean, for sure, when needed, we will implement a buyback, but not driven by financial needs not driven by the fact that we need to allocate more efficiently our cash. As you know, we know we are aware that our cash allocation is not efficient. But I mean, we prefer to be safe and efficient and having cash on hand allows us to be open to any opportunity, first of all, to keep investing importantly in our brands.

And about the other question, the rational production, okay. First of all, important to remind you, but I'm sure you remember that we double our production facility in Romania last year, actually at the end of 2022. And so this is an important step to increase our own production capacity. We are now looking at an increase in the production capacity of our mid-to area facility. We have a small facility in Italy. We are now planning to expand that facility actually to move to another much bigger facility because knitwear is important to highlight. We don't say that very often but knitwear is our second leading category after outerwear keep growing very nicely in both the sub categories, the different and the so-called [ cartes ].

So in order to improve the quality of our product. We have started several years ago to build this kind of production facility in Italy right now we are mature to expand this facility and this is something will be done over the next few months -- so [ iteration ] of production, is something we keep working on. Of course, I mean, we also have a small production of use in Italy and the innovative technology, which is the improvisions something I'm sure you remember.

And these are the plans that we have right now in our pipeline. We expect to achieve more or less 30% of internal production over the next 12, 18 months.

[Operator]

The next question is from Liwei Hou from CICC.

[Liwei Hou, analyst]

Good evening, everyone. This is Liwei from CICC. Thank you very much. The first one is our license agreement with solo Luxottica. As we all know, the licensing business will be margin accretive I just want to understand the scale of this business that we think might be reasonable and how meaningful it will be to help with our margins in 2024.

And my second question is actually on our Chinese customers. It's actually a follow-up. We all know that Chinese are becoming more cautious in spending. I think it will be helpful if you could let us know the involvement of active customers among the Chinese cluster in the past few quarters? And has that been expanded? Or is it more from recurring thing from existing customers? I think that would be very helpful.

[Luciano Santel, executive]

Okay. Let me start first about so Luxottica and our eyewear strategy that started many years ago. I mean the last license agreement was with Marcolin. I mean we did a great job together to develop a credible strong product under the strong identity of the brand of Moncler brand. And I'm saying that because the strategically, the decision to develop this business was not adjusted to develop revenues or to develop royalties, but to develop something that should enhance [indiscernible] of our brand. So product first. The reason why we decided to move to [ EsoLuxottic ] is because needless to say, as Luxottica is #1. And their capability on product is huge, of course. And very important also, their distribution capacity is very, very high because they have to furtherly increase and improve the activity that has been developed over the past year with Marcolin, taking advantage again on the great power of Luxottica on product and distribution.

[Gino Fisanotti, executive]

I think to add a bit more into what Luciano was mentioning, I think one of the most exciting opportunities is the deep partnership we have between them in terms of product and brand as well. I think Luxottica is pairing up with us as well in terms of making sure that we have a product offering across the three dimensions of the brand, something that will help us to, again, expand and be meaningful to different audiences as well. So that very important. And as I mentioned before the beginning, just to reinforce that the launch of the first Luxottica collection will be in '24, we will clarify probably Q1, Q2, the exact month, but that's the plan so far.

[Roberto Eggs, executive]

Regarding your question on Chinese, just as a reminder, as I was mentioning, the cluster increased 50% year quarter after quarter on a 2-year stack plus 50%. What we have seen is an improvement of the retention. This is linked to all the client telling activities and activation that we have been working in part of this retail excellence, omnichannel excellence that we have. And we continue to have additional new clients coming into the brand, especially now that have restarted to travel. They started to travel first in the neighboring countries mainly to Japan, a little bit Korea, Indonesia, Singapore and of course, Hong Kong, Macau and [ Cayman ]. But now they have restarted to travel also to Europe, which was a little bit of the surprise that we have seen along the year. You remember that we started the year with 30% of the volumes compared to 2019. It went up to 50% in the middle of the year, and we have seen an acceleration at the end of the year where we were for Europe at 80% of the volumes of 2019.

So we see a progression in their willingness to travel started by a very healthy and wealthy -- sorry, a very wealthy Chinese, but now it's broadening also the fact that different countries have facilitated the emission of Visa is clearly helping to restart the activities with Chinese outside of China.

[Elena Mariani, executive]

I think it's -- I think it's almost a quarter to 8, so we can stop here. Thank you very much to everyone for participating in this call. Let me just give you a quick reminder of the next release interim management statement will be released on April 24, after market close, and our quiet period will start on March 26. Thank you again. And for any follow-ups, you can contact me or the IR team any time. Thank you, and have a great evening. .

[Operator]

Ladies and gentlemen, thank you for joining. The conference is now over, and you may disconnect your telephones.