WHAT IS BEHIND MONCLER'S ACQUISITION OF STONE ISLAND?
The Italian firm specialised in mountain clothing Moncler has closed the purchase of its rival Stone Island, also Italian, for a total of 1.15 billion euros, a value that represents a multiple of 16.6 times the ebitda generated by Stone Island. The purchase will be made for a 70% stake held by Stone Island's parent company SPW.
In this way Moncler, which in recent years has been the subject of rumours about alleged takeover interest from the big luxury textile groups, diversifies its business at a time of deep falls in sales due to the lack of demand, which has been clearly affected by the pandemic.
- The agreement guarantees the permanence of Stone Island as a brand that will continue to operate independently.
- Moncler, as a company specialising in the luxury fashion sector, will seek to gain market share and develop its full potential.
- The agreement is thus established as a mechanism that will strengthen the position and capacity of both Italian firms in their aim to interpret the new cultural codes and their evolution.
Moncler's 2020 results will mean a sharp slowdown in the upward trend that Moncler had been experiencing since 2012. Since that year, its sales have grown at double digits until reaching a record 1.627 million euros in 2019.
This has also gone hand in hand with ever-increasing profits of 361,5 million in the last financial year, while increasing its gross margin to 77.7% last year, a very high percentage that explains the interest aroused among the big groups. Just a year ago, it was Kering that approached the firm.
However, the purchase made official today is interpreted as one of Moncler's strategies, strengthening its business and extending it to new consumers.
This is what it achieves with Stone Island, a brand founded in 1982 that mixes luxury, sportiness and casual fashion.
Stone Island is currently ranked number five among the top 10 most sought-after fashion brands in the world, behind only two brands that still have a foot in streetwear, Vetements and Off-White, and two of the most powerful brands of the Kering group, Balenciaga and Gucci, with luxury prices and strategies.
Just five or six years ago, no one would have named Stone Island as one of the leading brands in the world.
The secret to Stone Island's success lies with Drake, because when he started appearing in photos back in 2015 wearing Stone Island clothing, it really went viral.
As has happened with other brands and garments in recent years, everything has a more or less similar origin and has to do with the rise in mass fashion of a streetwear aesthetic that clearly draws on the phenomena of the 80s and 90s.
Stone Island was, along with other brands such as Burberry, Paul & Shark, Ralph Lauren, Fred Perry, or Sergio Tacchini, a reference point for British casual fashion, the kind that related branding to hooliganism: the toughest and most violent football fans 'disguised' themselves with noble garments so as not to arouse suspicion. Stone Island was everywhere back then.
Stone Island was especially well known in England, so much so that even today it is still among the aesthetic references associated with football and even Pep Guardiola wears Stone Island jerseys in the dugout.
Stone Island has built a strong loyalty among its consumers, across all demographics. The key is an effective mix of brand image and competitive pricing. Its clothes are strong, tough, masculine. It is a fundamental part of his success.
In 2014, Stone Island took the definitive step in the United States when they presented collaborations with Nike and Supreme, super-familiar brands in the US and with a high hype component. Drake and the designs of fashion did the rest.
Today it is a brand that no longer appears to be linked only to a countercultural movement but is absolutely horizontal.
The truth is that the style of its clothing makes it very appealing to all kinds of people: jumpers, jackets, trousers and fashion accessories are, shall we say, practical.
In addition to jackets and windbreakers, the reversible and military-look jumpers are also very iconic.
A point of attraction lies in the technology of many of these pieces, for example the famous Ice Jacket, which changed colour depending on the temperature.
But what about price? Although Stone Island describe themselves as a firm with more or less competitive prices (and they are, bearing in mind that its direct rivals multiply by two or three the costs of equivalent products), the truth is that wearing Stone Island still costs a more or less reasonable investment, which is also to some extent part of its success. It is a brand and logo that is familiar to all but requires a little more expense.
So today Stone Island is much closer to the most hype brands of the moment than to other references.
Along with others such as Patagonia, Napapijri, or The North Face, they appear in the current fashion imaginary of men who are looking, above all, for clothes that protect them from the cold or that allow them to have multiple urban uses.
The dominance of the brand with the compass logo seems to have only just begun.
