Moncler S.p.A.

Thank you. Good afternoon, I'm sorry good evening, everyone.

Thank you for joining Moncler nine months 2020 interim management statement conference call. We know today is a busy reporting day, so we will keep this call as a short as possible.

As usual, today for Q1 and Q3, you have myself and our Chief Corporate and Supply Officer, Luciano Santel. Let me also remind that before our comment, this presentation may contain specific statements that are neither reported financial results nor other historical information.

Any forward-looking statements are based on Moncler's current expectations and the functions on future events and subject to various risk and uncertainties that could cause actual results to differ materially from those projected or implied by these statements and from historical trends. Let me also remind you that interim results can be influenced by seasonality and cannot be used as proxy for yearend results.

And as usual media has been invited to participate in listen-only mode. Let's now move to the presentation Page 3, revenue results key highlights.

I will comment only for some currency strengths, if I don't say otherwise. But before commenting on nine months and Q3 results, I would like to make three quick comments.

Even if 2020 results continue to be impacted by the COVID-19 pandemic, in Q3, we started to see clear improvements with revenues declining by 14% compared to the minus 52% in Q2. Improvements were driven in particular by the standing performance in China.

But also Korea and the online continued to significantly outperform. The positive signs reinforced farther in October even if uncertainty remains very high, while we faced the most important weeks of the year as you perfectly know.

Let's move to Page 4, revenue breakdown by distribution channel. Both channels showed improved performances, thanks to store reopenings and better domestic traffic.

In particular, retail revenues declined by 18% in Q3, with Mainland China and Korea, the best performing markets. Online grew from double-digit in accelerations compared to the first six months of the year.

Our sale recorded good, very good performance in the quarter, mainly thanks to the good acceptance, a good reception of the full winter collections and the strong domestic demand in some markets, in particularly North Europe, Middle East and in APAC. E-tailers also in this channel continued to grow double-digit.

Let's now move to Page 5, revenue breakdown by region. As I already highlighted before the covering the third quarter has been largely driven by China followed by Korea and the Americas.

China particularly showed the outstanding strong, I would say double digit growth in Q3 recovery, partially the loss of Chinese travelers. On the other side, EMEA, Italy actually in particularly continue to suffer due to the lack to the lower international travelers, which as you know are important in the third quarter.

And let's go to Page 6 for a deep dive on our EMEA region. In this case, I will comment EMEA including also Italy as usual.

In the first nine months, EMEA including Italy reported 25% decline, 21% in Q3. With the wholesale outperforming retail, thanks to the very good domestic demand.

The retail performance on the other side has been panelized by the decline in international travelers, which mainly in Q3 accounts in a normal year can account up to something around the 70% of revenues. In Q3, we saw improved performances in particular in Germany, Russia and India the European markets.

Going now to Page 7, and commenting on the Asia performance. Asia Moncler includes the APAC, Japan and Korea.

In the third quarter, Asia was down 4% significantly less than minus 38% we recorded in Q2, as you remember. This performance has been supported by the strong double digit in China, but also Taiwan and Korea grew double digit in the quarter.

And these are largely offset - not entirely but largely offset the negative performance in the rest of the other APAC markets, in particularly there is still negative performance in Hong Kong side. The positive trend in China has continued even stronger in October, boosted, as you know by the very good the golden week.

Finally Japan in particular has been penalized in August and September by the challenging base of comparison. In October, so far, so the first few weeks, few days in October, we have seen some clear improved performances.

Finally, let's move to the Page 8, the last region Americas. Revenues in Americas decreased by 13% in the quarter, with similar performance among the two main markets.

The trend has improved significantly during the quarter month after month in August, better than July and September, better than August. Retail outperformed, driven by the very solid local demand and I would say a very good positive consumer sentiment and the strength of our brand in the market.

Online also performed well and we're very happy with the internalization of our North American line business, which occurred in October. And I leave that after Luciano to provide you with some more colors and comments on this.

Finally, Page 9 of the presentation, let me comment on our store network, which at the end of September was at 217 in units. In the quarter we opened four stores.

During Q3, we have also relocated some important stores and we have enlarged our flagship door in Old Bond Street that you see some features in the presentation. Very nice store, even if I haven't seen it.

In Q4, we expect to open two doors, two further doors to get to around 10 for the year, as we were anticipating. While for next year so far we have secured around 15 stores with a large focus on Asia.

I leave now the floor to Luciano to comment on some of our main strategic projects and actions to face the current scenario, and then we are open and ready for all your questions.

Thank you, Paola, and good afternoon, everybody. Okay, a quick update comment on the current situation related to the pandemic starting from people.

You know that under this situation, people still is our first priority. The protection of our people first from the health point of view.

And in September, we started working again regularly in the offices for the majority of our employees. Unfortunately, right now the situation in Italy not only is getting more and more serious, so we are planning our next week unfortunately to get back to a higher percent of remote working.

But we are getting near to work remotely, and in fact, that we organized early in October, we held for the first time our business resource is totally digital. Of course, we are implementing regularly testing swabs for all our people.

We continue the production of surgery masks. A project, as you know, we set priorities this year more than ever, in order to select only the most important and essential projects for the business for the brand.

And one of this project, probably number one project was still is the in-sourcing of our e-commerce business. As expected, as we obviously planned, we started October 6, early October in North America.

I would say with very, very good results not only from the business point of view, business online in North America is doing very well in October, but also, we're very happy about I mean all the infrastructure all the machine, because you know that we started last year in Korea, but I mean, the e-commerce business in North America is going to be again to be greater than Korea. Of course, we still take under control our expenses.

All the expenses, [indiscernible] as we already said that, at the end of the first-half of the year we implemented the negotiation of discussions with the landlords, very tough discussions about at the end. We reported at the end of June pretty good results.

And the negotiations are going ahead with the additional good results that are coming. So this is the situation right now, and I think that we are ready now to answer your questions.

Thank you.

Operator, you can open.

Hi, good evening, everyone. Thanks so much for taking my questions.

So my first one would be on the trends by channel. I would like to dig a little bit more into what's driving the strength in the wholesale channel?

And if there was any time effect or any anticipation of deliveries from Q4 into Q3. Because I think it is quite unusual to see the wholesale outperforming retail by this extent.

And especially because in the previous quarters you had talked about being taking a more cautious approach to wholesale. So can you maybe discuss a bit which markets are seeing higher levels of deliveries?

And most importantly, are you comfortable with such levels of products in the market, given all the ongoing uncertainties? Or is this a sign that Q4 is expected to be particularly strong?

And then one question on potential pent up demand. Because arguably, your Q3 being weaker than peers is also due to the type of product that you sell.

And as there was no tourism this summer, is it reasonable to expect that some of the sales may have shifted from Q3 to Q4, as people will buy winter jackets when it's actually cold. So I was wondering, if this is something that you're witnessing.

And are you expecting to see some of this pent-up demand? Or is there also an element of risk that perhaps due to lack of international travel, those customers that live in warmer climates, maybe they would not be buying these jackets this year and this has to be lost.

And then a short one on gross margin. If you can give some indication on the key moving parts and relative to last year, in terms of price mix but also in terms of channel mix given the outperformance of wholesale?

And if there is any reason why gross margin will be below H2 last year? Thank you so much.

Okay, thank you. Thank you, Susy, for your question.

About the wholesale, wholesale is doing well. Of course, the numbers we reported are based on deliveries, but there is not any particular shift in deliveries from Q2 to Q3, or anticipation of Q4 honestly.

The wholesale is doing well. And just to make it clear, before making any comments, we still have a very, very prudent approach in all the channels of course.

But wholesale more than others because we tend as you know to ship only product, we expect our customers can successfully sell out. So wholesale is doing well for several reasons.

One is the very good acceptance of a full winter collection that is driving very good orders honestly. Another point is that we just compared to the retail business, the wholesale business is less, not all the wholesale business.

I mean, wholesale is a variety of different sub-channels. But normally wholesale business is less exposed to travelers is much more local.

Think of Italy, Europe, Japan even the United States where the big department stores have stores in minor cities, much less touched by travelers. And because of business with locals is doing well, but this is another story.

I mean, we are doing very well with locals in retail too. I think that this is one reason why wholesale is doing well.

And about Q4, of course, needless to say, our wholesale business in Q4 is not particularly material, because that the wholesale is a business in Q1 and Q3 mostly. But based on the current trend, I mean we are pretty confident about our wholesale deliveries in Q4.

So again, wholesale is good, very good. About your elaboration, let's say of the trend we reported in Q3 and whether or not we can expect some kind of shift.

If I well understand your question from Q2 to Q4, I think you're totally right. I think you're right, because I mean the current situation is to some extent increasing little bit our seasonality.

People under normal circumstances last year for example, started buying our product in summer, much more than what they did this year. In Q4, of course, it's still very early and premature to predict, but based on October I mean, we have adjusted 20 days behind us.

I can tell you that October is doing very well probably also, because the weather is particularly good for our product. It is pretty cold better than last year.

But I think that, you are right. Our let's say curve maybe could see that little bit shifted from Q3 to Q4.

You mentioned international travelers, of course, this is a risk by definition, because we lost the vast majority of international travelers. I have to tell you on the other hand, that the tourism outside the region with international tourism in Q3 is much more important than in Q4.

As Paola said in Q3, international travelers represent up to 70% number very high in Q4 is the other way around. I mean the locals are more important than international travelers.

But this is a risk. I will say that unfortunately, is more than a risk right now the lack of international travelers.

On the other hand and other point important to highlight is that because the international business is coming in Europe but not only mostly from a Chinese customers, we are implementing in all the regions but specifically in China business actions to capture these people that are not traveling any longer. And what we call a new low cost by implementing activities to contact them and to call them to come to visit our stores in their local market.

In this case, specifically, in China Mainland. Third question is about gross margin.

Gross margin in the second-half of the year, honestly, more or less, should not be different from last year. One reason important that we already said that but important to update you about the write down all of our inventory that was very heavy, very important in the first-half of the year, remember € 50 million.

But in the second-half of the year until now, I mean, of course, let me cross my fingers, but based on the current visibility we have, we don't see any reason to firstly write down inventory. And so without any depreciation of our inventory or extraordinary depreciation of our inventory, I think that the gross margin in the second-half of the year should be in line with last year.

You are right, the wholesale maybe for the yearend a little bit better than retail, but again, we are not talking about significant impact on gross margin.

Okay, clear. Thank you.

Hi, good evening, Luciano and Paola. Thank you very much for the commentary so far.

Just a couple of questions for me and one following up from the prior question. Just in terms of domestic consumer, we've obviously been hearing some fairly strong anecdotes over the last kind of two or three weeks or so.

But I just wondered if you could help us, I think Paola you mentioned Northern Europe. You also mentioned the Middle East and APAC, obviously.

But any of the consumer clusters turning positive towards the end of the period? And any color for October, you said that that's generally starting well?

And then my second question is just about product initiatives for Q4. We've obviously seen a delay on Genius, understandably, this year, but we've seen you coming content from recurring Jonathan Anderson coming.

If you just talk us through the pipeline for the fourth quarter that'd be really helpful. Thank you.

Yes. I mean, about a domestic demand, overall, I mean, in Q3 was good, much better than of course, the demand that coming from tourism.

September, much better than July and August. So, the trend was progressively improving in September better than the two months before.

And the exit rate was very good. In fact, as I said, October is doing now very well and much better than September.

This is in all of the different regions. Honestly starting from unfortunately the weakest region now, which is Europe.

But notwithstanding Europe is suffering a lot about in the lack of tourism, but the local the domestic demand is very good and this is against last year. China, needless to comment, because we already said that Korea and other market, which is driven mostly by domestic demand, and now more than ever, because they only store so that in Korea has not doing well not at all.

Unfortunately, our duty free stores, which are doing business only with the tourists with the Chinese tourists. So these stores are not doing well at all.

But the lack of business in these stores is offset by the other stores. So domestic demand is doing pretty well everywhere.

Japan, in Q3 the demand which normally, it's mostly local demand was not good. I mean Japan was down in Q3.

September was also negative, but there was a reason last year September was particularly strong in Japan, because many people in anticipation of VAT increase which started October 1, Japan September was very strong. So the base of comparison was very tough.

So September Japan was heavily negative, however, in October when the base of comparison is much easier. However, Japan started again to be positive and to do pretty well.

Domestic demand in the U.S. was the same.

I mean U.S. in Q3 - U.S.

and Canada in Q3 if we take out Hawaii and business in Hawaii is 80%-90% made with customers coming from Japan normally. This year of course, without tourism these stores, two stores, very big stores are not doing at all business they did last year.

But taking out Japan, North America overall in Q3 was pretty good. And again, most of the demand in North America is local domestic demand.

About another question was about Genius. I mean, Genius, we have been able so far and I think that there is no reason why we couldn't respect our timeline, which is very, very intense, honestly this year notwithstanding the situation.

But we have delivered with some delay only in June, June-July if you remember. But we were able to deliver all the collections, most recent collections were JW Anderson.

JW Anderson was 10 days ago. And exactly today, we delivered you can find our stores recovers.

Next will be Grenoble and then in December Alyx as planned as expected. So again, notwithstanding the situation I think that the Genius project this year is doing very well considering the situation.

That's very clear. Thank you.

You are welcome.

Yes, good afternoon. I was wondering about product availability.

There's a possible scenario where you face in the fourth quarter significant growth from all nationalities. Are you seemingly seeing the pent-up demand and the recapture of that demand in the fourth quarter?

It must be very difficult to be planning in these days. But I wonder in case that scenario materializes, would you have enough products to be satisfying that demand trend and a positive year-on-year growth?

Or would you be short of products because you haven't necessarily planned for this kind of context? As a second question, the progress you are achieving in digital in the U.S.

seems to be very assuring and potentially bringing forward similar progress in China. I wonder where you stand in developing your digital distribution in China.

And how much of an opportunity you see there? And last but not least, you have been on the forefront inventing a new way of presenting new collections through the Genius party event.

I wonder how you're thinking about making the Genius event COVID-19 compliant, and possibly the world generating the same amount of buzz and positive momentum for the brand. Thank you.

Okay. Hi Luca, thank you for your questions.

Let me for a second to joke about the availability of product, because we strongly hope to face this problem. I think that we shouldn't have a problem notwithstanding.

As you remember, we implemented very important pickup in our production plan. But I don't think we will face this problem seriously also because, I mean we have implemented over the years some flexibility, better flexibility in our supply chain, that may allow us to react to the demand, of course, not for some specific particular seasonal product, but for all the products we have materials in house that are most obtained.

I mean if we have a fabrics and the components, we can react in a few weeks. So, again, seriously, I think that this is not the problem.

About digital of course, I mean, we are very happy with the North America, but again, not only for business because we are talking about just the 15 days that are meaningless, but because when you start with the new platform, it's very difficult to protect the business because of technically behind the screen there is a different machine. So, the fact that even with a completely different machine, we protected the traffic of our customers and the business which is doing even better than before, makes us very satisfied.

And this was a success of our teams in North America in that quarter, and our people again that made it happen. About China and not only because U.S.

is the first very important step. But the most important step will be next year in May when we expect the May and June I mean not well defined yet, but when we will resource Europe.

Europe as you know, is much more complex than North America for tax, for duty, for currencies whatever is much more complex. And also from the business point of view is by far right now, the most important region for the online business.

After Europe and Japan, because Japan is the other region that we will start major or next year. We expect for the end of the second-half of next year to implement our platform in China.

The digital project for China has already started. It's a completely separate project, because from the technology point of view, from social point of view, from the many, many different points, China requires a completely different project.

And this is something the two separate teams of China in that quarter working very hard to make it happen next year. For the time being, needless to say how important is it to sell in China, also because I mean, it is important and it's a big opportunity, because we are doing really something more than zero but not so much.

So, we have huge opportunities. We are implementing - I mean we have opened a TikTok account.

We are implementing shortly the mini program with the WeChat. So I mean, the machine is moving.

But I think that on one side we are very, very weak in China from the digital point of view, but on the other side, we see really huge opportunities also because the machine is moving and the organization now is very focused on China.

The last question was on Genius evolution, but I think we will surprise them.

Yes, this is something we cannot disclose Luca, is something that you have to wait. And you will see something, as usual amazing.

We look forward to that. Thank you.

Welcome.

Yes. Good evening.

So I have two questions, please. I just want to come back to the aforementioned, in the U.S.

you flagged in the presentation that the results have been strong and so further accelerated in September. Meaning that you are writing [indiscernible] territories in the U.S.

to understand the magnitude of the improvement in the U.S.? And more generally speaking, regarding your comment about the performance in the October which is very encouraging is it back to British territory?

[ph] And finally, sorry I have lot of question, sorry. Is it possible - is it just to assume contribution from new space during Q3 which is not very [ph] strong that is to say roughly approximately 6%?

And my last question is about the store opening for full year 2021. So you have already secured 15 store locations.

Will you be focusing Asia? Is it possible to grow, how many stores do you plan to open there out of the 61 planned in 2021?

Thank you very much.

The first question was on the acceleration magnitude in the North American market in the quarter. Clearly the months, August, as I mentioned, unload August was better than July and September better than August.

But we cannot provide further comments on that. For sure, we are happy in what we have seen.

But we need to wait, as we said the most important weeks are ahead of us. So it's important to understand how the business will develop now in this following weeks.

The second question and this I leave it to you is a new space contribution. Is it fair to assume a 6% in Q3?

Of course, Anne-Laure, we don't report these numbers. We just give a general guideline for the year normally.

I think that for Q3 honestly is inaccurate, a reasonable estimate is a reasonable estimate, I think. And the other question was about a new openings for 2021.

Yes, your assumption is correct. I mean, we are opening some stores, probably more than for sure more than this year in China.

But there are two stores that I would like to mention, because our two stores that we expect to become a flagship. One is [indiscernible] which will be a two-floor store, very big, very visible and what we consider a flagship.

And the other one is in Chengdu flyer and other store that will be a flagship and others. But this is the most important.

Also among the 15 stores, there are two important openings in Europe. One is Milan Galleria, which, I mean is a project we already mentioned in the past.

But we have in the next year again a flagship. And the second store after Barcelona, in Spain, which would be Madrid of course a very, very important, very visible store in [indiscernible].

These are the most important openings of next year, but again in China as you said, we have two important openings and other minor but one in Wuhan and other one in Dalian. For China, of course is an important market also for so many openings.

Thank you very much. I just want to come back to the performance in October.

I know that the two most important months are ahead, in November and in December. But just turning back on October, given the comment that you made about a very good performance.

Does that mean that you're already back in [indiscernible] territory?

As was seen, I was referring to U.S. but it's the same event for October.

In general, we cannot comment on single month performance in detail. So the signs are good, but the 11 weeks that we have ahead of us are very tough and the environment overall remains very, very uncertain.

So, no further comments on the October. Happy, yes, we are happy, but we know that there is still two very important months ahead of us.

Thank you for the answer.

Thank you, Anne-Laure.

Good evening. Thank you for taking my question.

Congratulations on the nice results. We understand it's a very difficult operating environment.

My first question I wanted to follow-up, I believe you said tourism represented 70% historically, 70% of EMEA in the third quarter. How does that evolve as we move into the fourth quarter?

Is it more or less dependent than the third quarter? Or the different call outs as we think about the tourism effects and the lack of travel in different regions and the seasonality around that?

And I'd also like to ask a question on kind of what your outlook is for the backdrop for the broader outerwear category? Do you have any insights into outdoor activities, ski resorts?

Do you expect them to be open and the key resorts to be open in Europe and North America and other markets, where you see a lot of the winter activities that's so important to your brand? Thank you.

Hi, Omar. About tourism outside region, the number that Paola mentioned, I mean this is associated with the summer period with Q3 specifically, which is up to 70%, very high.

But in Q4, the percent of the contribution is much lower. On the other hand, the local demand is much higher.

So, I mean, we have three months, I mean, two month and a half ahead where the local demand is more important than the tourism outside the region. So your assumption is accurate.

Yes. I mean about the Grenoble line of course, this is not only a part of our DNA, but also I mean, you know that we have invested a lot in this line over the past few years, not only from the style point of view, but also from the technical point of view to protect and to develop more and more a very technical credibility in this field for our brand.

Something important to highlight about store and about ski resort is that we are opening, we are relocating actually shortly the store of [indiscernible] and both locations are really amazing, much bigger, much more visible than particularly is really an amazing location. So the ski resorts are important, more and more important, more than ever.

And I mean, we keep investing because they represent also the credibility of our brand, not only for business, but also because they represent the DNA of our brand.

Thank you.

No, Omar I think I answered your question, but probably you asked also if they will be open the stores for, I mean, we hope so, of course. But the future this year, more than ever is very uncertain.

But we strongly hope so.

Thank you.

Good evening, Paola and Luciano. I have three questions, please.

The first one on e-commerce. I know it's only two weeks of trading, but any lessons you can share on the internalization of eCom in Canada and U.S.

Any difficulties on the integration, anything that surprised you in terms of maybe changing in the merchandising mix. And are you still sticking to your schedule for next year for Europe and Asia rollout?

Secondly, on the wholesale performance, I guess within that minus 6%, you said E-tailers outperformed. I guess travel retail underperformed.

And then you had positive reception for winter and reorders from maybe some of your multi-brand retailers? Should we take that in light of your minus 25% like for like maybe?

Is that positive reception for winter effectively a very good indicator you think for the fourth quarter? Does that give you actually confidence about November, December to have seen maybe a surprisingly strong or less bad than expected performance in the wholesale channel?

And finally, on the Asia growth, I'm trying to reconcile the country mix. You have China, Korea double digit, Taiwan positive.

Is it fair to assume that Japan was down 25%, 30% in the period? And as you said, Luciano, up low single digit maybe in October, given the depressed comp.

Okay. Thomas, about your first question e-commerce, I mean [Indiscernible] means a lot, but again honestly, it is still premature to get to significant conclusions about the product mix, merchandising for the region so that should start next year.

The most important key learning, again is about the capability of organization to make it happen, which again, is something important and sounds that makes us more optimistic, because I mean, the project is still long and very complex. About wholesale…

Wholesale was actually a good indicator of good reception of our …

Yes, I mean, this is what we look at. I mean, of course, the business may be better, maybe worse.

I mean, we may have the help of the climate, the weather, but at the end, what makes us confident is the results of our collection of our products the strength of our brand. So again, wholesale did well and better than retail.

Retail is doing in October, as we said well. So, these are all encouraging signs for the future.

As Paola said, and let me say it again, it's very difficult. I have said that is totally impossible to predict the future.

Normally, it's impossible and this is what I normally say in October every year, but this year more than ever. I mean, that the situation overall is very, very critical.

We are happy. Yes, we are happy because notwithstanding whatever happened in the last month or whatever may happen hopefully not in the future but our brand is strong, our product is good, people when they can come to visit our stores.

So again overall, we are happy. Yes.

But without any particular indication on the aggressive expectation for the yearend, also because I mean results are important but again, we look at the brand for the future not just for this quarter. About China, overall I mean, China Mainland are number one, by far.

Korea, again, as I said as you highlighted well, very well. On the other hand, Hong Kong a disaster.

Macau a disaster. Macau is getting a little bit better now in October, but if I have to comment accurately, Hong Kong and Macau a disaster.

Taiwan, a fairly well. Japan in September negative, I mean double digit negative, but again October better, October is positive, if I can say that it is positive also because as I said before the base of comparison is much, much easier.

But in any event, I mean we are very confident about the possibility the capability the potential of Japan. Of course, Q3 has been heavily impacted not only by the based on comparison with last year, but by the pandemic.

I mean, Japan in Q3 was still in a very serious a very serious situation. So, again, any expectation, any forecast is more than ever very, very difficult to now.

But what we can say for sure is that the signs are good, the brand is very stronger in the collection which is very important is received a very good acceptance by our customers.

Thank you, Luciano.

You're welcome.

Thank you.

Hello. Thank you for taking my question.

Just one if I may. I was just thinking about the link in Q4 between winter holidays and going skiing and so on and buying Moncler, especially in Europe.

And I was thinking like there's strong link, what could be the size of the impact if people can't go on winter holiday due to the second wave worsening?

Sorry, your question was what the impact is if the resorts are not going to open in winter. So I mean, the resorts are open, but clearly, maybe the ski loops will not be opened.

No, the impact is, as Luciano was saying before, and I think maybe he was saying that the ski resorts are very important for the brand. Therefore the strength of the brand and our DNA.

So it's important they are critical for us, but not as much in terms of contribution to business, not even in Q4. So it's not a big impact if they're not going to be open.

Of course, if they are open everything helps. But otherwise, it's not going to have a big impact, if this was your question.

Yes, I was thinking about the sales in ski resort, but also just about buying a jacket before going skiing. So not only the sales in ski resorts, I was just thinking maybe people are buying a Moncler jacket, because they know they are going on winter holidays.

And they might not do it if they don't, we're just thinking about the link between these two.

Our Grenoble collection, which is a ski collections account we normally say single digit of our revenues. So of course, we have - you can also buy products of the main collection that used for skiing.

This is something that can happen. But otherwise, I would say it's not going to be so such a big impact on our revenue.

As we were saying, of course, we hope they would be opened because it would be much, much better. But more for a general environment than really for a big impact or an important impact on our revenues.

Okay. And if I may squeeze in I just had one.

You said that Q4, it seems some travelers were lower than the Q3 levels and lower than [indiscernible]. Can you have an idea of the presentation for Q4?

Sorry, we couldn't really understand the question. Can you repeat because there is the line that goes - and is not regular?

So we don't really get all your words, if you can repeat.

Excuse me. So, I was - so you said that the travelers accounted for 70% of the sales in Q3 and then you said that Q4 his lowest.

Can we have an idea of the percentage in Q4?

Yes, travelers in EMEA we were specifically mentioning not travelers overall.

Okay.

Yes, correct, because travel in EMEA are very important. 70% is some in Q3 and less than 50% in Q4.

I mean, in the region of a 40% or 30% 40% in Q4 in EMEA as Paola said.

Thank you very much.

You're welcome.

Thank you.

Yes. Hi.

Good evening, everybody. I have few questions.

First of all, looking to the in sourcing of your e-commerce activity now that part of the project is already up and running in the U.S. and Canada.

I was wondering whether you can share with us a bit more of colors, in terms of the impact this project might have in terms of profitability. And as a broader question looking maybe to next year or whenever you will ever regain the 2019 revenues, would you expect the profitability as well to come back to your 2019 levels?

Then another question is about your marketing budget, as I presumed, and then I understand, you are going to be more vocal with your marketing activities in the winter season now. I was wondering how we should look at your marketing cost in the second-half of the year compared to last year?

Then quick question if you can on the travel, retail channel, if you have any different thought now on this channel, because of the situation in terms of your development strategy there? And the last one, in terms of the mix of clientele, you are seeing in the most recent amount, sorry the restart of winter sales so that are more - let's say more on in tune with your core offering.

I was wondering if you can share with us anything about the evolution of the DH cluster [ph] with the current situation, rather than for example the evolution of the price mix with the current situation. What are you seeing since the start of winter sales?

Thank you very much.

Hi, Paola. About e-commerce, I mean, everything we said about America is important for future.

To be honest, we do and even if as in my role I should look, as I do normally at the profitability. But right now, profitability of this channel is not on the top of our priorities.

What is on the top of our priorities is to become able and strong in driving this complex machine from all the different points of view. And this is also the strategic reason why we decided to resource this business.

This business may be profitable, even more than before in theory, but everything is theory now. When the machine will be up and running in all the different regions, and when we will comment one year from now more or less the result of all the other regions.

We may start to low cost profitability. For the time being in our plan, we maintain the same profitability we currently have, or we had before and currently have with [indiscernible].

But again, the strategy is behind this project is different. But your point is correct, but right now is honestly pretty much sure.

About the marketing budget, second half will be lower than last year, of course. I mean, we expect for the yearend, a marketing budget in the region of 6%, last year was 7%.

And you know that, I mean we included in that budget also charity activities actions and we did in the first-half of the year. So for sure, marketing activity this year will be a much, much lower than last year.

When you asked a question about price mix.

Our recent primary development, so it's the development.

I mean travel retail now is the channel, which is suffering most. I mean, we still have a few stores still closed and all of them are in airports.

One is Hong Kong, the other one is Istanbul.

And the Melbourne is locked down.

Melbourne, yes. But I mean, two of three are in the airport.

And the stores in airports that are open, unfortunately are suffering a lot and thinking of in North Korea [ph] and all the others. So travel retail right now is suffering, nevertheless and we still believe that retail business, we wanted to hope that business will be important again in the future.

For the upcoming year, we have a project only one important is Sydney, Sydney Airport, where we plan to open a store. And then we have, yes, a couple in China, in Shanghai and Guangdong.

And again, not so many, but I think that this channel after this unfortunate situation, will be again, a very important channel, if people, as we all believe, will start again to travel and to enjoy in traveling and shopping abroad. One question was about the price mix.

Yes, the initial indication on this for winter collections in terms of average price customer.

Yes. I mean, we see in some regions more than others and some younger customers, for example, in North America, which is encouraging, of course.

And because I mean it's that we developed a collection which is and looking not only at our existing loyal client telling but also at younger and new customers. Price, right now is more or less in line probably a little bit higher, because we are selling now more outerwear.

But, not big differences honestly not at all. Yes.

I mean, if we look at the retail metrics, this is a very important to highlight, because, I mean, all of our stores with no exclusions, I mean, except the China suffering of lack lower, much lower traffic. But on the other hand, we are offsetting not completely, but in part the lack of traffic with a much higher conversion rate, and with higher and increasing units per transaction.

So these two metrics are doing well, not as much to totally offset traffic, I mean, not in Q3, of course. But again, these are very encouraging signs of the capability of our store people to convert business.

Thank you very much.

Thank you, Paola. Operator, I don't know if there are follow-up questions or other questions, I think if any, we can get the last one.

Perfect. Fantastic.

So, thank you all for participating in this call. Clearly, as usual, myself and the IR team here with me is at your disposal, if you have any follow-up tonight or tomorrow.

Also, I remind you that I don't know if you have seen we published today our 2021 financial calendar. So full year '20 results are going to be published on February 18.

And the silent period will start on January 20. I wish you a very good evening, and speak to you very soon.

Bye, Chao.