Shares of Moncler closed nearly 3% lower in Milan yesterday, after the luxury brand joined its rivals in feeling the efforts of the coronavirus outbreak in China.
Fundamental analysis: Full coronavirus impact is still not certain
Moncler, the Milan-based fashion company known for ski jackets and luxury activewear, reported better-than-expected quarterly results. Net sales grew 9%, while the company registered a double-digit growth in all its markets.
Remo Ruffini, the CEO of the company, said that 2019 was “another extraordinary year”. Revenues increased 15% to 1.62 billion, while like-for-like sales grew 7%. In total, Moncler earned 574.8 million euros, which, compared to 500.2 million euros in 2018, is an increase of 15%.
Still, Ruffini spent most of the time addressing concerns and the impact of coronavirus on sales this year.
“We face a new and unexpected scenario. The first concern is to protect our people and take measures to protect our company,” said Ruffini before adding that the company’s ability to adjust quickly is “one of our assets”.
He admitted that the company has already felt the impact of the coronavirus in the past two weeks. Moncler is in discussion with landlords in Hong Kong and China to negotiate rent reductions.
“Right now it’s a critical situation, and after the breakout, we took important actions, cut expenses, reducing and postponing to protect margins,” explained Ruffini.
Addressing media rumours about potential takeover from another company, Ruffini said that “nothing is on the table”.
“We talk to many people, that is the way we work, we have very good relations with everyone, we explore the market, but we have not yet found an opportunity. There is no news honestly”.
Technical analysis: Stock hits a new 11-week low
Moncler stock price dipped nearly 3% lower on coronavirus fears, although a portion of losses was erased later in the afternoon. The daily low of €37.50 represents the 11-month low for Moncler stock price.
As seen in the chart above, the price action stopped at the 200-DMA (the red line). Furthermore, the bulls received an additional boost with the horizontal support near the €37.50 low, enough to facilitate a rebound.
Thus, the support is clearly located at €37.50, in addition to €36.77, where the 100-DMA sits. This zone offers an entry point for those looking to buy Moncler stock. On the other hand, the area of €42.50 – €43.50 is the major target for the bulls if the rebound extends higher.
Moncler stock price corrected on the fears that the coronavirus outbreak may have a strong impact on sales and earnings for the first quarter. The stock hit an 11-month low as it tests the key short-term support.