Compagnie Financière Richemont S.A.

Good morning, everyone, and welcome to Richemont's 2026 full-year results presentation. Thank you for joining us in person in Geneva or virtually by webcast. I'm Alessandra Girolami, Group IR Director, and joining me today are Johan Ruppert, Chairman, Anton Ruppert, Nicolas Boss, CEO, and Burka Grun CFO. As usual, the company announcement and results presentation can be downloaded from richemont.com and the replay of the webcast will be available on our website today from 3 p.m. Geneva time. Before we begin, please take note of the forward-looking statements in our ad hoc announcements and on slide two of the presentation. Turning now to the presentation, Nicolas will begin by discussing the year's highlights and group sales. Lookout will then review our business areas and group financials, and Nicolas will finish with some concluding remarks. This presentation will then be followed by a Q&A session open to participants present in the room. I now hand over to Nicolas.

Thank you, Alessandra, and good morning to everyone. Thank you for joining us today. In fiscal year 2036, Richemont delivered strong sales momentum and solid results against fast-evolving global conditions. And I would like to start by warmly thanking all teams for their dedication and achievements throughout such a challenging year. Let's start with a few key numbers. Sales reached 22.4 billion euros, an increase of 11% at constant exchange rates and 5% at actual exchange rates. Operating profit came in at 4.5 billion euros, up by 1% compared to the prior year, or up by 23% at constant exchange rates. Profit for the year reached 3.5 billion euros, compared to 2.8 billion euros in the prior year. This solid performance led to the generation of 4.9 billion euros of cash flow from operating activities, enabling the group to end the year with a net cash position of 8.5 billion euros. Let's turn to the highlights, starting with sales. The group demonstrated sustained momentum throughout the year, delivering growth across all business areas, regions, and channels at constant exchange rates. The Drury Maison posted a remarkable performance, illustrating the strength of their brand equity and overall value proposition. Sales rose by 14%, with double-digit growth throughout the year, led by higher demand across all regions. In addition, the specialist watchmakers and fashion and accessories maisons posted modest growth, both improving in the second half. All regions contributed to growth with a notable double-digit rise in the Americas throughout the entire year. Sales in Middle East and Africa were also up by double digits, although naturally affected by the conflict in the region during March. In addition, Europe, Japan and Asia-Pacific contributed to growth in value, all posting high single-digit growth for the year. Let me add that in Q4, the group was able to maintain its momentum, with sales up by 13% at constant rates. Sequential acceleration in Asia-Pacific, the Americas and Japan offset slower sales growth in Europe and a modest decline in the Middle East and Africa region. Moving to our financial performance, operating profit reached 4.5 billion euros, up by 1% versus the prior year. while including 164 million euros of non-recurring costs. Overall, the contribution of our strong sales growth, combined with ongoing cost discipline, mitigated the significant impact of the external headwinds we faced. With a net cash position of 8.5 billion euros, the group ended the year in a strong position to continue supporting both long-term resilience and growth prospects. As we navigate this challenging macroeconomic environment, we continue to execute on our long-term vision. We've always been guided by the belief that differentiation, brand identity, and disciplined pricing are primary divers for enchanting clients and delivering value over time. To support this, we continue to make strategic investments, including 1 billion euros of capital expenditures, primarily for distribution and manufacturing, while dedicating circa 9% of our sales to communications. In parallel, our teams demonstrated unwavering creativity, further cultivating the desirability of our iconic collections and successfully launching new lines. Let me now elaborate concretely on how we are strengthening the distinctiveness of our Maison for the long term. First, we continue to elevate the quality of our retail network. This involves openings in ski locations, such as new cities for Van Cleef & Apples in Europe, alongside Cartier in Tokyo, Buccellati in Busan Centrum, Korea, and IWC in Dallas, among others. At the same time, we significantly enhance the client experience through major relocations and renovations, such as Piaget in Place Vendôme and Buccellati in Aspen. Specifically looking at the China market, we have been reshaping our store network by closing selectively stores across business areas as well as opening in key locations to optimize our footprint. Second, we continue to cultivate craftsmanship to preserve specific skills as well as the enduring quality of our timeless pieces. We invested in our own atelier notably with several jewelry projects in Paris, in Valenza, in Italy, which are due to open over the coming year. In parallel, we nurtured artisanal and creative skills through dedicated programs. We accompanied over 200 apprentices in Switzerland and Germany through two-, three-, and four-year programs in watchmaking, and another 100 in France and Italy for jewelry métiers. This year again, we welcome another 20 young designers at our Creative Academy in Milan, while our Maison continues to partner with prestigious institutions like the Accademia Costume & Moda in Milan, or recently the King Foundation in the UK on decorative métiers d'art in watchmaking. Extending this commitment, we also strive to share our passion for craftsmanship and art with a wider audience. In the past year, the four campuses of l'Ecole des Arts Joyeux, supported by Van Cleef & Arpels, attracted thousands of students and visitors to curated yet accessible exhibitions around jewelry arts. Another example is the Fondation Cartier's new home in Paris that has already welcomed over 300,000 visitors since its opening last October. Third, and building on this, our Maisons continued to perpetuate their heritage and singularity, further solidifying the iconic status of their creations. Throughout the year, several Maisons hosted patrimonial exhibitions. Highlights included Bucciarati's successful Prince of Goldsmiths exhibition in Shanghai and Cartier's exhibition at the V&A in London, which drew over 350,000 visitors, including many of your help. Our Maison also held exclusive high-jury events across various geographies, including Italy, Sweden, and Spain. This was accompanied by vibrant and purposeful communication, such as the Cartier New Brand campaign launched in September and centered on its iconic panther symbol, showcasing both beauty and audacity, consistent with the Maison's identity. This of course would not be possible without a constant obsession with creativity that contributes to drive desirability and nurture brand equity over time, and I want to thank the teams for their unwavering efforts at designing and crafting the beautiful new creations featured on this page. Let me now walk you through the group sales performance in more detail, first by region and then by distribution channel. Unless otherwise stated, all comments refer to year-on-year changes at constant exchange rates. Fiscal year 26 saw robust sales growth across all regions, with notable improvements in the second half in both Asia-Pacific and Japan. Sales in Europe rose by 9%, supported by growth across all business areas, led by the jury-maison. All main markets grew, with notable performances in Italy, Germany and the United Kingdom. After a strong first half, Europe's growth rate moderated in the second half, reflecting strong comparatives in the prior year period. Local demand was strong throughout the year, while tourist spending was overall positive, albeit decreasing in Q4. Fourth quarter sales overall grew by 5%. Sales in Europe made up 24% of group sales, up slightly from the prior year. Asia-Pacific sales ended the year up by 8%, led by double-digit growth at the jewelry maison, which more than offset lower sales at other business areas. Regionally, the performance was driven by strength in the South Korean market. Sales in China, Hong Kong and Macau combined rose by 3% for the year, led by double-digit growth in Hong Kong. Elsewhere in the region, Australia and Singapore also continued to deliver robust growth. Fourth quarter sales for the region were up by 14%. Sales in Asia Pacific represented 32% of group sales, down slightly from 33% the year before. Sales in the Americas grew by double digits throughout the year, ending the full year at plus 17% against demanding comparatives. This included double-digit rises at jewelry maisons and specialist watchmakers, combined with mid-single-digit growth on the other business areas. Strong local demand supported growth across all markets in the region and all channels. Fourth quarter sales were up by 18%, marking the ninth consecutive quarter of double-digit growth. The Americas contributed 25% of group sales, in line with the prior year. Japan sales were up by 9% compared to the prior year, led by the Drury Maison and the Ritter Channel. The performance was supported by strong growth of local demand, while tourist spend was lower, notably from Chinese clientele. Growth significantly accelerated in the second half and included a remarkable plus 28% in Q4 that built upon a demanding comparative of plus 22% in the prior year period. Japan's contribution to group sales remained stable compared to the prior year at 10%. Turning now to Middle East and Africa, where our thoughts are with our teams, our partners and everyone affected by the ongoing events. Sales for the year increased by 13% in the region, driven by the Drury Maison. All main markets saw strong increases, led by growth in the UAE and Saudi Arabia. In the fourth quarter, sales were naturally affected by the conflict in the region in March and ended 3% lower than the prior year period, contrasting with the double-digit increases recorded until then. Sales in the Middle East and Africa region represented 9% of group sales, in line with the previous year. In fiscal year 2006, all regions contributed to the group sales growth, attesting to the strength and balance of our regional footprint. Despite the unfavorable currency movements, sales grew by 1 billion euros. In value, the main contributors were the Americas and Europe, both adding circa 400 million euros of sales compared to the prior year. Let us now turn to sales by distribution channel, with growth expressed at constant exchange rates. Retail represented 71% of group sales, slightly above the prior year's level. Retail sales were up by 12%, with growth across all business areas and regions, led by strength at the Drury Maisons and the Americas. Online retail contributed 6% of group sales in line with the prior year. Sales rose by 8%, with growth at the Drury Maisons and modest declines elsewhere. All regions grew, with notable performances in Japan and the Americas. Overall direct-to-client sales, combining sales in directly operated stores and online retail, made up 77% of the group, up slightly compared to the prior year. Finally, the wholesale Chanel represented 23% of the total, with sales up by 9%. Similarly to retail, wholesale sales were up across all business areas and regions, led by the Drury Maisons and the Americas. With this, I now hand over to Burkhart, who will take you through the year's highlights by business areas. Over to you, Burkhart.

Thank you, Nicolas. I will now review the business areas with all comparisons at actual rates, unless specified otherwise. Let me start with the jeweler maisons, which include Buccellati, Cartier, Van Cleef & Appels and Vernier. Sales were up by 8% for the year to €16.5 billion. At constant rates, they increased by 14%, with double-digit growth across all regions, underpinned by both jewelry and watch sales. In the fourth quarter, jewelry maisons maintained the momentum with sales up by 16% at constant rates. During the year, the jewelry maisons implemented measured price increases while continuing to preserve value for clients. At the same time, they demonstrated agile cost management, notably through efficient communications with spend below prior levels, both in absolute terms and as a percentage of sales. This was accompanied by sustained yet selective network expansions. As a result, Blue Remaisons managed to mitigate the significant impact of external headwinds on their costs, and operating profit reached 5 billion euros, up by 3%, or by 20% at constant rates compared to the prior year. Operating margin remained solid at 30.5%. Let us look at the key developments of the year. The Jewellery Maison saw strength across their iconic collections in both jewellery and watches, among which Love and Panthère et Quartier, Alhambra and Perlet at Van Cleef & Arpeltz, and Operatul and Macri at Bucciolati. Throughout the years, sparkling novelties contributed to further building desirability and attractiveness. At Bucciolati, these included bejewelled bags and coloured additions to étoilés. At Cartier, the love unlimited and clash color pieces and jewelry, and new watch creations for Pantera and Santos collections. Also of note, Van Cleef & Arpels introduced major Alhambra novelties, as well as its new jewelry collections, Flowerlace and Fleur d'Arroy. Our Maisons held successful exclusive events across several regions, building on outstanding high jewelry collections, of which Lilo Tresor at Van Cleef & Arpels, On Equilibre at Cartier, and Ardis at Vernier. In parallel, the jewelry mazons continued to enhance the client experience through selective network upgrades and openings while conducting targeted closures. Of note, Buccellati completed the expansion of its Hong Kong Princess Flagship Boutique. O'Cartier opened a boutique in Tokyo, Ginza and Japan and completed a major renovation in the Miami Design District. Mancleo Fianapel's notably reinforced its presence in Europe through several openings, including in Florence, Frankfurt, and Hamburg. Vernier continued to consolidate its foundations and ended the year with a net addition of two new boutiques, of which its first one in Asia. Turning to specialist watchmakers, where sales were down by 4% to 3.1 billion euros. At constant rates, sales rose by 1%, led by strong growth in the Americas that compensated for declines in Asia Pacific and Japan. both retail and wholesale channels slightly increased at constant rates. Signs of stabilization emerged, with sales returning to moderate growth in H2, including plus 2% in the fourth quarter, despite a double-digit decline in Middle East and Africa. Moving to profits, gross margin was affected by unfavorable external factors, such as foreign exchange rate movements and the rise in gold prices. in addition to the leverage and impact from lower sales on fixed costs. While facing these headwinds, the maisons have displayed solid discipline in managing their operating expenses, that were down compared to the prior year, most notably in communication. Consequently, the operating result amounted to 107 million euros, down versus the prior year, but up at constant exchange rates. Operating margins stood at 3.4% for the year. While specialist watchmakers overall posted mixed performances across the year, some of them showed notable improvement in the second half, of which Erlangen & Söhne, Jaeger-LeCoultre, and Vacheron Constantin. The overall sell-in, sell-out ratio remained at circa 100% over 12 months, reflecting sustained efforts to maintain a healthy level of inventory in the trade. Major novelties introduced during the year supported the solid growth of iconic collections, such as the Reverse Tribute at Jaeger-LeCoultre. In parallel, the Maisons hosted notable events showcasing their distinct heritage and craftsmanship, including Rochon Constantin's 270th Anniversary Global Celebrations and Panaray's Depth of Time Travelling Exhibition, presented to the public in Florence and Shanghai. Overall, Specialist Watchmaker Maisons pursued selective openings, such as Arlang and Söhne on Old Bond Street in London, while proceeding with targeted closures mainly in China. Major renovation projects were completed in the year, such as the Piaget flagship on Platon Dome in Paris. Finally, let me conclude that earlier this year, an agreement was announced for the Damiani Group to acquire a full ownership of Beaumont-Mercier, with completion expected in summer of this year. Let's move to the other business area, comprising the group's fashion and accessories mazons, watch finder and co., the group's watch component manufacturing, and real estate activities. Sales of 2.1 billion euros for the year were down by 2% at actual exchange rates. Constant exchange rates, sales were up by 3%, underpinned by growth in the Americas, Europe, and Middle East and Africa. The Fashion and Accessories Maisons saw a moderate increase, while Watchfinder boasted double-digit growth. The retail channel showed solid performance, and wholesale sales were slightly up. Sales in the fourth quarter were robust at plus 7% at constant rates, led by growth across all regions, except obviously for Melillis in Africa, that was slightly down. The Fashion and Accessories Maisons maintained consistent and disciplined investment in their brand equity during the year. Overall, the other business area reported an operating loss for the year of 96 million euros, representing a modest improvement over the prior year at actual rates, and a more meaningful one when excluding unfavorable FX movements. Peter Millar and Alaya both showed continued sales momentum during the year. Peter Millar benefited from its further expansion into a broader lifestyle proposition, Balalaya achieved increased global recognition and strong performance of winter-spring 25 and summer-fall 25 archetypes collections across categories. Overall, the F&A Maison saw robust increases in the ready-to-wear category. Also of note, Montblanc showed encouraging signs with sequential improvement during the year as the Maison progressed on its transformation, driven by writing instruments and high visibility brand initiatives. Watchfinder had a solid year, supported by certified pre-owned partnerships with Cartier and Vacheron Constantin, while benefiting from increased local sourcing. The fashion and accessories maisons continued to enhance their retail network with selective openings and targeted closures. Notably, new locations included flagship boutiques for Montblanc in Sydney and for Laya in Beijing, Sanlitun, as well as the first store for Chloé in Australia. Let me now walk you through the rest of the P&L, starting with cross-profit. Cross-profit rose by 1% in absolute terms to 14.4 billion euros, but declined by 250 basis points as a percentage of sales to 64.4%. Let me provide some color on the moving parts, starting with the production costs. In the full year, about two-thirds of the increase in production costs were driven by the net impact of higher raw material costs, notably gold. The remaining third was mostly due to the additional US duties that amounted to circa 200 million euros. Finally, like in the prior year, we made the decision to proceed with targeted buybacks at some of our specialist watchmaker maisons, mainly in China. These pressures were partly offset by the positive impact from measured price increases combined with favorable sales mix, notably through higher volumes combined with the shift towards higher priced products. Taking these elements into account and excluding foreign exchange rate movements, gross margin was down 40 basis points for the year. As we anticipated at our interim results in November, the gross margin erosion was more visible in the second half than in the first as the stronger pressure from gold and U.S. tariffs was only partly offset by a higher contribution from price increases. Finally, foreign exchange movements for the year, mainly from the U.S. dollar, Swiss franc, and the Chinese renminbi, accounted for a 210 basis point negative impact, bringing the total gross margin down by 250 basis points. Next, let's look at operating expenses, which were broadly stable in value. reflecting our strategic investment to nurture Maison's long-term potential while exercising discipline on costs. I will now take you through the expenses by category. First, selling distribution expenses rose modestly by 2% at actual rates and 7% at constant rates, reflecting selective network expansion and salary increases. As a percentage of sales, selling distribution expenses accounted for 25.6%, down by 70 basis points. Communication expenses were down by 5% compared to the prior year, or by 2% at constant rates. This evolution illustrated the Maison's efficiency at allocating their spend, and to a lesser extent, the phasing of certain expense events, such as Home and Father. Administrative and other expenses were up by 4%. This increase was fully driven by higher non-recurring costs that went from €72 million in the prior year to €164 million for the year under review. These €164 million primarily reflected a €99 million combined charge related to non-current asset impairments, mostly Goodwill, in addition to a €59 million write-down following the announced sale agreement of Beaumont-Mercier. Overall, net operating expenses amounted to 44.4% of group sales, down by 160 basis points, reflecting the sales leverage from strong top-line growth. This resulted in an operating profit of 4.5 billion euros, up by 1% at actual exchange rates, and by 23% at constant exchange rates. This robust performance reflected the positive contribution from strong sales growth and cost discipline, that mitigated the impact of the external headwinds we faced during the year. Excluding the €164 million of non-recurring charges and the targeted buybacks that I mentioned earlier, the underlying operating profit was close to €4.7 billion. Let us now review the rest of the P&L items below the operating profit line, starting with finance costs. Net finance costs increased by 91 million euros to 144 million euros for the year. Net foreign exchange losses on monetary items increased by 314 million euros compared to the prior year. In addition, we bore a 170 million euro impact from lower fair value adjustments, mainly related to the group's investments in its money market funds and segregated investment mandates. These two items were mostly offset by a positive variation resulting from the group's foreign exchange hedging program, thanks to a 374 million euro gain after a 71 million euro loss in the prior year. On this point, I would like to remind you that the results of the FX hedging is not included in our operating profit today. Should we adjust our operating profit for the FX hedging gain of 374 million euros, Operating profit would be up by 11% instead of plus 1%. Returning to our fiscal year 26 results, let's review the profit for the year. Profit from continuing operations stood at 3.5 billion euros, down by 8% versus the prior year. This reflected the increase in net finance cost that I just described, in addition to a lower share of equity accounted investment results, mostly due to our stake and lux experience. And finally, an increase in the group's tax charge. Indeed, the effective tax rate for the year was 20.4%, reflecting the group's regional mix and compared to a 16.5% in the prior year, which included non-cash accounting items. Overall profit for the year increased by 27% to 3.5 billion euros, benefiting from the non-recurrence of the YNAB write-down in our previous financial year. Cash flow generated from operating activities came in at 4.9 billion euros, up by 0.4 billion euros. This 10% increase mostly reflected two elements. First, a high operating profit adjusted for the non-cash items that I mentioned earlier. And second, low working capital needs, mostly reflecting higher cash inflows from foreign exchange derivatives. Let me add that in a context of strong sales growth, cash consumption was brought in line with the prior year, owing to solid management of trade working capital. Let us now turn to gross capital expenditure, which amounted to 1 billion euros, or 4.6% of sales. While down on prior year, CapEx included a higher share dedicated to investments in our distribution network. Up by double digits, retail investments represented over 50% of the total envelope and were largely dedicated to upgrading our internal boutique network. Manufacturing accounted for over a quarter of our investments, mainly dedicated to the continued expansion of manufacturing capabilities, mostly for the jewelry maisons. Other investments included disciplined spending in IT and other projects, making up 20% of CAPEX. Let us now review free cash flow. At €2.8 billion, free cash flow was €0.6 billion higher than the prior year. The increase was primarily driven by the rise in cash flow from operating activities, driven by the solid results of the Group. Our balance sheet remained solid, with shareholders' equity accounting for 57% of the total. In March 2026, the group repaid a 1.5 billion euro corporate bond, which was issued in 2018 and had carried a 1% coupon. The free payment had no impact on the group's net cash position, as the decrease in liabilities was matched by an equivalent cash outflow. Finally, net cash amounted to 8.5 billion euros at year end, an increase of 239 million euros over the prior year. I would like to take a moment to summarize our cash usage for the year. As I mentioned earlier, cash generated from operations amounted to €4.9 billion. It was used to fund strategic investments in operations and reward shareholders. On the one hand, investments in our business include €1 billion of capex and €0.8 billion in lease payments. In addition, €0.6 billion were transferred to YNAB upon completion of the sales transaction with LuxExperience, on top of which other movements, including FX, explained another €0.4 billion of negative impact. On the other hand, the cash outfall linked to the group's ordinary dividend amounted to €1.9 billion, reflecting last year's dividend. As a result, net cash increased by €0.2 billion, as described in the prior slide, further strengthening the Group's balance sheet. Let me now finish with the dividend for the year. Based upon the solid performance of the year and the strong net cash position that I've just described, the Board has proposed a total dividend of 4.30 Swiss francs for 1 A share or 10 B shares, made up of an ordinary dividend of 3.3 Swiss francs, up by 10% over the prior year, in addition to a special dividend of 1 Swiss franc. This will be submitted for shareholders' approval at the Group's Annual General Meeting on 9 September 2026. Thank you for your attention and let me now hand back to Nicolas for the conclusion.

Thank you, Burkhardt. Before moving to the Q&A, I would like to summarize the year for the group and share some concluding remarks. Richemont delivered remarkable sales growth and solid results for the year, highlighting the strength of our differentiated market positioning, the strategic value of our balanced regional footprint, and the enduring agility of our teams. It is worth noting that the outstanding performance of the Drury Maison, that gained further market share in both Drury and Watches, led by their high desirability and strong value proposition built over time. Importantly, in such a highly complex and volatile environment, the Group maintains its long-term focus, prioritizing Maison's future growth prospects while exercising consistent discipline on cost and operational execution. Looking ahead, we will have to navigate through volatile times, which will continue to require agility and discipline. While we remain vigilant about the macroeconomic environment, particularly as the consequences of the conflict in the Middle East are still unfolding, Richemont has the strong fundamentals to continue to create long-term value. This includes a distinctive heritage and brand identity for each of our missions, unwavering creativity to nurture our iconic collections and enhance desirability, in addition to a balanced regional and client mix, building on deep local anchoring. All of this is underpinned by the group's financial robustness that allows us to invest in quality distribution and develop our manufacturing capabilities while consistently cultivating craftsmanship. I would like to finish by thanking our colleagues, valued clients, and partners across the world for their continued commitment and support. This concludes our presentation. Thank you very much.

We'll now open the floor to questions, so please announce your name and company, and if you can, at least at the beginning, limit yourself to two questions. Thank you. Okay, let's start this time. On the left, Susanna.

Thank you. from UBS. I have two questions, but I guess before I answer it, I just wanted to congratulate the whole team and especially Burkhart on this great cost control. And also, I think we all owe you an apology because I was the other day rereading the transcripts from 2022 when we were all pushing back why the margins were not exceeding peaks like among peers. And well, I guess it all paid off. So I just wanted to say that. So two questions. One is on Flur Maison's growth. I think if I understand correctly, there's maybe roughly six percentage points contribution from pricing in order to offset partially the pressure from gold. But I presume you're not growing by volume alone, so there must be also some mix effect, which I've personally fallen victim of as well in the store. I'm just curious if you could tell us a little bit more. There's been so much innovation, lots of products at nice or higher price points. If you could tell us just a bit of an idea of what could be the next contribution within last year's number. And then the second question, maybe very quickly on... The supply chain, we've seen a lot of your peers now focusing a lot suddenly on jewelry. There's been some pretty expensive transactions happening, some peers buying out workshops. It would be just interesting to hear your thoughts on that, if that changes in any way your approach to vertical integration, if you plan to maybe accelerate that. So these are my two questions. Thank you.

Thank you very much. I will start. On your first question, yes, I think that the growth for the Jury Maison was a combination of value increase with some limited yet real price increases, pretty much in the area that you mentioned, 5% to 6%, and volume increase. And volume increase is in the like-for-like networks where we saw some growth, additional stores also in certain countries, and the mixed effect, which is also part of the equation, as you mentioned, where we've seen in some brands, you know, some movements towards higher price points. But that doesn't mean, unlike what we've read sometimes, that it's really only the high-end and the high-duty that's doing well. It is doing well indeed. but there is still very, very strong traction and success on the more affordable lines. But yes, we've seen with the Clash collection that you seem to appreciate, for instance, very nice mix effect, particularly on novelties. On the second one, for the Drury Maison manufacturing, yes, we watch what's going on around. It's been a competitive environment forever. I think that it has always been in a category with many, many players. We have history and expertise in the field, we believe. So we've been consistently building our manufacturing capabilities in jewelry and Burkhard touched upon that. It requires some capital expenditure. But we prefer in most cases to build because we know how to build additional workshops in high jewelry, in volume jewelry, rather than to acquire. So it has happened in the past that Cartier or Van Cleef & Arpels or Bucciarati did acquire certain specific workshops with a very, very unique expertise that complements our own, but the majority of our investments are very much developing our own capacities so that we really dedicate the resources and the cash to optimize the production capabilities.

Natacha?

Thank you. This is Natasha Bonnet from Morgan Stanley, and congratulations on the good set of results. The first question, was growth consistent throughout the quarter in Q1, you know, including and excluding the Middle East? Because obviously, you know, you had posted a good performance in the Middle East, which is a big part of your sales, despite, you know, in light of basically the conflict in the region. And then, you know, are the trends to excluding the Middle East continuing so far? And my second question would be how should we be thinking about margins in fiscal year 27 because I believe as it stands the intensity of headwinds you experience in this fiscal year should diminish. Thank you.

Thank you for the questions. I'd say growth was pretty consistent throughout the quarter with obviously two exceptions. The first one being Chinese New Year It was primarily in January last year, February this year, so obviously that changed a bit the growth dynamic from one month to the other in our last quarter in China. And secondly, the Middle East, obviously. We had a consistent and nice double-digit growth in the first two months, and then obviously a sharp drop in the month of March, which I think all of us, including our peers, have experienced. Sorry, can you just remind me what the second question was? How do you think about margins?

This is what you're trying to say, and it looks like I understand the intensity of the

Well, I don't know. I mean, we'll discuss that on March 15th.

If you don't discuss that, you can look for another job. Yeah. I was trying to anticipate that comment.

No, I mean, I don't think I can seriously answer that. If you would have asked that question a year ago, I think no one would have foreseen what we experienced.

We'd like more money. wherever he goes, if he can answer that. I'll put in a joint.

I'm serious.

If you can predict that, why wait your time? Yeah. I can predict the gold price, the world price, anything. Three days. It doesn't have to be a year. I'll go there.

I'm not sure it's connected.

Is it connected? Yeah, I'll try that one.

Hello, from RBC, thank you. So just to follow up on the previous question, are you able to provide us with a bit more quantification on what the realised gold price was in the 2026 P&L and perhaps also what the revaluation benefit would have been in terms of the tailwind to margins and just stay on that point, maybe the average cost of gold on the inventories, just so we can try and calculate what the 2027 gross margin headwind could be from a gold price perspective. And then the second one is just in terms of brand level performance and category performance within Jewelry Maison, obviously very, very strong numbers on the top line. Could you maybe give us some colour around Cartier versus Van Cleef versus Bucciarati? Is there any big differences or are they all performing?

They're all performing well and the gold price you figure out yourself. Okay.

Thank you.

We are never, ever comparing in between the different myself. They're all three doing very well.

I know.

Hello everyone, so I'm Lourdes Smith from HSBC. So the first question is on Jewellery Megron and particularly Cartier. Just to come back on your comments about the performance by price points or which price point is outperforming. You talk about the fact that the affordable segment is also performing, but can we have a bit more granularity around that? And my other question is around China. Who are the underlying trends there and what are your key observations for this market? Thank you.

I think you will remember, we've said it on numerous occasions in the past, I know your colleague on your left knows it, that the higher the jury, the lower the margin. High, high, high jury do not enjoy the same margin. And that's what we'll say about the mix. It depends per maison and depends upon what they focus on. Right now we've got a Cartier high jewellery show on outside Saint-Probert, is it? Yes. And it's going extremely well. But that's a very long show. I think the thing that we must get into our minds, because you have all these wonderful new words, soft luxuries, hard luxury. I mean, when I started, none of you had heard of luxury. It was a boring business, which was very nice for me. Because it wasn't sexy luxury. There were no predatory buyers out there. And certainly we didn't feature in the newspapers. Suddenly it's sexy and everybody's here and it's a lot cooler for you to be here than at an oil refinery's announcement of results, even though they make five times more than we do. I've noticed that when I go to dinner Cartier may be a fifth of the tenth of the size of the chap's oil refinery, but I sit at a better table than he does because it's not that cool to own an oil refinery. So you're all here because you write about nice things. There's nothing special about luxury goods. You know, if there's a real catastrophe, The world's not going to miss us. It's not shelter. It's not food. So we mustn't think that we are this holy, beautiful nonsense. We're just very lucky to be in a very beautiful business where we deal with lovely people and with beautiful handcrafted products from the conception right through the end. But our business, Resmont, takes longer. From when our designers start conceptualizing until we're ready to offer, not sell, offer our products, takes a while. So we have a pretty good understanding I mean, we'll sit at the product committee and we'll see a year or two in advance. Because we know what's coming. You know, with the combined two, Alain Perrin and I have together over 100 years of experience. Anton's now been there 20 years. How long have you been? 35. 35, but not product committee. 20. 20. So it's 240. We have a pretty good idea. The Germans call it Singerspitzunger fuel, but we have a pretty good idea whether it's going to sell or not. That's longer. That's not a spring line or a cruise line. We don't do cruise line of any impact on our group. So for us, we don't control the gold price. We have to make sure that our product mix is affordable to customers. That's how we look at the gold price. Not a speculation, but we need to hedge, we will hedge just enough to be able to tell our watch manufacturers and jewellery, roughly this is the band that your cost of goods sold will be. So you can competitively price. But it's driven by marketing and by competitive positioning. Is that helpful? not as helpful as you'd like so that you can write down in your little model, you know what, you carry on like this. I'll have an AI model, I'll take your questions, put it in, and I'll save you the trip here. I saw last night an AI model of somebody who fed his public information in. Nikesha Rora with Palo Alto. And he only fed in public information. And Anton was damn good. He said, why, sorry, J.P. Morgan. He said, why do I need J.P. Morgan? He happened to mention in that case J.P. Morgan. But you could basically put anybody in. If you want to be good, you've got to pick up what's not obvious. You've got to pick up nuances. You're going to have to use your nose more than asking questions like what's the average gold price which you can work in back into your model. You're going to have to ask your friends, what do you like? Ah, did you see that line? Do you like it? I go and I ask sales ladies. I do shopping before any of you heard of it. Mystery shopping. For 30 years, 40 years. And I go and ask the sales ladies. Because they deal with the customers. And I ask them, so what do you think's hot? What? And then in the end I reveal who I am. I go and stand on window corners. Sorry, on street corners. And I count. Have you ever stood outside the shopping mall or inside and looked who walked into Omas, who walked in? I know you do, but you're a special one. You're excluded here, okay? But I'm asking in general. Have you ever done that? Well, guess what? Today they do it with drones. And they look at shopping centres. They actually use AI to see who goes where. But that's how you get a competitive advantage as an analyst. If there's any question you ask me that's of real value to you, I'm not going to tell you. It's like people who consistently use business consultants. Bain, whoever, McKenzie. They come here, they steal all your information, they go sell it to your competitor. You've got to be out of your mind to do that. The once or twice where we do have a competitive advantage, we've been working together for decades. I trust them. They trust me. We trust our colleagues in the room. We're not going to blabber it out. And I'm just giving you a tip. It's what you can't see that's important. And your friends will tell you what's what. They'll tell you XYZ is overpriced. XYZ has dropped its quality. Because we get it, even if we don't ask. You go to a dinner party, somebody's bound to cheer you. You've dropped quality there, or you've overpriced there, and all you have to do is listen. So I'm sorry, you can't expect of us to do your work. Clever questions, but it's doing your work. And, you know, when you ask that of Burkhardt, he's not going to, he knows that he's not going to answer that. Right, and now here we go for the maestro.

Look up.

Look up, old guy.

Thank you very much indeed, Johan, for saving me the effort of announcing me. From Bernstein. I lost track because of the various gyrations and what has been going on with duties in the US. Maybe you can tell us, as you're very close to the American administration and President Trump.

Sorry. I had access to the present. There's a huge difference between being friends and having access. Okay, I had access.

Thank you. Yeah, for sure. Are you going to be able to, because of the Supreme Court ruling, are you going to be looking at getting some of the duties? I win my bet.

I went to my bed, dinner, thank you, I'll tell you to have it in the restaurant. I said, Luca Solca is going to pick up on the fact of the tariffs. How much and what are we going to do? Luca, we haven't decided. We have another week, eight days is it? Seven months. Basically end of the month. to decide, and we're looking at what the other people are doing. Now, on the one extreme, there's somebody who's noticed to the world that he is going to reclaim because it was a tax on consumers. We, if you look at our pricing, we've always believed in a worldwide pricing to stop, as you know, grey market in the Our products are high margin, low volume. Whenever you have high margin, low volume products, they can move seamlessly across borders. They can be stuck in a plane. It's tougher than bulky things, dresses, etc. So we've always had to make sure that our global pricing was roughly the same. So, the major impact in the last year, and now you guys must shoot me, huh? That I don't say the wrong stuff. But the major, Nicola, has been gold price and dollar. Now, you know, Luca, in the past, when the gold price went up, it was basically the dollar down and vice versa. This time, Luca, we had both up. is rather unforeseen. So that hits us more than the tariffs. The tariffs, I think we've made it public, 300 million, and we are deciding upon what we're going to do. But it's not as big an impact on our P&L and our operating... margins as the gold price and the dollar, Swiss franc dollar, euro. We must all as tariff payers watch that we don't reclaim the tariffs back without handing it back to the consumer. Now we did not use price increases to offset. But who knows, we may have one sales lady or salesman somewhere saying to one client, erroneously I give you my word, that yeah, because your president did it, so we increased the prices. And then we have a lawsuit. So we are very cautious. We're looking at everything. I can give you my word, we did not use pricing to offset tariffs. If I could get the gold and the dollar back, then I would be front of line. But there's no counterparty that's willing to do that. I have no idea how it's going to play out. we are awash with the Swiss government two nights ago and we are still in discussions with the United States on the finalized agreement. But there's nothing bad emanating out of the United States heading our way at Switzerland. I find it Very sad, though, that Eleanor has to appear in front of Parliament. I mean, had it not been for the delegation and going to Switzerland, going to the White House, 40% plus in a brilliant company, Like Pilatus would have had 25-30% of its people unemployed. We could not withstand 40% plus salary. What these people think when they say why did they go, etc. We didn't negotiate. I mean, how do you negotiate with the United States? You beg. Okay, it's a big difference. When I saw the President, I said, we're not negotiating, sir. Henry Kissinger said, if you want to negotiate, you need three aircraft carriers standing out there. China can negotiate. The whole of Europe can't negotiate. Let alone Switzerland. So we really applied to their goodwill and said to them, we're not against America and Switzerland. In fact, please just hear off. And the good thing is America is now in surplus with Switzerland. And it was all about the gold price. Because they thought gold was going to be tariffed. So there was a huge amount of raw gold flowing not jewelry, gold flowing into the United States at that stage. So it looked like the United States had a huge trade deficit with Switzerland. We pointed it out to him and it reversed. So now Switzerland is in a deficit or the United States is in a surplus. So no rational reason for punitive tariffs.

which would have been devastating for switzerland absolutely absolutely my second question was on the perimeter um i think the market in investors is so uh with pleasure uh the simplification the business simplification you've been bringing forward uh the diverse can you tell us maybe how the other divisions' businesses are doing, and if there's any further latitude and opportunity for simplification.

Thank you very much. You know, it's sad because Boehm was one of our very first naisons. You know, at times one must realize that for Boehm, we're not their best owner. They need more flexibility. They need to... Crudely put, they need to be able to act more entrepreneurial. We have very fixed cost structures. And I think that the new owners... Bum was always an Italian brand. It always did very, very, very well. And we wish them luck. We tried. And sometimes you would say it's better than somebody else's ads. That's nonsense about church. I mean, please, how can you? Where's UBS here? You apparently believed what you read there. Yeah, but please, whoever says that, never trust them again. There are two or three of them Or, you know, bloggers who really don't have a clue and who are stirring nonsense. And for us it doesn't mean a damn thing. But imagine if you're a worker at JCR. It's unfair. It's surreal. Like there's somebody who's actually suing. Because it's a lie. It was never discussed. In fact, you want to know how we got... The whole group. When LMH was bought by... We started a mobile phone business in South Africa, Vodafone. And we were in partnership with Vodafone. You can't believe it. I saw Julian Horne-Smith. That was our counterpart. The other day at one of my grandson's schools. And because Manners Manners bought the mobile phone business in Germany, Vodafone bought it. But in it, they had LMH. And we really wanted LMH. We didn't know how to make watches. We were big with Cartier, but mainly quartz. And Alain didn't like it very much, but I told him that they're quartz. And Alain and I are very, very close, but I had just become sophisticated enough. Because I don't know whether you know Guillaume Piquet, Van Piquet. Well, we worked in New York together, and I had a quartz watch on, and he went like this, quartz. What do you mean? He said, you need a mechanical watch. In any case, so little did I know how much trouble we were going to cause ourselves because mechanical watches need a lot more after service than quartz. But, so we really decided this is the last we had to get it. And I'll tell you, I went to see Nick Hayek, senior. We agreed, either he or I buy this. We can't let the French or anybody in to Switzerland. So we bid. But I then found out that there was a secret. That the Audemars family owned 25% of Beaumont-Marseille. sorry, of Jésus Lecoultre, and the other match, the other 75. So I went to see Jacqueline Audemars and the current head of, is he Olivier? Olivier, and we had a, one of the first times I had a video conferencing, and I bought their 25% in Jésus Lecoultre. And I went to see my hero, absolute hero, Mr. Gunther Blumlein, who built Dow Group. And he was a systems engineer. He was also one of the best copywriters that I've ever seen. He wrote all the copyright for London Zona. And for that sorry lady, somewhat provocative. non-woke copy that he had for IWC about women shouldn't do this and that, any case and I was the only one who actually went to Glashütte and who went to I didn't know how to pronounce it because I asked him how do you pronounce the The town where IWC's manufacturer is. How do you pronounce it? I see Schaffhausen. You're wrong. Schaffhausen. Schaffhausen. So I go there. I said, please, can I go to Schaffhausen? Taxi driver said, no. So I had to explain. So we went to Schaffhausen. And I met with him and my hero. was, and we really wanted to, was Mr. Blimlein, who basically recreated Lange. And we bid and we won. And part of the extreme price was for an idiot bone cancer. It was an absolute tragedy. But the key that he used And I think you must all understand this. His engine that he had, and the key that he used, the expertise that he used, is Gégé Lecourt. And up till today, Gégé is the watch company, the maison, the manufacture, that can do nearly every component of a watch, except for, you know, probably... you know, crocodile skin, lizard straps. They can do everything. And in a sense, they have helped so many of the other maisons. You know, if somebody else runs into a trouble. So there is no way in which it could ever have been contemplated. And I'm saying this to you so that when you hear these stories, do not listen. Because it's rubbish. We're very loyal to them. They make phenomenal watches. I mean, what have you got on your arm there, Anton?

The cardinal points. Oh, okay.

But that's only because you and I can't get the steel. Because we're waiting for the steel to get here. They've made a new steel watch which is thinner than the new master line. That is spectacular! It's not their fault. It's our fault that we haven't been able to explain to the rest of the world that it is. It's the watchmaker's watchmaker. You speak to watchmakers, They look up to Jezreel. So trust me, it's... I won't use the words in front of ladies, okay? But don't believe it. Any case, have you got other questions, Luca? I'm sure you do.

I was just thinking of business simplification in the other division. I'm thinking, you know, you mentioned in the presentation that Mont Blanc is proceeding in the right way. There are bits and pieces in that business with things doing very well like Bitter Millar and other brands not doing very well.

You're 100% correct and you could have four of us sitting here. I had 20 minutes yesterday asking people and before. that we have people who have the habit of turning simple things into complex things. And those days are over now. We want complexity refined to simplicity. And trust me, we are going in that direction. It's a very good question.

Thank you. Thank you.

Thank you. Good morning. Thomas Chauvet from Citi. Congrats to everyone for a strong end to the year in a difficult environment for the sector. I have two questions. The first one on the Americas, another strong year, plus 17 in constant effects with extreme stability quarter on quarter. While the environment has started with Liberation Day at the start of your fiscal year and ended with the war in the Middle East, could you explain what you think are the structural changes in the high-end luxury consumer in the US, perhaps the hard luxury consumer that explains such resilience, or do you think this is largely due to wealth effects and the stock markets? Secondly, on the Chinese consumer and the potential behavior changes, a year ago, Nicolas, you provided some very interesting comments about the strong success of Chinese-born jewelry brands, particularly Laopu, not to mention them. How do you adapt a year later to these local players, is it about being very differentiated style, craft, quality, slightly different pricing, I guess, as well, or do you see opportunities to acquire brands on the ground in China? Richemont was even a pioneer with Shanghai Tank that you acquired in the late 90s when no one had ever thought of doing such a move, I guess. We heard Mr. Ruppert in the media interview this morning saying the group could pursue acquisition if there were interesting opportunities. Are there interesting Chinese jewelry brands out there? Thank you.

Thank you very much. On the first one, in America I think our activities are very much linked to consumer confidence and I think that there is quite a high level of consumer confidence in America. When you're over there, you feel a very, very positive feeling and that translates into a very good level of sales. It's true that there's probably been a refocus, cycles obviously, but a refocus towards jewelry, watches, more iconic products with a long-term value compared to probably more fashion and accessories in America. We see that clearly. And there's also been long ongoing trends towards internal brand retail versus wholesale in America. So we're benefiting from this impact. And we've seen them, as you mentioned, very, very steady throughout the year with very, very good steady growth. So that's for America. On China, we had a discussion last year. First of all, I think that, you know, probably... Chinese owners are the best at running Chinese brands and probably we are not so bad at running Swiss brands or French brands. And so anything artificial like trying to be there by acquiring something local that we don't necessarily fully understand or master is not necessarily what we look for. The success of Laopu and a few others taught us and indicated and we discussed last year In a market that was rather stable and that's not at its all-time high for the last couple of years, there is very much an interest in newness, in new brands, in new propositions. And probably these new emerging brands, Chinese for that one, answer that expectation. And we see other ways to answer that. We see, for instance, with the success of Bucciarati in China, which is still quite recent in the country and considered a bit of a newcomer, although it has a very long and respected heritage. That's getting a lot of traction. And we've seen also with Tartier, which is long established in China, the success this year, for instance, of collections like Clash or Pantera Watches, that were not necessarily the historically successful collections in China, but that under a new light, together with high jewelry, are highly in demand. So I think that there is really, we feel that there is really a renewed interest in China for creativity, and maybe going for a different proposition that can come from the same historical brands, but has to be renewed. Thank you.

People, Luca will tell you he's heard it thousands of times, but we've come to suspect over the years that what Nicolas said is people, did you say feel good or what, happy or confidence factor. a feel-good factor. People are willing to spend if they feel good. It's not necessary that you have to have a lot of money in your pocket and no debt, but if you feel good about the future, if you're confident about the future, then you're more comfortable to spend and to buy and to give gifts. If you're worried, concerned, you're not happy, It dampens that. And in America, in the United States, we kind of internally, we joke that a nation's happiness is through economic status minus envy. And in the United States, People are not as envious of people who are successful. In Europe, they hate success to a very large extent. You're sinister. In the United States, it's a much younger society. People still say, well done. Because they also believe that they can work hard and do it. In Europe they believe, sorry, by large people believe, even if I work hard, I can't do it. My son and I were commenting yesterday, the exception is Switzerland, where the rich do not behave in a vulgar way. People are much more conservative. So there's not this hatred of the rich. It's starting in the United States on the campuses now with the students. If you see, Eric Schmidt got booed when he made a speech about AI because these kids leaving the college have got debt and they can't find jobs. And any commencement, or actually it's now graduation, and you've got to watch it. This is what I was trying to say if you want to know. Watch what goes on. Sniff. I'm a lot older than you. I still... I watched that Eric Schmidt speech. Because every time he said AI, everybody moved. And we discussed this last night with this friend of ours who's one of the top... Silicon Valley CEOs and he said, why aren't they realizing that they're not getting jobs? So you're a college kid, you leave college with debt and you're not finding as many jobs as ten years ago. So in ten years time, five years time, will that few good factor still be there? Well, They're talking in numbers that I don't understand. I mean, I've got to rely upon Anton with all the acronyms when we have a discussion with these techies. Every second sentence has got a new acronym in that I've never heard of. But this is where the money is. I mean, the new IPO is $1.6 trillion. I mean, that is half of the UK GDP. I mean, it's numbers we do not... Sorry, that I cannot quite get my hands around. But they still seem to be confident. If something goes wrong in AI... And that AI loop, I am told by Nikesh and others that it's gone too far now. It is self-fulfilling. It will carry on. The build-up of data centers and it's unassured, it's real. Whilst that is carrying on, they're going to grow faster than Europe. But, Luca, we bombed people not once, not twice, three times on the suspicion that they might have nuclear weapons. But we're giving three or four individuals a capacity that's going to affect our grandchildren far more with no guardrails. I mean, agentic AI and we're handing over power. I'm told, and nobody contests it, that if you want to stop people from putting viruses into your system, you need If you want to stop bad agents using AI from infiltrating your system, you need AI. So we're going to have AI fighting AI. And I said to you, I'm not going to know what the hell they're doing to each other. This is three years from now. Two years, they have gone, what's your bet? Three years, Already happening. Okay, it's already happening. The point is, you're asking me about the oil price in the US, or gold price, or what. What scares the living daylights out of me is stuff that I really just don't have a clue of. And we're constantly thinking, how can it affect us? And stopping the choke points, the entry points. And there we have the gentleman sitting who never knew what he was signing up for. Behind you. That would bother me more if I had to be in your shoes. I would look at which companies can actually, like SARS companies, can be wiped out in a month, two months. We've never, I think we're on the cusp of seeing, we've seen the biggest growth, but we could, it follows, see the biggest destruction of wealth. of people who never understood what was going to eat them. And software as, you know, SaaS, as a service, those companies... Can you imagine if I was... I wouldn't sleep at all. I mean, I would probably have seldom gone farming. The real issues are things that we cannot foresee. Things that we can foresee, I can assure you, Burkas, will in a better shape now, Niklas, than I can remember ever. From balance sheet, through tech, through everything, supply chain, for everything traditional that we could foresee within great shape. Something on the left field.

I think we have a few more questions. Chris, please.

Thanks for the opportunity. This is from Hong Kong. And congrats on the very resilient results amid the complex environment. I have two core questions regarding China-Chinese. So firstly, we are very happy to see a great China on the path of coming back. So my question is on the mid-term outlook of the competitive landscape in the China market. So on one hand, in the past few years, definitely the market noted the fashion cycle of some of the local heritage gold jewelry has been picking up the momentum in China, like Laopu selling out. Well, on the other hand, together with Hishmon, we also see other luxury peers deploying more resources in the jewelry segmentation and also sequentially more in China market. So how would you see the competitive landscape in China in the next few years? And I remember last year, Mr. Rupert mentioned that there is definitely universal visibility on Hishmon brands. So are you seeing or do you expect to see the high-net-worth consumer in China shifting more towards global brands in the future, especially to regional brands in the next cycle? So this is the first question. My second question is regarding the drivers of recovery that you see in Greater China right now. So wondering if the comeback is more from the existing loyal customers or you have been seeing a very apparent new consumer recruitment. As Mr. Rupert said, now we're seeing AI industry, for example, as a new wealth effect driver. So at the same time, how does aspirational customer spending trend look like now, and how would you comment on aspirational consumer recovery trends going forward in China? Thank you.

That's a very good question.

I'd rather have you answer it than me. I think there is definitely and has always been, at least in the last 25 years, a highly competitive landscape in China in luxury and jewelry and watches. So that's going to remain. Probably some, as always, some players are getting stronger, some players are getting weaker. There's definitely an effect of cycles and trends. I was mentioning what we see today that there is a very strong clientele, there is a very strong desire for our categories, but there is an expectation of creativity and renewal, which we have to answer to. And that can be found in our brands, in historical brands, as well as newcomers. I think it's a good reminder that we're here to be creative, we're here to be enchanting, we cannot rely on past successes, and we start to see really very positive effects of that in China. Our view in China is also to adjust and right-size our presence, I think that I was mentioning The confidence factor, maybe sometimes we got ourselves a bit carried away by the confidence factor in China in the past few years where everybody thought in China and advised that third-tier, fourth-tier cities would be very, very strong places for luxury retail. There were so many new real estate developments, so many opportunities that probably some of our brands and some of our competitors also overextended their presence and now we are really fine-tuning our presence, particularly with Cartier this year. We reduced our presence by five points of sales in the country and at the same time we are upgrading and improving some of the major ones. So I think that's really a phase of consolidation and stabilization. And we see a clientele that's a very loyal clientele. I was mentioning the Cartier high jewelry event that took place in Beijing last November that was extremely successful. And this is primarily a clientele that knows Cartier very well, is very, very familiar with the high jewelry collections, and is a loyal clientele. And at the same time, we see also a renewal of more aspirational customers. that really appreciate both iconic historic lines, Alhambra, love, and also expect new collections that are again very, very successful. So I think it's a very, for us, a very interesting time. We still consider that stabilization is important. We don't bet on... China coming back to growth patterns that we've seen, you know, years ago. But we feel it's a very important moment to consolidate the presence of our brands over there.

Next question, Nick.

Sorry, are you from Shanghai? But where are you from? Okay, well, you've heard of Shanghai Women. Do you really think Shanghai woman is not going to decide for herself. Shanghai woman decides for Shanghai woman. Not Shanghai men, and certainly not whitey sitting in Switzerland. They are the strongest group of people I've met. Right? Do you agree? They make their own decisions.

No. In the foreseeable future, definitely you can see, I would say, not only China, but the emerging market, consumers definitely, everybody have a stronger understanding towards themselves, towards the brands.

But I'm specifically, you're very polite. My Chinese girlfriends, lady friends, are not as polite. They tell me straight, that's a stuff up, this is good, that's bad. Trust me, they decide for themselves. I have a friend who's a big industrialist. Originally Hong Kong moved to the mainland, he's probably got 300,000 people working for him. And he, he has a group of, every year he picks the best of the youngsters to intake. And about ten years ago his partner came to him and he said, we're going to need a bit of action here. He said, what do you mean? He said, we're going to have to promote certain sexes. He said, what are you talking about? He said, if you looked around, of all of our future leaders, 85% are women. The men don't make it. So we're going to have to artificially promote men. And he showed me the list. And he said they're better. And a lot of them are. So I say to my colleagues, go and speak to them, ask them what they want. And when they say they want it, just make it. Don't be French, don't be. You know better. Trust me, they're the boss. Okay? So that's my attitude.

Really appreciate it.

Do you realize that they're not around the table anymore, but when I saw Le Clou, the nail, on our French, on a French colleague of ours who ran Cartier in London, I said, I said, Bambi, what's that? Says Le Clou. I said, what is that? And he told me what it was. So I came back and I said, please make it. Now, a little secret. If you say, if in our group you suggest something to a German, they think it's an instruction. So you've got to be very careful. You can't just make a joke and make a suggestion. They'll do it. If you give a Frenchman an absolute instruction, it's a mere suggestion. Okay. Maybe he was meaning that, but we don't think he was serious. So I said to him, I want you to make it. They didn't. And a year later, I really got angry. And when they finally did it, I went on one of my trips and I went to China. And I just went to Japan, where they thanked me, all the sales ladies. And you know how polite the Japanese ladies are. You know, they don't give you a hug, they, you know, thank you. I said, why thank you? He said, no, we got it. I said, yes? He's telling like crazy. Then I go, and I find out that our friends at head office decided the clue is too aggressive for their Chinese clients. So, I didn't even bother, I asked Kayu Jin on our board. She just burst out laughing. She said, we are the most aggressive people on earth. You need to change your marketing team. They clearly do not know us as clients. So you asked me about China. I actually think we go to China, we ask the Chinese, and then we've got a good chance. Would you agree? Yes.

I will see, you know, China definitely have its long-term resilience. And the Chinese women decide their career path. Thank you.

All the response people here, did you listen here? Okay, Chinese people decide their own career path. I love it there, but this is my real answer for you as to why we've been rather slow.

Thank you.

It's not anymore.

Next question from Nick. And I think that we have two more.

I think I'm taking the question from Nick Anderson from Berenberg. You just had two. And you talked about being in the best shape ever.

Sorry. Sorry. I just, the current day of the occult, you're loved in China. For a long time. For a long time. I think it's fluent in Mandarin.

Yeah. He speaks Mandarin.

He speaks Mandarin, but... So you see a change.

So I had two questions, one on the balance sheet, one on the stores, and just on the balance sheet specifically on cash balances. You've always been very, very clear in the past about the benefit of having a very healthy balance sheet and the large cash balances, but I just wondered if you can help us how you think about is there an optimum size, is it an absolute amount, is it relative to sales? I don't know, just help us understand that, thank you. And then on the stores, You've obviously done a lot of right-sizing this year. Is that process largely complete? Or going forward, are we likely to see a similar-sized store network that you aim to drive, I suppose, effectively more revenue through existing stores? Or might we start to see new store openings on the net basis again? Thank you.

I think better, rather than smaller. Is that a fair statement, Nicola?

Yes, exactly. It's never completed. I mean, a network is a living organism, so there will always be, you know, adjustments, improvements. But yes, there is a phase of consolidation right now where it's very much more to your point about improving the quality of the network, rather than continuing to expand the number of points.

Yeah, but I think he mustn't think we're going to have fewer and smaller networks. And that's part of not having a problem with cash. We can improve. Improve the shopping experience.

And if I may, it evolves over time. Yes. I remember from my days at Van Cleef & Harper's, you know, when we, 20 years ago, the adoption size was, you know, 100, 120 square meters. Now an optimum size is probably 300 square meters because the offer has expanded, we welcome more clients, so this is also evolving with time and the desirability of the brands.

When did we, when did I meet Mr. Frattini and buy, when did we buy the bundle? So it's 25, 26 years ago. We paid 300 million. Tell them our turnover.

It was around 60 million euros. And tell me, tell them your losses. It was around 60 million euros.

So we paid 300. It was something that turned around 60 million. That also lost 60 million. And we did it over the phone, over the gentleman. And today, Chapeau, Nicola, because it's a 5 billion euro brand. So, you know, when people talk about attacking our competitors, they forgot that Van Cleef is killing them. It's a remarkable success story. Go from minus 60 to 5 billion euros. So this is really what I'm going to say to you. It's a group of people working together in a culture of trust. We don't get killed if you make a mistake. Don't make it twice, then we'll have an issue. You can make one mistake as long as you admit to it immediately.

And we're having fun.

And I think if you carry on doing it, you're also, during bad times such as now, we've, I've said to you, and look how I remember, I said a few years ago, in bad times we tend to outperform our competitors. And it's not great at the moment, especially not for some of our competitors. So we have the flexibility. And the other interesting thing is, as Nicola will tell you, it's easier to gain marketing access and to do deals when other people are cutting their marketing. So you gain ground in bad times. and gain loyalty from trade partners. Is that a good way of putting it? Yes, very much so. Are there any other questions?

Yes, okay.

Thank you. It's James from Jefferies. I wanted to piggyback on your sense of smell on demand elasticity to full price. I presume it's very different in China relative to Western markets. Can you help us map out the extent to which you are concerned or otherwise to sudden adjustments in gold price?

It looks like it's... I'll give you a tip. When I buy gold, sir, okay, it's the sure indicator of the high point.

So what are you doing right now?

I don't have enough money left to buy gold. I bought 5% from the high point. Okay.

Okay. Call margin call.

No, I did not get a margin call. So nonsense.

But on all seriousness, it looks like short-term Chinese consumers are bearish, or have been bearish on gold prices.

I'm not sure that it's consumers and whether it's not central banks. I'm not sure, I don't know who was buying, but what I can say to you is, if you've ever been in a gold mine, and you've got grandchildren, and you know governors of central banks, then maybe you should think of two or three percent in gold for your grandchildren. promise you they're not going to print new gold. It's impossible to get it out at $5,000 an ounce. Okay, if you track guys with crypto, it's over centuries, I will not go and tell anybody 10 or 50 or 50%, but 5 to 10, 5%, put it away, Soon Anton's going to have a son or daughter in a month's time. Then I'll have eight. So I want to leave some for all eight grandchildren. That they can maybe get through university, put a payment on the house, and how do I make sure it's there? Yes, you can put some in the S&P, but do I trust central bankers? I used to be a banker. When I found out that I understood certain things better than them, then I got very worried. When they were a lot younger than me, I got even more worried. So that's the reason for gold, but the problem is it's affected us. On the other hand, you know what psychologically? It's given our clients a feeling for, hang on, it's gold. So they, you know, it's a value store.

I guess that's my question in terms of, I understand production costs and the long-term bias towards inflation, but if I think a world unpredictable, big adjustment downwards for whatever reason in gold prices, is that an issue in terms of demand in Western markets? Is that something you think about?

I don't think that... I don't think... I think people who are worried at $4,000 and $5,000 are still worried at $4,500. It's... It's... It underpins the feeling of value of luxury. It makes it very expensive. And... We've got to be very cautious. But what would you say?

You sell it to them. Exactly what you say. I think that, you know, on one hand it's a challenge because it has a strong impact on the gross margin, but on the other hand it plays in favour of jewelry and precious watches because there is this feeling of intrinsic value. Not investment in the sense it's going to come with a return, but investment in the sense that you're going to be able to transmit. which is what jewelry has always been about for thousands of years. So should gold go down, I think at the end of the day it's going to be less pressure on the margin, going to enable to go even more into creation with gold products, which is a bit more difficult these days, and to maintain them at a reasonable price so that they are still affordable also to an aspirational customer, which is being challenged in some markets today. Thank you.

We take one very last question for Vika.

Thank you very much and I'll be quick. First, we're obviously seeing your jewelry overall and you significantly outperforming luxury markets. What is your idea on who you are taking market share away from? Is it leather goods? Are you just expanding the boundaries of your category? Is it other non-consolidated players given the retention of value of Cartier and Van Cleef and other products? And my second question is your communication costs went down this year and you are still talking about keeping them stable and with everything you talked about AI and the world technological progress. Do you think you are more efficient on your communication and marketing? Do you think there is, I don't know, a ratio where one euro spent on marketing next year would be worth one and a half a year before? Do you think you can keep it at 9% and reach more consumers ultimately?

Thank you. Thank you. Thank you for asking the question. I gave them hell and I told them I want that answer which was given to the board yesterday. Thank you. I did just the same thing as you did. Don't laugh. That's our company secretary sitting there. One of the worst signs to me Never, ever, ever, if you can, buy anything from private equity. Because they will cut research and development, etc., and then communications just before they sell it to you. But one of the things I watch all the time is communication expenses. The problem is the smaller the maison, the bigger a percentage of turnover you have to spend just to get notices. But when you get to $5 billion, $7 billion, $10 billion, $500 million is a lot of money. You know, when you start spending, really spending, $100 million. So we ask for a very good explanation, which he can give you now.

It's a very good question, and it's actually... I really mean it.

Thank you.

A series of factors. The first one is that, yes, some of the brands, and typically jewelry brands, are reaching levels in absolute terms where they have the visibility that they wish to get. And we don't want to be all over the place. We want only to have very measured, selective communications. We don't believe that any noise, any communication is good for a brand. So we want to make sure that we have the right threshold. the bigger they are at the end of the day, the less they need necessarily in percentage. The second thing, and the chairman mentioned it, that it was a year also with a lot of destruction in the industry, in the market, so you could optimize your marketing spend. You could get positions in advertising, communication in better conditions than before. So with the same amount of money, you could get a better impact. And the last part is that, yes, with the environment, we've been very, very cautious together with the management of the brand throughout the year. And we maintain cost discipline, including on communication. It's true that we saw quarter after quarter that the desirability of the brand was there, that the results were very, very positive. but yet we maintain that core discipline. So that drove also for a decrease in the percentage of communication compared to the growth of cells.

But you said to me yesterday, Nicolas, which I'd forgotten, that we exceeded our budgets in turnover, and as a result, simply mathematically, the percentage of turnover that we budgeted

It went down.

It went down. So it was a straight mechanical flaw. But trust me, we do not try to save money by cutting communication. But you know, on that note, it's changing so much. I mean, my son's generation communicates and gets their information through totally different means. It's a young person's job that for all of our communication we need to realize that the medium has changed. Any last question?

If I look at the geographical trends, it seems that the growth in Greater China accelerated significantly Q4 compared to Q3. If I have seen well, you haven't given the growth in Greater China in Q4. I'm not sure you will give it, but my question is, do the efforts you mentioned at Cartier on the product side were already a visible result in Q4 in China?

Yes, yes, we saw, once again, we mentioned it a couple of times today, we are very, we believe there is still a phase of consolidation, we see an improvement, we see better signs, definitely with jewelry brands, with Cartier. Notably, there was a very, very good Chinese New Year period on the Q4 that also drove quite healthy results.

Chinese New Year fell in Q4 for us this year. But yes, Iran is incorrect.

Thank you very much for everyone in the room and listening to us today. This now finishes the webcast. Thank you.

Thank you.