Lanvin Group Holdings Limited Ordinary Shares

Thank you for joining us, and welcome to the Lon Vaughan Group's Fiscal Year 2024 Financial Results Conference Call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. Please note this event is being recorded. Now, please take a moment to review the disclaimers. During this presentation, the company will be making certain forward-looking statements, including but not limited to future performance and industry outlook. Forward-looking statements are inherently subject to risks, uncertainties, and other factors, and they are not guarantees of performance. For today's presentation, I would like to introduce David Chan, Executive President and CFO of Lanvin Group, and Andy Liu, Executive President of Lanvin Group. I will now turn it over to David to start the presentation.

Thank you, and welcome to all the participants. I'm David Chan, Executive President and CFO of Longmont Group. Today, we'll take you through a comprehensive view of Longmont Group's performance in 2024, the strategic actions we have taken to navigate a challenging environment, and our roadmap for 2025 and beyond. The key topic today is to share how we overcame these hurdles and laid the groundwork for sustainable growth. 2024 was a year defined by macroeconomic turbulence, shifting consumer behaviors, and industry-wide softness. Yet, within these challenges, we achieved critical milestones that positioned us for recovery. For fiscal year 2024, our global revenue was €329 million, a 23% decrease from fiscal year 2023. This decline reflects broader industry trends, particularly in EMEA and Greater China, where macroeconomic pressures weighted heavily. Nevertheless, we took proactive measures to reduce G&A expenses and improve working capital management. We also consolidated our store network to optimize our retail footprint and concentrate on our core business units. These efforts, along with appointment of Andy Liu as executive president, whose expertise in brand transformation are expected to drive strategy implementation and bring transformative initiatives to our group. Andy's leadership, combined with new creative appointments along with Bono Sotirasi, signals a new era of innovation and growth. Let's take a deeper look at our 2024 results. Despite a 23% decline in revenue with effective cost control inventory management, we managed to maintain a stable gross margin of 56%, compared with a gross margin of 59% last year. While contribution profit and adjusted EBITDA face challenges, we are encouraged by progress in operation efficiency. G&A expenses were reduced by 15% year-over-year, a testament to our streamlined cost structure. We have also reduced directly operated stores, focusing on core and high potential markets. such as EMEA for LongVon and Sergio Rossi, and North America for St. John. We've made significant strides in cash management, with a 32% improvement in operating cash flow from 2020 to 2024, driven by reduced inventory days and tighter receivable management. These results demonstrate our dedication to operation excellence and financial discipline. Since 2020, LongVon Group has delivered 10% CAGR, underscoring the resilience of our diversified portfolio, our brands, Lanvin, Wolfer, Sardarasi, St. John Knits, and Caruso, each contributed to the group's performance, leveraging their distinctive strength and strategies to grow our global footprint. Let's turn our attention to slide seven, which highlights the revitalization efforts across our brand portfolio. During the past years, we have made significant strides in aligning them for sustainable growth. starting with Caruso, a luxury tailoring powerhouse, and St. John, the iconic American luxury brand, both show strong improvements. Caruso's contribution profit increased to 8.8 million euros in 2024, up from 3.2 million in 2022, a reflection of our success in refined distribution strategy and growing demand for Caruso's playful elegance in bespoke tailoring. Similarly, St. John's contribution profit grew from a loss in 2020 to €8 million in 2024, thanks to strategic investments in brand repositioning and digital infrastructure. We're confident that these steps will further amplify margins in the coming years. Lanvin, our crown jewel, saw revenue increase to €82.7 million in 2024, more than doubling from €35 million in 2020. This growth was driven by continued investment in increasing the brand's like desirability and reinvigorating its Parisian heritage while appealing to a new generation of luxury consumers. Wofford, the Austrian legwear and ready-to-wear innovator, also made strides. We adjusted the product mix to position Wofford as a full lifestyle brand, expanding beyond legwear to cater to the growing demand for versatile high-end essentials. Finally, Sardarasi launched a global retail expansion since 2022, shifting from heavy reliance on wholesale and to enhance margin control and brand equity. While the top line is facing challenges, our foundational improvements set the stage for development. These achievements underscore our ability to focus on long-term strategic priorities while undergoing short-term challenges. Let's now turn to slide eight, which outlines our journey towards profitability. Over the past year, global headwinds, including inflationary pressures and shifting consumer behaviors, impacted our top-line performance. However, we responded decisively by sharpening our focus on operation efficiency and cost discipline. There are three key pillars of our turnaround plans, which include, first, gross profit resilience. Despite revenue declines, we maintain strong gross margins, reflecting disciplined pricing and reduced promotional activity. Second, OpEx streamlining. We continue to reduce operating expenses since 2022, a testament to our commitment to leaner operations. Last but not least is breakeven optimization. We've narrowed our breakeven point through rigorous cost management, ensuring our position to capitalize on revenue recovery. In 2022, our OpEx, which includes marketing, selling, and G&A expenses, stood at 378 million euros. By 2024, we reduced this to 326 million, a 14% cumulative saving over two years. Equally important is our improved cash management. Net cash used in operating activities improved by 27% since 2022, decreasing from negative 81 million to negative 59 million euros. This was achieved through tighter working capital controls, including reducing inventory days through minimizing excess stock and accelerating receivable collection. In 2024, we welcome new creative leadership with appointment of Peter Koffing as Artistic Director of Lombon and Paul Andrew as Creative Director of Sergi Rossi. Their vision and creativity are already making significant impact on our brands, as seen in the positive reception of Long Bon's Debug Show under Peter Copping in January. I will now hand over to Andy, who will provide insights into our achievements in 2024 and strategic priorities in 2025.

Thank you, David. I'm Andy Liu, and I'm honored to serve as the Executive President of Long Bon Group, and I'm thrilled to share our brand-level achievements in 2024. Starting with our iconic flagship brand, Lamban. As mentioned by David, in June 2024, we announced Peter Coping as Artistic Director, marking a pivotal moment for the brand. Peter's fresh, creative vision has already reinvigorated Lamban's DNA, blending timeless elegance with contemporary artistry. Lamban has also launched the Character Studies Series, a bold initiative that bridges couture and modern culture, This was further amplified by our collaboration with choreographer Benjamin Milpied, whose work brought a dynamic, performative edge to our campaigns. Financially, Fonvon demonstrated remarkable resilience. Despite market pressures, we maintained a stable gross profit margin through disciplined cost control and inventory optimization. The highlight was Peter Coping's debut fashion show in Paris, a triumphant return to elegance that garnered global acclaim and set the stage for our fall 2025 collection. Now, let's shift our focus to Wolford. Wolford is crafting compelling brand campaigns and product narratives that not only highlight its unique value proposition, but also elevate its positioning within the luxury market. Those marketing campaigns highlighted Wolford's unique value proposition. Collaborations like the Etro x Wolford capsule, collection, merging Italian flair with Austrian precision, not only expanded our audience but also reinforced cultural relevance. Lastly, Wolford is enhancing the brand experience through a refreshed webshop identity and optimized retail and wholesale distribution, ensuring a cohesive and premium brand presence across all touchpoints. Turning to Sergio Rossi. In July, Sergio Rossi appointed Paul Landrieu as creative director. a visionary move to redefine Italian footwear. Paul's Fall 2025 collection set to debut in Milan blends architecture, boldness, and timeless craftsmanship. Sergio Rossi also optimized its retail network, focusing on key markets like EMEA and Japan. Efficiency continued to be a priority for Sergio Rossi, with factory structuring measures aimed at improving production lead time and productivity, all while reducing costs. Additionally, Sergio Rossi has expanded its wholesale development by opening franchise stores in the Middle East and Taiwan through local partnerships, expanding its global footprint. St. John's 2024 strategy centered on focus and agility. We streamlined operations to prioritize North America, upgrading flagship stores in Beverly Hills and New York. These spaces now showcase our newest collection, which marries classic knits with tech fabrics and a modern edge. Our new whole session model, developed with our partnership with Nordstrom, improved margin control and brand consistency. Digitally, the revamped e-commerce platform is already showing improvements and convergence. Lastly, the shift in asset-light model, including the sale of non-core products, enhanced our operational flexibility. Finally, Caruso. Amplified resilience despite a challenging luxury landscape. Not only did Caruso achieve its revenue growth in its proprietary brand business, Margin improvement was a standout. Positive net profit and robust cash flow underscored success of Crusoe's strategy. Branded appeal is growing for Crusoe thanks to high standard yet efficient content creation, credible collaborations and trade events that resonate with their customers. Effective prototype and fashion show pieces management have also played a crucial role in the success. Proceeding to page 22. I am pleased to present our strategic priorities for 2025. Initiatives to drive growth, agility, and profitability across the portfolio. First and foremost, leadership and organizational excellence. We're building a dynamic leadership team, combining industry veterans with fresh perspectives to foster innovation and rapid decision-making. Our new European headquarters based in Milan will enhance regional oversight, streamline operations, and traction relationships with key stakeholders. Second, creative momentum. The appointments of Peter Kopien and Paul Andrew mark a new era of artistic vision. Their collections will reinvigorate brand relevance, supported by 360-degree marketing campaigns, from runway shows to social media activations. Third, operational efficiency remains a cornerstone. We'll continue optimizing store networks, prioritizing high-traffic locations, and refining inventory management and pricing strategies to improve cash conversion cycles and reduce working capital. Fourth, market expansion. We're committed to key cities while tapping into high-growth luxury markets. In the Middle East, new franchise stores, as an example, Sergio Rossi and Dubai Mall, and partnerships are key initiatives for us. Additionally, we'll also continue to explore emerging categories to diversify revenue streams. At Lombong Group, we view challenges as catalysts for transformation. With a refreshed leadership team, strategic market focus, and unwavering commitment to craftsmanship, we're confident in our ability to deliver sustainable growth and restore profitability in 2025 and beyond. With that, I'd like to turn it back to David to go through some of the consolidated and brand-level results in 2024.