LVMH Moët Hennessy - Louis Vuitton

Ladies and gentlemen, good afternoon and thank you for joining today's conference call. I'm Rodolphe Feuzan, Director of Financial Communications at RVMH and with me is Cecile Cabanis, our Chief Financial Officer. Cecile will start by taking you through the key highlights of the first quarter and I will then comment our performance by business group, after which Cecile will conclude and will be happy to take your questions. As a reminder, certain information to be discussed on today's call is forward-looking, subject to important risk uncertainties that could cause actual results to differ materially. For these, I refer you to the safe harbor statement included in our press release and on slide 2 of our presentation. Turning now to our announcement, our release was issued a short while ago in French and English and is available on the website lvmh.com as are the slides for the call. Let's now move on to today's topic, our first quarter 2026 figures and passing over to Cecile who will comment the key highlights for this quarter.

Thank you, Rodolphe, and thank you all for joining our Q1 results call, starting with a few comments on the first three months of the year on slide three. As you see on the chart, LVMH continued to grow organically in Q1 with improved trends across most businesses. The quarter was impacted by the ongoing conflict in Middle East, which had a tangible incidence on demand in the region in March, after a good start of the year, and this accounting for a negative one percentage point on the growth of the quarter, so excluding this impact, organic growth would have been plus 2%. On Middle East, I would like to thank all the teams and the partners locally, who had an incredible reaction, protecting our teams and consumers, which is our priority, and helping business to continue. Elsewhere, Q1 saw solid growth in China and Asia at large, as well as in the United States. Rodolphe will comment division's performance in more details, but in a nutshell, I would highlight for the quarter a good Chinese New Year, a good response to product innovation and creative renewal in fashion and leather goods, and particularly a good start for Jonathan Anderson products at Dior, a good performance of our star brands in beauty, an excellent performance of our jewelry maisons, with Tiffany's transformation progressing very well and another good quarter for Bulgari, and finally a solid momentum across markets at Sephora. Let's move to the revenue bridge for the three first months of the year on slide four. Group revenues reached 19.1 billion euros in Q1, up 1% on an organic basis, down 6% on a reported basis. The euro strength against key currency generated a negative 7% currency impact in Q1, which continued to have also an unfavorable impact for tourist sales, especially in Europe. Slide 5 details the geographic breakdown of revenues in euros. Asia and Europe both grew in the mix slightly to 32% and 16% respectively, while France, Japan, and the U.S. fell by one point, and other markets remained stable. These being reported numbers, meaning euro, Several changes reflect currency fluctuations rather than underlying, notably when it comes to the U.S. Overall, the footprint of the group remains very balanced. Let's move to organic performance by region on slide six. You can see the strong performance of VGA excluding Japan, which is up 7% at constant currencies, driven by growth across divisions, in China and North Asia in particular. Europe and Japan are both down 3%, partially reflecting less dynamic tourist consumption, notably in Europe. U.S. momentum improved sequentially to plus 3%, driven by watch and jewelry, fashion and leather goods, and selective distribution. Let's now go to the detail of the division with Rodolphe.

Thank you, Cecile. Let's start with wines on spirits. Slide nine shows the wines and spirits business group delivered 1.3 billion euros in revenue for the first three months of 2026. This represents a 5% increase on an organic basis and a 2% decrease on a reported basis after taking account negative 7% currency effect. Broken-down champagne and wines generated €663 million in revenue over the period, whilst cognac and spirits generated €610 million, and both segments increased 5% on an organic basis. On slide 10, we share some of the highlights of the quarter for this business group. Champagne and wines. So, strong performance, notably for Champagne in Prestige Cuvee from Runard, Dom Pérignon, which released its 2017 vintage, and Krug with the release of 2013 vintage. Boeuf Clicquot also unveiled La Grande Dame 2018 Rosé. and Moët & Chandon returned as the official Champagne of Formula 1. The quarter benefited from the early phasing of Easter in Europe and from favorable timing of price increases in Japan. And as a result, Q1 performance should not be extrapolated, but all Champagne brands grew. In Q1, inventory levels are healthy and it seems fair to say this is a good start to the year for our Champagne business. Rosé Wines also delivered a good performance. Chateau d'Esclan released its 20th vintage of Whispering Angels, while Chateau Galoupe achieved one of the world's most rigorous standards for sustainable agriculture with the regenerative organic certified status. Meanwhile, Cognac also saw improved trends at the start of the year, supported by the phasing of Chinese New Year, which more than offset soft U.S. demand. And finally, Spirit Brands unveils several unique innovations, among which Glenmorangie's oldest single malt whiskey expression to date, named the 30. Now turning to fashion leather goods, on slide 12, revenue reached 9.2 billion euros for the first three months of 2026. Organic growth improved sequentially to minus two, driven by an improvement in American and Chinese demand, partially offset by the Middle East. After a negative 7% currency impact, the division was down 9% on a reported basis. I'm now on slide 13, which lists the key highlights of the quarter by brand. This year sees Louis Vuitton celebrate 130 years of the monogram, designed by Georges Vuitton as a tribute to his father Louis, founder of the Maison, and which continues to transcend generations. The brand also continues to progress on strategic retail initiatives, with the opening of LV The Place Seoul, one of the Maison's largest flagships, pictured on Site 7, which pays homage to the city of Seoul in Korea and to Vuitton's history, creativity, and savoir-faire through a range of immersive experiences. Finally, Vuitton also unveiled new and successful collections by Nicolas Ghesiquier and Farid Williams. Christian Dior saw the arrival of the first products designed by Jonathan Anderson, and although they still accounted for a small portion of the mix in the first quarter, they're off to a very good start across regions and product categories. After Seoul and Bangkok, Dior celebrated the opening of a third spectacular concept store, the Bamboo Pavilion in Tokyo, which you have on slide 23. offering the opportunity to shop, dine, and discover the work of local artists and artisans, among other experiences. Most recently, Christian Dior and UNESCO renewed their partnership, Women at Dior UNESCO, which fosters women empowerment through concrete actions aimed at education and the transmission of savoir-faire. A few highlights to conclude on fashion and leather goods from several of our other Maisons. Laure Piana unveiled a new yarn and fabric called Royal Lightness, which complements the brand's range of exquisite fabrics, such as the Gift of Kings. Céline continued to improve sequentially, driven by new products and Michael Ryder's collection. Fendi, Givenchy and Loewe also all continued to unveil new creative visions and finally Rimowa expanded its iconic classic range with a permanent titanium hue. Moving to perfumes and cosmetics on slide 15 where you have the bridge revenue reached 2 billion euros for the first three months of 2026 and was flat on an organic basis and down 6% on a reported basis after taking into account a negative 6% currency impact. On slide 16, more details on the brands, perfumes and cosmetics business groups saw good performance from its largest brands, starting with Parfum Christian Dior, which continues to perform well, notably in makeup, with the recent release of two new foundations in its forever range, Skin Glow and Skinwear Foundation. Women's fragrances also enjoy strong growth, led by recent launches, the latest fragrance in the J'adore franchise, J'adore Intense, created by Francis Curgeon, as well as three new Addict perfumes. Lastly, in skincare, Dior saw good growth from its flagship range, Dior Prestige. A few words of some of our other brands. Guerlain enjoyed a very strong start to the year, across all categories and notably fragrances, driven by L'Art et la Matière and Aquarelle Guerlain collections, and so continued success of its Rouge G lipstick. Finally, Parfum Loewe and Maison Francis Curdion also continued to deliver strong growth. Now, to watches and jewellery on slide 18, revenue came to 2.4 billion euros in the first three months of the year, up 7% on an organic basis and down 2% on a reported basis after taking into account a negative 8% currency impact. Our maisons continue to enjoy a very strong response to the development of their iconic lines, notably jewellery. Tiffany saw a very good start to the year, driven by strong momentum in fine jewellery, in particular hardware, knot and 16 stone collections, which continue to resonate with consumers and expand rapidly. High jewellery also enjoyed strong growth, with two collections in this quarter, Birds on a Pearl 2026 and Lovebirds by Tiffany. The store renovation program progresses and yields results according to plan, with tangible outperformance from new stores, including New York's flagship store The Landmark, which opened three years ago. Lastly, Tiffany announced Natalie Portman as its new house ambassador and unveiled a new campaign film centered on the many facets of love. On Borggris, the brand also delivered another strong quarter of growth thanks to the excellent performance of its iconic lines, Serpentier, Tubogaz and Bizarro 1, and to a good momentum across all regions. Bouguerie unveiled its latest high-jewellery collection, Eclectica, which features 128 new high-jewellery designs and a selection of exceptional watch creations. Finally, the brand launched a new collection called Liminis, derived from a bracelet designed in 1942. This is the first chapter in a new Bouguerie Eternal range, which merges archival pieces with modern creations. Chaumet unveiled the fresh modern take on this honeycomb inspired B collection and announced a partnership with WWF and Fred celebrated its 90th anniversary unveiling 17 new high jewelry creations around its fourth 10 collection which was first created in 1966. A few words to conclude on watchmakers, starting with Tagayer, once again official timekeeper of Formula 1, so good growth in its train Carrera range. Hublot returned as official timekeeper of the Snowlin in Aspen and launched a Big Bang Mecca 10 Aspen 1, which is powered by an in-house movement with a 10-day power reserve. And lastly, Zenith unveiled several new additions to its Defy collection. Now looking at our final business group selective retailing on slide 21, revenue in the three months period reached 4 billion euros, representing a 4% increase on an organic basis and down 3% on a reported basis after taking into account a negative 8% currency impact. Sephora saw solid growth across its markets and continued to expand its store network, notably in North America, as well as in more recently opened markets like the United Kingdom, with its first store opening in Northern Ireland in February. The Sephora Beauty Celebration event Sephora also brought beauty lovers together in Los Angeles for the first time since 2019. DFS remained focused on controlling costs and optimizing its store network. As you may have seen at the start of the year, DFS and China Tourism Duty Free Group announced an agreement for the latter to acquire DFS business in Hong Kong and Macau, along with intangible assets in greater China. And more recently, DFS also signed an agreement to sell its travel retail concessions in Los Angeles International Airport and San Francisco International Airport to duty-free Americas. Le Bon Marché finally continued to offer its consumers exclusive, distinctive concepts and a diverse range of products alongside a rich array of cultural events. This ends the business group presentation and I'll hand back to Cécile for the conclusion of this presentation.

Thank you, Rodolphe. A few words to conclude this presentation before we switch to Q&A. First, despite the macro context, you can see and you have heard that Q1 showed very good progress across most businesses. First, the quarter highlights the merits of our focus on iconic products, both old and more recent, across business groups, from Vuitton's monogram, 130 years young, to more recent hardware at Tiffany, which is fast emerging as a brand, very large, and a dynamic franchise. We also continue to observe that consumers respond well to creativity and newness in product, but also stores and experiences, as demonstrated by an improving conversion rate across our largest brands. In a context that we can all agree will remain highly volatile in the coming months and particularly disrupted, we remain confident on growth and committed to deliver long-lasting efficiency. Thank you very much and I will now be happy to take your questions.

This is the conference operator. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one under touchtone telephone. The first question is from Anlor Bismuth, HSBC. Please go ahead.

Yes, good evening. I have two questions, please. First, can you give us some indication about the performance by clientele for the fashion and leather division, particularly for the Chinese cluster, given the strong improvements you have seen in Asia for the group? And the second question is about the performance for the fashion and leather division by brand. Any brand that you would like to point to that performed much better than you thought, and would it be fair to assume that the Dior brand did better than the average in that quarter, and the LV brand was in line or slightly lower the average of the division? Thank you.

Thank you. On clientele, maybe before I go into detail, the first point to notice is that overall the local clientele are slightly positive and the touristic clientele are mid to high single digit negative. Then maybe the best way to take you through the evolution is to look versus Q4 last year. So if you look at the progress we made, we overall we gain one point. And this point is made with three tangible moving paths. The first one is on the American clientele that have been improving from slightly negative in Q4 to low to mid-digit positive in Q1. And this accounts roughly for one point. The second one, and you mentioned it, is greater Chinese, which improved from low to mid-negative in Q4 to flattish in the Q1. And in this flattish, you have the local Chinese that are growing very solidly, and then the touristic, which is still slightly negative. And finally, the other major impact will be on Middle Eastern turning negative double digit this quarter. So this would be your main movements. And then if we go through the rest of the clientele, Europeans are flattish. Japanese are down low to mid-single digit. And other Aegean nationalities are down mid single digit, but within that you have Korean that are positive and Southeast Asia that are below the average. So that would be overall the clientele performance and their evolution and the one point improvement that we've been seeing in Q1. On the brand, for the Q1, both LV and Dior are very close. They are very close of each other with Vuitton continuing to be more resilient than the average and Dior improving quite a lot versus previous quarters. Then you have Loro Piana still going double digit and then Rimowa is also outperforming the average and the rest of the brands are below the average. So that's for the brand.

The next question is from . Please go ahead.

Thank you for taking my questions. So I have three. So maybe first of all, actually follow up on the Middle East because you mentioned in the press release that at the group level, there's a one percentage point negative impact. But I was just wondering, is it the same case for fashion leather goods? I'm just wondering if it's not a bit bigger given that you mentioned the clusters down double digits. And then, secondly, I was just wondering if you could tell us maybe anything about the drivers of, say, . So, you know, if you can maybe mention what the more or less pricing year to date was, I don't know, upload single-digit mix, anything you could mention. And then, thirdly, I appreciate it's probably a bit difficult to comment because this is a revenue call, Is there any indication you could tell us, you know, how we should think about the margins, especially for fashion leather goods in this context? And maybe specifically, I guess we've had some questions from investors, if there is any disproportionate impact on the margin difference of Middle East versus the rest of the world, specifically, again, for fashion leather goods. Thank you.

Thank you, Susanna. On Middle East, overall, if you look at the mix within the group cells, it's around 6%. You're right to mention that it's not for every division the same, so it's much less for wine and spirits. It's more for watch and jewelry. It's even more for Sephora. And fashion and leather goods is just a bit more than the average, but quite close to the average. So that's for Middle East. On the gross component of FNLG in the quarter, you have around 2% price impact. The mix is slightly negative, and the rest is volume. So the main movement is volume, and if you consider outside of Middle East, volume is improving quite nicely. And then on your question on the margin, yes, it's a bit early because there are still a lot of uncertainty, especially when it comes to the scale and the outcome of the Middle East conflict. That said, the first element you need to take into account for the margin is the currency impact, which is going to be in line with what we shared in the full year results around 80 bps negative for the first half. And then on the organic, we said that we needed 3% to 4% organic growth in order to stabilize margin. We could maybe do it with a bit less, but if you go to flat-ish or slightly negative, then it will have an impact on organic margin. Obviously, we're working on cost and on mitigation measures.

Thank you.

The next question is from Thomas Chauvet, CT. Please go ahead.

Good evening, Cecilia Nordolf. I have two questions, please. The first one on the U.S. and the improving trend here. We've seen several data points, including luxury credit card data, showing a strong Q1 spend in the U.S., including in March. Could you comment maybe on the U.S. performance for your key businesses and say whether you've seen changes in March in traffic, in conversion after the war in the Middle East started, and maybe comment also on Europe, whether the European consumer, the local consumer is changing is behaving differently in March and perhaps early April. And secondly, on Asia X Japan, plus seven in the quarter. I think that's the best quarterly performance really since the end of 23. Are you seeing here on the ground any change? You talked about the Chinese cluster for FNL improving nicely. Are you seeing any change in the mood, in the traffic on the ground? Give us some color maybe on the underlying performance of the key division if we strip out the Chinese newer impact on Cognac. Thank you.

Thank you, Thomas. The trend in the U.S. and with the American clientele is quite homogeneous on the quarter. So to your question, we didn't see any specific disruption linked to the start of the conflict. And the improvement has been throughout the quarter. And indeed, on local clientele, we're quite happy with the performance. On the EU, actually, the Europeans are resisting and quite resilient because the European clientele is only slightly negative. But you still have the impact on the touristic clientele because of your currencies. And you might have some disruption. Also, it's very difficult to address on some specific tourism because of the conflict. Then you question on Asia plus 7%. You write to mention that it's the best quarter since 2023. And it's good because it's broad-based. One thing to maybe to notice is that also Sephora is flat this quarter on the Asia cluster and especially China, which was one of the geographical area that we were fixing for Sephora. So it's good to see that it's rebounding. And on the underlying, in terms of clients, first in China we see good response to the newness and the products, especially what we have been starting to put in store for Jonathan Anderson on the bureau side. Second, in Asia, you know that we've opened in Seoul the place which is the new flagship from Vuitton. There was a picture. I don't know if you saw it on the presentation. And this has reconnected the Korean and rebounded the growth for Vuitton in Korea, which is an important market. So this is also a very good outcome.

Thank you.

The next question is from Antoine Bege, BNP Paribas. Please go ahead.

Yes, hi. It's Antoine Bege at BNP Paribas. Three questions, if I may. So first of all, coming back to the impact of the Middle East, I think you said down double digits, but is it possible to be a bit more specific on the months of March? Was it down 30, 50? And also, are you seeing a bit of an improvement early In the quarter, if minus one is the impact from one month, you think that minus three would be the impact on the full quarter. My second question is about the newness. Is it fair to say that in the second quarter you expect more availability of products from Jonathan Anderson's? And also, can you talk a bit more about the product pipeline at Vuitton? This is the 130th anniversary of the monogram, but what is it translating into? And is there beyond Q2 a certain pipeline of product to be aware of? My third question is about Q2. China or Chinese, there is a bit of a disconnect, in my view, if I may, between a flattish Chinese cluster and a good Chinese New Year. So I don't know if you could explain a little bit. And also, what's your view more broadly about Chinese consumption? There was this idea that cons were easier. for four quarters, but the macro was still challenging, so any updated view on China for this year. Thank you very much.

Thank you. Middle East, maybe I'll put it simple so that you can have an easy idea of the impact. If you take the group, it's overall 6% of the mix. I said earlier there are plus and minuses depending on the division. When the conflict started in the month of March, there was a shortfall and a deterioration of demand between 30 and 70%, depending on the malls, depending on the businesses. So overall, if you take 50%, deterioration, then you can have the overall impact which would be indeed three points in March and one point on the quarter. I think the outcome is probably anybody's guess. What we have not seen yet is repatriation, and what we know is that the wealth has not evaporated, so there will be a time where we'll see that coming probably elsewhere and mitigate the impact should the conflict continue. On the newness, so the first drop of Jonathan Anderson came in Q1 as we explained it will. It was mostly ready to wear and it was not the full collection, so yes. We expect more to come gradually also on the bags and the shoes. So it will continue to come to the stores in the coming quarter. On Vuitton, actually, the 130 years monogram anniversary was not supposed to be a commercial event, but it did yield quite good results with also a correlated impact on the classic monogram, so it's been having some response. And I think Vuitton has demonstrated that it can nourish its client both with a product and with very unique retail experience, which will continue in the Q2. On China and Chinese, yes, it depends how you look at it, obviously. But if you look at where we came from, the Chinese cluster has improved. quite nicely with Chinese clientele locally being growing solid in the Q1 and we have improved quite significantly the touristic part of the clientele but it's true that it's still negative and we continue to ensure that we do what it takes in order to gradually improve.

The next question is from Edouard Aubin, Morgan Stanley. Please go ahead.

Yeah, good evening. So three questions, if I may. So the first one, Cécile, on fashion leather good, your comparison basis is getting quite easier in the second quarter. You're going to have less of a Muakami headwind in Q2 versus Q1. I'm not asking for guidance, which you would not provide anyway, but can you just help us, you know, with the kind of tailwinds and headwinds we should have in mind, the technical factors involved? when we are looking ahead at, you know, the second quarter and knowing that you don't have a crystal ball last time I checked. Number two, so you kind of indicated that I guess the brand came in a bit below the division, so maybe down minus three in the first quarter. One of the competing leading luxury brand is kind of enjoying a moment which seems to have kind of intensified in March. To what extent, you know, the exit rate might have been impacted for your, in terms of the competitive, because of the competitive dynamics, you know, that would be my second question. And then lastly, sorry, you gave us, and thank you very much for the indication you provided big picture by brands for fashion leather goods in Q1, which basically confirmed that we are a bit in a K-shape economy where the brands more exposed to high net worth individuals seem to be clearly performing better. And so it's a bit of a difficult question, but in that context, can Vuitton, which is obviously very large brand, you know, print positive growth if the sector continues to have difficulty recruiting from the middle-income consumer. To what extent is that an issue for Vuitton this year? Thank you.

Thank you. Maybe the easiest for you to have an idea on how to look at what could be the sequence in the Q2 would be to give you one data point, which is in March, if you remove the impact of the conflict, fashion and leather goods would have been flattish in terms of growth. There is no other than this one, which is quite a big one. There is no other technical impact at this stage to take into account for the quarter. The only thing that you have to take in mind is that, as I said, consumers respond well to the newness, the products, the store. There are improvements in many markets, especially US, as we said, and China. We have local clientele as well, which is positive, and that is a very good signal. And overall, you have a divergence between regions that is decreasing, so it's more homogeneous than what we had seen in some of the previous quarter. On your question about Vuitton, if your question is current momentum, again, here as well, we have improved trends in many places. We've discussed several recent facts on retail, whether it's the 57th in New York, the Louis in Shanghai, the place, the 130 years of monogram, and the continuation of the double entry strategy will continue to gradually improve and accelerate, and we will continue to accelerate at the right pace. If your question is more philosophical, I think we really need not to enter into a collective anxiety about Vuitton, Because if we look at the brand, it's been leading in all key markets for many years. It's been more resilient than many in hard times. It has unparalleled competitive advantage on all what matters. And it has always been able to nourish clientele and is continuing to do it. with the best operating model, the best in class operating model, the best in class inventivity when it comes to retail products and creativity. So we are very confident on Vuitton's ability to continue to improve and we have no worry about the growth at Vuitton.

On just one point on both Dior and Vuitton, we never said they underperformed division average, by the way, just factually.

The next question is from Luca Solka Bernstein. Please go ahead.

Yes, good evening. Thank you for taking my questions. My first question is on Dior. When we look at our social media analysis globally, we seem to be getting a bit of a spiky performance in terms of where Dior is now getting traction. with social media in the West reporting better performance than social media in China. The feedback from the field in China is weaker than what we got from the West. I wonder if you could confirm this or maybe disprove it, and if there's anything down the road that could potentially further strengthen your recovery in China. Then a question on the as far as the Middle East is concerned. While I realize that this was only a month, so the month of March, we seem to assume and I would tend to assume that there was a much bigger impact in the first few days or in the first few weeks of the conflict. that things have gone back to almost normal as we moved into the latter part of March and at the beginning of April. I wonder if you implicitly were pointing at this trend being correct. And then last but not least, I assume that there was not a major impact from new stores and new space in the quarter for functional leather goods. Please consider if I'm wrong or right. Thanks very much.

Thank you. On there, we actually see very nice performance and products reception on both U.S. and China. The performance is a bit less good rather in Japan and Europe, but like a bit everyone else given the impact of the tourism. But on both U.S. and Chinese, it has improved markedly versus previous quarter. On your mention on the Middle East, well, at the really beginning, there was full closure of stores. What we see today is still that demand is very much down. Remember as well that the retail repartition is not even, so there are very strong touristic malls where some of the brands have stores that used to be in the top 10 or top 20, and these are still very strongly impacted. The one that is resisting better is Sephora, because Sephora in the Middle East is also having a big presence in Saudi, and Saudi is better and more resilient in this time. But overall, we still see significant downside demand in the touristic malls. And then on the impact of the new stores, I think all of them are performing quite well. And I mention Vuitton because the place is really doing very well. It's kind of the same impact as the Louis, and the Louis continues to perform very well, by the way. And it's in a very important market where it reconnected the brand also with Korea and with a lot of success. So we're very happy with that.

The next question is from Charles-Louis Scotty, Kapler Chevreux. Please go ahead.

Good evening. Thank you for taking my questions. I have two, please. The first one on watches and jewelry, the growth was solid at plus 7%, but if my estimates are correct, this appears to broadly reflect the embedded pricing impact. Could you please provide more detail by segment between watches and jewelry, and in particular, did the jewelry volumes grow during the quarter? And my second question, there have been several press rumors suggesting that you may consider divesting some of your beauty brands, such as Makeup Forever or Fenty Beauty. Can you confirm whether you intend to rationalize your beauty brands portfolio? And also regarding the wines and spirits, the sector also appears to be entering a phase of consolidation. Could you participate in this trend in one way or another? Thank you.

Thank you. And thank you for your questions on watch and jewelry growth. So there have been some price increase, but you need to be careful when you look at it on the facing value because it was on specific range and specific products. So overall, yes, there is volume growth. And I would really like to take the opportunity to thank the team at Tiffany and at Bulgari. On Tiffany, the transformation is really progressing well. We are now around 60% on fine jewelry growing strong double digits. And in addition to that, the icons that are importantly getting traction are growing even more so. We mentioned hardware, we mentioned nuts, we mentioned 16 stones, so we are very happy that the transformation of Tiffany is unfolding with success. And Bulgaria has done a great quarter after a very strong one as well. So the jewelry brands are going very well. On the watches, it's still negative, but there are quite some difference in the brand and the region. So it was positive in the U.S., which is good because for Tagoyer, it's the biggest market. But overall, it's still negative. You know that Zenith has... Very interesting competitive advantage when it comes to manufacturing and industrial. Probably not enough embedded in the brand equity, so we need to make that evolve. But overall, very happy with the jewelry maison and the growth there, the quality of the growth. On the press rumors, so I have nothing to report and I am not going to comment the press rumors. I can repeat what I say is that whenever, and it's not specific to beauty, but whenever we have underperforming brands, the first priority is to fix them. And if in some case, like it happened with DFS, like it happened in the past with Stella McCartney, we see or we have a discussion with an operator where we believe it will be the good place for the brand to land, then we make a deal. What happened in the Q1 was we signed for DFS the sale of the airport concessions in the U.S., and we closed the deal with China Duty Free, sorry. On wine and spirits, what I can say is that if you look at Moet & Sy portfolio, it has a unique feature which is its exposure to super premium range of products. And I think it's a very strong competitive advantage in a world where people qualify that of drinking less but drinking better. And if you look at other players, any combination somehow would probably lead to a dilution of that portfolio because it's very unique.

Thank you. We'll take the next question.

is from Carol Maggio of Artlease.

Hi, yes, good evening. Two questions on my side, please. The first one, just to follow up on the watch and jewelry division, can you come back on how the jewelry space is evolving in China? So, of course, the key brands, Bulgari and Tiffany. From what, of course, we are seeing, it seems like domestic brands over there are taking market share, growing quite strongly. So are you also being affected by this, or are your brands also being able to see growth despite the new competitive environment? That's the first question. And the second one, just to come back quickly on SLG and on the comments that you have been sharing so far. So would it be fair to assume that a growth of at least low single-digit could be possible in Q2 on the back of the ESICOM base and the confidence and improvement you are seeing across the U.S., China, et cetera? Thanks.

On jewelry in China, you know that it was a place where, especially for Tiffany, it has been difficult in the recent quarter. So we are improving, which makes us very hopeful for the fall. But we still have work to do in China in terms of making sure that we deploy the icons at the high speed, etc. But we are confident that this will come. And on Q2, I think we can really repeat what we've been seeing, meaning one data point is that for FNLG, March would have been flattish outside of the impact of the conflict. Second, the local clientele have continued to improve and are now positive, and we expect it to gradually continue. And the rest is obviously that we don't know yet the outcome of the conflict. One thing as well is that we might see if it lasts some repatriation of some of the wealth in other geographies. So we will make sure that if it happens, we are there to serve the clients.

The next question is from Oliver Chan at TD Cowan. Please go ahead.

Hi, thank you. Hi, Cecilia and Rudolf. Regarding conversion rates, Cecile, and your comments, where are you seeing conversion rate differences? It sounds very encouraging, and will that offset traffic? What should we know about conversion in the context of the fashion and leather division? Second, as we look ahead to advertising and promotion, the Monogram campaign has been Very exciting, but you mentioned in some ways less transactional. Like what's ahead for demand creation in this dynamic environment as you're thinking about innovation with marketing and demand creation? And third and finally, at Sephora, if we could have color on the, no pun intended, on the comp store sales within cosmetics or other categories, It's been a really nice category, but it's a more competitive market with Amazon and Ulta, etc. Thank you very much.

Thank you. So in the quarter, we've seen traffic being down, but conversion improving, as you said. Clienteling is obviously easier to do with high-end and recurring consumers, while often traffic drives recruitment. However, we didn't see any shift in the clientele pyramid, but it's true that we've been working a lot, especially with AI, in how we improve conversion, and it is happening, so we are happy with that. On demand creation, it's not a menu or a list of things that you will do. It's really around for each clientele being able to resonate with them. with the products, with the stores, with the experience, with the service. I think we have demonstrated that whether on units for products, on retail experience, on exhibition, on pushing our icons, we've been able to do it. So we will continue to unfold what we are doing. And then on perfume and cosmetics, so we were flat on the quarter. The best performing brands are our premium brands. And within the premium brands, the best performing range are the premium products of the range. I think we've been very clear that making sure we... focus on maintaining desirability and being exclusive in distribution is going to push for long-lasting performance and this is happening so we will here again continue to uh to work on that there are great opportunities both in makeup and perfume so this is where we'll be where we'll be pushing

The next question is from Donna Telsey, Telsey Advisory Group.

Hi, good evening, everyone. As you think about locals and tourist customers, how does it differ by region in terms of the performance? Stronger in one region than another, and how does it differ by brand? And then also, given some of your wholesale distribution, particularly in the U.S. and SACs, Are you eliminating some of that distribution? How do you think about wholesale distribution versus your own stores? You opened two beautiful Dior stores in New York in 2020, one in New York, one in Los Angeles in 2025. Any showcase stores that we should be thinking about for 2026? Thank you.

Thank you. And maybe because I did not answer on the Sephora like-for-like question, so let me start with that. On Sephora, you have several levers for growth. You have the like-for-like, definitely. You also have, and it's growing strongly on the like-for-like, you have to look at the selective division considering that DFS is costing you two points of growth. So that will give you a best view of the rhythm of growth for Sephora. A big part of it is like for like, and then you know that we continue to expand where we have underdeveloped exposure. It was a very good success in the UK where we continue to expand, and there are still some markets where we have opportunity to continue the geographical expansions. Going forward, the growth of Sephora is relying on several levels, the like for like, based on their unique model of search brand and nurturing and developing those brands, and also on geographical expression where there is still opportunities. On the question on tourists and clients, The best performing local clientele have been American and Chinese on fashion and leather goods. The Japanese is still a bit down and the Europeans are quite resilient but slightly negative, slightly negative. The biggest improvement and performance has been American and Chinese, which is very good news that on the American side, a sophisticated clientele like that continues to respond and to be there with a good demand. And on China, it shows that we continue to rebuild the growth there on local and in a qualitative manner. So it's a good outcome. SACS had some impact in Taiwan in the U.S., around $150 million of sales. We are managing that. And Dior two opening are really getting very good traction. And they participate also to the fact that Dior has been improving very markedly in the U.S.

Right. Judith, I think we've got another two questions.

The next question is from Pira Aldedania, RBC.

Thank you. Good evening, everybody. So firstly, could I come back to the revenue versus cost equation question? I think at the full year results presentation, there was an emphasis on prioritizing the Let's call it stabilization. Obviously, some of the assumptions since then have changed in relation to the Middle East. So, Cecile, to what extent are you more aggressively deploying cost-saving strategies? And could you maybe give us some flavor as to what areas that might be in? Is it in A&P or perhaps headcount in store? And is it limited to the Middle East or a bit more global in nature? And secondly, just on DFS, I may have missed it, but could you perhaps just give us a high-level summary of the deal economics related to the Chinese duty-free group disposal and also the duty-free America's disposal Should we be penciling in any cash consideration for 2026, and when can we expect those deals to close? And just to be clear, are you intending on selling all of your DFS assets over time so that there will be no duty-free business left once you have found appropriate buyers? Thank you.

So very concretely on cost, if we look at Middle East impact, of course when the conflict started, we went into looking at reducing cost. What you have to take into account is that Middle East is quite a profitable market. So what we cut is activation, animation, and short-term thing, but overall the fixed costs are there. So if you lose one euro in sales, you probably lose a bit more in your margin. We continue to be very disciplined in terms of the cost. However, our first priority is to go back to growth because this is what is going to ultimately give us a lever in a sustainable manner. So the one thing that we don't want to do is cut costs. that would be important in order to restore growth. For example, when we started in January with the first drop of Jonathan, we put some animation and it was very important to do that, to create really and continue to have everyone excited and it worked well. So it's always going to be a balance. And whatever we can remove and is not necessary for the client, for the service and for the growth, we will of course look at it. Then on DFS, so DFS, there were several things. In January, we discussed around the signature of the sale of the greater Chinese part of DFS business to China duty-free. This has closed in Q1. So you will start to have some perimeter effects of probably Q2 will be two points, linked to the closing of that transaction, two points on selective distribution, just to be very precise. And yes, there has been some cash, but we have also closed quite a few locations, if you remember. So all in all, it's not going to make a very important impact in the cash.

The next question is from Chris Gao, CLSA. Okay.

Hi, Cecilia. Hi, Rudolf. Thanks for taking my questions. I have two very quick questions. So the first one is a follow-up on Chinese clientele and also hard luxury. I remember Cecilia mentioned Bulgari's relative strength in the China market in previous questions. I just want to quickly confirm, just how does Chinese clientele perform or which century compares fashion attitudes? Is it more outperforming? And also regarding Bulgari's strength, where do you think that Bulgari's market share taking is coming from? So who do you are taking the share from? So the second question is related to wine and spirits. I know we're just entering Q2, but just wondering if there is any preliminary colors on the selling sentiments for wine and spirits for the following quarter, especially under current, you know, geopolitical uncertainties. And also, like, wine and spirits also have some, like, trouble retail exposures. Just these two questions. Thank you.

So on wine and spirit, maybe I start with that because we didn't talk a lot about it for this quarter. So you've seen that we had solid growth It was two things. First, it was a good stabilization of the champagne and good performance of wine. And on the other side, there was a good Chinese New Year in cognac plus a phasing effect because Chinese New Year was in February this year, January last year, so the shipment enabled to count the growth for the start of the year. And this helped to mitigate a demand in the U.S. that is still soft and that we don't see moving a lot. So Q2 will not be repeating Q1 overall given this impact, but we are already quite pleased that Champagne has stabilized and that wine are doing great. On the Chinese clientele for Tiffany and Bulgari, Again, it's been improving in Q1. We had a very strong Q4 for Bulgari. It's still going okay. And on Tiffany, it's improving. The overall response to the icon, the craft match chip, the high jewelry are very strong. And we will continue to lean on that to gradually accelerate there.

Well, thank you for your attention.

Again, we are very pleased with the progress even if we are in a moment where there is a lot of volatility. But we trust that we've been having quite a lot of good response on our initiatives, and we will continue to make sure we focus on that. Have a great evening. Thank you very much for your attention.