Kering Sa Ord

Good evening to all of you and welcome to Caring's 2023 first quarter revenue call. Starting on slide four, our revenue reached 5.1 billion euros this quarter, up 2% reported and 1% comparable. Retail fueled our comparable growth and all our houses contributed to the positive trend in our stock network. All sale was down double-digit as we pursued and in some cases intensify the rationalization of this channel to tighten control over distribution. Ethics was broadly neutral with Scope a 2% point boost from the consolidation of MauiGym. So, even if we set aside the drag from old sales, it was a soft quarter. On a brighter note, retail sales improved at every one of our houses month after month. Western Europe and Japan posted very positive trends while North America was still muted. Asia-Pacific swung back to growth on the gradual recovery in China. While the contribution of tourism resumed in Asia-Pacific and was confirmed in Western Europe, our brands did not relax their focus on local clientele in all key markets. I'll come back shortly on the regional trends. Our houses continued to implement their elevation strategies passionately and with determination. I will highlight some of the initiatives they rolled out to raise desirability and exclusivity, and many more are in the works. Their unique blend of heritage and creativity was very much in evidence at each of the fashion shows, which all received top rankings and gathered a lot of attention. High visibility communications campaigns were launched to support and amplify our brand statements with others to follow as the year progresses. Turning to slide five, our revenue breakdown by business and region. Kering Eyewear and Saint Laurent led the growth, up 11% and 8% comparable, respectively. The contributions of Gucci and Bottega Veneta were up very slightly. Revenue at our other houses was down 9% as the weight of all sales more than offset progress in retail. We've seen very different dynamics by brand, channel, and region, as we will discuss later. Speaking to big picture comments, Western Europe, Japan, and Asia Pacific all gained share in our revenue mix, now respectively weighting 25%, 7%, and 40% of the total. Conversely, North America lost six points and represented 21% of total revenue. rest of the world was stable. On slide six, let's review our revenue by channel and region. Retail, accounting for 76% of the total, was up 4% comparable in Q1. Expansion of our global store network has been very modest since year M. Western Europe up 15% remained a powerful growth engine broadly in line with Q4 trends. Locals still accounted for the majority of the sales, but tourists also contributed with hefty demand from intra-European, Middle Eastern, Asian, and American travelers. Japan enjoyed a buy-in quarter up 30%. Revenue from locals grew steadily, and the country also benefited from strong tourist inflows. North America, down 18%, had a challenging quarter, although trends were not very different from Q4, and even in line when you adjust for the drag from Balenciaga. The explanations are the same as last quarter and should not come as a surprise. One important element is a normalization on particularly high comps if you consider that we are still nearly 60% ahead of Q1 2019. Other factors include lower demand for categories more exposed to the aspirational clientele, as well as the underperformance of the online channel. To some extent, this is a short-term flip side of our houses elevation strategies. Looking at the US cluster, it is a bit more resilient thanks to overseas shopping, notably in Western Europe. Asia-Pacific swung back to positive territory, up 10% compared to a 19% decline in Q4. The improvement was, of course, driven by mainland China, our houses benefiting gradually from the reopening of the market. Hong Kong and Macao rebounded sharply. The rest of Asia was supportive overall, with the exception of Korea, which posted a weaker quarter on the back of steady increases until the end of last year, as well as dynamic trends from Korean travelers in Asia-Pacific and Europe. And finally, rest of the world was down very slightly, as further growth in the Middle East, on top of very high comps, was not enough to offset the decline in Eastern Europe. For their part, wholesale and other revenue were down 10% comparable, reflecting the sharp drop in pure wholesale from our luxury houses, notably in the US. This was partly offset by good performances at carrying eyewear and in royalties. Let's now move to our houses, starting with Gucci on slide 7. Q1 revenue was up 1% reported and comparable. Retail grew 1% comparable. And as usual, you will find details by region for all our houses in the appendix. As we told you in February, the work we are doing at Gucci is a journey, not a race. And we don't expect it to pay off in the very short term. But we are extremely heartened by our progress to date, by the drive of all the teams, and by the reaction in the market. For example, if you look at Gucci's performance by product category, it is worth stressing that handbags, travel, and women's ready-to-wear led the growth. It is a testimony to the fact that recent introductions together with focus on iconic lines are yielding positive results. Across categories, Gucci is also achieving higher AURs coming from both newness and carryovers. The Gucci teams are vigorously reinforcing the product proposition and pipeline across collections and price segments to achieve optimal balance in the offer architecture. Gucci unveiled its first salon in Los Angeles two weeks ago displaying the house's most exclusive pieces and proposing a BISC book by appointment-only experience for its top clients. Following the campaign for the Jackie Bag you have certainly noticed earlier this year, the house's global communications are now featuring the Horsebit 1965 and Bamboo 1947 in exciting displays. Three days from now, Gucci will open a beautiful, immersive exhibition in Shanghai, Gucci Cosmos, showcasing its heritage, innovative spirit, and visionary creativity. This striking event will be an opportunity to bolster its image and position in the China market. Moving to slide eight, Saint Laurent delivered another good quarter. Comparable sales rose 8% year-on-year, with retail up a healthy 14%. Leather goods and ready-to-wear drove growth thanks to both the undiminished appeal of carryover lines and the solid showing of new collections. Salon's legitimacy in higher price points was further demonstrated by the success of its recent Leverkusen introductions. The house is systematically building on its legacy and desirability. Its winter 23 fashion show, reinterpreting classic styles in a venue reminiscent of the grand ballroom in which its founder presented his haute couture collection, was widely acclaimed. As anticipated, all sale was down double digit on retailization and increasingly selective distribution. On slide 9, Bottega Veneta's revenue was stable in reported and comparable terms. In retail, the house posted a 5% increase, quality growth consistent with its ultra high-end positioning. The store network is stable as the focus is on elevating the experience through refurbs and tactical expansions. Fashion show after fashion show, Bottega Veneta nurtures its prestige rooted in exceptional craft and creativity. The recent winter 23 presentation was praised and garnered the highest ranking. Product wise, higher level good sales are fueled both by pillar lines and the success of novelty. The Amdiano bag, which hit the stores in February, was sold out in a matter of weeks and is the object of a long waiting list. This value-driven strategy translates into higher AUR. Bodeca Veneta's priority is to amplify and replicate success across all markets. To heighten its visibility in China, the house will stage a repeat show in Beijing in July. All sale rationalization is ongoing, even accelerating, resulting in a 14% drop in revenue in the quarter in this channel. On slide 10, a summary of the performance of our other houses. In total, revenue was down 9% reported and comparable with contrasted trends by channel. In retail, revenue was up 7% with all houses positive, although to various degrees. Balenciaga clearly experienced a challenging quarter on the back of the controversy that impacted the US, the Middle East, and to a lesser extent, Europe. However, in some of these markets, the brand showed signs of gradual recovery along the quarter while it enjoyed double-digit growth in Asia. Alexander McQueen's retail revenue was positive across regions and product categories, with ready-to-wear showing strength. The house, emphasizing its directly operated network, recently reopened its Paris flagship after expansion and extensive renovation. Briony had another very positive quarter in retail in all markets with a high level of bespoke sales. The house launched a capsule dedicated to women available in selected stalls. In jewelry, all our houses achieved double digit increases in retail. once again posted an excellent quarter, fueled by sales in its stunning high jewelry collection, as well as from the house's well-established jewelry lines. Pomelato also delivered robust growth in Western Europe, Japan, and the Asia-Pacific region. Finally, Keelin took full advantage of the reopening of the Chinese market. The house recently enlarged its product offering with the launch of a bridal collection. All sale of the other houses segment was down 32% on increased selectivity in third-party distribution and switched to retail. This impact is amplified by the current environment in the US, leading to a more cautious approach to this market. Let's turn to Caring Eyewear and Corporate on slide 11. Revenue was $400. 33 million euros entirely from eyewear, up 44% reported from 300 million in the first quarter last year. As you can see from the chart, we have a little bit of scope adjustment outside of the eyewear perimeter, reflecting disposal of remaining PPR legacy activities. The year is off to a strong start, with comparable sales up 11%. Revenue rose in all regions. and all key brands performed well. Lindbergh delivered solid growth, and we are very pleased with the significant contribution of MAUIGIN whose integration is working out smoothly. As you saw, Carignac Warefather secured its supply chain with the announced acquisition of UNT, the supplier of metallic and mechanical components based in the French region of Jura, known for its high-precision industry. Kering is proud to contribute to the preservation on both sides of the Alps of key reservoirs of craftsmanship allied with advanced technology. So, to conclude, our first quarter remained challenging as we continue working diligently to strengthen our houses and invest in their future. Beyond the eyewear acquisition I just discussed, we are continuing to enhance and internalize our supply chain. Saint Laurent, 28,000 square meter facility near Florence, in Tuscany, should come on stream this quarter, while Bottega Veneta's new shoe atelier in Veneto has been operational since earlier this year. We are confident that the wealth of initiatives or houses, a small selection of which I mentioned in my remarks, will enhance the appeal and exclusivity of their products and distribution and strengthen their position in their key markets. While we are conscious that this might not yet be reflected in their top-line performances, we are more than encouraged by our progress, by our brand-rich product pipelines and strategic determination. Claire and I are now ready to take your questions. Operator?

Thank you, sir. We will now begin the question and answer session. Anyone who has a question may press star and 1 on their touch-tone telephone. To remove yourself from the question queue, please press star and 2. Please pick up the receiver when asking questions. We will pause momentarily while participants join the queue. The first question comes from Luca Solka of Bernstein.

Yes, good afternoon and thank you for taking my question. I'm wondering if as part of the move to retail and the appropriate production of wholesale exposure, you're planning high profile flagship stores with seeing a number of exceptional flagship stores come to the market in the recent weeks and in the recent months and i wonder how you think about that and how you're planning to elevate service and in a way produce a shock and all experience for consumers coming to your most important locations the second question deals with the gucci brand elevation uh i'm wondering how mary christina lomanto is getting on with this program i understand that this is a journey and it's not going to change the gucci profile overnight but i wonder if you could potentially give us an update on that and the third question is on bottega veneta i always thought given the prevailing quite luxury trend that particular veneta could potentially be even growing further or higher than it currently is. I mean, clearly the retail performance is good. There's no discussion about it. But I wonder whether you would also see higher opportunities for particular editor going forward or if you have anything that is missing from that equation that you would like to point us out to. Thank you very much indeed.

Thank you, Lucaire, for your questions. So, regarding retail, indeed, you know that there is a clear strategy that was presented at the end of 2019 for the whole group, which is to increase the contribution of retail in our business. Still working with key wholesale accounts as it is the case today now with Gucci typically that is for the first quarter at 92% of the distribution made or directly operated. And in that context, it's obvious that we need to upgrade, as we already mentioned, the quality of our start network. I think that globally speaking for our brands, we have already a good set of locations, but you need always to fine tune. And we know that in this industry, part of the investments we have to make, and it's not only about CapEx, it's also about brand statement, it's also about communication. You have to have some landmark stores, and that's the reason why we are pushing our brands in that direction. But you're right at the same time that that's part of the journey, but another part is also to be sure that we have in the stores the right profile of sales associates. Not only the right profile, but also the right number of people in each store. And it's clearly an area, something on which we continue to work and to improve. If you remember well, it was one of the points we made about the plan we had for China which was to train and to recruit some people in the store so that's part of the strategy across the brands not only for gucci but i think globally speaking which is to clearly have the right people in the store starting also with all the vic corners or salon that we are launching or that we plan to launch at gucci That's about the strategy regarding retail. When it comes to the brand elevation and what's going on at Gucci with the merchandising, so as you know perfectly, Maria-Christina Lomanto started her new role in April 22, and has been focusing since then her attention on three key areas. um so good shift will return to the fashion calendar in 2023 with six collections Working very closely with the design team and the supply chain in order to improve the time to market and also all the things around allocation of products by region and replenishment strategy. I can tell you that based on what I saw during our last business review that she's now at full speed in that way to work with the different functions. The further extension of Gucci's high-end offer across categories, so you see that the recent launches we had in handbags are heading in that direction, but without, of course, forgetting to address more affordable categories, which does remain absolutely strategic. and the last point it's about the significant opportunity to drive gucci's men and travel categories to reach their full potential so as you can imagine part of the journey has been made when it comes to the travel business with a good very good reception of uh the collection in travel even if of course in terms of contribution to the cells it's not yet sufficiently material but still it's a brown statement here again in that direction when it comes to gucci men we had a show which was a demonstration that there was an inflection in terms of aesthetic with more high-end products obviously of course we will amplify that once sabato will be on board but what i can tell you is that clearly now Maria-Christina is very aligned and is working very hard with all the rest of the teams at Gucci, also with Suzanne when it comes to the communication to be sure that we have a full alignment in terms of visual merchandising communication and so on. I see what you mean about Bottega Veneta and I think it's all this story around quiet luxury, which is indeed, I think without clearly exaggerating what could happen around quiet luxury, it's a trend and it's a fact. And I think that we have some brands which are well-positioned to address that market. Of course, Brioni, but also Boutique Avenida, you're totally right. I could mention also Boucheron to a certain extent in that segment. But we have also in the other brands an offer which is very relevant to address this new trend. That being said... And coming back maybe to your first question, which was also very relevant, you know that there was a lot of things to do for Bottega Veneta in terms of offer, in terms of architecture of the offer, in terms of style. It has been done. Now the next step is clearly to boost the retail, where clearly we are missing, we are a little bit limited by our retail network. And that's the reason why probably we cannot fully exploit the potential of the brand today. We have some tactical moves with some refurbishment extension of some stores with some new flagships as well. But clearly, we need to amplify that trend, which is to be able to present in all the stores the full assortment of Bottega Veneta. Another point which is important to mention is that at the time when we We had a transformation at Bottega Veneta with a new style and a new aesthetic. It happened at a time when it was quite challenging to manage the Chinese market, and it's clear that we are impacted by the fact, and we had mentioned it already during the full year results, that there was something to do in China to regain market share for Bottega Veneta. It's another obstacle so far to deliver higher performance at Bottega Veneta.

Thank you very much, Jean-Marc.

The next question is from Susanna Boots of UBS.

Good evening. Thank you for taking my questions. I have three. So the first question will be on performance by cluster, especially the Chinese and the American consumers. Would you be able to comment on what was the growth for Gucci specifically, but maybe other brands? And I think especially the Chinese consumer would be quite important for us, given how comps are getting easier for the rest of the year. And the second question is on your margin guidance. So at the last poll, you were suggesting that margins should be higher this year for Gucci, but also other brands. So I was just curious, you know, whether you've changed some of your guidance or whether you still expect the margins to be up. I'm specifically asking about Gucci because I remember the inventories for the group were a bit elevated at the end of the full year. And also, it seems that Store network has expanded a little bit, so I don't know if I'm right, but maybe the likes for Gucci were negative in QM. So any comments on the margins would be very helpful. And then finally on, and apologies again, Gucci, but would you be able to tell us what was the marketing spend for Gucci as a percentage of sales around the time where I think the margin was peak 41%? And where do you intend to end 2023 in terms of, you know, what was the A&P uplift as a percentage of sales from the peak margin until, I guess, maybe last year or what you expect for this year? Thank you.

Good evening, Susanna. And first of all, congratulations for your recent promotion within UBS. Let's start with some comments about the clientele and the clusters. In fact, the situation is quite simple to explain. We have a clear recovery and even an acceleration on the Chinese cluster along the quarter. of course due to the easier conveys we had mentioned that we had a quite good start or decent start of the year across the board but with a comparison which is not easy because last year in 2022 the Chinese new year was okay but clearly month after month and especially starting from mid-march there was an acceleration in terms of trends in mainland China of course starting with mainland China But also, of course, with more and more Chinese traveling, first of all in Asia and starting at the end of the day, first of all in Macau and Hong Kong. And so as a result, if we look at the Chinese cluster, the trends across the board, if we look at all the brands, they are all double digit up. on the Chinese cluster with clearly a shift of the traffic or part of the traffic to Macau and Hong Kong. We consider that in Macau and Hong Kong, these are Chinese clients who could have bought also in mainland China. So if we look at greater China as a whole, all our brands are quite strong and especially with an acceleration, a sequential acceleration. When it comes to the U.S., clearly this is where the brands are at a challenging quarter with the American clientele. you see that uh the the performance is negative or for the for the first quarter quite consistent with what we had delivered uh in q4 2022 especially if we consider that balance sega has been impacted quite late in uh in the in the last quarter of 2022 so if we in a way restate from this situation of Balenciaga, the trends are very consistent. We see again some improvement along the quarter, but quite modest improvement. This is not the best tourist season for the American clients. Of course, we have a lot of American clients in Europe. The growth of the film with the American clients in Europe is double to triple digit in some cases. but it's not enough to completely offset the weakness we have in the U.S., and it's across the board. All the brands have a challenging quarter in the U.S. If we look at the other nationalities globally, it's okay, especially with the Japanese still up. Japan benefiting, by the way, from tourism. In European, we have some, let's say, moderation of the growth, but still OK globally across the board for the European clientele. Now let's move to your question about the margin. As you can imagine, it's a little bit early to make any detailed comments since it's a Q1 call. I would just say that we I don't know if we could qualify the comments we made at your end as a guidance, but we gave some indications. And I must say that Q1 has not changed so much our views on Gucci. Because at the end of the day, we have invested a lot in Gucci already in 2022. We will continue to invest. If we look at the OPEX, besides store OPEX, We have planned to increase the OPEX in H1, in H2, more or less in the same proportion, but you can imagine that we are also betting on the sequential improvement of the top line. So based on our current views for Gucci, we continue to consider that Gucci could see its margin flat to slightly up in 2023. We continue to believe that also Saint Laurent is in a position to improve its margin for this year. I think the only one comment I could make is that considering the magnitude of the wholesale rationalization we will make in the other luxury brands and also with the recovery of the pace of recovery at Balenciaga there could be some it could imply some margin dilution at Balenciaga and therefore considering the contribution of Balenciaga to the other luxury brands to the old segments And just maybe to bounce back on one of your comments, the store expansion at Gucci, it's difficult to reason based on the store expansion because you know that in store expansion you have always a mixed bag. We don't factor also sometimes the contribution of some pop-up activities. So the comparison is not always relevant from one quarter to another. And I can tell you that what we have privileged in any case is quality growth and value over volume. Just to end on the A&P side, what I can tell you is that if we look at what was the The percentage of A&P in 2019, and we compared to 22, we have increased the A&P budget by 2 percentage points of sales. So it was quite a massive investment that we made. Also considering that, as I was mentioning, entering to Luca, we have also, when we opened some stores, especially some flagships, a sort of A&P investment with a strong bond statement. You see perfectly that the boundaries between retail and amp are more blurred than before but as a result we had increased by two percentage points uh and it should be more or less uh and we consider that in 2022 we were more or less on par with the objective we have uh in terms of amp budget uh as a percentage of sales excellent thank you so much for the very helpful answers if i could just follow up on the chinese cluster so

I understand you've mentioned the Chinese consumer was up double digit in Q1. But if we look at it on a two-year stack, would you be able to tell us maybe if it was flat or, I don't know, slightly up or slightly down versus 2021? And sorry, I know it's a bit annoying. I'm being very specific, but it would just be really helpful for us given how the comp is developing for the rest of the year. Thank you.

Yeah, hello, Susanna. This is Claire. So your question is on Chinese cluster two-year stack, right? Yes.

So where's the 20-year? Sure, sure, sure.

Up. It was up. Do you need more quantification?

Maybe a little bit like low or anything like that.

Let's say low-double.

Excellent. Thank you very much.

The next question is from Thomas Chauvet of Citi.

Good evening, Claire and Jean-Marc. I have three questions, please. The first one, coming back to the U.S., as you said, Jean-Marc, the weak retail performance across most of your brands is quite similar to Q4. Not a real surprise also when you compare that to U.S. luxury credit card data. But could you try to dissociate the underlying market weakness from the caring brand-specific issues you've identified and, of course, how you're addressing those? Are you assuming also these demand pressures will persist for the rest of the year in the U.S.? Secondly, on inventories, which stood at €2.5 billion at the end of last year, so a little bit elevated demand I guess largely due to the revenue shortfall in China and the US in 2004. Can you comment on how the inventory has evolved after three, now nearly four months of 2023? And then my last question on your medium-term plan for Gucci, you presented at Invested Day last June in Paris, notably the 15 billion euro in sales and the 41% EBIT margin medium-term. In the choice of Sabato, they saw no changing anything in how you execute the plan, in how you think you will achieve those targets. I'm thinking in particular of the slide you showed back then on the mixed ambitions, if you remember, you know, in terms of product, gender, generation, geographies, and so on. Well, effectively, the plan was there, and Sabato has been hired – because it fits in very well with the plan and so it will be pretty unchanged in terms of executing that. Thank you.

Thank you, Thomas. Let's try to elaborate a little bit on the U.S. If you look at the data brand by brand, you see that it's a weakness that we have across all the brands. Of course, Bottega Veneta being a little bit above the rest of the other brands. I don't mention Brioni, which had a quite good quarter in the U.S. because of the bespoke But besides this, it's quite, let's say, coherent, consistent across the board. I think, obviously, it's very difficult, of course, to say that it's all about the aspirational clientele because we know that some other aspirational segments outside of the luxury business at a quite decent quarter so maybe there is a question also of allocation of wallet among the the aspirational customers uh but what we can say when we look specifically at luxury the categories or the the price clusters price segments that have been the most affected by the situation in the US are the aspirational ones. Another point which is important to stress is the weakness of the online business. The decrease of online sales are clearly above the decrease of the sales in the stores. By the way, the traffic in the US was up. There was a question of conversion, clearly. It tends to demonstrate, first of all, that clearly there was a weakness of the demand of the more aspirational clients. We see that among the top clients, we continue to grow in the US. The opening of the salon in Melrose Place, even if it's very recent, it's very difficult to extrapolate, but it was a tremendous success, great results, and very happy with what has been done. So, and the fact that Brioni and Bottega Veneta are doing slightly better, it's a demonstration that clearly the weakness is relying in this more aspirational cohort. It's important to remind that we continue to perform something like 60% above 2019, so the fact that The situation in the U.S. has changed and it has become a very important market for luxury or even more important than before. We still believe that there is a potential to continue to grow in the U.S. Another point I could make also about the U.S. on the differences by region. In fact, there is not a clear trend if we compare the performance region by region, so it's very difficult to extrapolate based on the performance by region. What I have not mentioned as regards the US is that in the wholesale it has been obvious that the US were very challenging. Clearly, we observed a reduction of the orders of the American department stores, which is not necessarily a big problem for us because it does clearly push us to amplify and accelerate the wholesale rationalization in that context. So we are working now to clearly engage even more than before with this more wealthy client, but still we also work to be sure that we have in the offer across all the brands the right offer. for the more aspirational clients because we are convinced that at a point they will come back. And just to conclude on the US side, don't forget that we will have some easier comps at a point in the year starting, by the way, from mid Q2 where last year we started to see somehow a form of deceleration. Regarding inventories, I will start first with a few comments on inventories, reminding first of all that And it's important that in 2022 and still in 2023, we have increased the share of carryovers and permanent style in inventories. And we are quite happy about what we did in terms of management of all inventories. So that's the reason why we consider that we have the right level of depreciation rate, which is by the way very coherent with the rest of the industry. That being said, it's not only about an accounting matter. It's also about, of course, an operational issue. And there, clearly, we are still at the level of inventories which is very comparable to the one we had at the end of the year in the sense that we had not yet completely revised the open to buy for the beginning of the year the work now which is at stake among our brands is to work on the open to buy and we have some better or we work to have better predictions in terms of Sell out? Oui. Also, see some brands ready to take the risk to have a waiting list. And typically, what Bottega Veneta decided to do with the Andiamo bag was clearly to focus first on the sellout. And quite successfully, we have a record sellout with the Andiamo bag. So it should contribute along the year and that the plan to reduce the level of inventories. But it's not yet the case at the end of Q1. Finally, regarding the plan we had for Gucci, I know that there may be some skepticism about the objectives we have set in our previous presentations about Gucci. But if we take a step back and we look at what Marco presented a few years ago, what he presented recently, I think that we are delivering some of the parts or some of the blocks of the journey. If I think about the elevation of the AUR with the contribution of mix and price increases, fundamentally compared to what we have presented during the last Capital Market Day, we are there. We have not necessarily yet the traffic is up but not necessarily the volumes are back to positive territories and we expect that along the year with the improvement in China we should start to turn positive also in terms of volumes. But we are implementing, gradually, what we have announced. Another point which was about the retail contribution, the opening of new flagships, and so on. It's exactly what we are delivering. And when the roadmap was presented to the different potential designers including Satata Di Sarno, the playbook, the roadmap, were completely aligned with the strategy that has been presented during the capital market day. Concerning the size of Gucci, there is no reason to completely or dramatically change the breakdown of sales between categories, to completely change the strategy. What is at stake is clearly what we need to do in terms of products, merchandising style, but when it comes to the overall strategy or strategic ambitions, we think that Sabato will be the perfect match with these ambitions we have presented. Thank you, Jamal.

The next question is from Melania Grippo of BNP Paribas Exxon. Good evening, everyone.

This is Melania Grippo from BNP Paribas Exxon. I have three questions. The first one is your pricing strategy. I was wondering if you have implemented any price increases here to date across your brands, and if you could please give us any detail. On Saint Laurent, momentum continues to be quite good. Could you tell us more on the drivers behind the brand in the quarter? I mean, price mix and volumes. And finally, on your Gucci salon in USA, I don't know if there is any qualitative feedback you can share without. You said it was a tremendous success. I was wondering also if you could give us your definition of big customers. I mean, the threshold above which you consider a client as such. Thank you.

Hello, Melania, this is Claire. So on the pricing strategy, you know, in Q1, there has not been any, I would say, changes in the pure price. I'm just talking about really pure price increases across the board. You remember that for most of our brands, we did pass significant price increases last year, or some of them also at the end of last year. So we were not planning, to be honest, to do big moves in Q1. We just mentioned maybe for Gucci that very, very end of Q1, so end of March and early April, there have been very selective price increases. All in all, it's going to be a very low single digit on the very specific SKUs. So that's what I can say about the pricing strategy. When it comes to Saint Laurent, I mean, we don't disclose the breakdown in terms of volume slash pure price slash product mix. I think, as always, at Saint Laurent, it's quite a healthy growth. There is some contribution in terms of traffic and volume. There is clearly a big work being done at Saint Laurent on the value component and The value implies, of course, some pure price increases that the brand passed, especially last year, and that quite significant pure price increases on some carryover lines. And then there is more and more of a mixed component. You remember probably we mentioned already last year a few times the IKAR bag, which was the first really high-end price point of the brand in the handbag segment. Clearly well above €3,000. I think now the pricing for this one is €3,900. And then there has been a new introduction recently. I'll let you browse on the website and find the new introduction. But it's another, I would say, quite big handbag and big comes with a high price point too. So the brand is definitely now successful in getting traction in this higher price point.

On your last question, you can imagine that the... It's like the concept of Salon, it's like high jewelry. We know that in terms of contribution to the sales, it's not necessarily a game changer short term, but in terms of engagement with key clients, key clients which are also some ambassadors for the brand, it's absolutely key to invest there. First of all, L.A. was the first salon to be opened, but you will have some openings to come in the year in the key destinations. I won't list all the cities where we will have the opportunity to open salons or, let's say, quite large VIC rooms or floors, but that's part of the strategy. Qualitatively, what we can say is that it's very difficult to say because we know that some competitors have more or less the same concept. What we see is that in terms of sales per day, we are reaching a very high level, but here again, it's difficult to extrapolate because we have opened the store very recently, but we had a very positive response. of some key clients when we invited them to come because, of course, as you can imagine, it's based on appointment to improve or to have a top quality of service. And, of course, I will not enter in the details of the classification of our clients by type of purchases, if it's about repeated purchases, the level of spending. Like all the other brands in this industry, we have a classification of the clients with Some of the clients at the top of the pyramid representing probably something like less than 5% of the clients in terms of number of clients, but which are contributing to a very significant amount of the sales. And this is this amount that we want to continue to grow because it's clearly a way to improve the resilience of the performance of the brand and to increase the level of royalties.

Thank you, thank you both. The next question is from Chiara Battistini of JPMorgan.

Thank you very much and good evening Jean-Marc and Claire. Just a really follow up. The first one maybe on China and Gucci. I was wondering besides the reopening, can you discuss a bit the actions, initial actions that the new management team on the ground has been taking and the priorities there besides capitalizing on the reopening? And also, sorry, on the Chinese cluster, a clarification on your comment, Claire, about the growth in low double-digit territory versus 2021. Was that a comment for the group or for Gucci specifically? And then a question on APAC, Bottega Veneta, please. If you could comment on, maybe give some more color on the different countries as APAC was particularly weak for the brand. So maybe if you could help us understand Korea versus China um there please as well and then finally um a curiosity on the china reopening as you have brands spanning across different categories and different price points um i was wondering are you seeing within the reopening the consumer preferring some being driven mainly by brand momentum versus categories and or different price points specifically thank you

Yeah, hello, Chiara. This is Claire. I'm just going to jump on the clarification. So it was for the group, my comment on the Chinese cluster on the two-year stack. What I can say is that it's also positive for Gucci, but I will not quantify brand by brand.

Thank you, Claire. Chiara, starting with the actions of the management in China, I think it's very important to say that uh as we mentioned during uh the um during the full year results that um we it's uh it's uh it's a we are looking at at a long term uh at long-term objectives uh we cannot um re we we cannot regain massively market shares uh in two weeks so all the action plans from the management, it would take some time to implement. We had mentioned that the priority, and once again, I refer to the question of Luca, which was very relevant. It's about the management of the people and the management of the talents. We are missing some talents in China. We are fulfilling some gaps now, but we are not yet there. talents in all key functions in the stores, but not only. So we need to reinforce the work, the structure we have in place in China and the quality of the people in the stores. We need to continue to elevate the brand perception. And of course, you can imagine that the exhibition that will start in a few days in Shanghai, which is really a unique exhibition, it's really brilliant, will contribute to elevate the brand perception, but it will be not sufficient, as you can imagine. So we have a lot of other actions around that, with also more celebrities, some more communication, new ambassadors, not only from China, but also from Asia, but with an impact on the Chinese market. We need to enhance retail experience. We know that the brand had been quite weak compared to some peers, and here it does really tie to the quality of the distribution and the quality of the people I've mentioned before. Of course, there is a need to fine-tune the product assortment and merchandising. It's something that has to be made at brand level, but also more specifically for China. All the initiatives that we are pushing now, they will not pay off immediately. Some of them will pay off, and we start to see some positive feedback about the recent introduction, about the new collections. quite encouraged by what we see, but we know also that it would take some time to improve the quality of the distribution or to refocus more on full-price stores. That's a priority, but you can imagine that it cannot be done overnight. So that's what I can tell you that Mr. Bizzari and the Gucci team spent some time in China recently to visit the teams, to encourage the teams. So it's a work in progress, but we start to see some encouraging signs across the different stalls. If we now jump on Bottega Veneta and Asia, I think that overall, China, as we mentioned before, this is a market where Bottega Veneta has to invest more, a little bit in action plan like I've described for Gucci, but also, of course, with a different, let's say, uh approach because it's not a brand which is fully comparable uh while in korea uh but together extremely well uh in the past few years to an extent that the conveys in a context where we had also some a shift of customers to other countries in Asia or outside Asia, especially in Japan, has penalized the performance of Bottega Veneta in Korea. So it's true that we have two big markets which have been quite challenging for Bottega Veneta in Asia.

So your last question, Chiara, was on China reopening, whether it's about brand momentum of categories, what we see.

Yeah, and also if you see maybe different performance across the different price point. And there have been reports that maybe the higher end is doing better in the recovery versus the sort of more aspirational mid-price kind of point. So any evidence you have seen so far, either by brand momentum or categories or positioning? Thank you.

It's pretty difficult to say, to be honest. I think, of course, brand momentum is playing a part. I mean, Jean-Marc mentioned about Bottega. You know about Gucci also. We just elaborated on the two brands. So we know what we have to do to regain momentum in this market. And clearly, there are action plans in place to gradually, I would say, regain traction. You probably have in mind that Bottega is also going to have a show in Beijing in July. There are lots of initiatives around ambassadors, et cetera. So clearly that's going to participate. Now by categories, yeah, I think we are seeing good traction across, I would say, shoe category. We're seeing good traction also around leather goods. What does it mean? I mean, I'm not sure for now we have sufficient data points to analyze whether it's younger, aspirational, higher-end clients that are coming back sooner or later, let's say.

Great. Thank you very much.

The next question is from Louise Singlehurst of Goldman Sachs.

Hi, good evening. Jean-Marc and Claire, thank you for taking my questions and for all the details we've had so far. brief follow-ups for me if I can do please just firstly on domestic Europe I suppose Europe has been a key surprise so far for q1 across the across the peers it's been very strong can you help us understand the mix between domestic and tourism and if there's anything to highlight particularly on the domestic side between q4 and q1 and then secondly just going back to the US performance Given what we've seen between Q4 and Q1, fairly stable performance and the comp base going forward, is it fair to assume that Q1 is going to mark the trough for Gucci brand in the US in Q1? Thank you.

Hi, Louise. This is Claire also. I'll try to start on the Western Europe and probably Jean-Marc will jump in a bit later. I think on Western Europe, the only thing we can say really is that the locals are still the majority of the sales. I think Jean-Marc mentioned it already. But of course, we are seeing very strong increases in tourism. But once again, locals are still more than 50% of the clientele in Europe. By region, by country, let's say, in Europe, I think we're seeing a bit of a good traction overall uh rather in southern part of uh of europe so italy probably uh is uh is uh is fine uh i would say france is fine um it's a bit more difficult in uh in the uk um so i think that's the only thing we can say and when it comes to tourists i mean we are uh still seeing good traction that john mark mentioned already it's not a very high quarter for americans but it's uh they are still performing very well. Middle Eastern, of course, still. And then Asian tourists, quite other Asian, if I exclude mainland Chinese, although we are starting to see more and more mainland Chinese coming back to Europe. It was mostly individuals first. We see how it will evolve in Q2. I think that's what I can say about Western Europe.

Maybe what I could add is that clearly the tourism has clearly contributed to the good performance of Europe. What we continue to see in Europe, a little bit like in some other regions and especially America, is a good performance with clients above 40 years old or, let's say, starting from 30, 35. So probably some clients with higher purchasing power So here again because of the inflation and we see that particularly in some countries where inflation is eating hard, some categories of the population in the UK or in Italy, that among the young clients there is some moderation or even a decline of the performance. Now, looking at the US, it's always very difficult to make some predictions, especially in that context, and we don't know exactly. Of course, the market will depend also on the evolution of the macro in the US. It's fair to say that across the board, the comparison base is easier starting from mid Q2, not only for Gucci, but particularly for Gucci, while for Balenciaga, we can expect some gradual recovery and improvement along along the year so to to to to to to bet that q1 was a trough it's it's quite difficult theoretically you're right but we don't know because of the evolution of the macro why it's true that at the same time we uh it's not because of the current situation in the us that we don't invest in the us for the gucci brand um And by the way, the opening to give a priority to LA for the first tunnel is a sign that it's a market which is still absolutely key for the brand. So we continue to invest in that market. So we'll see if the combination of easier comps and all these investments will help the trends in the US in Q2.

Thank you very much.

The next question is from Aurélie from HSBC.

Good evening, everyone. I have two questions. The first one is on the US, again, sorry for that, with Yves Saint Laurent, which is down 13% in retail. And I was wondering whether it was the result of the price increase you passed on in 2004, or is there anything else happening at Saint Laurent? I have also a question actually on Briani. I know it's small, but I was wondering if you could give us some ingredients of the recipe for the recovery of that brand and why not try women? And if maybe there are some experiences that you've done at Briani that could be extended to some other brands. And the final one is for the other brands. The performance in retail of plus 7% in Q1, would it be possible to have it excluding Balenciaga to see how much the Balenciaga issues have affected the performance? And do you feel that these are over now? And that would link me to the final part of my question, which is what can you tell us about the current trading and how April's chart started? Is there anything to tell about that? Thank you.

Thank you, Aurélie, and congratulations for having asked theoretically two questions and finally five questions. I will try to go fast on each of them and try to answer. On the whole, I think obviously that, as you know also, the brand has been very strong in the U.S. for now several years a very very strong performance across the regions and and and in a very constant way manner so clearly i think that we have different situations first of all um clearly a very demanding base point two uh clearly some reaction to the price increases that we had already mentioned uh in q4 but At the end of the day the market will absorb it and we see already month after month some sequential improvement there showing that the market starts to digest these price increases but which was anyway needed considering the elevation strategy we have for the brand. And as I mentioned before, also, clearly, the online channel suffered a little bit during the quarter. Like the other brands, like Gucci, let's say, Saint Laurent was quite mature in terms of penetration of online and has been impacted by this. That would be the main explanation for the performance of Saint Laurent in the US. Brioni. i think the the recipe is uh is first of all let's let's remain humble we are going in the right direction with brioni we are very happy with the achievements uh already last year but also even more on in q1 uh the recipe is quite simple is that there is a clear direction uh both at the management level but also at the at the creative level so that the uh The brand is super clean in terms of positioning. We have also streamlined the network to be more efficient with different formats, which is more productive at the end of the day. And in a way, now that the brand is a little bit more stabilized, We started to push some new categories. We have a quite successful development in fragrances and in a way the women capsule was a way also to engage with new clients or to attract or to create some events in the store so that we can engage with more clients. I think what we can learn from Boreani as we can learn from Boucheron and some others with this experience of high-end is about the quality of service you can provide in the store and the importance to have clienteling activity, to have a lot of events in the store. That's the reason why I think that's what we can learn from Brioni. On the other brand side, you can imagine that we won't provide any additional details. We have mentioned that our jewelry brand grew double digits. So you can imagine that, and we mentioned that Balenciaga was positive in terms of retail, but I can just tell you that it's slightly positive, but which is already an achievement, consider what happened at the end of the year. So I don't know if your question about current trading was something generic across the board or more specific to Balenciaga?

I was wondering whether the issues at Balenciaga are over now already.

Okay, so on that point, let's say that, as I mentioned during my speech, that the Balenciaga is doing extremely well in some key markets, and I'm thinking about Asia-Pacific, where clearly the controversy has a very little impact. The markets which are more impacted are the US, UK, and Middle East, where we see some improvement, but we are not back to our positive growth there, with something that should rather happen in H2. While in continental Europe, we start to see a normalization, and we are positive again. So I think Q2, as we mentioned, will be positive. It's what we can guess so far regarding the current trading. We are quite early in the quarter. But let's say that it would be completely behind us, probably rather in H2.

Thank you very much.

The next question comes from Edouard Albine of Morgan Stanley.

Yeah. Hi, Jean-Marc and Claire. So three quick ones, I mean, relatively quick ones on Gucci to follow up. The first one is in China, Gucci China. So we are at the end of April now. Have you noticed any type of underlying inflection between the first two months of the year and March, April versus 21, the Chinese cohort? I mean, there's talk about Gucci sales picking up a bit in recent weeks. So just curious to have your views there, number one. Number two, Jean-Marc, you talked about the brand elevation journey at Gucci, which I guess is multi-year. I mean, Gucci is clearly more exposed than other brands to outlets or Hainan in China. Do you have a plan to reduce your exposure to these channels or not? So I'd be curious to have your view as well there. And then lastly, to follow up on the question asked previously, but on the store network in the U.S., I mean, Gucci has increased its store network by 14% year-over-year. Your organic sales were down 19%. So you had identified white space, pockets of wealth like Austin. I think you opened in the meatpacking district. And you followed suit, you opened stores. But are we going to see a moderation of your store opening program for the remainder of the year at Gucci? Thank you.

Yeah. Hello, Edouard. It's Claire. If I got your question right, your question is about the China for Gucci on a two-year stack, month by month, right?

Well, yeah, grouping January, February, and then March, April. I mean, are the first last two months of the year better than the first two?

Okay. No, I got it right. I'm not going to answer on a two-year stack, to be honest, Edouard. I'm going to answer on a year-on-year basis. I mean, and it's not going to be a big surprise for you for sure. March, April are clearly accelerating in China for Gucci. You remember we said that we had a good Chinese New Year on not so easy come base in Jan. February was a bit more mixed because we had the calendar effect of Chinese New Year. And then, of course, gradually it's accelerating in March, and the comment still applies, of course, for April. Of course, the base is easy, but I will not comment on a two-year stack.

Regarding the outlet, I think we have been very clear in the past few years saying that the priority for us was to improve the quality of the distribution by focusing on retail and by reducing wholesale. And we always say that the outlet channel, as long as it is well controlled, it's a way also to manage old items, inventories, and to avoid any sort of destruction of products. which is now something completely forbidden in many jurisdictions. Going forward, nonetheless, it's true that there is a question of, let's say, consistency of the brand, and we cannot at the same time elevate the brand to significant outlet exposure. So going forward for Gucci and for the other brands, as we did in all 30, it will be a group initiative to look at the trajectory aiming at reducing the exposure to outlets, still considering that to manage old items and old inventory, that's something that can be kept, but clearly in terms of percentage of stores in the network or percentage in the sales without giving further indication. It's something that will be also managed and reduced going forward. Finally, a question about the U.S. store network. In fact, there was a wave of openings between 21 and 23. We have not in the pipeline many more openings, so we will continue to open technically, especially at a time when As I was mentioning before, the wholesale business is contracting, opening some opportunities in some cities, so we will continue to have some openings in the US, but clearly in terms of additional space, if we look at square meters, it will be, of course, reduced and with a moderation of the space expansion. I'm conscious of time, we have still a lot of questions, so we'll try to take as many, as much as possible, all the questions, but we are not sure that we can stick to, we need to stick to the timing, so maybe I will try to shorten my answer, and if you're on your side, you can focus on the questions which have not been asked yet.

The next question is from Terry Kota of Societea General.

Yes, good evening, Jean-Marc and Claire. Two questions for me. First, clarification on Gucci. Am I correct to understand that you expect OPEX about mid-single-digit growth this year at constant currency so that when you expect a flat to slightly up margin implicitly, you do expect at least 5% organic growth for the brand for the year? Am I correct in that reasoning? And secondly, back on wholesale that you've explained, the resizing process, which is ongoing across Europe, all divisions but Gucci. Do you have a target of where you want wholesale to account for in terms of the revenues for each division? Is it different from one to the other? And do you have by division a sort of timeline of when you think you're going to be getting there? I'm just trying to measure and time the kind of revenue headwind we're going to have from this wholesale resizing for the different segments. Thank you.

Thank you, Thierry, for your questions. Starting with Gucci, yes, definitely, and I think in this year that you could qualify as a year of transition. It's up to you, but clearly we had been very also humble in our ambition for this year. Maybe we would do better, but for sure something which is reasonable in terms of ambition was concerning what was the year, what was 2022, was to target mid-single-digit growth for the top line. And we have built our ambitions also in terms of a bid based on that. So yes, you're right to consider that we guess that we'll have an increase to the same extent of the OPEX. We saw quite good balance between H1 and H2. As regards wholesale, The target is not necessarily in terms of percentage of sales, which would be absolutely not, I think, smart. It's more about the number of accounts we want to work with, the quality of the distribution with these accounts. And you're right that at the end of the day, depending on the brand positioning, it's a product mix. you can have different approaches and as a result different number of wholesale accounts and then a different percentage of wholesale in the total business what what we can say is that now at 92 percent of retail which is more or less where it should be maybe it could be slightly higher but we are more or less there we can guess that for the three or the big brands, so Saint Laurent, Bottega Veneta, Balenciaga, we should reach quite rapidly and probably by the end of the year something around 85% of sales through directly operated network. Should we go above, we will continue to work to assess if there is a need to be even more exclusive, but already 85% is a major step for this year. It does imply a double-digit decrease of the wholesale business for all the brands or Balenciaga, Saint Laurent and Bottega Veneta. Now we are targeting something rather minus 25 on Bottega Veneta. We keep an ambition of minus 10, around minus 10, minus 15 at Saint Laurent or minus 20, sorry, minus 20 on Saint Laurent and Balenciaga more or less in the same range.

And so what you're saying that by year end, you're going to be more or less done, you think, or the bulk would be done?

I can imagine that by the end of the year, or let's say mid-24, we should be on the more normative side of the wholesale business for these three brands, definitely.

Great. Thank you.

Thank you, Thierry.

The next question is from Charles-Louis Scotti of Kepler Chevrolet.

Hi, good evening. I have only one question. I'm not sure that you will share this information with me, but you said at the beginning of the conference call that the retail performance has improved sequentially throughout Q1. Any chance you can share with us the phasing of the growth and most specifically the exit rate in terms of retail organic sales growth at the group level in March? Thank you.

um well usually we don't give monthly uh performance shall we but uh let's say that uh it's i mean once again on easier comes so uh having to keep that in mind uh we will double digit uh in uh in march okay thank you thank you very much

The next question is from Rogerio Fujimori of People.

Hi, Jean-Marc and Claire. I have just one question about the Gucci brand elevation. For the carryover part of Gucci, have you seen mixed gains positively contributing to growth, or put differently, are the higher AUR categories that you're emphasizing outperforming the lower AUR categories? Or have you seen the new high-end offerings for bags outperforming the enterprise and bag offer? Thank you.

Hello, Roger. No, I think, you know, in the – I mean, your question is not that simple because you have carriers. You've probably seen that the merchandising team and the team at Gucci have recently introduced quite a lot of newness. I can give you quite a long list of new bags, both in H2 and early this year in Q1. And most of them, of course, are benefiting to the mixed components because they are stepping into higher price points. Now, to be very clear, we also have introduction in, I would say, entry mid-price point because we need to ensure this balanced pricing architecture. for the categories. What I can tell you is that both Carrier Overs and UNES are contributing positively to growth this quarter, and this is true, I would say, across the main regions where we are seeing growth. The two are really contributing.

Okay, thank you.

The final question is from Oliver Chen of TB Cohen.

Hi, thanks, John, Mark, and Claire. On the Gucci brand, you mentioned allocation, replenishment, and inventory management. Would love your characterization of that opportunity relative to brand elevation and realizing that they're not mutually exclusive. And second and final question, on the conversion rate, Are there any characterizations of the conversion digitally relative to the traffic and conversion in your own stores physically that are noteworthy in terms of what you've been seeing? Thank you.

Hello, Oliver. Can you just maybe clarify a bit the first question? Make sure we understand properly.

Yeah, I was curious about the opportunity ahead with inventory management and logic and supply as you think about planning and allocation and speed and replenishment and how you would contrast that with what you're doing creatively to return to classic and elevate the brand. Another way to ask that is what what inning you're in as you think about allocation replenishment and inventory management and agility and speed and how big of an opportunity is that or not, thanks.

No, I think definitely it's an opportunity. I think that we should not forget that we have made in the past few years huge investments to elevate or to upgrade our logistics and our information systems. That was absolutely needed to have really a clean backbone to... coming from a time when we had different systems and some obsolete solutions, so clearly to improve the quality of all the support functions was absolutely needed. Now, clearly we have gained in terms of agility, so that we can have real-time information about the inventories, we can, as a result, have a more 360 approach, an omnichannel approach that we can order in the store and then deliver to home and so on. So I think we have gained in terms of efficiency, but we could gain even more, and that's exactly what is the next milestone for us in the journey, which is about First, having better predictions of the sell-out so that we can clearly say the production in order to be more agile and to improve the sell-out. And also that the reason why We need to work on the supply chain side. I think it's a big thing now in this industry, which is to be strong on the supply chain side, to gain in terms of flexibility. The more you internalize, the more flexibility you have, both in terms of product development, product quality, and then you can launch some smaller batch of products in terms of production. Here again, to be more agile in terms of replenishment and supply, it will be a way clearly to improve the sell-out and to manage better inventories. So clearly there is an opportunity. It's not as if we had not invested in the past few years, but now we have the right setup to improve further. When it comes to the conversion, let's make the difference between online and physical store. In the offline channel, what is happening is that clearly the traffic is up across almost across all the brands and across almost all the regions. So brand by brand, you could find some regions where the traffic is flattish or sometimes negative, but overall the traffic is up, meaning that there is in all markets much appetite for luxury products. And the more traffic you are, generally you have an impact on your conversion rate because some people will not buy. Then you have some specific situations which can be linked to the offer, the quality of the staff in the store, so that it can have an impact on the conversion rate. So clearly on that side, this is something we need to work on to stabilize, let's say, the conversion rate in the store. When it comes to digital, clearly the conversion rate is I think quite comparable or let's say quite consistent with the conversion rate we had in the past. But here there is a question of traffic with less people coming to buy online. But the conversion rate online is fundamentally different from what you can see in the store. It's far lower. Yeah, so anyway, we are happy because we see these people coming wherever to the stores, which is good also. But the conversion rate in online has not deteriorated so massively. There is more question of traffic.

Okay.

Yeah, maybe last point.

I had one. Yeah, one quick one. Sustainability, you've been a leader there. What do consumers care about most? I know this could be two hours, but from a consumer perspective, anything that you would want to mention in terms of demand and the ability for the consumer to really value that and or younger versus older consumers? Thanks a lot for taking my questions. Best regards.

Thank you. In fact, it could take hours indeed. I think what is important is about, I think, something I would mention is traceability, how we source the raw materials, then how the products are manufactured. That's really what is important for the young customers, not only the young customers, by the way, but mainly the young customers, and globally the impact on the planet, meaning the use of natural resources. which is really important, or at least when there is an impact, how we can offset that impact through different initiatives around regenerative agriculture and other initiatives of this nature, initiatives to to offset CO2 emissions and so on. And of course, the questions around alternative materials we are working on. That's the reason why we have R&D around alternative materials and we are investing in some startups. to find alternative materials. So we cannot really say that it's necessarily an engine for additional sales, but it's more and more a question that the clients are asking. And just to close the circle and coming back to the initial question of Luca, it's all about training or sales associates so that they can have that type of discussion with the clients. So thank you very much for all your questions. We are very happy with Claire to be able to take all your questions. It was a long session and sorry for that. And thank you for your patience. Thank you all for being on our call and for your good questions and very relevant questions. Please note that we will report our 2023 first half earnings on July 27 after market close with a conference call scheduled for 6 p.m. Paris time as usual. In the meantime, as always, with Claire and her team, we remain fully available to answer any questions you still have. We wish you a very nice evening or day.