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.