Kering Sa Ord

Good morning to all of you and welcome to Kering's 2023 Full Year Results presentation. 2023 was a mixture for Kering. Market conditions began to deteriorate as many of our brands were evolving their operating models. And of course, as a consequence, our performance did not match our expectations. Against this backdrop, well, we made a series of far-reaching decisions, both to speed up the transition and to seize opportunities for the long term. As you've seen in the news release, I have decided together with our executive team that despite the current uncertain environment, well, we should not reduce our investment in the future. Our top priority is to continue to enhance the exclusivity and the desirability of all of our houses, and of course, first and foremost, Gucci. This will cause some pressure on our result in the short term, and I am absolutely determined to make this short-term pain pay off in the long term. So this morning, I will first go over last year's key takeaways and our priorities for 2024. Then Armel Poulou, Caring Chief Financial Officer since last September, will then review our 2023 operational and financial highlights. And then finally, together with Francesca Bellettini and Jean-Marc Duplex, Caring Deputy CEOs, we will be available to answer your questions. So let's start with a few key 2023 numbers. Our revenue came just shy of 20 billion euros, and our recurring operating income resulted in a margin of over 24%. Cash flow remained strong at 3.3 billion euros, excluding the real estate acquisition and disposal that we did last year. We globally employ 49,000 people around the world, and we enjoyed the highest environmental, social and governance ratings, and this is rewarding the pioneering efforts that Kering has made from the start. In line with our long-standing strategy, we dedicated much of our 2023 efforts to nurturing the desirability and exclusivity of our houses. We continue to invest in creation, to invest in communication, distribution, and in our ateliers and production setup. So let's start with a look at our collections and their creations. At two of our culture houses, new creative directors were hired last year with the goal to re-energize the collections while it is very important staying true to their respective DNA. Sabato de Sarno joined Gucci in May and presented his first collection last September. And Sean McGuire was appointed at Alexander McQueen in October. His first collection will hit the runway next month. Both Sabato and Schoen will give a new impetus to these very different but highly influential brands. Our houses staged some of the most visible celebrated shows in the year's fashion calendar last year. In addition to Gucci, the spring-summer 2024 shows of Bottega Veneta and Saint Laurent were acclaimed high points in the Milan and Paris scene last September. Intense creativity characterizes all of our houses as evidence across their collections in art as well as soft luxury. For example, Bouchon's audacious More is More collection that was launched last July challenges the traditional understanding of what high jewelry is about. Bottega Venetas and Yamo line of handbags represent a modern take on the understated but relevant luxury, and that is part of the brand's idea of what we call creativity in motion. Saint Laurent women's ready-to-wear collection, shown in Paris in September, continued to affirm the prominent positioning of this magnificent house. Turning to communications, 2023 was a year of in-depth reassessment of each of our houses in order to best convey the desirability and exclusive positioning. They leveraged the full range of instruments at their disposal to effectively engage with their existing and potential clientele. So powerful campaigns have been launched and even more are in the making focusing both on the brand's value and culture and on specific icons and new products. In addition, our houses carry out a steady stream of events ranging from intimate VIC engagement to large exhibitions such as Gucci Cosmos that was held in Shanghai and in London last year. And those events aim to strengthen the bonds with a broad base of customers and raise the understanding of our brand's heritage and cultural relevance. Providing the most gorgeous setting for our collections is an imperative to support the brand desirability. And of course, it guides our distribution strategy. In line with this priority, we've had a very active 2023. We significantly enhanced our retail network in key markets with selective openings as well as important transfers, extensions and upgrades in prestigious locations. We focused our new store openings on cities or districts offering the highest potential in terms of traffic, of course, but also in terms of disposable income. And in addition, we opened a few resorts like Aspen for Bottega Veneta or Capri for Saint Laurent. We also opened new flagships such as Saint Laurent's largest store to date on Paris Champs-Élysées, showcasing the brand's new store concept in what has become a prime luxury avenue. After years-long renovation, Gucci returned to its Via Montenapoleone flagship in Milan, which represents a good transition to a new store concept that will come in the future for the brand. Other highlights of the year include the reopening of a radically transformed Bottega Veneta store, and this is on Paris Avenue Montaigne, Or I could mention also Boucheron's cut-in-edge Ginza flagship in Tokyo, which is the second in size after the Paris Vendôme store. In addition, we are pursuing our wholesale rationalization strategy, focusing on the most exclusive partners across the world. Creating products of absolute quality is another essential requirement of all of our houses. and this entails exercising a stringent control over our entire supply chain. In this regard, we have taken several steps last year to further integrate our product development and production, expanding existing ateliers, opening new facilities, and also acquiring some of our suppliers. For example, Saint-Laurent relocated and expanded its atelier maroquinerie in a 28,000 square meter site outside of Florence. A specialized Bottega Veneta shoe workshop went on stream in the Veneto footwear district. It was last June. Boucheron acquired a Paris atelier specializing in high jewelry while carrying high wear, but UNT, a manufacturer of high precision components. we intend to retain flexibility in our production. And greater integration, in particular of key activities such as product development and research, enables us to strengthen in-house training to secure valuable skills and to sharpen our craftsmanship excellence. In the past few years, while sustaining core collection and the business of all of our houses, we also invested in new categories and client experiences at some of our brands. Bottega Veneta's success in fashion jewelry is particularly noteworthy, as is Gucci's continued foray in aisle jewelry. Saint Laurent, for example, established a movie production unit working with such renowned directors as Pedro Almodovar or Paolo Sorrentino. And this is to magnify the brand aura in new directions. You have all seen how taking our eyewear activities in-house gave us direct control over a crucial entry-level category that we turned into a full-fledged element of each brand's aesthetics and image, featured in the ads and shows. So we have grown Keying Eyewear in a meaningful way. In 2023, we added Maui Gym, so today Kering Eyewear weighs 1.5 billion euros in annual revenues, making it the world's second largest luxury eyewear maker. Beauty, and notably fragrance, is another key adjacent offering that some of our houses must control and offer directly. It is an attractive business, particularly at the top end of the pyramid. After long and careful consideration, we stepped up the pace of our development in beauty last year, first with the creation of Kering Beauté and then with the acquisition of Creed, a beautiful brand, highly profitable and with great recognition among high-end consumers. We have always been open to welcoming complementary houses to our stable of brands. And Valentino, a house with a long-standing Italian haute couture positioning, had long been on our radar screen. And we are obviously very pleased with our acquisition of an initial 30% stake and we look forward to the next steps in our journey together. Sustainability remained at the forefront of our strategy in 2023 as we keep pursuing our targets. We also last year defined new key milestones for the future. The year was pivotal in transitioning our model to address the environmental crisis with a dual focus on nature and on climate. We became one of the 16 companies worldwide piloting the science-based targets for nature program. At the same time, we launched a new call for projects through the Caring Regenerative Fund for Nature. On the climate front, we announced a new objective of reducing by 40% in absolute terms our greenhouse gas emissions for Scope 1, 2 and 3 by 2035 from a 2021 baseline. Our efforts are earning us recognition from the most demanding ESG ratings. Earlier this week, we were awarded a AAA score from CDP Worldwide, the Carbon Disclosure Project, which is a clear testimony of our dedication to climate, water and nature initiatives. Innovation remains paramount. Alternative and sustainable materials are making ever greater inroads in our collection. And for example, last year Balenciaga launched the first coat made from mycelium leather developed by an Italian startup in which we invested. In conclusion, everyone should be aware that this transformation will continue to reshape the way we do business, the way we support jobs, the way we develop skills, and even the way we create value. Before turning to our 2024 priorities, I would like to share with you a brief video showcasing some of the year's highlights at our houses and activities. Easy year. So now turning to 2024, as I told you earlier, our overwhelming priority is getting Gucci back on track. And I will talk to you about how we are doing this, of course. And I will also give you a bit more insight on one another major 2024 project, which is the operational launch of Caring Boutet and the integration of Creed. So let's look at Gucci first. Taking Gucci to its next stage is the main focus of our attention under the leadership of Jean-François Pallu. In less than six months, he has made gigantic headways in assessing where we stand and designing the roadmap for the next years. Among the world's handful of mega brands, Gucci enjoys a very strong awareness, a unique positioning spanning luxury and fashion. Its influence has always come from a subtle blend of craftsmanship, Italianity, heritage on the one hand, and modernity and fashion authority on the other. In the past few years, however, Gucci has not kept pace with its peers. In fact, it was slow to evolve its brand aesthetic in the wake of the pandemic. Its communications messages lost focus and blurred the brand's perception. The necessary balance between fashion and exclusivity, which supports the house ability to attract a broad range of consumers, was a little bit diluted. But however, Gucci retained all its strong awareness, which is a very solid base for every new start. Of course, Gucci belongs in the Premier League. Gucci is a cultural icon the world over. We leverage its unicity, its solid grounding in luxury and fashion to reach our ambitions. We are executing sharply on an evolving vision of what the house stands for. We aim to be relevant across everything the brand does, and I don't mean just products and collections. In fact, creativity and agility must be at work everywhere and not just in the studios. We are putting in place a new operating model that fits its 10 billion euro status. The organization has always had its eyes on the next collection. Well, of course, we want to retain this agility and at the same time strengthen our ability to plan ahead, to expand our time horizon to the next 12, 24 months and beyond. We have significantly reduced the weight of wholesale, but we haven't fully moved away from what I call a wholesale-driven mindset. Here we need to always push retail and clients at the core. Now we are moving faster, we are cutting down time to market, and defining a new paradigm for production and merchandising. Gucci is bigger than any individual. The creative director as well as the corporate leadership are custodians of the brand and the house. They need to work together, respecting rules and balancing competences. And today, with Sabato de Cerno, we have a great designer who puts his creative ability at the service of the brand to make it shine. Of course, none of this will happen overnight. The assessment stage is nearly complete and the implementation phase is on the way. The new collection will gradually be arriving in stores starting this month in February. The new operating model is being implemented at headquarters but also at regional level and new talents are joining the brands in key functions. With each step, Gucci's new vision is taking shape. The strategy we are implementing rests on four pillars that you will see flourish in the coming months. Enhancing consideration first means being consistent with the brand image in everything we do and staying grounded in a well-defined creative universe, adhering to the brand key attributes while at the same time re-establishing the core role of leather goods. As you have started to see, communication aims at creating emotion, cultivating desire and amplifying the brand narrative. But there is a lot more to do. Gucci is a cultural institution, so it must leave and breathe luxury in everything it touches. Another major pillar of the strategy is to enhance exclusivity at the level of product and collection, better monitoring the contribution of each individual SKUs, reducing special projects, completing the offer from the entry point level all the way to ultra luxury products, and curbing availability on certain items. In distribution, we are conducting an exhaustive review of our footprint, and we will start to close a few outlets as early as this year. A key imperative, of course, is never to compromise on quality, both in terms of products through the entire development and manufacturing cycle and of stores where a new concept fully identifiable and unique to the brand itself will eventually be rolled out. Quality of in-store experience is another area of focus and part of a broader skills improvement process. We are revising the entire structure, transforming processes and deploying resources more effectively so that our organization is truly adapted to the scale of the house. Enhancing efficiency also requires the right talents at the right place. The arrival of Massimo Vian as Chief Industrial and Supply Chain Officer is an important step in this regard, and there will be more announcements in the very near future. To assess our progress along this journey, Jean-François and his team have defined a set of KPIs relative to every dimension of the business. So as you see, we are moving with determination to get to the inflection point. Now turning to Kering Beauté, the steps we've taken in 2023 to get our beauty business up and running are laid out in more details here. We have the team in place, we have a strategy ready for implementation, the first prototype of perfumes, and now the platform and production setup to get onto the next stage as early as this year. Beauty represents a sizable opportunity for top fashion players and one that we have not fully harnessed to date. It is steadily growing and sizable market. And of course, the most natural relevant starting point is with fragrances. This is a category whose essence should be fully aligned with the DNA of the brands. So to begin with, our focus is squarely on the summit of the fragrance pyramid, which is high-end and then prestige. Fragrance magnifies the visibility, the desirability of luxury houses over a greater universe, driving recruitment and widening the accessibility to the brands. So as you see, we have a straightforward roadmap for 2024 and the coming years. Then in CREED, we bought a century-old first-year brand that has a huge potential ahead of it, and we will drive it forward in terms of categories, particularly with women, for instance, or in terms of geography, particularly in China, where it is underrepresented. We are also starting to leverage the expertise Creed has accumulated over all these years in terms of sourcing, in terms of distributor and retailer relationships, logistics, or in marketing and sales. So as a result, we will be ready to launch our first fragrances for Bottega Veneta in our own stores and selective doors before the year is over. And then Balenciaga and Alexander McQueen should be the next in line. and we will continue to scale up the business. We are convinced that we are following the right strategy here and we are building the right platform around CREED to reach our ambitions with Caring Bote. Our 2024 operating priorities are quite straightforward. Our capital allocation priorities are unchanged. Our healthy financial situation provides us with the resources to re-establish good ship remnants, to get carrying bodies off the ground, and to smartly support performances across the group in a tougher environment. So we will continue to invest in all our activities with an eye on the long term. However, short-term pressures might lead us to privilege certain houses or certain projects. The Board has approved our recommendation to maintain the 2023 dividend unchanged at €14 per share. And this decision is an acknowledgement of our healthy financial situation and above all, a testimony of our confidence in the long term. And we retain the flexibility to look at opportunities that might arise, even if the health and potential of our existing houses is our top focus. In the past year, we have also taken advantage of changing market conditions to secure prime and coveted sites for our brands in some of the world's most desirable locations. That being said, when it comes to retail, I want to make it very clear that we do intend to remain primarily operators and not landlords. So to conclude, we are at a pivotal moment in our journey. In our first 10 years as Kering, as an integrated pure player in luxury, our top priority was to scale up our houses and we successfully raised their visibility and desirability. We also engaged in a very selective M&A activity and as a result, over this period, we built a powerful group. We triple annual revenue from our luxury businesses. Organically, we quadruple sales from jewelry, getting close to the 1 billion euro mark. We also developed adjacencies in eyewear and now in beauty, worth close to 2 billion euros in revenue on a full year basis. We also enjoy a solid retail presence around the world. And here in 10 years, the share of our own network in our revenue has gone from 17 percentage points, excluding carrying eyewear. As you know, carrying eyewear is essentially a wholesale business. And if you include carrying eyewear, we still improve by 10 points the weight of our own stores on our revenues. So over the decade, we spent over eight billion euros in capital expenditures, excluding real estate acquisitions. And our communication expenses grew slightly faster than our revenues, bolstering the visibility of our houses. I have no doubt that the strategy that has gotten us where we are in the space of 10 years is the right one, even if the recent period has not been up to our previous track record. We've been able to scale up our houses to get them to the level of influence they deserve, to turn them into serious, relevant contenders in the universe of fashion and luxury. Now we need to make them even more visible and desirable. To unleash the full potential of all our activities, our number one imperative is to further cultivate our brand exclusivity. And it is from this perspective that we assess all customer touchpoints across our houses, collections and products, communications and stores. Our new organization, announced last July, improves its interaction between our houses and the corporate functions. And this is key to reaching our goals and secure the path to long-term growth of the group and all its components. And now I will ask Armel Poulou, our CFO, to review for you our performance in 2023. Armel, the floor is yours.

Thank you, François-Henri. And good morning to all of you. Let's start with some highlights of our financial results on slide 21 and 22. Full-year revenue came just short of the 20 billion euro mark at 19.6 billion, down 4% reported year-on-year and 2% comparable. To bridge comparable and reported figures, we had a 2% positive scope impact as Maui Gym was consolidated over the whole year versus only three months in 2022 and Creed was included for the last two months of 2023. FX represented a 4% headwind, a significant swing versus the prior year. Looking at our geographical mix, the major change comes from the weight of North America, down 4 percentage points to 23% of total. Conversely, Asia Pacific was up 3 points at 35% of full year revenue. The weight of the other regions did not move much. I will review the trends by regions later. In Q4, revenue was down 4% comparable and 6% reported, with a one-point positive scope impact and a three-point negative impact from FX. 23 was a year of significant investments in our future growth. At 4.7 billion euros, recurring operating income was down 15%. Full year operating margin dropped 320 basis points to 24.3%. The positive impact of the execution of our strategy, notably higher AURs, was partly offset by further investment in product quality and inventory management. To support our brand's strategies and visibility, we sustained operating expenses, notably in communications. The H2 margin at 21.3% was further impacted by negative top-line trends despite good cost control. At 3.3 billion euros, our free cash flow generation, excluding the impact of real estate transactions, was healthy, a touch higher than 2022. Including real estate, it is close to 2 billion euros. CapEx, excluding real estate transactions, at 1.2 billion euros, increased by 15%. It supported the development and enhancement of our housing stores and production capacities. The capex-to-sales ratio was 6.3%. Our operating working cap stood close to 18% of revenue, a contending increase compared to the prior year. Net debt was 8.5 billion euros at your hand after an active year on both the M&A front and in terms of real estate. In addition to CREED and the Valentino stake, we acquired prestigious buildings in Paris, securing prime locations for our houses near Place Vendôme and on Avenue Montaigne, and sold a building in London. and we paid 1.75 billion euros in dividend, a 15% increase year on year. On slides 23 to 25, a deeper dive into revenue. First, by channel, retail contributed 78% of total revenue, with the balance coming from wholesale, royalties, and other. Saint Laurent, Bottega Veneta, Balenciaga, Boucheron, all generated more than 80% of revenue from retail, while Gucci exceeds 90%. In the full year, retail was unchanged in comparable terms, with contrasting trends between the two halves, up 4% in H1, down by the same percentage in H2. In Q4, retail was down 2% comparable, a 4% point sequential improvement on an easier-come base. Included in retail, e-commerce dropped sharply, down 18% comparable in the full year. It accounted for 12% of retail sales. Not including the integration of Creed, our houses added 89 net units to their store count. Our footprint expanded on a mix of increased penetration in recent or well-established markets and conversion into directly operated stores. Wholesale and other revenue was done 11% comparable in 2023. Consistent with our move towards greater exclusivity, together with the challenging situation in the US, wholesale was down a material 21% for our luxury houses. The shift towards increased control of distribution does entail a dose of short-term pressure. Focusing on Q4, wholesale and other revenue were done 12% comparable. For our luxury houses alone, wholesale decreased by 22%. For their part, carrying eyewear and royalties posted very good performances, up 10% comparable in the full year. Now, turning to retail trends by geographies on slide 24. In the fourth quarter, Western Europe remained in negative territory, down 8% year-on-year, a slightly better trend than in Q3. Local demand, accounting for roughly 55% of the total, was still a drag but less material than in the prior quarter. Purchases by tourists were a touch below last year, the positive trend from certain nationalities, notably Chinese, not fully offsetting the drop from American visitors. Looking at the full year performance, Western Europe was roughly unchanged, although tourism spending was still 10% below pre-COVID levels. In North America, after nine very challenging months, Q4, down 11%, showed an improvement on easier comps. Most of our houses were still impacted by lower traffic. For the full year, North America was the most challenging geography, down 18% in retail, with the US cluster pretty much in line with the region. Japan posted a good fourth quarter, up 13% year on year, yet with a sequential deceleration. Weak local demand was more than offset by strong tourism spending, representing close to 40% in Q4 and mostly coming from other Asian countries. On a full year basis, Japan retail was up 23%. Asia Pacific recovered mildly in Q4, up 8% on the undemanding ComBase. Greater China accelerated sequentially, but the magnitude of this improvement was somewhat underwhelming. The Chinese cluster, up 35% year-on-year in Q4, posted a nice sequential acceleration. Trends in Korea, although still negative, also improved in the quarter. For the full year, retail in Asia-Pacific was up 10%. Finally, rest of the world was broadly unchanged in both Q4 and the full year. On slide 25, you will find our revenue by segment for Q4 and the full year. In Q4, the trends were comparable across our houses, down 4 or 5%, but with quite different dynamics by region or channel. Revenue from the clearing eyewear and corporate segment was up both in the quarter and full year, on comparable as well as reported terms, which include the consolidation of Maui Gym and Creed. I will now comment on our individual houses, starting with Gucci. Revenue for the full year came close to 10 billion euros, down 6% reported and 2% comparable. Retail, also down 2% comparable, accounting for 91% of sales. Wholesale decreased by 5% and royalties were up 11%. In Q4, retail was down 4% comparable, with trends improving in North America and Asia Pacific. Product-wise, Gucci showed good resilience in leather goods and women's ready-to-wear. The quarter was marked by a host of events following Sabato de Sarno's maiden fashion show in September. Gucci unveiled its inaugural evening wear collection, Ancora Notte, at the LACMA Film Festival. Milan's Monte Napoleone flagship reopened in December after a full renovation, blending tradition with contemporary design, celebrating the essence of the city and made in Italy. The very first creations from the spring-summer collection are just starting to hit the shelves, with a gradual ramp-up due to take place in the coming months. Not including any deliveries from this collection, wholesale was up slightly. Gucci posted full-year recurring operating income of 3.3 billion euros, a 33.1% margin, 2.5 points below last year. To sustain its future performance, Gucci pursued its investment in such key areas as stores, communication and clienteling, prompting operating delivery, especially in the second half. CAPEX was up, supporting Gucci's exclusivity focus through a mix of refurbs, reopening and relocations, including landmark stores in Milan and London. The net store count increased by 10 units. Starting from slide 29, some highlights on Saint Laurent. At 3.2 billion euros, full year revenue was down 4% reported and 1% comparable, a contrasted performance on a very high comps 2022, having been a remarkable year. The drop came from wholesale, down 22%, with rationalization well underway. For its part, Ristel was up 4% comparable and represented 81% of revenue. Focusing on Q4, retail was unchanged. Saint Laurent enjoyed strong performances in Asia Pacific and Japan, while Western Europe and North America, though still negative, improved sequentially. By product category, leather goods were fueled by the appreciation of new launches and ready-to-wear fall and winter collections were very well received. Wholesale was down 39% comparable in Q4, reflecting both the impact of rationalization and our cautious approach towards the US market. Recurring operating income was €969 million, yielding a 30.5% margin. Gross margin was up on channel mix, and the house continued to invest in brand and client experience to support its elevation strategy. CapEx was up with 28 net openings this year. Store investments were aimed at deepening Saint Laurent's penetration in various markets and for the opening of landmark locations, including the Champs-Élysées flagship. The house also inaugurated a new leather goods atelier outside of Florence. Now, moving to slide 32 to review Bottega Veneta's performance. Bottega Veneta's full year revenue was 1.6 billion euros, down 5% reported and 2% comparable. Here as well, the drop in revenue is entirely due to wholesale as continuing rationalization translated into a 24% comparable decline. Retail, accounting for 82% of sales, was up 4%. In Q4, retail was solid, up 5% comparable. The house posted strong growth in North America and was resilient in Western Europe, both with locals and tourists. We achieved encouraging performances in mainland China, where Bottega deployed sizable investments to amplify brand resonance. Firmly positioned in the ultra-high-end segment, Bottega's growth was driven by the high desirability of leather goods and ready-to-wear collections, consistent with the impressive reception of its recent fashion shows. Bottega's sound growth is fueled by a continued increase in AUR on a healthy mix of existing and new clients. Wholesale was down 37% in Q4, in line with the strategy of exclusivity. Recurring operating income was 312 million euros, a 19% profitability, two points lower than in 2022. Gross profit margin was up on product and channel mix, as well as pricing. However, the timing was right for Bottega Veneta to reinvest in collections, communication, stores and client experience to strengthen its momentum. CAPEX is up on store network upgrades. Openings remain highly selective and including some revitalization. The focus is still on strategic relocation and store enlargement. From slide 35, our other houses which had a challenging year. At 3.5 billion euros, revenue in 2023 was down 9% reported and 8% comparable. Wholesale was 29% down as our main soft luxury houses continued to tighten control over distribution, but also faced lower orders. Retail, accounting for 72% of sales, was up 3% comparable. In Q4, retail was up 4% comparable, with all houses up except Balenciaga. Trends in wholesale were consistent with the full year. In soft luxury, Balenciaga went through a complex year with sharply contrasting trends, down materially in Western markets and up significantly in Asia Pacific and Japan. Q4 was no exception on the retail side, although both Europe and North America showed some improvement on easier comps. Ready to wear and shoes perform well, especially for men. The House recently resumed more visible initiatives, with a fashion show in Los Angeles, new campaigns, and new ambassadors. Alexander McQueen also had a challenging year, and Q4 stemming from the heavy impact of wholesale. Retail was positive on the back of its core ready-to-wear offer. The house is getting ready for a busy 2024 with Schoenmacher's first show and refreshed communications. Brionif's very solid performance during the year and in Q4 was fueled by its bespoke and formal offer together with the appeal of its leisure wear proposition. Our jewelry houses continue to show strength in Q4, ending another year of double-digit growth with total revenue close to 900 million euros. Delicately combining tradition and creativity in its high jewelry and jewelry offerings, Boucheron delivered another year of high growth, consistently reinforcing its position, notably on Asian markets. Pomellato pursued its steady growth trajectory and Kilin posted another strong performance. Recurring operating income of the other houses was €212 million, a steep year-on-year decline resulting in a margin of only 6%. With unsupportive top-line trends and lower wholesale revenue, Balenciaga and Alexander McQueen had less capacity to absorb their fixed cost structure, which has expanded as they shifted towards more retail. By contrast, results were solid for our jewellery houses. CapEx was up 12% as our houses continued to enhance their direct presence. Now, turning to Kering Eyewear and our corporate segment, which includes Kering Bote. On slide 39, revenue at Kering Eyewear passed the 1.5 billion euro mark this year as expected. Comparable revenue was up a solid 10% in the full year. Reported revenue was up 35% thanks to the material contribution from Maui Gym. Q4, up 6% comparable, confirms the successful development of the category and portfolio of brands. Revenue for the segment as a whole was 1.6 billion euros as we consolidated CREED from November onwards. Recurring operating income of the segment as a whole was minus 7 million euros, a notable year-on-year improvement. Gain High Wealth Operating Income stood at 276 million euros, delivering a strong profitability at 18.4%. This level is not fully normative at this stage, as some reinvestment will still be needed to further expand the global reach of Lindbergh and my regime. Guérin-Beauté had a slight positive contribution, the integration of the highly profitable creed more than offsetting startup costs. As for corporate costs, they were stable year on year. CAPEX stood at 1.6 billion euros, mainly comprising the acquisition of three prestigious buildings in Paris for 1.4 billion euros. We have summarized the remaining lines of the P&L on slide 40. Other non-recurring operating result was negative 103 million euros, a 91 million improvement compared to 2022. The gain on disposal on the sale of a building in London mitigated various impairments, reorganization costs and M&A related expenses. Net financial charges amounted to 410 million euros compared to 260 million euros in 2022. They included interest and leases liabilities for 150 million euros. Excluding this, financial charges were 259 million euros compared to 136 million last year. Cost of net debt at 108 million euros was up on the back of higher average outstanding debt. We issued three multi-trench bonds under very favourable financing conditions in higher interest rate environments. But conversely, we benefited from a higher income on our deposits. Other financial charges were €151 million, mostly including the ineffective portion of hedging and other FX-related impacts. Restated for the recognition in 2022 of a fair value gain on Puma exchangeable bond derivatives, other financial charges decreased by €44 million. Corporate tax amounted to 1.2 billion euros at 27.4% tax rate on recurring income, consistent with our normative tax rate. Group net income from continuing operations, excluding non-recurring items, exceeded 3 billion euros, an 18% decrease year on year. A few comments on free cash flow on slide 41. The slight improvement in free cash flow generation, excluding real estate, at 3.3 billion euros, came from a more limited change in working capital due to tighter inventory management and from lower income tax paid. Including real estate acquisition and disposals, free cash flow was close to 2 billion euros. On the bridge on slide 42, you can observe the main components underpinning the change in our net financial debt. We paid 1.75 billion in dividend and devoted close to 5.5 billion to financial investments, mostly Creed and Valentino, with a few minor investments in strategic suppliers. We continued to trim our stake in Puma and were down to 0.4% ownership at December 31st. Our net debt at year end stood at 8.5 billion euros, a net debt to EBITDA ratio of 1.3 times. A quick look at our balance sheet and financial structure on slide 43. Total asset and liabilities increased by 7.5 billion euros and we consolidated CREED as we consolidated CREED, our new real estate properties and equity accounting accounted our 30% stake in Valentino. Our net debt to equity ratio stood at a healthy 53%. At 4.5 billion euros, our inventories remain broadly stable in value year on year, but decrease significantly in quantities, down 12% as a result of tight inventory management across our houses. Operating working cap was a bit higher than last year, close to 18% of revenue. My final comment will relate to the dividend on slide 44. The board of directors has proposed a dividend of 14 euros per share. The payout is consistent with our longstanding policy as a percentage of recurring net income and illustrates our confidence in continuing to generate significant cash flow. We paid an interim dividend of 4.5 euros last month, and the balance should be paid in May, pending AGM approval. This ends my remarks, and I will turn the mic over to François Henry.

Thank you, Armelle. As you see, we intend to pursue our long-term strategy with serenity and determination, and of course, despite the tougher conditions on the market that we foresee in the near future. Of course, we will remain very agile, very vigilant before engaging any OPEX or CAPEX, but we will make sure that our houses get the full support they need for their journey. So now we are ready to take your question.