Kering Sa Ord

Good morning, everyone, and thank you for joining us this morning. We are pleased to welcome you to our Caring 2025 Folio Results. We are here with Luca De Meo, CEO of Caring, Jean-Marc Duplex, CEO of Caring, and Armel Poulou, CFO. This presentation will be followed by a Q&A session. Luca, the floor is yours.

Thank you, Philippine. Good morning, everyone. Very happy to be with you today. Of course 2025 was not the year we wanted. I think it didn't reflect the full potential of Caring and we all know it here. But what matters is our response. Swift, disciplined and unwavering. Since the second half of the year I can assure you we have been taking action decisively to put the group back on the right trajectory. I think we're still far from where we want to be. We don't have everything in place yet, but we're building every day with focus. Our objective is clear. Reignite desirability. and prepare the next cycle of growth, house by house, product by product, client by client. So 2025 was a turning point, not because of the numbers, but because of the decision we started to take. And I want to thank Francois Henry and the Caring Board of Directors for their trust, their support. This trust allowed us to move fast, and to start shaping the strategy we will present during our Capital Market Day in May. Over the last month, we strengthened our financial flexibility, we reshaped parts of our portfolio, and we made bold strategic moves to give our houses the space and the time they need to regain momentum. A very important step, of course, was the partnership with L'Oréal. It allows us to accelerate the development of our beauty business with the number one player in the world, unlocking power that we could not reach alone. And also prepare our entry into the high growth, wellness and longevity segment a space where we want to play and where we know value and growth will be created. In jewelry, the progressive acquisition of Razzelli Franco, I think, reinforces our industrial capabilities in a category where we see tremendous potential. It gives us more control, more know-how, and more capacity to scale. And this is only the beginning. Sharing the full ambition of our jewelry strategy is, of course, also on the agenda of the Capital Market Bay. In parallel, we started to reinforce our operational discipline while protecting everything that makes our houses desirable. 75 fewer stores in 2025 net a sharper, higher quality retail footprint. 8% reduction in inventories at the year end, and we will go further in 2026. 925 million in cost savings, down 9% compared to 2024. Improving our agility and focus while preserving creativity and craftsmanship. On sustainability, I want to say that Caring remains At the forefront in 2025, it's a real competitive advantage, recognized again this year with our CDP AAA rating for the third year in a row. But beyond recognition, we focus on delivery, closing our 10-year sustainability strategy and already shaping the next chapter, which we will present, of course, at the CMD. For us at Caring, sustainability is not a separate agenda. It guides the way we create, source and operate the business. Producing less but producing better will remain a core principle to protect our brand equity, our clients and our environmental footprint. 2025 also marked the beginning of a creative renewal across houses. new creative leadership, new expression between heritage and innovation at Gucci, at Bottega Veneta, at Balenciaga. I think the feedback is encouraging. We are not celebrating anything yet, but I believe the momentum is building step by step. And one conviction has become even stronger week after week, day after day, creativity is our North Star. It is what sets luxury apart, that creativity only becomes value when execution follows at the same pace in retail, in supply chain, in merchandising, in marketing. This is where we are putting our energy into. On the ground, the acceleration, I believe, is already visible. I spend time every weekend in our stores, seeing the teams, talking to clients, feeling the product. And I can tell you there is energy coming back. Our products are reconnecting with our clients. We saw progress in Q3 and Q4, with sales trends improving quarter after quarter. The momentum is real, early, fragile, but real. Ends I can guarantee you that we will build on it. Before handing over to Armel, let me highlight the key figures for the year. Excluding Caring Beauté, revenue for 2025 amounted to 14.7 billion, down 10% on a comparable basis. with a clear sequential improvement throughout the year and Q4 at minus 3 on a comparable basis. This revenue level reflects the low point of the cycle and the starting point of our rebound. Recurring operating income reached 1.6 billion, corresponding to a 11.1% EBIT margin showing the impact of course of a difficult top line. Operating income will now start to benefit from the first effects of our work on top line and efficiency. Free cash flow amounted to 4.4 billion, including real estate transactions. And finally, net financial debt decreased by 2.5 billion to 8 billion, even before the impact of the L'Oréal transaction, which will close in the first half of 2026. These results are not where we want to be, but they mark the bottom and the first steps of the turnaround we have initiated. Armel will now take you through our operational and financial performance in more detail. Armel, over to you.

Thank you, Luca. and good morning to all of you. As you have clearly stated, 2025 was a turning point within it. The figures I will present confirm this low point. But let's be clear, these numbers establish a starting line from which we are now driving our turnaround. And they are the evidence of the financial discipline that underpins our strategy. Let's start with revenue on slide eight. As a reminder, in accordance with IFRS 5, Kering-Bauté has been deconsolidated from our fiscal year 2025 accounts and has been restated from 2024 figures to provide proper comparison. So all figures discussed in this presentation exclude Kering-Bauté. Full year revenue reached 14.7 billion euros, down 10% in comparable terms, and 13% reported. Forex was a three-point headwind, mostly due to the strengthening of the euro against the dollar and the yuan. The scope effect was immaterial, linked only to the turnover from the mall for one month, disposed of in January 2025. but the annual numbers don't tell the whole story. The critical point is the sequential improvement we delivered throughout the second half with Q4 showing a clear acceleration. This tells us our actions are starting to gain traction where it matters most, with our clients. Our geographic footprint remains well balanced across regions, Within this stable profile, we saw some mixed adjustments during the year. Asia-Pacific declined by 2.29%, while North America and Western Europe each gained 1 point. Japan and the rest of the world maintained their respective shares. Slide 9 shows that throughout the year, we saw a gradual recovery with Q4 coming at minus 3%, representing a sequential improvement versus Q3, despite a more demanding calm base. The acceleration in trends was visible across all segments, returning to positive territory, except for Gucci. At group level, in Q4, AUR grew by a single digit with only a minor impact from pure price increases, reflecting our actions to improve the mix within our brands. Conversion rate improved slightly, which is also encouraging. On the other hand, traffic remained soft. December, despite facing the toughest comparison base of the quarter, delivered the performance slightly better than we expected and remained consistent with the overall quarterly trend. On slide 10, let's take a closer look at revenue by channel. Retail, including e-commerce, accounting for 76% of total revenue with a balance coming from wholesale, royalties and other. For the full year, retail declined 11% comparable with improved trends in the second half. After a nine-point sequential improvement in Q3, our retail channel, which is the heart of our business, saw its performance improve by three points in Q4 versus Q3, ending the quarter at minus 4% comparable despite the tougher comparison base. This progression was driven by a strong AUR, but also by some improvement in volume trends. Included in retail, e-commerce was down 12% comparable in 2025 and represented 11% of retail sales in line with last year. Online performance also improved progressively throughout the year. Wholesale and other revenue declined 7% on a comparable basis in 2025. Consistent with our move towards greater exclusivity, together with the challenging market situation in some regions, wholesale was down 19% for our luxury houses. We have delivered on our plan to strengthen the control of our wholesale distribution, bringing down wholesale revenue for our luxury houses in line with the target we set in February 2024. In the fourth quarter, wholesale and other revenue were down 2% on a comparable basis. For our luxury houses, wholesale posted a sequential improvement with a decline contained to 9%. Kering Eyewear reported a solid and consistent wholesale performance, up 3% in 2025 and in the fourth quarter. Royalties and other revenue were up 6%, both for the full year and in Q4. Now, turning to retail trends by geography on slide 11. As you can see, we registered a sequential improvement in three of our five main regions in Q4 and a sequential improvement in all regions if we look on the two-year stack. Western Europe was down 7% in Q4, in line with Q3, despite a tougher comparison basis. On a two-year stack, however, retail sales in Europe have improved four points, restated from Kering Bote. Tourism remained weak, affected by the decline in Asian visitors. Local demand, accounting for 51% of the total, was still subdued, though not consistently across brands. Saint Laurent returned to growth in the region. For the full year, Western Europe was down 11% on a comparable basis. In North America, Q4 delivered a 2% comparable growth, maintaining solid momentum with only a 1-point deceleration versus Q3, despite a 5-point tougher comparison basis. The higher-end segment performed better, and importantly, Gucci was flat in Q4 versus last year, marking the end of the decline in the region. For the full year, North America was down 5% in retail, with the US cluster broadly in line with the region. Japan improved in Q4 to minus 7%, supported by a more favorable comparison basis. Tourist purchases accounted for around 33% of sales in the country. Local trends were similar to Q3. The decline in tourist spending continued, but was less pronounced than in prior quarters. We can highlight that in Q4, Bottega Veneta turned positive in Japan. For the full year, Japan retail was down 16%. The appreciation of the yen, combined with a rebalancing of price gaps between geographical zones, significantly reduced the market's attractiveness for tourist customers. Asia-Pacific showed a clear acceleration in Q4 at minus 6%, marking a 5-point improvement versus Q3, driven by mainland China, Hong Kong, Taiwan, and Korea. The Chinese cluster also improved slightly quarter on quarter, ending the period down mid-teens. For the full year, retail in Asia Pacific was down 16%. Finally, rest of the world was up 3% in Q4, fueled by Middle East and to a lesser extent, Latin America. For the full year, retail in the rest of the world was stable, slightly positive in the Middle East. Now, let's move to results on Site 12. At 1.6 billion euros, recurring EBIT was down 33% year-on-year, representing a 340 basis point margin dilution that was more contained in the second half with a 120 basis point decrease. While the 11.1% EBIT margin reflects the top-line pressure, it more importantly demonstrates our efforts. To protect our profitability in such a challenging environment, it required rigorous cost management and deliberate choices. This discipline is precisely what provides a healthy financial foundation to fund our comeback. To support our brands, we continue to invest selectively in key areas while maintaining strict cost control in others. We delivered 925 million euros in savings this year, reducing our OPEX base by 9%. This was not about blind cost-cutting. It was a smart reallocation of our resources. We successfully protected creativity while boosting our efficiency, which is precisely how we are rebuilding our firepower to invest in our brands. At year end, our store count was 1,719, a reduction of 75 units fully in line with our plan and reflecting our strategy to upgrade the quality of our footprint. Fewer stores, but in stronger and more strategic locations. In 2025, we opened 58 stores and closed 133, resulting in these net 75 closures. Our store network is being accessed constantly and we have accelerated its rationalization by closing stores that no longer support our ambition to strengthen sales density. This is why in 2026, there will be another reduction of the retail footprint with 100 net closures already planned and more still under discussion. In the fourth quarter, we closed 18 stores, but we also continue to enhance the quality of our retail network with key openings, including the stunning Saint Laurent flagship on Arc de Montaigne in Paris, a new Bottega Veneta store in New York's mid-parking district, We also expanded the Bush home presence in the UAE with openings in Dubai and Abu Dhabi. At 2.3 billion euros, free cash flow generation excluding real estate transaction was down 35% compared to 2024. Including real estate, it amounted to 4.4 billion euros. CapEx, excluding real estate transaction, at €0.8 billion was down almost 30%. The capex-to-sales ratio was 5.4%, declining one point versus last year. We prioritized investments to upgrade the stock network of our brands and selectively expand its footprint. Net debt stood at €8 billion at year-end, down €2.5 billion versus last year, confirming that our deleveraging strategy is firmly on track and that financial pressure continues to ease. In addition, the €4 billion cash inflow from the Kering-Botte deal will further strengthen our balance sheet in the first half of 2026. I will now comment on our houses starting with Gucci on slide 15. Revenue for the full year came in at 6 billion euros, down 22% reported and 19% comparable. Retail, down 18% comparable, accounted for 92% of sales. Wholesale decreased by 34% and royalties declined 2%. In Q4, retail was down 10% on a comparable basis, showing a clear sequential acceleration driven by almost all regions except Western Europe. The three-point, quarter-on-quarter sequential improvement was supported mainly by North America and APAC. The launch of La Familia Collection, together with the surrounding activations, has put Gucci back at the center of the attention. New nest trends, including revamped carryovers, continue to strengthen, reaching 60% of the mix in Q4. The AUR increased thanks to the improvements in the performance of handbags. There was nearly no pure price increase. Wholesale was down 34% on a comparable basis for the year, reflecting the strategic rationalization of this channel and a reduction in the number of doors. In Q4, wholesale was down 14%. Gucci posted a full-year recurring operating income of €966 million, resulting in a 16.1% EBIT margin. There was a negative operational delivery rate from lower sales, but it was partially offset by substantial efforts on the cost structure while reinvesting in product development. Over the year, the house continued to elevate its retail footprint, closing 32 stores, mainly in Asia Pacific and Japan. This is part of its strategy to reinforce its presence in its prime location and offer an increasingly exclusive experience to its clientele with existing lower contribution sites. Some highlights on Saint Laurent, slide 17. Saint Laurent delivered €2.6 billion in full-year revenue, down 8% reported and 6% on a comparable basis. Retail declined 6% comparable and wholesale decreased by 14% as Yahoo! continued to streamline and elevate its wholesale network. Focusing on Q4, retail was flat year-on-year, marking the third consecutive quarter of sequential improvement, supported by better trends in Western Europe and Japan, while North America remained positive. In leather goods, new launches and reinterpretations of iconic bags were very well received, even if they did not fully offset for the softness in carryovers. Women's ready-to-wear and footwear collections delivered strong growth, fueled by the success of the latest collections and new introductions, particularly in footwear such as the Laufer and the Babylon. Traffic remained under pressure in Q4, but this was offset by a higher average ticket and stronger conversion. Wholesale grew 5% comparable in Q4, reflecting a phasing effect. Full year recurring operating income reached 529 million euros, delivering a robust 20% margin. The house maintained its profitability through efficiency measures that help reduce the cost base. The year was also marked by major investments in high-impact retail locations with several flagship openings. The relocation on Avenue Montaigne in Paris, inaugurated in 2004, has been performing exceptionally well, and the reopening of the Diamante Napoleone flagship in Milan further strengthened the house footprint in prime luxury destinations. Moving to Bottega Veneta on slide 19. whose full year revenue was 1.7 billion euros, up 3% comparable. Retail activity remained robust, with revenue accounting for 86% of sales, up 4% on a comparable basis. Wholesale declined by 6%, in line with Bottega Veneta's strategic focus on selective distribution. Royalties delivered a strong 25% increase, benefiting from the initial launch of Bottega Veneta fragrances. In Q4, retail posted a solid plus 5% comparable, despite a very demanding comparison base. North America was a key contributor, delivering mid-teens growth in the quarter. Performance continued to be driven by the strong appeal of the leather goods offering, while the brand expanded across other categories. In Q4, Bottega Veneta recorded double-digit growth in ready-to-wear and shoes. Revenue also benefited from a sustained increase in AUR and from the recruitment of new VIP clients. Wholesale declined 9% in Q4, consistent with the brand's disciplined approach to distribution. Full-year recurring operating income reached 267 million, a 5% year-on-year, resulting in a 15.6% margin. Course margin improved and the brand continued to invest in communication and store upgrades to support its strong momentum and reinforce its positioning. Comments on our other houses are found on slide 21. At 2.9 billion euros, 2025 revenue was down 6% on a comparable basis. Retail, which represented 77% of sales, declined 4% comparable, while wholesale decreased 15% comparable as our soft luxury houses continued to strengthen their control over the distribution. In Q4, retail revenue rose 6% on a comparable basis, while wholesale was down 9%. Trends across our soft luxury brands remain contrasted. Balenciaga delivered a sequential improvement with retail turning positive in Q4 in Asia Pacific and maintaining solid momentum in North America. For Alexander McQueen, failure and Q4 remain challenging. We are taking firm and decisive actions to restore sustainable performance. The restructuring plan of the brand is well underway. It included the closure of 21 stores in 2025. Brioni delivered another strong year with Q4 revenue up double digits, driven by excellent traction in Western Europe and the rest of the world. Our jewellery houses once again posted very robust trends in Q4, confirming the strong desirability and resilience of our houses. Bouchon achieved outstanding momentum with revenues up in the mid-20s on a comparable basis and outstanding performance in Japan and Asia-Pacific. Pobelato pursued its steady trajectory with solid resilience in Asia-Pacific and high growth in both North America and Japan. Killeen had another sound year up in the mid-teens with a clear acceleration in the second half. The jewelry division continues to be one of the group's most dynamic growth engines, supported by strong brand equity, consistent investment in creativity and craftsmanship. At the same time, Bouchon expanded its geographic footprint by opening new stores, notably in Los Angeles, Rodeo Drive, Shanghai, Shintendi, Abu Dhabi, and three openings in Dubai. Recurring operating income for the other houses amounting to minus 112 million euros in 2025, as soft revenue performance at Balenciaga and losses at Alexander McQueen weighted on profitability despite ongoing deep restructuring efforts. Conversely, Bouchon delivered higher results over the period, supported by strong brand momentum and disciplined execution. Now, turning to Kering Eyewear and our corporate segment, which no longer includes Kering Beauté. On slide 24, revenue at Kering Eyewear came close to the €1.6 billion mark this year. Comparable revenue was up 3%, both for the full year and in Q4. Performance was driven by sustained growth in Western Europe as well as in the optical category. Caring Eyewear operating income stood at €252 billion, reflecting a solid operating margin of 15.8%. The slight moderation, comparative to last year, mainly stems from higher custom duties and continued strategic investment in Maui Gym to support its development in new markets. As for corporate costs, they were down €10 million year-on-year, reflecting ongoing efficiency initiatives. The remaining lines of the P&L are summarized on slide 24. Non-recurring result was negative 584 billion euros. This reflects a combination of items, including capital losses on real estate deals in Paris and New York offset by gain from the sale of a building in Japan and the disposal of the board. Impermanence and restructuring charges related to the streamlining of our store network and organizational optimization initiatives. Adjustments related to the building at Via Montete Napoleone 8 in Milan, following its reclassification under Asset Health for Sale. And finally, the European Union Commission fine on which we communicated on in October. NEF's financial charges amounted to 594 million euros compared to 614 million last year. The cost of net debt at €328 million was broadly stable, with the average coupon on our bonds remaining at 3%. Corporate tax amounted to €354 million, down substantially from last year. The tax rate on recurring income was 36% above our normative tax rate, mainly due to the losses generated in the United Kingdom by Alexander McQueen and by the one-off impact of the rate classification of caring body into discontinued operation. For 2026, our best estimate so far is a tax rate around 33%. We will be gradually back to our normative tax rate of 27 to 28% in two to three years. Net income group share amounted to 72 million euros and to 532 million euros, excluding discontinued operations and non-recurring items. A few comments on free cash flow on slide 25. Net cash flow from operating activities reached 3.1 billion, down 34% versus last year, in line with a decline in a recurring operating profit. It benefited from lower taxes paid but the change in working capital was more limited than in the previous year. Excluding real estate transactions, free cash flow from operations was 2.3 billion euros. Slide 26 illustrates our disciplined capital allocation in action. This year, we focused on strengthening our balance sheet. Through sound cash generation and real estate refinancing, we achieved a significant 2.5 billion net debt reduction bringing our year-end position to 8 billion. This demonstrates our commitment to a strong financial profile with a resulting leverage ratio of 3.4. This net debt reduction will continue this year. A quick look at our balance sheet and financial structure on slide 27. You will notice that we have reclassified 5.2 billion euros in asset health for sales, corresponding to 3.7 billion euros net for the Guérin-Bauté division to be sold to L'Oréal, closing expected in H1, and 1.3 for our building via Monte Napoleone, as we expect to close the transaction in 2026. Our net debt to equity ratios to that 51%, an improvement from 67% last year, reflecting the positive impact of the real estate refinancing operations. Inventories decreased by 8%, and our operating working capital ratio increased by 0.8% year-on-year. It stood at 17.7%, up from 16.9% last year. Reducing inventory remains the key priority for the year, and we expect to bring them down further in 2026. My final comment relates to the dividend on slide 28. The Board of Directors has proposed a dividend of €3 per share. In addition, an exceptional dividend of €1 per share will be proposed related to the disposal of Caring Bote to L'Oréal. Both dividends are subject to shareholder approval at our next AGM. Return to shareholders is a key priority in our capital allocation framework. Our ambition is to resume dividend increases as of 2026, in line with the expected improvement in our performance. This ends my remarks. I thank you for your attention, and I will turn the mic back to Luca.