Hermès (Hermes International) Stock

[Interpreted] Ladies and gentlemen, welcome to the quarterly information report of Hermes International. I'm now going to hand the floor to Eric du Halgouet, CFO; and Alexandra Boucheron, in charge of Investor Relations. Eric, Alexandra over to you.

[Interpreted] Good morning, one and all. Thank you very much for joining this call. Welcome. The group's consolidated revenue at the end of September 2026 amounted to EUR 12.3 billion, up 6% at constant exchange rates and 3% at current exchange rates compared to the same period in 2025. The Americas, Japan and Europe, excluding France, achieved particularly dynamic growth. Currency fluctuations represented a negative impact of approximately EUR 310 million on revenue. Third quarter sales continued to grow in Q3, with sales reaching EUR 4.1 billion, up 4% at constant exchange rates and 6% at current exchange rates.

In spite of macroeconomical and geopolitical difficulties, all regions posted growth with the exception of the Middle East. I would like to highlight that after a dynamic Q1, sales for the third quarter are equivalent in value to those for the first 2 quarters of the year, which speaks to the desirability of our collections, the loyalty of our customers and the robustness of our company. The group continued its operational investments globally in both production capacity and the distribution network.

Over now to Alexandra, who will give you more detail on the performance by geographical area and by division.

[Interpreted] Good morning, one and all. We'll start with the geographical breakdown. The figures are presented at constant exchange rate. At the end of September, as Eric mentioned, all regions posted growth, but the Middle East that recorded a slight drop. To start off, in spite of a more difficult environment in China, Asia, excluding Japan, continues to grow, driven by solid performance in Korea and a speed up in Singapore and Thailand in Q3. Greater China was stable across the period, which is very positive, given the backdrop.

In April, the new Sanlitun store opened in Beijing, followed by the renovated and extended stores of Hong Kong Elements and Sogo Fuxing in Taipei. Finally, the Kaohsiung store in Taiwan and the Taikoo Li mall store in Chengdu reopened after renovation and extension work. Japan next, up 11%, confirms solid and steady momentum driven by the loyalty of its local customer base.

The new store at Hilton Plaza East in Osaka was inaugurated in May after renovation and extension work before the opening of the new Nagoya location in June. Americas, plus 13%, achieved strong growth across all the countries and divisions. The San Diego store renovated and extended reopened in July, followed by the inauguration of new stores, the Plaza del Lago in Chicago and Williamsburg in New York. In Brazil, the Rio de Janeiro store also opened in August, an event dedicated to petit h creations was presented at the Ala Moana store in Hawaii in August.

Europe, excluding France, is up 9%. So strong growth there, thanks to the dynamism of Southern Europe. The U.K. also recorded strong performance in the third quarter, driven by the opening of a new Maison at 166 New Bond Street in London, successfully inaugurated on June 16. France, plus 2% is making progress, supported by the solid performance of seaside stores and the loyalty of our local customer base. Middle East, minus 4%, continues to show solid resilience in a geopolitical context that remains complex.

Let's now take a look at the different divisions, still at constant exchange rate. At the end of September, the Leather Goods and Saddlery division, whose appeal remains as strong as ever. And the Silk and Textile divisions posted solid growth. Leather goods and Saddlery, plus 10% was remarkably good from a performance stand view with strong desirability of both new models and iconic pieces. Our collections have been enriched with the Double Longe, Besace Attelee and Bride de Jour. The increase in production capacity continued with the inauguration of new workshops. And this dynamism shows that Hermes is unique. We are driven by the uniqueness of our know-how and by the loyalty of our customer base.

We continue to grow our capacity with a 25th leather goods workshop in Loupes Gironde. 3 new leather good workshops will open in the coming years. Charleville-Mézières in 2027, Colombelles in 2028 and Les Andelys by 2030. Hermès thus continues to reinforce its footprint in France by developing employment and training in 11 regions across the country.

The Ready-to-wear and Accessories sector is up 1%. Our Ready-to-wear collections were very successful, including our show at the Garde Républicaine, which speaks to the vitality of our offer. Silk and Textiles, up 7%, solid performance there as well, thanks to the richness of its creations in both women's and men's collections. The Chevaux d’Héphaïstos and La Nature en Voyage lend a modern twist to our iconic scarves.

Perfume and Beauty recorded a slight drop, minus 1%, with an improvement in the third quarter. The perfume collection was enriched by the new Eau de parfum solar signature, Barénia Pleine Fleur, as well as Ginseng Biloba. Hermes Beauty introduced a lip care ritual with a mask and a balm, which was met with immediate success.

Watches, minus 2%, continues to enrich its offering with, for example, the successful launch of the H08 squelette model, equipped with the latest generation titanium movement unveiled at the last April Watch and Wonders trade show in Geneva. We are continuing to grow our production capacity with the extension of the watchmaking site in Le Noirmont in Switzerland by 2028.

Finally, the other sectors, so including Jewellery and the Home Universe, are up 3%, which speaks to our uniqueness and the power of our creation. The Jewellery collection into the Horsescape was successfully unveiled in early July in Paris at the Musée des Arts Décoratifs and will be also shown in Shanghai -- and was shown, sorry, in Shanghai in September.

Thank you very much. And if you have any questions, do not hesitate.

[Operator Instructions]

[Interpreted] And the first question comes from Anne-Laure Bismuth from HSBC.

[Interpreted] My first question is on leather goods. And my question is, what was the driver of the speed up for each region? So what was the driver of regional growth for leather in Q3? And in leather, we're looking at plus 3%, plus 6% volumes increase. Is that still a reality? And tell us about the trends in October. Do you think there'll be any changes? And can you give us some regional granularity, please?

[Interpreted] For leather, there is no region that is driving the rest. It's pretty much balanced across the board. All regions grew for Q3 in this area. And the second question was what -- yes, on October and trends. No, there's no change in trends compared to what we have seen towards the end of Q3 for all the regions.

The questions that are up in the air right now are mainly about France to know if recent developments will have an impact because of maybe future tourist flows that might be smaller, but we're not sure yet.

[Interpreted] Just a quick word on leather and the increase in volumes. Could you confirm that we are at plus 6%?

[Interpreted] Well, capacity has increased by 6% for 2026. So that, yes, indeed remains unchanged.

[Interpreted] And the next question is from [indiscernible] from Goldman Sachs.

[Interpreted] First of all, I have a question on Europe, by France. I see that Europe is growing faster than Americas, which is surprising. Could you tell us to which extent London and the new opening is driving that? Or is it because American customers have come and bought items in Europe rather than in the U.S.? I'm just trying to understand because I was expecting America to perform better than Europe, and that's not the case.

Second question on your vision on what's happening in China. You told us Greater China was stable. So I imagine that China Mainland is slightly decreasing, and that's offset by growth elsewhere. But what is the most important factor. There was a new tax announced in July. There is the real estate sector. There is also concerns about unemployment. What do you think is the main driver affecting demand for luxury goods and Hermes goods more specifically?

[Interpreted] Thank you, [ Erwan. ] So first of all, on Europe, Europe grew 10% in Q1, 8% in Q2. So we continue to grow in a very consistent manner. All countries in the region are growing, which is great with double-digit growth in some countries such as Italy, for example, U.K., Spain, Turkey, Austria, Benelux, Portugal and Greece. So you can see that most countries, especially in Southern Europe, are driving this growth. Back to the specific example of U.K., we have a speed up in Q3, which is driven by, of course, the opening of the new Bond Street store. But it has exceeded, let's say, our expectations because this store is bringing in a higher revenue than the store that we closed and the previous one before. So we are not encroaching on the other stores in London and doing better than expected.

And then the European clients are those who are buying in Europe. And if you look at people who are coming from outside of Europe to buy in Europe. We have a few Americans for sure. And we also have a lot of Middle Eastern customers who are coming to Europe. That was towards the end of the summer, which helped us improve our results in both Italy and the U.K. mainly. So solid growth. And when you -- when we look ahead -- when we look at the next couple of weeks, we have the inauguration of the Geneva store, which is planned for early November.

And then your second question was on China. First of all, it's worth reminding you that the macroeconomic context is not favorable because real estate is down. Consumer trust in China is still quite low with a very high savings rate and consumption, which is -- which remains unchanged. Now what made it a bit tougher is that financial markets dropped slightly over the last few months. So this can be one part of the explanation. And then there was this new tax that was introduced, which aims at taxing all offshore goods to the tune of 20%, and it's retroactive.

So it applies to the 3 previous years. It has retroactive effects. So that income has to be paid pretty quickly for the last 3 years. So yes, that might speak to the figures in China. But I think it's worth looking at the group's performance. At the end of June, we were slightly growing in Greater China. And with this slight slowdown in Q3, we are pretty much stable compared to last year for Greater China.

With a few developments, a slight improvement in Hong Kong, for instance, which remains a dynamic financial hub. Macau, it's a slightly different picture with clients that don't necessarily come from China Mainland and then Taiwan, where the situation is a bit more polarized between traditional industry that is slowing and the tech industry, which is growing very rapidly.

And just a final word on China. We remain confident on the potential of China for the mid and long run. We've got a very qualitative distribution network there with few stores, but in good locations. We have 31 stores. And as you've seen, we've opened a new store this year, and we continue to renovate our distribution network.

[Interpreted] The next question is from Luca Solca from Bernstein.

[Interpreted] My first question is on France. Could you please remind us what your exposure to France will be in Q4? And tell us about the stores in France. We've seen the demonstrations that took place last Saturday. So we'd like to try and work out the risk for French stores with the unrest for Q4.

Second question now on China. Could you give us a bit more detail on what is currently driving your lower performances there? Is it a problem that has to do with footfall with fewer people going to the stores? Or has it more to do with the fact that the average basket is lower? Or is it something else? Because my feeling is that the tax that you mentioned earlier affects rich people. But when you look at the business side of things, we see that it's the more affordable products that are, in fact, slowing down. So I'm wondering what your rationale is to explain this.

[Interpreted] Okay. So first of all, on France, France is growing 4% for Q3. A lot of momentum on the French Riviera, so Monaco, Cannes, but it was a bit slower in Paris, especially during the summer with a drop in footfall, which we believe is linked to the heat wave. Now when you look at our clients, you can see that our local clients are growing. And for the export side of things, we have a lot of momentum with have a lot of European and American tourists that came to buy in the French stores.

What we've also noticed, and I spoke about this for Europe is that we have Middle Eastern clients who are coming to Europe to shop, but they arrive towards the end of the summer and then left quickly after that. But we are not at the same level as last year for Middle Eastern clients. There is a slight drop in that area. The beginning of October confirmed this slight improvement that we saw in September after a month of August, which was quite slow for provision stores.

Regarding China now, sorry, hold on, I forgot to answer your question on the recent demonstrations and events in Paris. First of all, we would like to have [indiscernible] for our clients and staff. And the first thing that we did was to protect our staff. And we have reinforced security and safety of both our staff and stores.

Now it's too early right now to gauge the impact on our stores and even less so on tourism. We haven't noticed anything different over the last couple of days. It's mainly our store in Marseille that was attacked, which will not be reopening anytime soon. But otherwise, we have very few damages. It's not [indiscernible] display windows that were broken, but nobody broke into these stores. So it's a bit too early to say what kind of impact that will have on our business in the weeks to come.

Back to China now. What we see is that it's the volume divisions that are suffering. So fashion accessories, for example, and also watches and shoes. These are the divisions, the immediate that are the most impacted. And it has to do with a drop in footfall that we have been able to offset with greater value, which is the strength of Hermes with other divisions like Jewellery, Leather Goods and such like. But it's really a matter of footfall more than anything else and the volume-related immediate that's suffer the most.

[Interpreted] The next question is from Charles-Louis Scotti from Kepler Cheuvreux.

[Interpreted] My first question is on the U.S. How do you explain the sequential slowdown in Q3 in the U.S. Growth is driven mainly by price and scope in the U.S. with new openings of stores. Or is it, in fact, driven by volumes? And then my second question is on the division other, more specifically Jewellery. Is Jewellery now down in Q3 even if fine Jewellery compensated to that extent. >So tell us about price and volumes for Jewellery and fine Jewellery.

[Interpreted] Thank you very much, Charles-Louis. So first of all, on the Americas, overall growth since the beginning of the year speaks to a higher footfall, greater value, so a higher average basket and a conversion rate effect that is also more positive. There is no scope effect or very little because we've closed the Wall Street store in July, and we opened the [ Williamsburg ] one at the end of September. So there is no scope effect there. That growth was enjoyed by all the divisions. And when you take a look at the geographical breakdown, that growth was balanced out between East, West Coast, Mexico, Brazil, so across the whole region.

Now the slowdown that you mentioned comes from 2 things. First of all, there's a basis effect. We were up 14% in Q3 last year, whereas we were at 12% for the beginning of the year. And there was a slight slowdown in August and in early September. But business is now back to the level of the beginning of the year. So there is no change in trend at the moment. The positive thing for the U.S. is that we are going to have a busy Q4 with Manhasset and its opening. That's for the 29th of October. We have a craft in time event in Miami. And in November, we'll be displaying our new fine jewellery collection in New York. So this should lend more momentum to the U.S. in the final stretch of the year.

And then your question on Jewellery and fine jewellery. So what we see there is that we have successfully launched the ninth fine jewellery collection in July. And that collection will continue to travel around the world after Paris in July, it was Shanghai in September. And then it will be New York, as I mentioned a minute ago in November. The division was hit by the slowdown of Greater China. And if you look at the product breakdown, performance remains strong for silver, which is a division where Hermes has always been very good with a strong increase in volumes and also good numbers for fine jewellery. So there as well, there's strong progress.

There was a slowdown, as you mentioned, but that's mainly because of Greater China and the slowdown affected the intermediary products. But you also need to bear in mind that we are comparing this to high performances and high increases in the past. So you need to bear in mind that we have this high comparison point. So it is a slowdown in the numbers, but it's just a momentary dip, nothing more. So yes, for Jewellery, we are very confident, and we have 2 avenues for growth. First of all, we're going to continue with our vertical integration to increase our production capacity and to grow fine jewellery.

And then we continue to extend our stores precisely because we want to better show off our offering of Jewellery and in fine jewellery. You probably have seen the Bond Street store where we have a beautiful area dedicated to Jewellery and fine jewellery.

[Interpreted] And the next question is from Jean Danjou from ODDO BHF.

[Interpreted] I was wondering if you have a comparison effect compared to 2025. And could you tell us about the surprising performance of Perfume and Beauty? Could you give us some detail on why that performance has improved so much?

[Interpreted] Well, last year, growth for Q3 and Q4 was plus 10%. So it was already a dynamic division. But over and beyond the percentage, you have to look at the revenue for Q3 in value, which is the same as Q2 and Q1. And in Q1, just for a reminder, there is the Chinese New Year. So strong momentum across the 3 quarters. For Perfume and Beauty, beauty performed really well with the launch of a new lipstick and a new range, [indiscernible].

And for perfumes, there was the launch of Un Jardin Sous La Mer and Musc Pallida, which is an [indiscernible] fragrances that we only sell in the Hermes stores. And then we all launched Barenia Pleine Fleur recently. And another Hermes [ hors les murs ]. So there were a lot of launches for Q3 for Perfume and Beauty. The business remains very dynamic in our stores for Perfume and Beauty, mainly driven by the Hermes hors range that I've just mentioned. It's a bit tougher or a different picture in the external network because a lot of the other players try to reduce their stock. So we are being hit by that desire from the external distributors to reduce their stock.

But our strategy remains unchanged. We're going to optimize our own distribution network. We have dedicated spaces to Perfume and Beauty to better display our offering that is now much broader and will get even broader with skin care and such like in 2028.

[Interpreted] The next question is from Thomas Chauvet from Citi.

[Interpreted] Two questions. First of all, for prices in 2027, sorry, what is the price increase that you're expecting on the basis of the inflation of prices for materials, et cetera? I seem to remember that you talked about plus 6% or even more than that at the end of June. So please clarify on that. Secondly, on the scope effect, you gave us an estimate of 1% or 1.5%. That was for the impact on the store network. But with Beijing, Geneva, Bond Street, what kind of impact would that be in 2027? So how will these stores be impacted, especially Bond Street in 2027?

[Interpreted] Thank you, Thomas. So first of all, for our pricing policy, we're going to apply the same rule as usual. We are going to try and clarify our own costs and to pass that on, at least for the Eurozone. So factoring the increasing cost of materials and payroll. So that's the first thing. And then secondly, we have to take into account the currency impact, which, as we mentioned, will be negative because of the depreciation of the yen because we are hedging gradually, but we haven't hedged for 2027 yet or at least not entirely.

But I mentioned that the price increases will probably be slightly under 2026 or 2027, but none of this is finalized for the moment. So we'll decide on price increases in a month or 2. Regarding the scope effect, we often have somewhere between 1% or 1.5% impact. But next year, we should not see any greater scope effect because there are no big openings like we have this year, Bond Street and Geneva.

[Interpreted] The next question is from Edouard Aubin from Morgan Stanley.

[Interpreted] On Ready-to-wear, I see that there's a drop in Q3. That's the first time in a decade, if I recall correctly. Eric, could you tell us why there is this slight drop? And what are you going to do to increase the desirability of Ready-to-wear going forward? Question number two now. You have a growth gap of 13% between Leather Goods and Ready-to-wear. Are there regions where there are stronger discrepancies? Is there anything that you can say on that? And yes, that's it for my 2 questions.

[Interpreted] Now regarding Ready-to-wear and Accessories, it's worth saying that Q3 does not reflect the positive underlying trend. There is a slowdown in Q3, mainly because of China. And excluding China, Ready-to-wear, Accessories and also Jewellery and other divisions are growing. Volume-related divisions have suffered a bit more once again because of the slowdown in Greater China. And Ready-to-wear, if you consolidate it, is growing for Q3. So all the regions are growing for Ready-to-wear, except China that is faced by a number of difficulties that I outlined earlier.

The positive thing about Ready-to-wear is that our sell-through rate of our collections remains very high, so much so that a lot of stores had to reorder, replenish their stock because both collections sold really well. The latest collection, Spring-Summer, which was presented at the Garde Républicaine was very successfully launched. There were a lot of very positive articles on the lightness, the excellency of this collection with unique know-how. And here again, it's a bit like for Jewellery. You need to bear in mind the fact that we had very strong growth across the last 4 years for Ready-to-wear. We are looking at plus 80% across 4 years. So the comparison basis is really very high.

And now when we look ahead, there are 2 main projects that are important milestones for us. First of all, there's the launch of the first men's collection by Grace Wales Bonner and then the new collection Couture, which will have a kind of halo effect for the whole Ready-to-wear division, probably women's Ready-to-wear even a larger extent. And then shoes are affected by, of course, China and also the slowdown in the Middle East. But here, we also have projects to have a value strategy. So for men's Ready-to-wear and for shoes. And for women's shoes, we are going to be developing items such as the jumping. So boots essentially and putting new models out there, but you'll see that soon.

The next question -- sorry, there was another question on the gap for Leather Goods. Leather Goods is making progress across all the regions. And all the Leather Goods that we produce is being sold. So desirability is very strong for Kelly, Birkin and other bags across all regions.

[Interpreted] And the next question is from David Da Maia from CIC CIB.

[Interpreted] My first question is on the October trends. If I understand correctly, there is no change in trends compared to Q3. You have given us some information on France, the U.S. for Q3. Could you tell us similar information about the Chinese market? How has it changed over Q3 so that we understand the October trends a bit better? And then second question on exchange rates. My understanding is that you haven't completely completed your hedging strategy. Could you tell us what you expect from a currency fluctuation point of view for the end of 2026 and for 2027?

[Interpreted] Right. Okay. So in October, no change in trends. And that's true for all regions, including China. China is following the trend that we've seen so far for August and September. So no drop there, a slowdown that has impacted mainly Q3. We'll see to which extent that will impact Q4. But right now, we don't see any change in trends. Regarding the hedging effect -- currency hedging effect, we are waiting for the budgets of our different entities.

For this year, we had about EUR 310 million of negative impact, but we are 100% covered for that and that has an impact on the operational margin. And for next year, I can't really give you more information because we still have one amount to hedge. And you might also have noticed that the dollar is a bit stronger now. So the dollar should be maybe more favorable, but we haven't completed the hedging yet. So I remain conservative for the moment.

[Interpreted] We're now going to move on to questions in English.

The next question comes from Chiara Battistini with JPMorgan.

I have just a couple left. One is on the operating expenses in the current environment, given the uncertainty and the ongoing pressure in Asia, how should we be thinking about the evolution of operating expenses into H2, but also starting to budget for next year and margin implications from sustained volatility on top line?

And the second question on maybe touching on the Middle East. What are the latest trends that you've been seeing there in -- towards end of the quarter and into Q4?

Okay. Maybe regarding the Middle East, as a reminder, we operate 6 stores in the region, out of which 3 are directly operated in the UAE, 2 in Dubai and 1 in Abu Dhabi and 3 concessionaire in Qatar, Bahrain, Kuwait. Like in Q2, the performance has been supported by local customers and the value strategy. We observed a drop -- a significant drop in traffic by around 25%. And part of this impact has been offset by this value strategy, mostly Leather and Jewellery.

The growth is driven by the retail sales. And while the performance is a little bit lower in Qatar, Bahrain, Kuwait, our concessionaire. So the region remains a strong growth potential for the group, hoping that the situation will improve in the near future, but this is not fixed today.

Operating expenses. So communication expenses will be maintained quite at a significant level because we consider that we need to address our key customers. And as you know, 70% of our communication expenses are dedicated to specific events like Saut Hermès, Hermès in the Making, and we consider it's very important to maintain the level of operating expenses.

Of course, we are starting now the budget process for next year. And recruitments will be focused on capacities because we will continue to invest in our capacity in the Leather, new workshops and capacities also for old [indiscernible] and also perimeter effect for new stores, enlargement of stores. And therefore, we will focus on the capacities -- production capacities and perimeter effect for sales next year, while, of course, we will be more conservative for support functions.

The next question comes from Melania Grippo with BNP Paribas.

This is Melania Grippo from BNP Paribas. I've got 2 questions. One, if you could please tell us what was the performance of your online business in the quarter? Should we assume you don't compare also to what you reported? And also, I have seen that there is a greater visibility of bags online, in particular, some of them are quite expensive. Is there any risk in doing this?

So online activity is growing at a lower pace than retail, but still growing. And regarding your question on leather visibility, we -- the offer, which was presented until last month was very poor, and we decided to have a broader presentation to reflect the richness of our offer. But it remains very marginal. It's more from a presentation point of view. And this is why we decided to increase slightly the number of models presented in the e-commerce.

The next question comes from Zuzanna Pusz with UBS.

I have 2. I just wanted to follow up on one thing. So I guess maybe first of all, on the margin. How should we think about -- I mean, you keep on investing in the business, which is obviously the right thing to do. And also, there was FX impact that we need to consider. Now you've just printed a 4% growth, which is obviously something we haven't seen in a while. So I'm just wondering what kind of level of organic growth do you need to maintain the margins?

For most of the companies, I think it's roughly 2%, 3%, but you're obviously investing more. So I'm wondering if that's perhaps a slightly higher number. So that's my first question. And second question is on the U.S. I think you mentioned a little bit before what -- that the U.S. slowed perhaps because the comparable basis was a bit tougher, et cetera. But I think we've read somewhere that maybe there's been a change in the wishlist -- Leather Goods wishlist allocation policy in the region, which I think -- well, I don't know if you can elaborate on that, but I'm just wondering if this may be impacted the region a little bit. So that's my second question.

And then just a follow-up, I think you said that you want to maintain the level of communication expense. But I think in the past, that was many years ago, I think 2014, you may have said that the level of marketing you aim for was 5% to 5.2% of sales. In recent years, that has dropped below 4%. So can you just refresh us, remind us what the -- what is the level -- if you look at it on an absolute level or as a percentage of sales?

So 3 questions. For communication, we do not build our budget saying we want to reach 3% or 3.5% or 4% of the sales. It's a bottom-up approach country by country, and we -- event by event and our budget is the sum of the event. Of course, when signing all these projects, then we make some -- we define some priorities, but it's a bottom-up approach, value-oriented and not a percentage of sales. We want to be -- to remain qualitative and to transmit to explain the specificities of our models to our customers. In fact, of course, to cover our fixed costs, given the increase of raw materials, which can be expected and given our wage policy to support our employees in this inflation context, a price increase of at least 4% to 5% could be meaningful, but this is not yet defined for next year.

The next question comes...

Impact of the new system that has been put in place in the U.S. regarding the wish list, it's not significant. It has nothing to do, I would say, with the slightly slower growth that we've seen in Q3 to which I think Eric explained the fact that it's rather linked to a basis of comparison that was a bit more challenging, I would say, in Q3 last year. So there is nothing to do with this, I would say.

Okay. And just -- sorry, the question, I don't think I got the answer on the level of top line growth you need to maintain growth margins?

Well, I just say 5%, for instance, would be an average.

The next question comes from Victoria Petrova with Barclays.

I don't fully understand and need your help to understand the discrepancy between Leather Goods and all other divisions. You obviously have double-digit growth with acceleration in Leather Goods and deceleration is pretty much everywhere else also sequentially. You talk about China. My understanding is that China is a drag on everything but Leather Goods. Could you explain it either on the China example or overall? Do you have different customers in different divisions?

Do you have different level of desirability? Do you think the price points are not resonating? And what has changed recently when this massive underperformance of ex Leather Goods started?

The leather Business is accelerating, but this is linked to the level of deliveries and the very strong desirability of the products which are delivered, while the other [ niches are, ] as I mentioned before, impacted by the slowdown in Greater China or as explained by the basis of comparison of the past years, but the trend remains positive for most of the [ niches. ]

Why so different? Why you have desirability for Leather Goods and all no desirability for Ready-to-wear in China?

Ready-to-wear remains slightly positive in Greater China, which is mostly more volume products like fashion accessories and shoes, which are impacted by the slowdown.

[Interpreted] We have no further questions for the moment.

[Interpreted] Well, in that case, thank you very much. Thank you kindly for your attention. To conclude, Hermes continues to follow its course, continues to perform better than the market in a difficult set of circumstances. It's particularly remarkable because Hermes has continued to grow every single year over the last few years. And the market trends are not always -- have not always been very favorable over the last 4 years. And yet we have performed really well and better than our peers.

Therefore, Hermes continues to deploy its long-term strategy, whilst protecting its ability to grow, to be profitable. So we are facing the future with confidence, and we're excited to prepare for a new year with a lot of creation and the first collection by Grace Wales Bonner and the introduction of Couture by Nadège Vanhée in next year. So the fundamentals of Hermes are more than ever a source of strength. So I'd like to thank you very much, and we'll see and speak to you soon. Thank you.

[Interpreted] Ladies and gentlemen, this conference is now over. Thank you so very much for taking part. You can now sign out.

[Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]

[Interpreted] Ladies and gentlemen, welcome to the financial results of Hermes for the first half of 2026. We're now going to hear from Axel Dumas, CEO of Hermes International; and Mr. Eric du Halgouet, Financial Director. Gentlemen, over to you.

[Interpreted] Thank you very much. Good morning, 1 and all. I'm very happy to present to you today the financial results of the first half of 2026. At the end of June 2026, Hermes has a solid dynamism with a revenue of EUR 8.2 billion, up 6% at constant exchange rate and up 2% at current exchange rate. Q2 at plus 7% and marks a speed up compared to the first quarter. Operating margin is at plus 41%, very high level and our available cash flow is up 18%.

Hermes remained its course, remains balanced, whilst staying true to our values. The renewed confidence of our clients and the exemplary commitment of our teams are the very foundation of this performance. I'd like to thank them. Our clients have turned up once again. They appreciate the creativity of our 16 divisions and the uncompromising quality of our objects in the first half of the year, Hermes continued to invest in its production capacity to secure its supply chain, guarantee its quality and traceability of raw materials.

We've also continued to extend and renovate our exclusive distribution network to support our growth. We've also created new jobs and training courses, created 600 new jobs in the quarter. And we have more than 27,000 people, if you work for Hermes, 61% of which are in France.

Let's now come to the highlights. Inspired by the theme of the year, venturing beyond divisions have given fee rain to their creativity. Let me give you some examples. Amongst the new handbags, added to our collection, we have Dublon and Kelly Robo that we'll be able to discover in September in our stores. The women and men's ready-to-wear collections have been very well received everywhere in the world. mentioning the fashion show of Tokyo in February to commend the talent of Veronique Mesan in L.A. in May -- for the second after the collection by Nadesan.

The creations of the home universe were presented to 36,000 visitors in the Milan furniture fair.

And finally, we unveiled in Paris the ninth high jewelry collection into the hole cape inspired by a question route, which met with immediate success amongst our customers worldwide. Hermes has continued its investment in additional production capacity in line with its vertical integration strategy at the service of quality. Last April, we inaugurated a 25th leather workshop in up Inground.

Work is continuing into other production sites, Charlene Median the Arden and Colonel in the Calvados which will open, respectively by 2027 and 2028. We have also announced setting up a new other workshop in ondeliz in the by 2030. Investment in additional production capacity has also been made in new production site of Kozak for table where extension of the production site in amo in Switzerland for watches and development of arms manufacturing the metal demand.

We continue to secure our supplies with our long-standing partners with this contribute to strengthening our local anchoring expanding sectors of excellence and job creation, particularly in France. Let us now come to our retail network. We have inaugurated many unique locations to a multi-local approach of our meters which allows us to have our collections reach our customers wherever they are.

In the first half of the year, amongst the extension and renovations of our stores, I would like to mention Berlin in Germany, Osaka in Japan or again, Hong Kong elements in Greater China. -- we have also celebrated the opening of 2 new stores, 1 in Beijing and the other in Nagoya, without, of course, forgetting the inauguration of our sixth Maison in London. -- so in the world. In fact, it is a pleasure for me to show you a video that illustrates the admirable work that was carried out by our teams of artisans and partners here we go.

[Presentation]

[Interpreted] The opening of this new Maison 166 newborn Street in London Mark, an important step in the history of Armas in the United Kingdom, bringing together historical buildings at the heart of Mayfair. Masonite embodies a new expression of AMS in 1 of the most dynamic cultural capitals of the world. The Maison which extends over 2,000 square meters and room showcases are meters and creates a unique universe for each of them.

In the first half of 2026, we continue to talk about the universe of our metro a communication, which is offbeat and Joy full spirit. -- the OMS in the Grand Palin Paris, an annual meeting, much appreciated by riders or mystery at the grooms and immersive experience, which took place in Seoul after, Shanghai, New York and Tokyo.

And finally, over 15,000 visitors discovered with our artisans, the wings of manufacturing of our objects during the Hermes and the making event in Shanghai. Let us now come to the responsible approach of as the first half of 2026, the group pursued its commitments. Firstly, as a responsible employer participating in the revitalization of the French regions, thanks to job creations. The group increased its teams by 600 employees, of which more than 300 in France.

These recruitments testify to the confidence in the future and our capacity to draw talent the misses continues to act in a responsible way to face up to climate change to preserve biodiversity and natural resources. Within this framework, we are in line with our objectives of reduction of CO2 that we've already reduced by 69% for scopes 1 and 2.

And finally, we continue to assert our attachment to the territories in which we set ourselves up and pursue the rolling out of Ecomaster, which delivers a leather diplomas sands.

Let us now come to -- has flagged a strong momentum in 2026, revenue amounted to EUR 8.2 billion, up by 6%. All the matters are growing, except for the Middle East, and Botin Beauty. America, Japan and Europe, excluding France, have shown remarkable progress in the first half -- first quarter and second quarter.

Q2 sales reached EUR 4.1 billion, up by 7% at constant exchange rates, slightly accelerating as compared with Q1, namely notably in France, Japan and the Middle East as well as across leather goods and salaries, ready-to-wear accessories, textile and watches.

Let us look at the activity in geographical. A1, all regions posted growth, except Middle East with a slight drop. Europe bar France is at plus 9%. So still strong dynos in there across the country in the region, France, plus 2%. -- recorded good growth in Q2, driven by its local customer base but also with a tick-up in tourist flows.

Japan, plus 11% enjoys strong progress with a strong footfall and loyal local clients. Asia bar Japan, plus 2% continues to grassfecially in Greater China. Korea performed exceptionally well. America plus 15%, continues with its remarkable performance in keeping with the figures of Q1 with a solid and balanced growth. The area, others, minus 4%, which is mainly made up of Middle East continues to be resistant in spite of geopolitical instability.

Now the geographical balance is maintained with a slight increase for America and Europe. Let's take now a look at the division or met breakdown. Leather Goods and sadly 10% solid performance of a speed up in Q2, driven by the strong desirability of our collections, clothing and accessories, plus 2% is growing with an uptick in Q2 with ready-to-wear. Silk and textile plus 10% is performing remarkably well especially in Q2, thanks to our creativity.

Perfume and beauty minus 4%, continues to grow -- to grow its offer with the launch of its Hermes Foundation watches is stable with a good progress in Q2 based on age 8 and the Aramark as an exceptional piece. The other divisions, plus 5% in mainly jewelry and home universe continues to grow. The division breakdown remains unchanged and shows the good momentum of leather goods in H1. Over now to our Finance Director, Erik Dengue for the results.

[Interpreted] Thank you, Axel. Good morning 1 and all. At H1, the operating income stands at EUR 3.4 billion in spite of negative currency impacts. The operating profitability remains at a high level to reach 41%. Available cash flow is up 18%. These results illustrate the group's solid performance in an uncertain geopolitical context. Revenue reached EUR 8.2 billion after taking into account the negative exchange rate effect of EUR 360 million that reduced growth by 4.5 points.

This impact stems mainly from the depreciation versus the euro of the yen, the U.S. dollar and the currency is titled and also the Korean one. Gross margin stands at 71.1%, up 0.4 points versus the first half of 2025. That is thanks to an excellent management of stocks and an exceptional sell-through rate of our recent collections.

The negative currency hedging of close to EUR 100 million or minus 1.2 points was offset in large part by the accretive impact of the conversion effect. Also based on current monetary parity, that conversion effect will be close to 0 across the year as a whole. Communication expenditure stands at EUR 301 million, i.e., 3.7% of sales as for H1 2025.

As Axel mentioned earlier, we had a major event in H1, the inauguration of new Bond Street store in London. Other sales and admin expenses reached EUR 1.6 billion, up 4%, growing slightly faster than revenue. The group continues to support the midtier and the regions as they grow, whilst rolling out a new information system for the distribution network and for logistics.

Other income and expenses stand at EUR 558 million, made up of fixed assets depreciation and use rights. That also includes the expense for the free share plan for employees in 2023. Recurring operating income for the first half of the year reached EUR 3.4 billion. It improved slightly in spite of the negative currency impact of nearly EUR 200 million, half of which is attributable to hedging the other 2 conversion.

In spite of the negative exchange impact of 1 point. Operating profitability reached 41%, so close to last year's level. This graph illustrates the high profitability of the group across the last 6 years. Net financial income is the result of EUR 90 million versus EUR 148 million for the first half of 2025. Income on cash stands at EUR 160 million. It's slightly down because of interest rates. Whereas the cost of currency hedging has slightly gone up.

Tax expense for the first half of the year is close to what it was last year, strongly impacted by the exceptional contribution on profit for large French companies. This additional tax of 41.2%, which applies to the average tax on profits for 2025 and '26 is estimated at EUR 360 million for the whole year. For H1, it makes up a total of EUR 270 million, i.e., 8 points for the half year tax rate that now reaches 35.4% as for 2025.

Income of associated companies stands at EUR 23 million versus EUR 26 million last year. This is mainly made up of our share of the profits in our activities in the Middle East, bar UAE. Net income group share, therefore, stands at EUR 2.2 billion, stable compared to 2025. Factoring in the exceptional contribution, it reaches EUR 2.5 billion as for 2025.

Excluding the exceptional contribution, net profitability stands at 30.7%, close to the high level of 2025 in spite of the negative exchange impact and the significant drop of the financial results. Between 2016 and 2026, the annual average growth rate of our revenue and net income stands at 13% and 15%, respectively. Over the last 5 years, revenue and net income, excluding exceptional contribution has increased nearly twofold.

Operating investments have reached EUR 344 million for the first half of 2026. EUR 197 million versus EUR 159 million in 2025. We're devoted to the renovating and extension of our distribution network, first of all, in Europe, with the completion of the Mersin Newborn Street in London and the extension of the Geneva store.

Investments were also made in the U.S. with the move of the San Diego store in July and the opening projects in the second half of the year in Williamsburg and Manhattan. Finally, Japan completed its renovation in Nagoya that opened in June. EUR 75 million were devoted to reinforcing our production capacity, mainly by opening new leather workshops but also in the Mizone division with the new printing site in Cusi in France and also in watchmaking where we extended our production site in Lahore, Switzerland.

And finally, EUR 71 million were invested in real estate, IT, digital, logistics and information systems. As per usual, operating investments will speed up in the second half and will reach EUR 1 billion across the year as a total. Cash flow reaches EUR 2.7 billion versus EUR 2.3 billion last year.

This strong increase plus 16% and is mainly down to the changes in our working capital requirements, which is close to 0 because we very well manage our stocks, both in production and in distribution and the sell-through rate of our recent collections have reached record levels. After factoring in operating investment and repayment of added, adjusted available cash flow stands at EUR 2.2 billion, up 18% compared to the first half of 2025.

Financial investments are mainly made up of the shares that we buy up under our vertical integration strategy, EUR 1.9 billion worth of dividend was paid out. Hermes International bought up 95,000 shares for its employee share plan. The rest is made up of the stronger currencies of other currencies versus the euro.

Restated net cash stands at EUR 12.9 billion at the 30th of June 2026, so close to the levels of 2025.

The structure of the balance sheet remains the same. Cash makes up 50% of equity, which stands at EUR 19 billion. This financial structure, allows us to remain independent and to continue with our long-term strategy with confidence.

Thank you very much for your kind attention. And over now to Axel for the outlook.

[Interpreted] Thank you, Eric. I now come to the outlook of the group that remain unchanged. In the medium term, Hermes confirms an objective of an ambitious objective of revenue growth at constant exchange rate. In Q2, Hermes will stay the course true to its long-term vision and will increase investments in all the divisions in all geographical areas. After Sydney in Australia and San Diego in the U.S.A., in the course of July, we'll be inaugurating the stores of Chicago and Brooklyn in the U.S. as Brazil, in Brazil, Chengdu in Greater China and Geneva and Switzerland.

We'll continue iterate jobs in France and internationally within the framework of our production capacity development of selective network in distribution, we'll be crossing a new step in its development with the presentation of first collection of Cut in January '27 in Paris.

In conclusion, we'd like to thank customers for their loyalty as well as our teams because this success above all is the fruit of the everyday work, which makes Hermes a livelihoods. We are now available with Eric to answer to your questions.

[Interpreted] Ladies and gentlemen, [Operator Instructions]. The first question comes from Luca Solca of Bernstein. You have the floor.

[Interpreted] Axel and Eric, 2 questions if I may. the first on the Chinese customers. We read in the press a few statements with regard to the dynamism, which remains quite anemic in China. I'd like to better understand how the Chinese demand is developing either in China or a broad outside of China.

The second question is focused on understanding the demand with regard to the price level and the price positioning of your products, we to today about res effects, something positive. My question is -- do you have a feeling of a better progression in the upmarket rather than the accessible part of your collections? And in your opinion, what are the greatest opportunities for the MAS brand in the very upmarket in the top of the range.

[Interpreted] Thank you, Luca. Now for China, may I caught myself. -- a year ago, 6 months ago, I already said that I see a situation that has stabilized in China, but I do not see an improvement.. I don't see a great improvement. You know my position, which is to say that today, what drives purchases today is the real estate market in our country and the stock market more than the growth.

In China, we have seen that they are digesting a drop in the real estate market, which represents it a large part of their savings and in fact, we see that the Chinese have increased their savings, which is there for question of expenditure, which is made, but it has -- there's a question of revenue than savings. The citric and I congratulate our teams and in particular, the Chinese team. So the excellent work we've never sort of dropped in China.

I can't say that some see a rebound. You can drop to minus 15%. You could do a plus 10% than plus 2%. But our strength is that we never went drop down -- and after COVID, we became the first brand, which is not the case before Covid. So we have a stability in our situation in China but it still doesn't have the past governs past momentum.

I know Luca, that you love to find KPIs that are interesting. So I'll give you 1 of my KPIs. I look at 2 things. One is the real estate market that is really important, but a less obvious KPI is the price of pork. That's interesting because the price of pork is very low. -- you might say there's a question of supply and demand, et cetera. But pork is eaten particularly during banquets and in restaurants. That is what I was reading in 1 of the Chinese article.

So it is a good indicator of the desire to celebrate and spend time together and have banquets. So the price is low. I'm not saying that our clients are all sensitive to the price of bulk. But I'm waiting for the rebound, which will be a good indicator of optimism and the desire for something joyful because what we want is to give with products -- a lot of people in is working very hard on the products to give the pleasure to our customers who come and buy them. So much for the Chinese.

For the rest, I continue -- we see that we have an aspiration of customers who are suffering more than the resistance of more well the customers. And you see the systems of Hermes is progressing from quarter-to-quarter. From that standpoint, and I think from that point of view, we not changing our strategy. We try to always make the best products possible whatever the product segment make the best makeup possible, the best is possible, whatever the price, the best bags and the best jewelry.

We have in July had a high jewelry event and the success went way beyond our expectations, and we are delighted. So that is the trend. And then you have to be very careful and allow me to say that sometimes in the comments on our figures, we reason too much in percentages. The percentage itself doesn't mean everything with regard to the absolute value.

Today, if I could take division, the biggest progression on the Chinese market, you would have jewelry, perfumes and makeup and Silk. So 2 midyears that are not the highest. However, it's not necessarily linked to a very strong increase of traffic and more the loyalty of habitual customers to complete.

To add to what Axeda is saying on China. It is -- the figures have remained overall stable, likewise for other areas, Europe, Asia and Japan.

The next question comes from Erwan from Morgan Stanley. The next question is from Erwan Hamburg from Goldman Sachs.

[Interpreted] I hope that you can hear me. Congratulations to the team for the great results, and thank you for this new KPI on the pork market in China. Two quick questions. You gave us the operational margin of 41%, which is very high. I was just thinking of what is the outlook for the second half of the year? If you look at the growth rates for different regions and the spot rates, what are we to expect for the second half of the year in that area?

And secondly, there is a strong contrast between France and the rest of Europe when it comes to growth. Now I believe that in the past, you told us that there were more tourist flows in France than in other European countries. So does that explain the contrast in Europe? Or is it because of the opening of new stores in Germany, London, -- how do you explain that 7 percentage point gap between Europe and France.

[Interpreted] What I'm going to answer these 2 questions. And I'll start with the first question. First of all, thank you very much. Thanks for noticing that the operational margin at 41% is outstanding. And cash flow is also up 18% and that shows the desirability of our products because if our cash flow is up, it's because we've been able to grow without increasing our stocks because we've sold a lot, especially a lot of lever goods. the goods that we had produced in.

I'd like to congratulate Eric -- do Alvito stuck to our core stack to our model. As you mentioned earlier, the luxury market has been shaken up, but we are sticking to our fundamentals and our fundamentals are very healthy. Over to you, Eric, for the operating margin.

[Interpreted] So for the margin side of things. There's the hedging effect, which was EUR 100 million and now EUR 210 million. So a negative impact, which will be quite strong across the year. For the first half of the year, we had a long accretive effect conversion of 0.5 percentage points. So in net, it's minus 0.8%. And this accretive effect, if you look at current monetary priority levels. It will actually be close to 0. If you look at it across the whole year.

So the hedging effect is something that we know and the accretive conversion effect was very positive in H1 but we need to wait and see what it looks like for H2. The second thing I want to say is that we're going to be speeding up our investments, and we'll be reaching EUR 1 billion across the year. we're going to organize more external communication events, and we're going to continue to recruit, targeted recruitments to increase our sales force in U.S., Japan, Korea, areas that are growing quickly.

And we are also going to continue to roll out our IT projects.

[Interpreted] Well, thank you very much, Eric. So Erin, paraphrase the former President of the Fed. If you've calculated the margin based on what Eric has said is that he hasn't probably explained it properly. Now on the gap between Europe and France. There is something quite unique you need to understand about RMS, of course, we produce a lot of what we make in France, 75% of what we make in France. But we also have a lot more stores in France than we do elsewhere. In Gev, in North, but we have stores across the country were created in France in 1827. So we have a strong network of stores in France.

I mentioned it last year, but no 1 was paying attention but be assured that it's the same inside the company. I am slightly concerned about the situation in France. I think that we should be a bit more careful about growth and the companies and the growth of companies in France. What I do see is that French clients continue to come to our stores but with a smaller basket than in other European countries. And we've seen a lot of dynamism in Italy, in North European countries recently and also in Germany.

So what happened in the first half of 2026? Well, we continue to have our French clients. We have fewer tourists in the first half of the year, especially tourists coming from the Middle East, for obvious reasons. They haven't traveled as much. They've stayed in their countries a bit more. And this has affected our French stores. especially Parisian stores. And we now have a speed up in Q2 with stores in France outside of Paris that are performing well.

And stores inside Paris that are working also quite well and an uptick in stores on the French Riviera. And then in Italy, we have a lot of clients in Milan. We also have the Bond Street effect in London. Greece performing really well. So there is very strong momentum across Europe with strong tourist flows, but also local customers.

And to add to what Eric mentioned earlier, local clients is a very important indicator. Our client customers, mainly buy in China. And I have a slightly different look at our good results. When you look at Japan, Korea, these results are mainly driven by current clients in Korea and Japanese clients in Japan. So we have this specificity of wanting to sell our products to our clients in their home countries. Thank you very much.

Thank you. The next question is from Eduard order from Morgan Stanley.

[Interpreted] Thank you very much for giving me the floor. Axel at the top of your presentation, you talked about your program of opening new leather workshops until 2030 with the plus 6% that you mentioned. Some investors are asking you to reduce volumes in that category for the next few years? Why would you think that would be a bad idea to reduce the volumes for leather goods going forward?

Hermes has been telling investors for quite a few years that the BKC in the bag mix is quite -- I'm not expecting you to give us any figures on how that share has changed for the whole bag mix. But tell us if indeed, there are fewer Burkina, et cetera, amongst the bags.

[Interpreted] Thank you for this question. Thank you for asking this question because sometimes the same notes. I read are they producing too much and not therefore, being too exclusive or are they not putting enough for the growth rate. So either way I -- I mean, 1 way I lost you win.

To answer at best this question, we have a very high demand for the handbags. You see -- and I come back to my story in working capital requirements, everything that we produce has been sold, hence, this positive cash flow. So there's a great desirability whatever be the model.

Now -- it is indeed important. Two things are important for me. One, it's good to say we're desirable. We're desirable, but it's better if you're desirable and if your sales increase. So I do have the ambition to grow. Second thing that's important is that I'm very proud to create jobs in France -- every time we open a leather workshop is 300 jobs. It's young people that we train people who retrain, who get diploma. And I've feel there's a responsibility to create jobs when we can. So have the plan of 1 leather workshop per year up until 2030.

And we could make 2 if we wanted to, but 1 a year is a good thing. But what to me what is the first guarantee of this without giving any scope, we do very little volume. Hermes handback is 15 hours of hand stitching compared to the industry volumes are low. And so despite the increase in production capacity, we keep great exclusiveness. And that is why we are also thinking with Guillemin, who heads production to have a new post 2030 installation go to other region, we'd be chosen quoted, but I project myself on the long term here. That's important.

And then I'm sensitive to this because I had a leather before being the CEO in 2008 and 2011. We have for a strategy of several bags and not have 1 single pillar. The balance of geographical areas is a very important balance of divisions very important as well different materials. And within each MTA, each division a different object. So many banks are in demand really strongly.

You talked about the Kelly, the Bergen, the constant. Thank you for adding the .But the Picot as much in upon the Evelyn as well, we have the Garden we in so many other bags, and that is truly important for us to launch cells in this diversity of models and -- so the 2 things I'd like to add here is the limits of the know-how and quality. I'm very strict with the teams here. if it's not Hermes quality, then we don't produce. And that is why it is important that we take the time to train people. We take the time to make a new model, and we also take the time to find the right raw material.

One of the bottlenecks today for me is the quality of leather. I often complain industrialization of animal husbandry has led to a reduction in quality. That's why we make big investment in tannery. So with the scale that we have, we can increase the quality of the leathers that come out of the tannery. We've got some new data leathers this year, which will be in the stores we have the fleet where we can't produce large quantities but a lot of small quantities, super leather quality of leather comes into play.

And the idea is that our watch dog is quality, quality above all before the results before growth and before the 6%. And if I may, and this is an important subject to you all look at it is to say, yes, we have a 6% growth. But don't forget that growth is in Hermes is mainly made up of ours. -- bags are made by hand. So it is growth first in hours. And then what do you do with that? It's not the same thing to make a Kroger bag or the big bag or a small bag.

So sometimes I get quite moved, if you just add 6 plus the price increase to come to what the figure of leather. We did a plus 10 this semester last one, plus 15. So all of this is not a systematic addition, there's a lot of inputs that come into play. The weighting of the leather distribution, the type of model that we make, the productivity of the different artisan and it's not the exact sort of signs of mathematics, but we are confident.

And we're confident with 2 pillars. This is something that really interesting about that's why give you a long answer. The creations. We must find new bus. We don't rest -- we don't rest on our laurels. When I was young micron father here at the football that who would draw the bag, it was made in the workshop next door and then we put it in the Window display and see whether it was sell. And if it did, then we make another one.

Today it's more structured because we have 294 stores, but creation has to remain at the very hot as well as the know-how. I don't produce if we don't have the right quality of leather that we're interested in or the level of quality to make our bags. That is the biggest guarantee as it were for keeping a desirability and exclusiveness for our customers.

[Interpreted] The next question is from Scott Chan Luis from Kerry one.

[Interpreted] First question, I'd like to go back to the Asia Pacific region, bar Japan, which seems to be following the same trend as Q1. In spite of the speed up in Korea. Does that mean that Greater China is going to be slowing down in the future? And is that slowdown explained by a different breakdown between the local and offshore expenditure of Chinese clients, even though you did mention that most of your revenue comes from cal clients in the countries.

Secondly, you talked about the impact of Middle East for the first half and the impact on growth, especially Q1, can you give us an idea of the impact on Q2? And maybe give us an update on the local situation in the Middle East? And tell us also about the money that your Middle Eastern clients spend broad. Do they spend abroad or not. So give us an update overall on the Middle East and what you can tell us at the beginning of the third quarter.

[Interpreted] So to answer your question. For Asia Pacific, we don't see any changes in trends for greater China compared to what I announced. You've seen the industry results over the last couple of years. You know that the revenue has dropped slightly in China. We have always grown, however, in China, that's worth mentioning, and we don't see any changes in trends in the future.

What we do see, however, is very strong growth in Korea, which is important. And then in Southern Asia, so in Thailand, there is a slowdown in the growth that we used to enjoys, but we're close to the trend. But China remains a strong foundation block for us.

A word now on the situation in the Middle East. Now I'm not going to criticize Eric, because he mentioned 1%, it's costing us 1% of growth. I remember 1 boss who told us, if you take away all the bad news all that is left is good news. Now of course, as you know, the situation is quite complicated in the Middle East, but the Middle East is quite resilient, as you can see in Q2, but the Middle East was area where there was double-digit growth, and there is now, of course, much less dynamic growth there.

But we do see nonetheless, resilience in the Middle East. We see that our clients in the Middle East because the mall have stayed at home when their home countries. In any case, in previous years, they used to travel, especially at this time, of the year because there's a very warm part in these countries, but now they're staying in their home countries. So we have slightly lower figures. But you shouldn't read too much into it.

What we can see, however, is a strong level of resilience also people who continue to very much like what Hermes produces and people who stay in their home countries when it's difficult to travel abroad. And our clients are very resilient in many different ways. And just to add to this, I'd like to confirm that the impact in Q2 is the same as for Q1, so 1.5 percentage points for Middle East. We calculated based on our initial assumptions. And we reached this figure of 1.5 percentage points.

And our stores in retail in the UAE, we've compensated the drop in footfall by an increase in value, so much so that we have pretty much balanced things out. It's a bit more complicated in Kuwait, Qatar, Bahrain, where we have these concession stores, but where the performance was nonetheless quite good for Q2.

[Interpreted] The next question is from Jean ago.

[Interpreted] I have a first question on the gross margin to specify what you said, everything being equal, the gross margin for second half of the year will be minus 30 basis points because it will be the non-offset exchange rate and can you also please specify the terms of the debate for price increase for 2027. Taking into account inflation for raw materials, will there be a price increase as compared to 2026.

[Interpreted] Well, you did understand the exchange effect on the gross margin. So I don't have any other elements to add. So on price increases, we are initiating our budgetary processes. It is still a bit too early. What we can estimate today is that the price increase would be slightly lower than the 1 that we applied this year.

The main increase is necessarily the French situation because production is mainly in France and then the currency effect, which are weighted the size of the country. It's a bit early to quantify it for the moment.

[Interpreted] Next question comes from David Dama CIB -- you have the floor.

[Interpreted] Thank you taking my questions. I'd like to come back to 1 of the good surprises of the semester. There's no custom duty reimbursement, which gives us this gross margin in first half, the gross margin progress, thanks to the sell through of exceptional products -- are you comfortable with the levels of inventory to generate growth, which is still measures for the second half of the year.

Are there any problems in capacity -- production capacity constraints because of the home fires. For example, will there be an impact on the manufacturing units that are located in the region.

[Interpreted] Well, thank you for asking the question. I won't give an answer on the margin. Eric, because you might want to add something. But I confirm that it is very good operational management of inventory. We have a level of inventory in most of the divisions, which is optimal in compliance with our objectives with the sell-through rate in the ready-to-wear division, which are exceptional.

So the operation has driven the improvement of the gross margin. After each success has its is drawbacks as it were, we've sold everything that we produced practically over the 6 months. Hermes is quite organic. There's something really wonderful, which is the podium where there is a great freedom of creation. We don't have a marketing department. And we, at the board and present all the novelties to all the buyers, and they are the ones who decide what to buy, what they like, what they don't like and the volume they want to buy.

So we have something really quite organic as compared to others who are quite centralized in terms of their head office or the merchandising departments trying to find a French word, but I can't find it. But for us, it's at the level of its tower manager. We received over 700 people from 40 countries in Porta to show them the collection. So the way we manage our inventory is quite organic and it's an addition of small stores, which leaves us with great flexibility which will be more or less adjusted.

Now if I was producing more weather, will I sell more leather? Yes, because the desirability is there. But as I said, we ran within our criteria of recruitment, training and know-how. Now obviously, we were all at that touched by -- we're present in France by the fires in Fontana, we have one leather workshop in Nonunion other workshops were quite far from the fires.

So our production tools have not been impacted, but necessarily the people have been touched and impacted. People in Fontenot and helped in the Ceron, there are families that were affected that had to be moved, and we are a company of artisans made up of women and men. And therefore, there's a strong stress in the region for their families themselves.

And obviously, we are with them wholeheartedly with them. And the impact will be limited because the production tool has not been affected. The workshops have not been affected, but the stress and the attention which for me is high, will -- we had the voluntary fireman from a company and the voluntary fireman have been solicited have been called upon and participated, and I'd like to thank all the voluntary of our company.

We now move to a question in English now.

The next question is from Melania.

This is Mario from BNP Pariba. I've got 2 questions. First, I would like if you could please give us a little bit of granularity on the performance of nonleather business, in particular, the jewelry, you did say that it was quite good, but if you could please add something and ready to wear as well and also see that the Silk has done pretty well. I want you to understand if there is any trend that you see in this category. And finally, perfume since that is a bit weak. I mean anything that you can add around it.

And my second question is on the space contribution. I understand that Q2 maybe also closer to flat to 0. So should we assume that the 1% that you expect for the full year would be entirely achieving to Income half.

Sorry, Mine, I didn't get the beginning of the second question. For the other Meisel, but the other one, the 1% you are targeting.

Yes, the space contribution for the ER should this be something that is in the second part of the Aero store openings.

Well, the automate are doing all -- if I want to summarize, I will say the high-end meter are doing great. ready-to-wear jewelry, and the volume meter a little bit -- I'm not struggling because we are growing, but I would say, with a lesser growth, we say, shoes, silk, for example. After -- as I said, I think we should not -- sometimes too much thing just in terms of percentage, but also in terms of absolute value.

The comparable for Silk was a little bit weaker than the other one. So the percentage on tele. Having said that, I'm very proud of the result of Silk because they had an incredible collection. We see that the people are happy to wear it and to have such a growth in Silk is a very good sign. And apparently, we are selling also well our ties.

Perfume. Perfume is a little bit complicated. And I think there is a thing that we have -- we should have done better -- there is a difference between perfume and make and beauty. Beauty is doing well. Perfume is doing well in our store. Outside our store is more complicated. And I think we need to work on it, and it's part of the job.

For perimeter effect, it's a funny -- for me, it's funny, but maybe it's not funny at all. But the Fini because when I started to be the CEO of the company, we had 313 stores. Now we have 294 stores. So actually, we were able to grow the turnover of the group with the reduction of the store. So a perimeter effect is not our main growth driver. But we are fortunate enough at Hermes to have Larian ran as a General Manager, and he's next to me, so I can say to him that I think he is brilliant. We had a strategy of having flagship.

So yes, we have the same -- we have a little bit less number of store, but it's not the same store than when I started 13 years ago. They are bigger stores, and that allow us to show all the meter, and that was the main driver for the growth of the odometer. So I don't think that now at this level because we don't want to increase dramatically the number of stores, the growth will come from the perimeter effect.

But there will be volume growth in each of the store, thanks to a better way to present all our meter. That's the idea. So the perimeter effect will remain in the same range.

Next question is from Ashley Wallace of Bank of America.

It's Ashley Willis. I have 2. And then a small follow-up question, please. The first question is on leather goods, Leather is up in half 1. I think this is slightly below the algorithm expected for the full year. which, if I'm not mistaken, is 11%, made up of 6% volume growth and mid-single-digit contribution from price. So would you please be able to help us understand what the volume growth contribution was in half 1? And if there is some element of catch-up to come in the second half, maybe actually linked to your point about perimeter or space contribution coming in, and that driving volume momentum.

Can you help us understand if we should expect later to continue to accelerate in the back half of the year? And then my second question is just on the composition of growth in the second quarter. In Q1, I think you kindly gave us a split out of retail performance. I was wondering if there's any difference between retail and wholesale in or if you could share, again, retail performance for the second quarter?

And then my follow-up was just on if you could explain again what the conversion effect is? Sorry, it wasn't so clear on the English translation.

[Foreign Language] You raised an interesting point about later growth. where, if I may, I have a slightly disagreement about how you do the calculation. We said that our long-term growth is 6% growth volume for leather. And as I said, most of our volume growth is actually a growth of working hour because our bags are made by and that it's technically, we are growing with people doing that. So there is always discrepancy between how many hours we can have.

And what also is what also is the hour that they are producing. It's not the same to produce bag in crocodile for 1 hour, then produce a note the bag. It's not the same to produce a smaller bag than a big bang. I'm not sure about -- by just adding 6% plus the price increase. I will also say that price increase is really a question mostly of also currency difference which is not reflected, for example, on our leather allocation.

So when you add the 2, and I have to justify 0.5 or difference between what you expect I have to say, I'm afraid the calculation, which is just adding price increase and 6% doesn't match up. To give you an example, for example, we are always in the same trend last year for Q2, we have plus 15%. But it's -- there is some effect and like that. So we continue to have our ambition of growing leather.

As I told you, we have up to 2030, almost 1 new manufacture per year that is -- that has been scheduled, and we are thinking ahead of 2030 to have a new region where we can implement our production in France. And so we continue our plan. And our plan is based on 3 things, I would say. First one is, of course, our production, productivity rate, what happened in France, our .com. The second one, which is very important for me, is maintaining and preserving craftsmanship which means we are delivering diploma, French diploma, SAP to our worker. It's very important that I don't compromise in craftsmanship.

And I will say, I won't produce if it's not at the level of core. And the third one which is not exactly in this figure is also the ability to find leader at our level for -- and I will say this is 1 thing that worries me is that with the industrialization of farming, we find less and less good skin. To compensate, we invest more and more in our tiny in order to get better quality of the skin, thanks to our investment. But I have to say what is the main important thing for me is to keep the quality of MS and keep the quality of Hermes bag.

So we are producing as much as we can in a term of quality. And I would just say on the slide that the calculation to estimate although your calculation is not that is quite good for the year. But the -- you cannot just add 6% to the price increase to get the expected leather turnover.

And that's for Second question was related to wholesale. Wholesale is slightly decreasing, mostly due to the travel retail business. which was strongly impacted in the first quarter, but the business is improving in the second quarter for Travel Retail and concessionaire which is also a little bit penalized by the situation in Middle East.

Regarding the conversion or translation impact, I explained that it was quite strong for the first half of the year, and it is expected to decrease based on the current exchange rate. Why do we have such a significant impact because 80% of our sales outside of the Eurozone, while a big part of our costs are based in France, and therefore, based in euro.

I hope this is clear.

The next question is from Suzanne as UBS.

I actually have just one. I'm just trying to -- well, I'm wondering, I guess, how much visibility do you think you have in terms of the volume growth of leather goods of let's say, non-quota back. I'm wondering because, I mean, clearly, you've done a great job over the years diversifying the business away from the 2 core Kelly Birken bags. But because you've done such a great job, I mean, the business is quite big. It's what, EUR 7 billion, EUR 8 billion that are good is roll bigger than some of your peers that are making more than us back.

So I'm just wondering if this maybe in some way, reduces your visibility when it comes to volume growth. I mean we've been accustomed to just saying as 1 of my peers me. We look at the volume growth, we had pricing. But at some point, probably you have less control of the volume growth because there's just enough bad out there and especially on some other values below the retail value.

So I'm just -- well, it's a bit of a philosophical question, I guess. But I'm just trying to understand if you think you really have enough visibility to be able to tell us of the volume growth and be able to actually deliver it going forward. I'm not sure if that's clear, but this is here in my head, but I can explain it otherwise.

Question. Yes, it's hard philosophical and in half. So I will start with the philosophical one. As a manager and especially in the environment, which is changing so much. There is event every time, earthquake yesterday in Japan, which is one of our great countries, I'm not sure you can have certainty or control about anything and much more game-to-type. So you need to have Gametootand adjust about it.

And if I take philosophy, when I read when I read analyst note, I have 2 I say, can they continue to grow on their volume because they grow so much? Or are they not growing too much, it should reduce because it will prevent exclusivity. So my line is to try to do it. First of all, is to do our bags with the level of quality we expect. And this is a tendency that limit our production because we need to have the right craftsmanship, we are training the people very hard from the beginning with difficult craftmanship so that we know that they can evolve with us.

And we need to find the right materials and leather especially, which is a constraint on production. On the other hand, I have to say, I'm very happy to create a job in France. I'm very happy that we have a dynamic. And I think it's -- on that, and I'm very happy that we have a demand which is much superior of what we can produce. And I think it's at the level sometime you see sometimes complain about Hermes is that I didn't find what I wanted. So to create clarity is not only plus -- so I'm really looking also to please our client by free product that they wish.

So with taking that into account, yes, I continue to have. And I don't increase it despite the size, but I don't reduce it also. One new crash shop per year up to 2030 with the training each new craft shop is approximately 300 new people, and we're going to continue in this region.

And one thing that I'm very keen on and you're right, is that there is a diversity of models that we are able to attract with novelty, a new client, see execution is something. There is a lot of opportunity in the men, for example, there is a lot of thing to do, and I'm quite excited to do it with One thing about the game Tory is that we are having Craftsman.

We are very nelegeable. We have a lot of craft and they are able to do different model. We train them for meter for craft, not by model. So they are able also to change, and we have the flexibility also to adapt our workforce to the demand. Thank you.

The next question is from Victoria Petrova, Barclays.

I have 2 short questions. One is basically silk watches ready-to-wear all performed better than expected and also showed acceleration in the second quarter. Does it give any early signs that aspirational consumer globally is doing a bit better? Could you provide any color on that? What what you are seeing on the ground?

And my second question, when we look at APAC in the first quarter, you mentioned that pricing in APAC was similar to leather goods, so probably around 5%. And that suggests that we see negative volumes in APAC once again. Do you think -- what needs to happen for that to stabilize?

And finally, when we look at consensus expectations, second half is between 9% and 10%. In the current environment and in your kind of expectations of the global consumer performance, does it look too ambitious?

I will take the BT and you take the other question, Eric. No, for the -- I will say we are lucky to grow the Q2 by 7%. And you grow by 7% because most of your media, as I said, apart from perfume are growing themselves. As I said, I'm less obsessed about percentage growth because sometimes there is a comparable effect. We had -- sometimes it's the difficulty of last year that made you shine in terms of percentage, but the volume itself not that well.

So I'm less keen on postage. What we see is, we see in all our desirability I think 1 thing is the environment. But you should also be you take also your own responsibility for your work. Should I have worked better in perfume and beauty probably, did we do the great job in Silk with the collection, yes, and it pays. So we are not only, I think, in the industry under the spell of the macro of the world and of the development. It's also what we do our creativity, our own choice.

And do I make 100% good solution every day, probably not. So there is -- and which is great because that means we can improve on a few things. So I'm very happy about the situation of the other meter. As I told you, if I take not a quarter-to-quarter percentage analysis, it's the met at I valued work the most. I will say later, of course, but jewelry, ready-to-wear, with us. The mid-tier ad volume is a little bit more struggling because there is less -- sometimes traffic in some area which is highly compensated by our strong clientele.

So I see really the same tenants after you've got in the Middle East that you don't expect, you have that. But I see for the last year and going forward, the same tenancy which at plus 7% is good on a modest opinion.

So for the -- regarding the trends for the second half of the year, for the time being, we do not observe any change in trends in Americas, United States, in Japan or in Korea and Europe. So the question remains on France, but we -- as we mentioned, there is an improvement in Q2 versus Q1. And the question is also on the Middle East, where nobody can predict what will happen.

Regarding your question on Asia Pacific, between Q2 and Q1, the trends are quite the same and as we mentioned before, Greater China is still growing in Q2. Korea is putting the growth while the situation in Thailand, for instance, is a bit more difficult. Those are the main trends.

Yes, we are potent enough in Q1 in Greater China to have a great Chinese New Year, which help us also.

We have no further questions for the end.

Well, thank you very much for taking part. Thank you very much for your questions. Thank you also for your loyalty because some of you will ask questions at every single turn. I'd like to thank and congratulate the teams. The exco of Hermes because the success of RMS is very much a collective one. and the fact that we are growing that we're at plus 7% and that we have a good operational margin and good cash flow, which is a very important indicator as far as I see it. because it speaks to the health of our business.

These figures and positive trends make me feel very confident about the rest of the year and I look forward to continue to work together. There will be some unknowns. There will be some difficulties. But I mean, this is what we've been doing over the last few years, who could have predicted Covid, Fukushima or war in the Middle East in Q1, but the fundamentals there, and I can assure you that even beyond your quantitative questions, what is important for us is quality.

So respecting product, our know-how and been very demanding on quality and respecting the people who make our products and sell them. So thank you very much to all of you. And Eric will be very happy to walk you through Q3 in a few months' time. Thank you very much.

Ladies and gentlemen, the conference is now over. Thank you very much for your participation. You can now sign out.

[Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]

Ladies and gentlemen, good morning. We're delighted to be with you once again in this stunning Salle Pleyel for the combined general meeting of Hermes International. As you know, the assembly will vote on financial year 2025, which once again was a year with exceptional performance for us despite the political and economic environment that has become more tense.

I should like to thank all the members of the Supervisory Board who are here with us and also greet Mrs. Lucia Sinapi-Thomas, who you don't know, who is ready to join the Board and who you will be called upon to elect later on. She is here in the room with us. And if you'll allow me, I'd like to give you a quick overview of her career.

She started as a business lawyer and then joined Capgemini, where she held strategic positions for more than 30 years, including as Head of Tax, Head of Corporate Finance, Head of Treasury and Investor Relations and then Deputy CFO until 2015. From 2016 to 2019, she was Executive Director, Business Platforms, as they say in French. Since 2019, she's been heading Capgemini Ventures, a vehicle focusing on investment in emerging technologies and innovation. I'd like to thank her once again for taking up our call and agreeing to put her name in the ring.

Without further ado, can I suggest we move on to appointing the bureau. I shall appoint as tellers the 2 shareholders with the largest number of votes. First of all, Mrs. Julie Guerrand, representing H51, and Etienne Puech, representing H2. Both of them have agreed to take on these duties. Mr. Nicolas Huonic, Company Secretary, will be the Secretary for the meeting.

Can I remind you also that the full tally of shareholders' votes and the attendance sheet is something that Uptevia, our contractor, will be writing up for us. As stands, we already have a quorum seeing as we had more than 81% quorum some 20 minutes ago. The assembly can therefore rightfully sit and take decisions. The final state of the attendance sheet will be produced at 10:00, and you will be told of it before we move on to the resolutions. The statutory auditors and the representatives of the Social and Economic Committee are here with us in the room. And Mrs. [ Stephanie DeChambeau ], bailiff, is here to make sure that everything runs smoothly and legally.

As in previous years, the meeting is being filmed and broadcast and will be available on the website for a whole year. You can access it on Hermes Finance website. The bundle of documents here combines all the documents that are to be made available to the members of the assembly under statutory obligations. These were also sent to the shareholders and to the statutory auditors or made available to them.

This being said, can I greet and thank the shareholders for coming, thank them for waiting with us before we got started earlier this morning and thank them for attending and taking part in the general meeting. It's always a great pleasure for us to meet up with you and share our results.

Mr. Henri-Louis Bauer, Chairman of the Management Board of Emile Hermes will speak.

Dear shareholders, welcome to this general meeting. Thank you very much for being here. Thank you for your confidence and your loyalty. We are delighted to confirm that in 2025, we did -- we had an excellent performance. Look at the numbers. This clearly shows the enthusiasm of our clients for our creations, the quality of our products and the commitment of our staff and the robustness of our strategy.

This is all the more remarkable as the world is becoming more complex. In 2025, and this seems to be the case for this year, the environment became much more tense and included global geopolitical threats, and Hermes is facing this with determination.

Three things make us very specific. First of all, the course we steer, the men and women, exceptional men and women who are with us and our determination to work in the long run. First of all, the course we steer. We know at Hermes that we have a strong ambition, the ambition to grow, to last, to go on innovating without ever giving up on our values of quality, creativity, responsibility and sustainability.

When the waters get choppy, we know we have to stay the course. And in this uncertain global environment, our strength is precisely our attitude and our course over the years. And can I, in this respect, pay tribute to Axel Dumas and all the members of the executive management. It is a great opportunity and chance for us. Thank you very much.

Something else that is very specific to Hermes. We have exceptional men and women with us. Indeed, our strength is all about our craftsmen, our creators, the people who have skills and talents. And year after year, they help create unique objects and produce timeless pieces and create new projects with ever renewed high expectations. We can count on them.

This year, again, we were able to see it. We had the Skills prize, which is an in-house competition, which rewards every 3 years, the craftsmen who are able to replicate an old or ancient piece whose skills have disappeared. And this is always impressive.

As concerns skills, still, we recently paid tribute to Veronique Nichanian, who after 37 years with us, signed off her final collection in January with a fashion show in Paris and Tokyo. This was a very strong and emotional moment. She has indeed, since 1988, been with us for men's ready-to-wear. Thank you so very much, Veronique.

We are also lucky to be able to rely on high-quality staff who are so committed to us. Their pride, their prospering are a great reward to us. You know that when you join Hermes, you often stay for a long time. But it's always a great pleasure to welcome new staff as we did this year by creating more than 1,300 jobs across Hermes, 60% or more of which were in France. So recognizing us, learning and passing on is what we do and we'll go on doing.

Can I also mention something else that is so specific to Hermes, our determination to operate in the long term. We, our staff, our teams are always trying to innovate, to look at new materials, new colors, new stories, as was the case, for instance, when we told everything about Hermes on stage in a play in Milan in September.

But this never undermines our fundamental principles. Our values are what we are built upon and help us turn to the future. That is our strength. This determination to go on writing a story. In December, we opened the 12th Hermes know-how schools. We issued 200 certificates and qualifications in leatherwork and we are delighted to have trained more than 800 learners. We are committed to this passing on of skills to tomorrow's craftsmen.

And we are forever thinking about creation to try and give meaning to our professions. We want to be relevant today and turn to the future. How can we be more responsible faced with the scarcity of materials, of water, of energy? How can we stimulate creativity and still be clear sighted? How can we make sure that our heritage is still alive? And this is what guides our work, our thoughts, our demands.

We do not want to lapse into short-termism, but we want to focus on patience and the long term. Nothing, however, can be done without your trust. Thank you, our shareholders, for supporting us constantly and forever. Your support is very important. Thank you so very much.

[Presentation]

So what a great year, 2025. Ladies and gentlemen, dear shareholders, I'm delighted to see you this morning for our General Meeting 2026, and I'd like to thank you for your loyalty. Let's take a look back at 2025.

2025 was a robust year for Hermes. Despite economic and geopolitical uncertainty, sales reached EUR 16 billion, up 9%. These solid results speak to the success of our collections, our care, our know-how and our vertical integration. We continue to invest in our production capacity and to secure our supply chain.

We have also grown our exclusive distribution network across the world to support long-term growth. For 2025, our operational investments reached EUR 1.2 billion. We also created jobs and training opportunities. Hermes beefed up its headcount to -- with an extra 1,300 people, 60% of them in France. In keeping with our policy of sharing the benefits of growth, we have given out a EUR 120 pay rise to our employees and a EUR 3,000 bonus to our 26,500 employees for 2025.

Every year, our teams find inspiration in the theme of the year. In 2025, it was Drawn to Craft. And with this team, the 16 metiers of Hermes expressed their creativity. There are many examples that stand out. For example, in leather goods, we have the So Medor, the Seau Mousqueton or the Haut a Courroies a relier that you can see on the screen, which are all very well received.

For La Maison, the furniture show in Milan was also a great success as was the launch of the tableware Hermes en contrepoint. The men and women's ready-to-wear collection were also very well received in Paris, but also in Seoul, Hong Kong and Shanghai.

I'd like to warmly thank Veronique Nichanian, who brilliantly contributed to men's ready-to-wear at Hermes across the last 37 years. It was very emotional to see her final collection in January 2026. With her talent and her conviction, she contributed brilliantly to the men's universe, and we owe her a great deal. Thank you, Veronique.

And now let's take a look back at 2025. In June, Nadege Vanhee, Artistic Director for women's ready-to-wear, opened the second chapter of her women's collection for Fall/Winter 2025. Let's take a look at the show that took place in Shanghai.

[Presentation]

Thank you very much. To reinforce our vertical integration, we have continued to invest in our production capacity across all our divisions. We inaugurated our 24th leather workshop at L'Isle-d'Espagnac in 2025 and the 25th in Loupes last week. Construction is underway in Charleville-Mezieres and Colombelles. These 2 leather workshops will be opening in 2027 and '28. We also announced at the end of January 2026, the setup of a new leather workshop in Andelys by 2030.

Capacity investments have also increased in other divisions. For example, we launched the construction of the site in Couzeix for a tableware. And we have started the extension work for the Noirmont site, which make watches in Switzerland. We continue to secure our supply chain and to work with our long-standing partners across all of our metiers.

Our model rests upon our vertical integration and local anchoring. Indeed, 55% of our objects are made in our own workshops and 75% of our objects are made in France. We have 63 production and training sites that you can see on this map and we are very proud to contribute to the emergence of these networks of excellence, and we also support our partners who are trained so as to preserve the unique qualities of Hermes and its creation.

For leather goods and saddlery, on average, a new leather workshop opens every year, and it employs 300 people and contribute to local dynamism or economic dynamism. When we open a new site, we look out for 3 main criteria: the respect of local expertise, creating new jobs and the protection of know-how. Let's take a look now at the launch and the opening of the L'Isle-d'Espagnac leather workshop.

[Presentation]

It's always very moving when we open a new leather workshop. Now let's talk about our integrated and exclusive distribution network. True to our multi-local approach, we've continued to grow our network in the U.S., 2 new stores were inaugurated in Scottsdale, Arizona, and Nashville, Tennessee, and you've got a picture of Nashville actually here on the screen.

Among the 15 extension and renovation projects, we have Florence in Italy, Knokke in Belgium and Macau and Changsha in Greater China. At the end of December 2025, the group had 294 stores and 3/4 of them are self-run. Each store at Hermes has its own story and ties in their story with that of Hermes, the know-how and the local culture.

Now let's take a look at a film about leather piping in our stores. Design has been the first encounter between the client and leather. The first handrail with leather piping was installed in the Lille store in 1998. 27 years later, we renovate this store and breathe new life into this new know-how in our Lille store.

[Presentation]

Now he worked for us for 40 years, but he didn't only do handrails. He was also a Technical Director and many different positions. Creation at Hermes also finds its expression in the 17th metier of Hermes that of communication in the second half of 2025 with Hermes Stories. We invited the public in Milan to discover the history of Hermes through a theater play. We also organized the Hermes in the Making event in Shenzhen, Istanbul and Taipei, and it drew in more than 66,000 visitors.

In 2025, the eighth collection of fine jewelry called Les formes de la couleur was presented in Hong Kong, Singapore and Tokyo. And finally, petit h stopped off in Taichung, Seoul and Vancouver. The creativity of Hermes also finds its expression in our campaigns like the campaign for our Barenia perfume. Let's take a look at this campaign.

[Presentation]

Let's now take a look at the responsible approach of Hermes. Our model rests upon 3 pillars: people first, our local anchoring and our ambitious environmental strategy. True to our model, we paid out EUR 328 million to our employees in 2025, including -- sorry, in France and a bonus for all our employees across the world. Across 3 years, we have created more than 6,200 jobs, more than half of them in France, a figure that we're particularly proud of.

Our commitment to diversity, fairness and inclusion remain a priority. We have 49% of women in the top 100 positions of Hermes, and we also are committed to the inclusion of people with disabilities. And our efforts are bearing their fruits under our environmental strategy since we have reduced our CO2 emissions, and we also use fewer resources like water, for example.

And we continue our commitment. At the end of 2025, we have 26,500 employees, 62% of which are in France. This growth speaks to our commitment to grow local employment and to value local talent. Hermes has been sharing the fruits of its growth with its employees for several years through free share plans, for example. And we are very proud to have 60% of our employees among our shareholders.

Protecting and imparting our know-how is at the heart of our approach. We've opened 2 new Ecoles Hermes des savoir-faire in 2025. That brings the total of Hermes schools to 12. They award certificates that are recognized by the French Ministry of Education. We train up to 800 people every year. These training centers are located close to the leather workshops to ramp up our production capacities.

Our -- sorry, Hermes has forever been committed to diversity, fairness and inclusion. And we also have more than 8% of our employees that are disabled, in excess of the legal threshold of 6% in France. And we also have many partners in the social economy.

So here, you can see the strong increase in our headcount. We've multiplied by 2 our headcount over the last decade. Hermes remains very balanced in its growth with a stable balance between divisions and different regions. And our craftspeople make up a large part of our headcount and most of our craftspeople are outside of large cities, which speaks to our local anchoring. And our staff outside of France are mainly in sales function.

Our environmental commitment has led to some practical successes. We've reduced our Scope 1 and Scope 2 emissions by 69% since 2018, in excess of our trajectory of minus 50% by 2030. Our construction standards have contributed to this decrease, mainly because our buildings are more energy efficient and run on 100% of renewable electricity, and that is true across the whole world.

Over and beyond that, we've reduced our Scope 3 emissions between 2018 and 2025. We continue also to work alongside our suppliers and partners and help them make progress in this area.

We have long-term relationships with these suppliers, on average, 21 years. And Hermes is very proud to have this strong connection with our partners and sometimes also protecting know-how in far-flung countries, for example, in Kyoto, where we rediscovered an ancient technique called silk marbling.

[Presentation]

I really love this film because we talk about our turnover, our sales and big numbers, but here you have a know-how that is brought back to life, and I think it's exciting that we are able to do that as well.

In 2025, Hermes continued to organize generous actions across all the regions where we operate. Our foundation has a budget of EUR 61 million for 5 years, and it rolls out programs around 4 areas: supporting creation, imparting know-how, protecting the environment and encouraging solidarity.

For example, we have the Manufacto and Manuterra programs to introduce young children to traditional craft and protecting the environment. Over and beyond that, we have 450 charity actions that were performed in 2025 for a total cost of EUR 23 million. Our employees have taken part either during their working hours, but also outside of work in cultural events and events with local communities.

The H-cube or H3 program is precisely designed to help our employees take part in these actions. Let's take a look at how it all works.

[Presentation]

Hermes continues to make progress in its nonfinancial rating, which reflects our model, for example, the AA from MSCI and our position on the A List by CDP, which makes us a leader across the world on environmental topics. Our ESG approach is consistent and ambitious, and these are -- this is an encouragement to continue with our efforts.

Now let's take a look at 2025. Our revenue was around EUR 16 billion, up 9% at constant exchange rate and 5.5% at current exchange rate. At the end of December 2025, all the regions and all the divisions apart from Perfume and Beauty and Watches recorded strong growth driven by the value strategy of Hermes.

In 2025, all regions grew. France, plus 9%; Europe, plus 11%, recorded good progress driven by the loyalty of local customers and dynamic tourist flows. Japan, plus 14%, continues on its strong momentum, thanks to its local client base. Asia, excluding Japan, is at plus 5%.

Good performance across all the countries. America, plus 12%, a great year for the U.S., but also for the other countries in the region. And finally, the region Other, which mainly is made up of the Middle East, is growing or grew by 15%. The geographical breakdown of our revenue is well balanced with an increase for Europe and Japan compared to the previous year.

Now let's take a look at the division breakdown. Leather goods is at plus 13%, in keeping with its annual objective, driven by the high desirability of our products and the ramp-up of our production capacity. Ready-to-wear accessories, plus 6%; silk and textile, plus 5% after a good fourth quarter is making progress with a great diversity of formats and material.

Perfume and Beauty is at minus 8% but compared to a very good year in 2024, marked by the launch of our new perfume, Barenia. Watches, minus 2% after a first difficult half of the year, grew in the second part of the year. And finally, the Other metier at plus 11%. The breakdown for the metiers is pretty much the same as the previous year, so well balanced overall.

Eric du Halgouet, our CFO, is now going to walk you through the results.

Good morning, everyone. In 2025, the results were good as they were in 2024. Operating income is up 7%, faster than sales despite the negative impact of foreign exchange. The net income restated following one-off contribution on large corporations in France is up 5.5% and CFFO is up 11%. The revenue is now above the EUR 16 billion mark despite the negative ForEx impact of EUR 500 million, mainly due to the depreciation of the U.S. dollar, the yuan and the yen compared to the euro.

The gross margin is at 71.1% compared to 70.3% in 2024. The negative impact of currency hedging has been offset by an accretive conversion impact and management of our cost increases and an improvement in the sell-through of collections. Communication account for EUR 620 million and represents 3.9% of sales. At constant exchange rate, it is stable compared to 2024, which was the year when we had started putting Barenia, the fragrance, out.

Administrative and general costs are at EUR 3.1 billion, an increase of 5%. The group has increased its staff in stores to support growth and initiated IT and distribution and logistics projects. Other products and expenses is mainly amortization and accounts for EUR 1 billion. The increase compared to 2024 is the result of the increase in or speeding up of investment and the increase in the employer contribution for free shares given out to staff for 2023, which now accounts for no longer 20%, but 30%.

And operating income is EUR 6.6 billion, up 7%. Here, you see the current operating profitability over the last 5 years. And despite the 1 percentage point negative ForEx impact, recurring profitability is up 0.5 percentage point to 41% in 2025. The financial result is plus -- is -- stands at EUR 207 million compared to EUR 283 million for 2024. It covers a slight decrease in ForEx hedging, debt interest and the remuneration of the treasury, which is EUR 300 million compared to EUR 400 million given the drop in interest rate.

The tax burden in 2025 is due to the one-off increase in France. This surtax of 41.2% accounts for EUR 330 million and is worth a tax increase of 5 percentage points. The result for associated businesses is EUR 47 million, and as was the case in '24, it was, in fact, our shares in the Middle East and more specifically in the United Arab Emirates. The net income group share is, therefore, EUR 4.5 billion. And restated, it is up 5.5%, the same pace as the sales.

Outside exceptional contribution, net profitability reaches 30.3%, which is the high level we already had in 2024. Between 2015 and 2025, average annual growth rate for revenue and net income was at 13% and 17% despite the negative ForEx impact over the last few years. Over the last 5 years, revenue has increased 2.5x, and net income, excluding exceptional contributions, was increased by a factor of 3.5.

Operating investments amounted EUR 1.2 billion and the group has increased its investments in distribution and the production capacity. EUR 769 million compared to EUR 611 million in the previous year were dedicated to securing our strategic positioning or renovating and developing the distribution network and retail network in the U.S. with Scottsdale, Beverly Hills or Nashville, and in Europe with London and Geneva reopening in June and November, and the Beijing Sanlitun.

EUR 226 million was spent on increasing our manufacturing capacity, mainly in the leather workshops in Charleville-Mezieres, Loupes, L'Isle-d'Espagnac and also in the upstream silk, metals and houseware divisions. And lastly, EUR 166 million were spent in real estate, digital and IT.

Operating cash flow stands at EUR 5.6 billion, restated, it is up 10% compared to 2024. The change in working capital requirement, as was the case in 2024, only accounts for limited use of cash to the tune of EUR 200 million, thanks to a good management of inventory, both in production and in retail.

Cash flow from operations is at EUR 5.4 billion and up 11%, excluding exceptional contributions. Having taken into account the operational investment and payment of rents, the available cash flow stands at EUR 3.9 billion.

Financial investment is us taking shares in businesses in the broader context of our vertical upstream and downstream integration strategies. EUR 2.8 billion dividends were paid out, and we did not buy back any shares outside of the liquidity contract. Taking into account the negative ForEx impact, net restated treasury stands -- cash stands at EUR 700 million and -- has increased EUR 700 million and now stands at EUR 12.8 billion.

The balance sheet is as was, and as was the case at year's end 2024, cash is more than 50% of equity, EUR 19 billion and accounts for more than 75% of our liabilities, and this will enable us to further our long-term strategy. Thank you for your kind attention.

I always leave the best slide to Eric. Now let's take a look at the beginning of the year. Sales increased at the beginning of the year, reaching EUR 4.1 billion, up 6%. America, Japan and Europe, excluding France, enjoy double-digit growth, and Greater China continues to grow. Even if tourist flows have slowed down, the business in the stores of the group are up 7%. The fundamentals of our group is more than ever a differentiating factor.

Regarding the outlook, I can tell you that it remains unchanged for the group. In a still uncertain geopolitical context, Hermes is confident about 2026, thanks to its artisanal model, its distribution network, its creativity and the loyalty of its customers. We continue on this momentum driven by the enthusiasm and creativity of our teams across the world.

It is, therefore, with great determination that we embark on 2026. The theme of the year, venturing beyond, is an invitation to discover new horizons and to continue to be curious. We continue to create jobs in our different divisions, in different regions and continue to ramp up our production capacity.

2026 will be a dynamic year for our distribution network with new openings and new extensions in Beijing, in London and our new Maison will be opening on New Bond Street. And I'd like to thank our clients across the whole world for trusting us, for being loyal, and thank you also to all our employees because it is the commitment and the enthusiasm of our employees that make this journey so exciting.

To conclude, I'd like to go back to some of the highlights or a highlight of 2025, the SautHermes that drew in more than 17,000 visitors. And a reminder that at Hermes, we like to jump over obstacles.

[Presentation]

Now before I run through the main resolutions, can I thank very warmly Axel Dumas and Eric du Halgouet for the high quality of their presentation, but also and maybe more so for all these achievements. As we've heard, 2025 ended on strong results, which proves our and confirms the relevance of our unique development model.

Can I, therefore, on behalf of everyone, thank all the members of staff of Hermes across the world for their contribution? Despite the increasingly complex geopolitical situation and the major climate challenges, our teams have been able to fuel what we do and support it in creation, quality and preserving our skills that are so specific to our divisions. The loyalty, the great loyalty of our customers was also the key or the result of unwavering dedication on part of our staff, leading to these great results.

Can I also thank the executive management and the Executive Committee for their inspired, enthusiastic and effective management of the company? Over the course of the year, they were able to preserve lively figures pull upward and properly managed, while at the same time preserving the values of Hermes, which we hold dearly to. Can I also thank all of you, shareholders, for your loyalty, your trust? We are very grateful for this link that has been binding us for so many years.

Yes, why don't you clap yourselves? Thank you. Thank you. Ladies and gentlemen, we've spoken this long-term approach. It is too rare nowadays to focus on this, so we have to mention it. The time has come to introduce the main resolutions that you will be called upon to vote upon. Given the agenda for today and so that we can have a proper discussion, let me outline briefly the resolution. You have read the details in the call for tender -- the notice of meeting.

Can I tell you also that our quorum is as follows: 86.9%, both on the ordinary and the extraordinary side of the meeting. In resolution #4, we -- you will be called upon to endorse the allocation of net income, a bit more than EUR 4 billion this year. The Supervisory Board suggests that you set the ordinary dividend at EUR 8 per share -- EUR 18 per share.

And this aims at striking the right kind of balance between a reasonable and recurring payout on the one hand and paying out the significant cash available. An advanced payment of EUR 5 was paid out on the 8th of February last, and the outstanding amount for ordinary shares will be detached on the 21st of April and payable on the 23rd of April, depending on shareholdings on the 22nd of April in the evening.

Resolutions 7 to 10 aim at approving the total compensation and other advantages in kind or otherwise given to the company officers for FY 2025. You will find all this in the Notice of Meeting, and they are, of course, in line with the compensation policy as agreed by the general assembly.

You will remember the management gets a fixed part -- fixed compensation indexed on growth of sales with a maximum increase of 5%. And also, there is a variable amount related to the consolidated income before tax. Can I also remind you that 10% of this variable amount is subject to reaching a number of CSR criteria? Moreover, management do not get variable multiyear compensation or deferred compensation. The compensation for the Chairman of the Supervisory Board is a fixed amount, which was set in the general assembly of 2023 and remains at that level.

In Resolution 11, you're called upon to approve the compensation policy for Executive Chairman. The 12th resolution is about the approval of the compensation policy for members of the Supervisory Board. They're again unchanged.

Resolutions 13 to 15 are related to the appointment of members of the Supervisory Board, Mrs. Dorothee Altmayer, Mr. Renaud Mommeja and myself, reappointments. All of them, and I hope this is true of me, brings knowledge of the company that is useful for the work of the Board and their varied professional backgrounds. Their presence also adds to the diversity of the Board and brings about a wealth of experience, works on parity and professional careers. Their terms of office will run until the general assembly held in 2029 on the FY 2028.

As you know, a change in the makeup of the Supervisory Board is being suggested. Indeed, Monique Cohen, an independent member of the Supervisory Board of Hermes International since 2014 and Chairman of the Audit and Risk Committee, sees her term of office expire at the end of our assembly. She is not being put forward for re-appointment seeing as she will have served 12 years on the 3rd of June and therefore, will lose her status as independent member of the Board under the AFEP-MEDEF code. This is a rule that Hermes International has always strictly abided by, and we are, therefore, sorry to see her leave the Board.

Monique was a useful and valuable assistance and contribution to the Board, bringing to us her expertise, a clear-sighted vision of humanist and strategic approach. And her commitment has significantly contributed to our success. Through her prestigious and focused work, her integrity and her loyalty, she was the embodiment of Hermes' values, and we wish her all the very best and thank her for her dedication and hard work for the company. Thank you.

Given these events, the Supervisory Board, together with the Compensation and Corporate Social Responsibility Committee, launched in 2024 a process aiming at identifying potential candidates to take over Mrs. Cohen's position. This means that we can suggest and put forward Mrs. Lucia Sinapi-Thomas. I mentioned her earlier, and you will get more about her up on the screen.

And this will be done under Resolution 16, that is appointment of Mrs. Lucia Sinapi-Thomas as a new member of the Supervisory Board. Her international experience, her financial and legal expertise and her understanding of the digital transformation will be a very useful contribution to the Board. Provided you endorse that nomination, Lucia will join the Audit Committee as the Chairman from her very first 3-year term.

For the six (sic) [ 16th ] and 17th resolution, we are asking you to renew the authorizations granted to executive management to trade in company shares with also the ability to cancel them. The maximum price to buy them up, excluding fees, is EUR 3,000 per share. And I'd also like to remind you that the buybacks made by the company cover the free share plan that we grant to our employees. Therefore, no share buyback for cancellation has been performed by Hermes for many years.

Now for Resolution 18, we are asking you to renew the authorization to be given to executive management to grant free existing shares. And I'd like to highlight that in keeping with the compensation policy of executive management, they receive no compensation through shares. So this authorization falls under the group's compensation policy and helps us to support some managers outside the executive management to pay for their retirement and pension scheme.

Through Resolution #19, we are asking you to conform with the Decree No. 2026-94 from 13th (sic) [ February ] of '26, which changes the record date from day minus 2 to day minus 5. In the universal document, you can also find on our website, you will have the report from the Supervisory Board on corporate governance. It's Page 524, at least in the French version. And in the convening notice, you will have the report of the Supervisory Board in Pages 62 and 63.

It's now time to hear from our chartered accountants who are eager to jump up on stage and share with us the content of their different reports.

Thank you very much, Mr. President. Ladies and gentlemen, dear shareholders, on behalf of the statutory auditors and PricewaterhouseCoopers and Grant Thornton, I'd like to share with you our findings for 2025.

In keeping with what we've done previously with this assembly, I suggest that I sum up the reports that you have in the universal document. Our reports on the consolidated accounts and annual accounts can be found in Page 409 to 412 and 439 to 442 of the universal registration document. The objective of our mission is to have a reasonable assurance that there is no significant issue with the accounts.

To this effect, we carry out a number of duties covering the whole organization, different metiers, different countries. We've covered, for example, 40 subsidiaries across 20 countries. And we've been able to perform these duties in all these countries with no obstacles. We've also regularly -- we're regularly in touch with the financial department, with the Audit and Risk Department and the Supervisory Board.

The key points and highlights of the audit that we have carried out on risk in light of their share in the group, their complexity, mainly cover for consolidated accounts, the assessment of inventory and work in progress and the accounting of currency hedging. For annual accounts, it's mainly about the assessment of equity interest. You will find a description and all the duties that we've performed in our different reports.

At the end of our work, we have expressed an opinion with no caveats, no particular observations for consolidated accounts and no caveats for annual accounts. Just one observation, since there is a change in accounting method due to the enforcement of a new accounting text that applies to all companies, including your own.

Regarding our report on related party agreements, this can be found in Pages 507 and 508. Under this report, we share with you the specificities of related party agreements, but we do not issue an opinion on their purpose or on their foundations. We have discovered no authorized agreement that needs to be submitted to your approval. Our report also describes the different agreements that were approved under previous general meetings or by previous general meetings.

And finally, we have 2 reports for the extraordinary part of the meeting. You can find them in Pages 510 and 511 of the universal document. And they pertain to the capital and equity of your company. The first report covers the 17th resolution, i.e., the authorization to be granted to the executive management to reduce the share capital. The second report covers the 18th resolution on the granting of free existing shares. And these 2 reports did not lead to any observations on our side.

Ladies and gentlemen, dear shareholders, Mr. President, thank you very much for your kind attention.

Well, thank you very much, [ Christoph Wunsch ] for taking the floor. We're now going to move on to the Q&A session. I'd like to tell you before that, that we have received in writing some questions in due course. And these questions have been answered by executive management, and you can find these answers on the website, Hermes Finance under General Meeting. And of course, you can go and read these questions and the answers that were outlined by executive management.

We're now going to have the opportunity to hear from your questions. And as per usual, I would like to ask you to introduce yourselves first, tell us your name, if you're an individual shareholder or if you're representing a company or if you are indeed a journalist before you ask your question. Finally, I'd like to ask you to be brief in your questions because they are questions, not comments nor recommendations.

So please keep your questions short so that everybody has a chance to ask their question. You are only allowed one question. Nobody follows these instructions. But nonetheless, I hope that this will help you limit the number of questions and queries. So please be brief in the way in which you ask your questions.

As you can see, we have people in the room with microphones and panels. And I suggest that we get started straight away, first come, first served. #7?

Good morning, everyone. James Fraser, I represent PETA. My question is a question to Mr. Dumas relating to the use of wild animal skins at Hermes. But it will be brief. Crocodiles, ostriches, lizards and other wild animals are shocked, bled and then turned into bags and belts. The indignation and the awareness of the public is increasing in the face of these awful practice. The recent trial of Matt Wright has focused the links of Hermes on the one hand and the dangerous practice of crocodile egg collection where nests are raided to fuel the farming, Mick Burns and PRI Farming.

Please let him finish. Heckling from the room. Ask your question.

PRI Farming...

Ladies and gentlemen, please show patience. It is a standard practice. Let us agree with it. Please finish, sir.

I will. This is one of the largest intensive crocodile farms in Australia, 50,000 animals in concrete beds. The environmental monitoring shows that the E. coli level is 500x the authorized maximum levels. This has led to warnings from experts as concerns the risk on the environment and human health.

Sir, the sale of Hermes hides now operates almost like fast fashion. 10,000 or tens of thousands of hides -- crocodile hides for Birkin bags come from vertically integrated farming, which are highly polluting and does seem to have profit over ethics. The question is the following. There is an environmental health and image risk. When will Hermes adjust its practice and cut with these practices and move to vegan leather?

Thank you, James. You're often here, so thank you for joining us. Thank you for your consistency. As I have said many times, we fully respect the beliefs of everyone. I don't fully agree with your description of the farms for Hermes. We have the highest scientific standards for animal welfare. We work with vets. We work with the International Crocodile Farmers Association (sic) [ International Crocodilian Farmers Association ]. And as you know, we operate under the strict rules of the Washington Convention managing and ruling over endangered species.

So can I say that, in fact, farming was one way of preserving that species of crocodile that wasn't reproducing in the wild very well. And the Washington Convention banning hunting and moving to farming and also combining this with the release of animals in the wild means that we -- there are more crocodiles in the world than there were in 1980. You tell me if that's a good or bad thing.

But we are doing our best to abide by the best scientific practices to farm our crocodiles. Many audits are being conducted, and we may and we do stop using some outside suppliers with whom we don't quite agree. Fast fashion, that was a bit of a low bar, isn't it? I mean you're under the belt maybe. But you do -- you are right in saying that we have alternative materials and natural materials. So we are not opposed to having both.

I mean we still haven't found alternative materials that are luxury for us. And these are very often reliant on petro-related products. We have invested significantly in a mushroom-based leather. Unfortunately, it's very low key in artisan, and we hope that we can use technology to replicate these leather cells.

I mean I know that there's much research already being done on human skin. It's not quite the same here because we're looking at the epidermis and the dermis. But we are trying to find exceptional materials, whatever their origin, to manufacture the handsomest products. And I think that, that is how we can come to your position.

Number 8, are you raising your black card or not? No, sorry. Okay. So #3.

Good day. Representative of [ API ], the association for individual shareholding. Can we thank the corporate officers of Hermes, who, without being upset, agreed to EUR 330 million being paid out rather than working on creating better jobs in-house.

First of all, why did you include EUR 500 million in other reserves, thus reducing the distributable amounts? Second question, your supply chains, are they safe and secure? Can you witness today drops in the quality of the supply depending on the quality of feed that the animals get? And lastly, seeing as luxury and high luxury is a long-term approach, what of the market in India? How are you getting on?

The EUR 500 million, that was already in the previous -- done in the previous years to increase our equity. As you know, 64% of our staff are also shareholders. So I'm not entirely sure that they would all agree by saying that this was a pointless use and allocation of value when you're talking about the EUR 330 million. I think the rumors in the corridor seem to be pretty positive. And also, it hasn't had a negative impact on the ordinary dividend that I hope you will vote on and for.

Then the issue of materials and the quality of materials. We want to try and industrialize farming to ensure access and quality. And that is true for leather, but there are also difficulties with crop farming, but also with silkworm farming or cashmere harvesting. So I'd say that the more farming and cattle rearing can be environmentally friendly, biological and organic farming, this will be great.

I mean, look at mulberry bushes, for instance, you can't get these in pesticide -- in places where there are many pesticides. So there's an issue of quality. So our statistics are actually showing also that milk-fed calves give better leather than maize-fed calves. But I mean, we don't fully manage everything. We've already had a bit of a spat about crocodiles, so let's try and avoid one on cattle farming and calves.

India now. India is a very interesting place. We've had a foothold there for a long time already, but our share of sales is very small, maybe because we're not too good at it, probably, but maybe not. The fact is that there are 2 difficulties.

First of all, the import duties are very high. We do have strong Indian customer base, but they don't buy in India much. Most of our Indian customers used to buy their products in the Middle East, where they often go. Unfortunately, that's the fact. So customs duties are a bit of an issue.

And India also has a very good artisanal companies on fabrics, on jewelry in Jaipur, for instance. So India is a great place, and we are going to build our business there. And we'll thrive at a pace that I am still unaware of. Yes. Okay. So mystery is always so important, isn't it?

#12 -- #11 sorry.

Good morning. [ Florian Villaume ], an individual shareholder. First of all, congratulations for your unbounding creativity. It was a great pleasure to travel by watching these different videos.

My question is this. Have you implemented any kind of tool, any kind of process to pick up on unsatisfaction from clients? So do you have any system to pick up on these weak signals of insatisfactions from your clients?

Well, thank you very much for your compliments on the films because we do spend quite a lot of time putting them together. So to your question, I inherited this from my uncle, Louis Dumas. I read every single complaint letter that we receive from clients. It takes up quite a lot of my time. There's not a lot of these letters, but we have quite a few clients. So unfortunately, there are a few. It takes up some time. Secondly, we also have mystery customers who go to our stores and their mission, so to speak, is to check the level of customer service and the quality of customer service in the stores. And then we're very lucky in that we have a very loyal customer base. And when they're not happy, we are made aware of that pretty quickly. And the salespeople actually will side with them against us. So we've got quite a direct contact with our clients who are very passionate and good connoisseurs of Hermès. And yes, they pay attention to details to say the least.

Number three.

Gentlemen, my name is [ Herve Delage ] from the National Association of French Shareholders. My question builds on the question that was asked last year on U.S. tariffs. Tariffs were implemented. You make 75% of your products in France, as you mentioned, your revenue increased in America, plus 12%. So what lessons do you draw from the implementation of tariffs? And what was the actual rate that was enforced in the U.S. for your products or applied to you?

Well, this is a tricky question because I've been told to not answer what I'm about to say. Everybody talks about tariffs. The tariffs in the U.S., as you saw in Eric's presentation, cost us much less than producing in France and paying this surplus tax. So sorry, I don't think it's the most relevant question. So tariffs increased in the U.S., and we increased our prices in the U.S. to compensate. Eric will give you some more detailed figures if he's allowed to, but these figures cover 2025 and 2026.

What happened when tariff increased?

Sometimes we have tariffs of more than 100% in some countries. It's a bit more complicated to navigate. It's sometimes the case in some countries. What happens is that our clients react in 2 ways. First of all, they continue to buy in their stores in their own countries. And you can see that in the figures for the U.S., which is a region that is growing quickly. And sometimes, they'll make a good deal by traveling abroad. And we have a lot of American tourists who buy in stores outside of the U.S. So the tariffs were a bump in the road, but not the biggest bump for Hermès. And Eric approves this answer, so I'll leave it at that.

Number two, please.

[Audio Gap], individual shareholder and very proud to be a shareholder of this great company and happy to be here at this general meeting. Three questions on my side, which might be interesting to other people in the room. A word on Hermès and marketing. How do you manage to not have a marketing department and yet -- and sorry, have a commercial cost of only 4% in an area where communication is so important. Second question, Hermès versus the difficult context of the luxury industry.

So how do you sit in this landscape? What about, for example, the increase in secondhand products, dupes, et cetera, and the Birkin bags that are sold at Walmart. Are you concerned at all? Is it afraid? And what about the share price? It's dropped by 27% in 1 year. So how are you able to keep the morale up when you lose so many [ millions ]? And finally, I'd like to give you also the prize of the best general meeting in Paris. I attend quite a few, and I see that you have a greater respect for shareholders, the kind of respect that my mentor Warren Buffett would very much appreciate.

Well, thank you very much for these kind comments. We are the first ones to organize our general meeting for this year. So thank you very much for your kind comment. We do have to love our shareholders because most of them are in the family. You've got to love your uncles and aunties even if they don't always love you back. Not always very optimistic and not always very focused on keeping the morale up. Nonetheless, you asked 3 interesting questions. First of all, on marketing. Now we do have this strategy of being a company that creates first and people are free to create here at Hermès. And we sometimes go a bit too far. If you don't like the theme of the year, the guilty party sits in the front row, and he might explain the intricacies and the workings behind this theme of the year. Nonetheless, it is quite unique at Hermès in that the Creative Director is at the ExCo.

Indeed, he takes part in all the decisions -- decision-making at Hermès. And we have a lot of freedom in our creativity. We don't have any marketing plan. We don't look at past demand. We try to invent and create something new. Sometimes it comes off, sometimes less so. But this is nonetheless an important part of what we do. And the few times where we try to do marketing, we fail because we're not very good at that. So it's probably best not to venture in that direction. And I'm not going to give you any examples. Otherwise, it will be lost on most people. And now back to your second question, we have Charlotte David in charge of communication, who also wants to see an increase in the communication budget. It is true that if I had to sum up the financial results of Hermès, I would say that our #1 communication tool is the price point of our products.

We have a gross margin, which is smaller than others because the production costs are very high. Some of our bags cost more to make than the sale price of bags from our competition. So some companies need more marketing to push these products. We hope that our products speak for themselves, and therefore, we spend less on marketing. Likewise, you talked about our revenue that increased and a fourfold increase of our turnover is great, which means that we have more resources necessary. And in actual fact, there are 2 important topics that you raised, secondhand and counterfeit goods. So for the secondary market, I'm not too worried because our clients are loyal and they want authentic products. Now for counterfeit goods, counterfeit goods are actually quite poor quality. And actually, Walmart, when they realized that it was a counterfeit good, they pulled the product off their marketplace. It wasn't actually Walmart. It was on their marketplace.

So I think that our clients are not interested in counterfeit goods, in dupes. Nonetheless, we do have very good legal teams that fight these counterfeit Hermès products, and they crack down in many countries around the world, and they do a great job and I'd like to thank them for that. The question that is often asked of us is they are dupes, they are fakes, they are counterfeit goods. And at the same time, people say be careful of AI. We have to respect IP rights. And here, when you're doing counterfeit goods and dupes, it's basically stealing IP rights. And any IP right should be protected and respected. That's a very important part of creation. The other message I'd like to get across is on secondhand goods. Now this is great to some extent because it allows products to have a new lease of life. At Hermès, we repair a lot of our products, and it makes me very happy when we have a granddaughter who brings the Kelly bag of her grandmother to have it repaired, cleaned up to give it a new lease of life after 3 generations.

It really is very exciting. Now there's also a secondary market where people sell Hermès bags at an inflated price. I'm less comfortable with that, obviously, not very happy that people buy to resell when we would like here -- or would rather to sell it at a lower price to our clients. But there as well, we have a number of ways to counter that. And then salespeople tend to trust people who come in the stores when they probably always -- shouldn't always, sorry. Now on the share price, I am very happy with our first quarter. I might be the only one, but I'm very happy with what our teams have done. The last quarter 2025 at exchange -- constant exchange rate, we were at plus 7% and now we're at plus 6% for Q1 2026. So there's only a small gap between the 2, which is very good, I think. 2025 was a bit difficult with foreign exchange. We lost EUR 0.5 billion because of the drop of some currencies or the increase of the euro. It's either or depending on what you prefer.

Some countries are trying to increase their exports. And if you have a weaker currency, it's great. Now we import a lot of our energy and the euro is strong, so it costs us a bit less and it kind of offsets. So plus 7% was, in fact, plus 9% at the current exchange rate. So the gap in performance for Hermès is quite small. So I'm very proud of that. Now where there is a risk is it's for the Middle East region. As you saw in the presentation, we recorded plus 15% last year, and we were growing very quickly in the area before the war started. For a very long time, our aspirational clients, especially in China, was less dynamic, but we were able to offset that elsewhere. And actually, we always made progress year-on-year in China, unlike our competition. When clients are affected, especially clients who have a lot of purchasing power and a very high average purchases, we are more affected by the Middle East than maybe others.

So we're going to be more affected than others. We were slightly affected for Q1, slightly affected because January and February were very good. March, less so. We're not responsible of exchange rates nor are we responsible of geopolitical developments. We do have experts in our Supervisory Board on such matters because we have bankers, specialists in geopolitics, we've got entrepreneurs. But nonetheless, it's difficult for us to foresee conflicts and to predict the share price. So I remain extremely proud of the work that we undertake. And secondly, I'm also -- well, not sure, I'm trying to look for a better word. I'm not sure, but I'm convinced nonetheless, that our model is relevant in the current world because we are very resilient. We've had quite a few problems to deal with over the last few years, and you need to prepare for this volatility, this uncertainty, this ambiguity since the beginning of [ 2020 ].

I'm telling you this to you today because you are a captive audience. When I say this at home, nobody really pays any attention. So since the beginning of the 21st century, we have a problem every 2 years, 9/11, SARS, Fukushima, terrorist attacks in Paris, the war in Ukraine, then COVID and now a war in the Middle East. So we discussed this with [ Patrick BOUCHON ], who's an expert, Professor at the [indiscernible] and specialist of middle ages and the play among other things. And he tells me that the crisis are inevitable and unpredictable at the same time. So there will be a next crisis, but I don't know where it will come from. Now our crisis will affect a division, a country, a region, but I think that with our strategy, we'll be able to offset that. So I am quite optimistic when it comes to the fundamentals of Hermès and our ability to navigate a world that is quite anxiety inducing in spite of my optimism.

And the share price has gone down to some extent, but the results, I think, speak for themselves. And I hope that the market will understand what we explain and not jump from one fashion trend to another. A few figures on that. If you have 2 companies, one that is at minus 60%, that is at [ plus 1% ] at [ 40% ] and [ 101% ] and the other one then goes at plus 60%. They're still at 64%, the one is at [ 102% ]. Now you could say, okay, you've done 1%, they've done plus 60%, but they came from a lower point. So I'm always quite careful when it comes to percentages. Well, just to say that our valuation is good. Our price earning ratio is 35x, where for the industry, we are slightly above 20x. And another indicator is the valuation of the company. We are 9x our revenue when on average for the industry, it's 2.7x. And the share price has gone [ 5.2x ] when the CAC 40 was 1.8x over the last few years. So yes, we are always very concerned when we look at the figures, but more reassured when we look at the competition around us.

Now your questions were very interesting. And I'd just like to add something to what Axel said. First of all, endorse what he said, but also remind you that we've talked about this long-term vision. And this long-term vision is really crucial at Hermès. Jean-Louis Dumas actually often used to say, and that will tie in with the question on marketing. Jean-Louis Dumas always said, what is important is our reputation more than how many people know about us. So we build our reputation rather than fame at Hermès. And the short-term obstacles need to be looked at through this long-term vision lens. And I hope that by doing so, you'll be happy and satisfied with our journey. Question 8.

[indiscernible], private investor. You've sort of answered part of my question. So I will agree with what you said, but I will make a comment nonetheless. I'd like to thank you for your strategy and the detailed beliefs of Hermès over time. This is even more valuable in these difficult times. My question is as follows. You have gone through and weathered a number of crises. You've mentioned this, exogenous outside crisis. And in the current political, geopolitical crisis and war, would you say that customers are changing their behavior and maybe might have an impact on future purchasing behavior. We've seen something with COVID. This time around, we've got peace maybe or maybe war, and that might have an impact.

Well, thank you. Thank you, madam. Can I be very honest here. The furthest reaching change I've seen over the last few years as concerns our sales to our customers is something that I experienced in the early 2010s. Up until then, the most reliable way of -- to forecast sales in a country was GDP growth. GDP growth meant increase in middle classes, meaning an increase in customers at Hermès and therefore, growth. from 2008,say, the most reliable proxy is real estate and the bond market, those share market. So you now buy more depending on your wealth than on your income. We've seen an increase in real estate valuation, significant indeed. And the issues we're experiencing in China is probably related to the drop in real estate valuation, leading people to spend less and save more. So the changes in the real estate market and the stock market are key.

Admittedly, war and peace have an impact, but you might see circumstances where there's a heightened nationalism with people wanting to be in an area more than in the world and feels that Hermès products because there aren't many of them, they're high quality, you don't find many replacements have maintained their appeal, strong appeal. And there's also an issue with geopolitics in the Middle East or at least in those parts of the Middle East, where the stores are still open because the authorities are trying to be normal even in times of war. In those places, the circumstances are still, well, weaker, but still positive, compare that to COVID when 83% of our stores were closed. And then we'll see what happens once the travails have come to an end. People tend to want to be happier and more joyful. So we just have to adjust to crises happening in some places.

I'm very mindful of our senior exec in Japan, who will be retiring this year, but we were together after Fukushima. The sales were significantly impacted. We reopened our stores because our staff wanted to be together with their colleagues, with their teams in the stores, and they felt better there than at home. It was a difficult year, but 2 years later, it was one of the countries experiencing the most buoyant growth. So you just have to go along with the fact that some markets have difficulties, other market -- new markets are slightly buoyant. Eric didn't want to say too much. But look at Japan and the such good results with 10% increase and the presence of a strong Japanese customer base, in part because we did what we had to do during Fukushima and in no small part due to loyalty. So we have to show that even in hard times, we are here alongside people.

Question four, please.

[indiscernible], a private investor. In the Middle East, in Saudi, you do not have a store, even though your main competitors have stores in Jeddah and Riyadh. Why?

True, we have been waiting. We've looked at what projects might suit us. You know the legal framework also has changed. You remember that we couldn't operate and run directly our business. Now we can. So we are thinking about it. But we do, rest assured, have a very good Saudi customer base. Tourists admittedly in the -- in Europe or in other places in the Middle East. So significant demand. But then how do you pick? How do you make your choice between Riyadh and Jeddah. Some haven't, in fact, chosen one over the other. So we're working on this, but we have to find the right kind of project. We need to find the right partner, et cetera, et cetera.

Question five.

[Audio Gap], private investor. On the exceptional dividend, you stopped paying them out. Is this like a horse bulking at the obstacle? Or do you expect to do that again? On Beauty & Fragrances on Page 27, there's an 8% drop in sales, even though a year or 2 years ago, you launched all kinds of makeup and creams and lipsticks. Was that a mistake? And what do you expect of that division?

Can I maybe contribute an answer to the dividend? That is the Supervisory Board's remit after all. Exceptional dividend. Well, as the name says, is exceptional. Others charge exceptional fees, which are not that exceptional, but we keep it exceptional in our dividends. Also, what we really want to have is a resilient payout, a balanced payout and a genuine share of value. And as you will have noticed, looking at the ordinary dividend here at Hermès, we've always paid out anywhere between 33% and 40%, say, 39%. And this year, we're at 39% payout.

And this is what we're really focusing on is trying to stay true to, which is why ordinary dividend increases, but in line with these objectives. But I do say that all of this is doing what we must and maybe we'd have been sending the wrong signal with a recurring exceptional payout. Axel then says, right, this is a message to the government. We've been honest with what is exceptional and what isn't. You haven't. And of course, the government might impose exceptional tax later in the future, and we might go back to exceptional dividends.

Well, Beauty & Fragrance, you tell us if it's glass half full or glass half empty. It's clearly not clear cut.

You know the industry is difficult. And again, we don't control our distribution and our retail in fragrance and beauty. You know about Sachs going bankrupt. You know the difficulties you've read that in the newspapers and all of that might have led to a slightly less dynamic market. Also, it's a very consolidated market. [indiscernible] and [indiscernible] talking about maybe merging. Some in our business have pulled out of that market. We're hoping to go on with our model, with our approach, which is demanding, maybe a bit difficult, but we are developing these products in-house. So the results are, as you will have noticed, always positive and still positive on beauty and fragrance in our stores, so where we have the upper hand. But very honestly, let me say, quite frankly, that the industry is -- how should I put it, focused, very marketing-driven, and that's not quite our general practice.

We're trying to stay true to ourselves while at the same time, do it their way. And maybe if we only did it our way, it would be worse. But results have been fairly good for Q1 on Beauty. On fragrances, we've had some partners that have had cold feet, maybe, but we have to focus on making sure that we are a tridimensional brand. So we have to find products that really work well on the market. We're looking at care. And we have to make sure that our products are better than those than the ladies in the family are using because everyone has been telling me, will your product be better.

Anyway, we will do something, and we hope that the products will be better for hydrating the skin, maybe doing something about anti-aging care also, I don't say it. We have something great, and that is Terre d'Hermès. We -- that is one of the best men's fragrances. Barénia had a good launch. And we just have to improve our position in rankings in ladies products. So I am fairly confident in the future. And can I say that what is happening is roughly in line with our strategic forecast, maybe a bit faster or starker, but I am convinced that these will progress and improve.

Question 10.

[indiscernible], private investor. Hermès restricts its production levels to preserve desirability. How do you strike a balance between growth of sales and managing scarcity? Is there a growth rate which you don't want to reach? And congratulations for 2025, hoping that 2026 will be just as good.

Okay. I understand the question. Thank you for putting it. I'm not sure I agree with your conclusion, though. Of course, people are telling us that it's marvelous the way we manage scarcity. It's not us. We're not doing it on purpose. It's just the way these products are manufactured. Craftsmen, that's what it is. We've not been creating desirability for 6 generations. No, we're just managing in-build scarcity in the craftsmanship in the craftsman model. And the fact is that we can't train more than 400, 500 craftsmen a year. And if we where we'd have an impact on production level. And I'm one of the annoying people who wanted to have that leather piping again in our stores. [indiscernible] is, of course mourning about it because you can't send everyone on leather piping on the hand rails.

I mean they usually do handbags, don't they? And when I send them to Seoul for a fortnight, well, that's a fortnight away from the work bench producing bags anyway. The other issue, which is a more structuring one than a longer-term one is the quality of materials. We mentioned that earlier, and industrial farming makes it a bit more difficult to find high-quality materials. So what I'm saying is that demand is high enough that I don't even have to think about artificially reducing the leather -- the production of -- the level of production of leather, sorry. We are using what we have, and we are, again, manufacturing in France and craftsmen are doing all they can. And okay. I mean, I'll pat myself on the back on this one.

But I very early on, felt that we had to have a -- strike a balance between the various businesses and not focus only on leatherwear. I am quite old. I ran my first internship in 1988, and it was 60% leather and 30 odd -- or 9% -- sorry, 65% in textile and 9% in leather in those days. But now we rebalanced it. Leather is about 45% of our sales and the other businesses, divisions have grown also, but thanks to their own strength. And we're not restricting growth on leather, and we're not looking at pie chart goals and setting the pie chart and then making -- squeezing our business into it. We're growing the pie chart.

Right. There are other questions. Question 11.

Good afternoon. I am an individual shareholder. And in spite of sending my question in writing in due course, I didn't receive my invitation. And in the queue, I actually realized that tens, if not hundreds of people were actually waiting and the staff was overwhelmed by the sheer flow of people who had not received their invitation. And some people in the queue were saying that this was not up to our expectations when it comes to Hermès' quality.

Well, thank you very much for that feedback. I do notice nonetheless that you were able to make it inside the room, and we're very glad and I hope it was the case for everybody else. But in any case, we'll take your feedback onboard so that our general meeting runs even more smoothly next year. So thank you for that comment.

Number one.

Mr. [indiscernible], individual shareholder. I'd just like to build on what the gentleman has just said. Quite a few of us were not allowed in, in spite of having our invitation. We insisted a little bit. And one of your representatives helped us to come in, but we don't have the devices to vote, and we can see that there are quite a few empty seats. So we don't really understand what happened. I arrived when we were talking about Japan, the video on Japan. So apologies if my question has been answered before my arrival in the room this morning. My question is, are you going to diversify your know-how? Are you going to branch out a little bit? And are you going to venture outside of France for production? There was this video about Japan. You talked about jewelry in Jaipur, India.

And there's also a kind of anti-western sentiment in many countries around the world. So against that backdrop, one might think that there will be some boycotts of Western brands. So my question is, are you thinking about it? Are you maybe looking for cross people outside of Europe, people who would do as good a job as those that are at Hermès currently? And secondly, I was wondering whether there was any study on building new subsidiaries abroad on top of the new stores that you already opened to avoid taxes in France, be it that exceptional contribution for large corporations. The landscape for taxes in France is not going to get any better, not for the foreseeable in any case. So are you thinking about options in that regard? And final question, we see that there is a slowdown in airline traffic. This will have an impact on your sales in airports. You also told us that your Indian clients buy Hermès products when they travel abroad. So will that impact you going forward?

Well, a quick answer because I've been quite long in my previous answers. I'll try to keep it brief to make my cousin happy. So first of all, on know-how. Now I am very much in love with our know-how and the techniques. And regardless of where they sit, I think it's great. I mentioned earlier the jewelry makers in Jaipur, it's great. Now we don't use them. We mainly make our jewels in France and a little bit in Italy. So our aim is not to have operations in all countries. Where you are right, however, is that when we spot a great know-how, we like to use it. For example, the craft people in Kyoto. We also have some handwoven products made in Nepal, which are more expensive actually than what we make in Lyon. But when there's an incredible know-how, we try and use it. And what we always strive to do, to answer your second question, is to draw on these know-how where there is a culture of that know-how.

For example, for leather goods, there's a strong culture of making leather goods in France. This is why 100% of our leather goods are made in France. There's a great culture of making silk products in Lyon. And therefore, a vast majority of our milk products are made in Lyon. So I don't believe that we can find ways to circumvent tax law or labor law by setting up somewhere else. Now I think it's worth setting up shop where we've been for several generations. And by way of example, we opened a leather workshop in Louvier. And by doing the construction work there, we discovered a needle that dated back to prehistorical times. And it's quite moving to think that 15,000 years before Christ, we were already making leather products here. But it's not always easy to push this narrative to the financial markets. But nonetheless, it's a nice story to tell. And sometimes, there are challenges because of geopolitics, because of air travel. But at Hermès, we are very lucky because we have a very strong local customer base.

Most of the demand comes from people who live around the stores. And actually, we have loyal customers who have their very own sales assistant, for example, or store director. What we have noticed in recent times is that Hermès clients mainly buy products in their own country. Now short term -- on the short term, it might create some negative impacts. As for the Middle East, we have clients who travel quite a lot. So yes, we've lost them for the time being because they used to travel to Europe quite a lot and likewise for Thailand. But we are multilocal. We are Taiwanese in Taiwan. We are Indonesian in Indonesia, American in America. And I think that's pretty much in keeping with global developments.

Okay. I can see that it's getting quite late. We're going to answer a few more questions. Please be brief in your questions and Axel promises to be brief in his answers. So if we could save a bit of time on the questions, that would be great. Number 12, I can't see very well, but over to you.

[indiscernible], I'm a journalist. Thank you very much for your presentations. They are always very interesting and inspiring. At the end of 2014, in an interview, you talked about maybe venturing into haute couture. Is that still the case? And if so, when is it going to happen?

Well, thank you very much. Yes, you are right. We embarked on this project that happened by chance. I talked about it, and other people decided to kind of run with it. But as usual, we want to do things the right way. So we are currently recruiting some teams to work in the workshops. We try to have a team that is up and ready. I have seen some proposals made by Nadège, and I think that they are great but maybe I'm a little biased. So the idea is to launch when we're ready and probably in the course of 2027. We have so many things to do in 2027. It's very exciting, but it's quite a crammed year, but it's an exciting project.

Okay. Two more questions because I can only see 2 placards. Number six first.

I've got only one question. I'm from Salzburg. I know that our store is based on franchise, which is running out by the end of the year. And I just want to know if there is a chance that we can keep Hermès store in Salzburg because I love it. And I have to say that I have compared the quality of other haute couture brands and your quality, your products are by far the best in the world. So thank you for the quality. Thank you for the products you offer and thank you for the services in all of your stores all around the world. And wherever I go, I visit Hermès because I really love your company, our company and thank you.

Thanks a lot for your comments because it's really warm. Probably worth translating that into French. The comment was mainly a word of gratitude for the products that we make. Our shareholder is from Salzburg. We have a store that will be transferred towards the end of the year, and our shareholder was worried about the future of that store. So Axel, over to you.

Well, first of all, we did not know. But after such a kind question, I can announce that Salzburg will remain open. Thank you to the shareholders for their kind support.

Well, quite an answer indeed, brief in any case. Probably not the best idea I've had Axel Dumas, but yes, that's my answer. Number eight.

[indiscernible], private investor. Looking at the world, there are a number of markets, Africa, Europe, Asia or rather I can't see Africa. Do you have any business in Africa?

Well, we don't have any stores in Africa. We haven't yet found the right place for these, the quality of the retail and the development or the size of the middle class. I mean, usually, we setup shop literally when the middle class is large enough in a place. Now we do have African customers, but they travel. And when we actually do set up a store somewhere, it's because the conditions are right. We tend not to be the first ones to get in quite simply because we move in for a local customer base and not for tourists. So we do have projects. We're giving them time, and you might have to wait a bit longer. I explained it.

Thank you very much. That was the last question of this question-and-answer session. Can I tell you, there were 2 questions or 2 comments about the way the assembly was run. Can I tell you that there was a 30% increase in attendance today compared to last year? So of course, we should have foreseen that, but it's not always easy. And also the request for voting cards was a bit later this year. We did try and work on this over the last 24 hours. We've asked as much as they could the shareholder employees to stay at home. They're online. And we've also added a few, maybe 100 or so seats in the room. We did try our best and apologies. We will do better next year, which now moves -- brings us to the resolutions. You are familiar with the voting terminal.

You have it yourself. You have 12 seconds to vote when I say voting is open. Please press on one of the 3 buttons, number 1, for, 2 against and 3 to abstain. You will see a confirmation of your vote on the screen -- on the display screen. If you've done press on the ring button, don't panic, you can press again. And it is the last button you pressed that will be taken account of. Can I also say that the only votes expressed by shareholders present or represented are taken into account for the calculation of the quorum. So let's now move on. We got it on screen, not quite yet, please. We will now move on and take the first resolution, approval of the parent company financial statements. Please vote.

[Voting]

Voting complete. The resolution is passed. Second resolution, approval of the consolidated financial statements. Please vote. Voting complete. Approved. Resolution 3, it's the discharge to the management. Please vote.

[Voting]

Voting complete. Approved. Resolution 3, it's the discharge to the management. Please vote.

[Voting]

Voting complete. Resolution passed. Resolution 4, allocation of net income and distribution of an ordinary dividend worth EUR 18. Please vote.

[Voting]

Voting complete. Resolution passed. Resolution #5, approval of related party agreements. Please vote.

[Voting]

Voting complete. Resolution passed. Resolution #6, authorization to the management to trade in the company's shares. Please vote.

[Voting]

Voting complete. Resolution passed. Resolution #7, approval of the information referred to in Chapter 1 of Article 22-10-9 of the French Commercial Code as concerns compensation for the financial year ended 31st of December 2025 for all corporate officers. Please vote.

[Voting]

Voting complete. Resolution is also passed. Resolution #8, approval of total compensation and benefits of all kinds paid during or awarded in respect to financial year 2025 to Mr. Axel Dumas. Please vote.

[Voting]

Voting complete. Approved. Resolution #9, approval of total compensation and benefits of all kind paid during or awarded in respect to the financial year ended 31st December 2025 to Emil Hermes, Executive Chairman. Please vote.

[Voting]

Voting complete. Approved. Resolution #10, approval of total compensation and benefits paid during or awarded in respect of financial year ended 31st of December 2025 to Mr. Eric de Seynes, Chairman of the Supervisory Board. Please vote.

[Voting]

Voting complete. Approved. Resolution #11, approval of the compensation policy for the Executive Chairman. Please vote.

[Voting]

Voting complete. Resolution approved. Resolution #12, approval of the compensation policy for members of the Supervisory Board. Please vote.

[Voting]

Voting complete. Approved. Resolution #13, reappointment of Supervisory Board member Mrs. Dorothée Altmayer for a 3-year term. Please vote.

[Voting]

Voting complete. Approved. 14, reappointment as a member of the Supervisory Board of Mr. Renaud Momméja 3-year term. Please vote.

[Voting]

Voting complete. Approved. Resolution 15, reappointment of Mr. Eric de Seynes as member of the Supervisory Board for 3 years. Please vote.

[Voting]

Voting complete. Approved. Thank you. Resolution 16, appointment of Mrs. Lucia Sinapi-Thomas as a new member of the Supervisory Board for a 3-year term. Please vote.

[Voting]

Voting complete. Approved at an overwhelming majority. Congratulations, Lucia. Resolution 17, authorization to executive management to reduce the share capital by cancellation of all or part of the treasury shares held by the company. Please vote.

[Voting]

Voting complete. Approved. Resolution 18, authorization to management to grant free existing shares. Please vote.

[Voting]

Voting complete. Approved. This now brings me to Resolution 19, amendment of Article 22 of the Articles of Association, which I mentioned earlier. Please vote.

[Voting]

Voting complete. Approved. Resolution #20, delegation of authority to carry out formalities related to the meeting. Please vote.

[Voting]

Voting complete. Approved. This brings us to the end of the meeting. Thank you so very much for coming in such great numbers. I hope to see you next year for the next general meeting on financial year 2026. Thank you, and good day to all.

Ladies and gentlemen, welcome to the 2026 Q1 Revenue Analyst Conference. The floor is now to Eric du Halgouet, CFO; and to Alexandra Boucheron, in charge of Investor Relations. Over to you.

Good morning, one and all. Thank you very much for joining for this conference. The group's consolidated revenue amounted to EUR 4.1 billion in the first quarter of 2026, up 6% at constant exchange rate with double-digit growth in Americas, Japan and Europe, excluding France. Moreover, Greater China continued its slight growth. This level of growth is all the more remarkable since the group has enjoyed strong growth over recent years, especially in 2024, 2025, especially in Greater China when the rest of industry was not growing.

Due to the significant negative impact of currency exchange rates, around EUR 300 million, sales declined slightly by 1% at current exchange rate. At the end of March 2026, Americas, Japan and Europe, excluding France, recorded strong growth in sales despite the slowdown in tourist flows linked to the situation in the Middle East, sales in the group stores increased by 7%. Furthermore, wholesale activity was significantly affected by lower sales to concession stores, particularly in the Middle East and in airports.

In keeping with our policy of sharing the fruits of our growth at the beginning of 2026, Hermes distributed EUR 328 million to employees. In respect of 2025, this includes profit sharing and incentive schemes in France and a EUR 3,000 bonus to all employees. In a tense geopolitical environment, Hermes maintained its course true to its long-term strategy, supported by its abundant creativity, its uncompromising quality and the loyalty of its customers. Hermes continues to be profitable to grow in 2026 with confidence and conviction. The fundamentals of the Hermes model are more than ever a differentiating strength.

Therefore, for 2026, our outlook remains unchanged, and the group confirms an ambitious goal for revenue growth at constant exchange rates.

Over now to Alexandra for the regional and division breakdown.

Good morning, one and all. Let's take a look at the regional breakdown. The figures are at constant exchange rate. At the end of March 2026, as Eric mentioned, Americas, Japan and Europe, excluding France, recorded strong growth in sales. France and Middle East are struggling because of the current geopolitical context. First of all, Asia, bar Japan is at plus 2%. So recorded growth in Q1, driven by the loyalty of local clients and the House's value strategy. Greater China continued its slight growth. Korea maintained solid momentum, while performance in the rest of the region was more subdued. In January, a new store opened in Hanoi, Vietnam, and that strengthened the house's presence in the country.

Japan next grows also plus 10%, continues to record solid growth supported by strong footfall and the loyalty of our local clients there. The store, Umeda Hankyu in Osaka was expanded and renovated in March. And then Americas, plus 17%, delivered an exceptional Q1 after a strong performance in 2025. Growth is balanced across all the mid-tier, the United States, Canada and South America. Europe now excluding France, posted 10% growth. So once again delivered a solid performance supported by local demand. France, minus 3% was affected by a slowdown in tourist flows, particularly in March linked to the situation in the Middle East.

The 16th edition of the Saut Hermes event, which brings together the world's leading showjumpers was successfully held under the glass roof of the Grand Palais in Paris at the end of March. This international event combines sporting excellence and the promotion of our craftsmanship and know-how. The area other, minus 6%, primarily includes the Middle East, which was significantly impacted by recent geopolitical developments in the region from March onwards, notably the UAE, Kuwait, Qatar and Bahrain.

Let's move on now to the division breakdown, also at constant exchange rate. At the end of March 2026, leather goods and saddlery, other Hermes divisions and silk and textiles recorded robust performances. Leather goods and saddlery is at plus 9%. It benefited from the strong desirability of the collections and increased production capacity. The Faubourg Express bag, a new style with an elongated format, echoes travel bags and the Collier d'attelgage bag, echoing these curved line, straps and rings of the eponymous collar has been particularly successful as well. The Herbag line has been enriched with a new mini format, the Herbag 20.

Last Friday, we inaugurated our new production workshop in Loupes. Production capacities continues to expand with the planned workshop opening of Charleville-Mezieres in 2027, Colombelles in 2028 and Les Andelys in 2030. So that's for the leather workshops due to open. Hermes thus continues to strengthen its local footprint in France and developing employment and training opportunities here. The ready-to-wear and accessory sector delivered a stable performance and continues to grow.

The women's fall/winter 2026 show at the Garde Republicaine in March was very well received. Following its January unveiling in Paris, the latest men's fall/winter collection by Veronique Nichanian, Artistic Director of Hermes Men's Universe of 37 years, sparked great emotion at the February presentation in Tokyo. The silk and textiles sector is up 8%, recorded solid growth driven by continually renewed creativity across both the women's and men's collection. The L'esprit s'envole carre scarf perfectly illustrates this creative vitality, poetically echoing the theme of the year, Venture beyond.

Perfume and Beauty recorded stable sales. The Hermessence collection welcomed Musc Pallida in February, while the Jardin collection was enriched with a seventh creation: Un Jardin sous la mer, aligned with this year's theme and promising the discovery of an unexpected garden. In January, Hermes beauty also launched Plein Air, its first skincare foundation available in 34 shades. In a still challenging environment, the Watches metier, minus 4%, expanded its offering by presenting several timepieces in Geneva at the Watches & Wonders Show, showcasing also its know-how with the new Hermes H08 featuring a state-of-the-art skeletonized titanium movement and the Arceau Samarcande, the minute repeater, which enriches the family of great complications.

Hermes also continued to expand its production capacity with the extension of its watchmaking facility in Le Noirmont, Switzerland, scheduled for completion by 2028. The other Hermes divisions grew by 7%. They include jewelry and the Home Universe, which continue on their momentum, showcasing the full creative strength and singularity of Hermes. The Haute Bijouterie event to Double Tour, celebrating the excellence of the house's jewelry craftsmanship took place for the first time in Tokyo in March. It presents a jewelry narrative in motion and the beauty of an ever-renewed bond. The new porcelain service, Natures Marines, was unveiled in January in Paris.

Thank you very much for your kind attention, and we are now available if you have any questions.

[Operator Instructions] The first question is from Luca Solca from Bernstein.

First of all, I was wondering, given the growth that you're recording today, I wondered if you were maybe up against more competition with the renewals at CHANEL, at Dior. In our analysis, we've seen that the footfall in China benefits to novelty. So with this new competition from outside, are you going to change your growth formula at all or not? So do you think that you need to do more of the same, basically? Or do you need to recalibrate your strategy?

Second question, are there some temporary elements that impact the availability of products or of stocks during Q1. That would help us to better understand the results of Q1.

Thank you very much, Luca, for those questions. As I mentioned, the fundamentals of Hermes are going to be crucial going forward, especially in this more complicated context. Therefore, we are not going to change the Hermes model. Creation lies at the heart of everything that we do. We have this freedom to buy, freedom to create that we're going to stand by. And what we see for the latest collections is that all the new products were very successful.

And now on your question on stocks. We have good stocks at the moment, especially in ready-to-wear and shoe. We had a very good sell-through rate for the spring/summer collection, which was sold during Q1. And we have stock ratios which are quite low. But all of this is going to be addressed in the next few months. But in any case, we are not going to change the model of the group to answer your first question. Will there be more innovation, do you think?

The next question comes from Kepler Cheuvreux, Charles-Louis Scotti.

I have 2 questions. First of all, could you quantify the impact of the conflict in the Middle East on organic growth of the group. What's the direct impact in the region, but also the impact across the world. I know that other groups have done it. Second question, I understand that there's a slowdown in Europe and in France due to a drop in tourism. But for the impact outside of Japan, I don't really understand because I see that other brands are growing faster. So could you tell us a bit more about the APAC region?

Okay. So a quick update on the Middle East. I have to start by thanking our teams who are doing a great work out there. We regularly reach out to them, and we focus on their safety first. This is why some of the stores actually were closed at the beginning of March or we changed the opening hours. But what is quite amazing is to see that our employees are all there. We've got about 500 people out there in the Middle East, 400 In the UAE and for Bahrain, Kuwait and Qatar, another 100 people.

What you need to bear in mind is that for January and February, we had great double-digit growth, which was very homogenous across these 2 months. It's only in March that the revenue started to go down. In the Middle East, we have 6 stores, 3 of them are directly operated by us. In the UAE, we have 2 stores, 1 in Abu Dhabi, 1 in Dubai, and they make up most of the revenue for the area. And then we operate through 3 concession stores in Qatar, Bahrain and Kuwait. So we have no stores in Saudi Arabia to date and no e-commerce at local level either.

So when you take this region, which is called other, which mainly makes up the Middle East, you can see that it makes up 4.3% of the total revenue of the group. But if you add to this, the sales, 2 Middle East clients that travel to other regions of the world, mainly in U.K., Italy and Switzerland and France. And Italy is a country that is nonetheless growing very quickly in spite of the fact that Middle East customers make up a big share of the revenue there.

So we had to close some of the stores at the beginning of March, mainly in Dubai and then in Bahrain and Kuwait because of the airports that closed and for security purposes. So our revenue dropped by 20%, 30% depending on the day and on the stores that we operate directly. So to answer your question, we estimate that the impact for the group will be 1.5% for the group for Q1. So the 7% I mentioned earlier should have been 8.5% if we hadn't had these developments in the Middle East.

And then early April, we can see that there is a slight improvement because all the stores are now open in the Middle East. And I'd like to conclude by saying that our fundamentals remain strong with great teams out there and loyal clients. And we are confident when it comes to the future developments for the region.

And to answer now your second question on Asia Pacific. I'm going to start with Greater China. So as for 2025, the region is growing slightly compared to a high basis point. We've had several years of constant growth in a difficult context, as you know. So we've got a quite homogenous growth in Greater China, be it Mainland, Hong Kong, Macau and Taiwan. And that was -- it's also worth noting that we had a great Chinese New Year last year. So we are growing slightly compared to 2025, but 2025 was a high comparison point. And we talked about the end of year trend in 2025. We see that traffic or footfall rather is flatlining, which means that we are very confident or is slightly picking up, so we're slightly confident.

No other trends that are noteworthy for us for beginning of April for Greater China. Now in Asia, we have 2 markets that are performing really well, Korea and India and a more subdued situation in Singapore, for example. And there's also the case of Thailand, Thailand, where we have more export customers. So the growth that you see at 2% if you remove retail, which was disturbed, retail is at 3%.

The next question is from Anne-Laure Bismuth from HSBC.

Well, I have 2 questions for you. First of all, on current trading. Thank you very much for clarifying the early April trends. But could you tell us about current trends at group level in April? How do they compare? And second question on leather goods. In light of a performance, which is slightly under what was expected, could you tell us if your 6% increase in volumes and 6% increase in sales, are you going to stick to that. Because that would mean that there should be a strong speed up in the rest of the year. Are you still confident you can reach that.

Well, for all geographical regions, there is no disruptions in the trends. We see that there is a strong momentum in the U.S., for example. But for the rest, no change in our objective. So for leather goods, indeed, we have a 9% growth in Q1. And it's worth reminding also that our annual objective is not necessarily linear from 1 month to the next or 1 quarter to the next, and that's down to our artisanal model. There can be some issues with manufacturing, which means that there are some delays that we catch up later.

So from one quarter to the other, our production is not linear. So our overall annual growth is -- or growth objective remains unchanged. And we were also very glad to open our 25th leather goods workshop in Loupes, which is the second in the border region. And just a final word on this to say that demand remains very strong in all markets, both for iconic bags and for all the other bags. So it's worth reminding that growth for leather goods is going to pick up, speed up in months to come gradually.

The next question is from Edouard Aubin from Morgan Stanley.

Two questions on my side. Could you please give us a bit more information on your exposure to airports because I know that you operate these stores directly. So tell us more about international travelers and your exposure to that. And you also have a greater exposition to local clients than your competition. So could you give us some numbers on that exposure to international tourists?

And second question, you just talked about growth, 6% for leather goods for this year. You tell us that this remains unchanged. But I asked Axel Dumas the question in February. For the longer term, are you not going to reduce the number of iconic bags that you make to keep them desirable, very much like what Ferrari does or not.

Right. Regarding travel retail. So we mainly operate concessional stores. It's not a huge share, but out of the 60 concession stores that we have, about 40 of them are affected. Deliveries to the network was affected because of the drop in footfall in airports. But also because it was harder to deliver these goods because they travel by air and often go through Dubai, especially for stores that are located in Asia, South Asia and Korea.

Regarding now tourism, which was your second question. The 2 regions where we are the most exposed to these export customers or tourism is, number one, France, especially in our Parisian stores. And we see it quite clearly in France because our stores on the coast are doing really well and the stores outside of Paris and in France are doing really well. But the Paris stores are more affected. And if you look at the nationality breakdown, we see that it's mainly clients from the Middle East and from Greater China who come less to Paris. And that is offset by a European clientele that has traveled to Paris and also American clients that travel to Paris.

As I mentioned, Europe is affected by tourism, but less so. We can see in Europe a drop in the number of tourists from the Middle East. We see it in Switzerland, in the U.K., for example, but also in Italy. But there is, however, a significant increase in the number of U.S. customers in these places. What's important to note for Europe is that local customers continue to grow, double-digit growth actually, and that is very important in these current times.

And then a final word on leather. There is no change to our strategy. We do have iconic products, of course, but we also have about 15 products, which make up a huge part of the volume. And we remain true to our policy of freedom to buy. So the markets, the stores are free to buy what they want and to give their chance to new models, some disappear after a couple of years, others emerge later on down the road, 4, 5 years later. So we're going to stick to that. But in light of our production capacities, we make sure that we have this capacity to also produce new models and not just focus on the iconics because we want to create other bags, not just Kelly and Constance.

And the next question is from Thomas Chauvet from Citi.

Two questions. Number one, on jewelry and on the other divisions that are at plus 7% after 6 years of double-digit growth. There is a slowdown in volumes in that segment. Could you explain this for us, please. Because we've seen jewelry speeding up in T1 -- or Q1, sorry, for your competition. And secondly, on prices and on the resistance of clients to price increases. We've seen your figures for Q1. We have factored in the 1.5% impact of the Middle East. But do you think that the 6% price increase explains, to some extent, the greater volatility of these categories. And how does it affect your aspirational clients?

I think Axel Dumas spoke to this last year. We know that these aspirational clients bought a lot of Hermes products between 2020 and 2023. What of them now. So yes, a comment on price increases, please. I know that the aim is to cover your input cost, but clients don't necessarily see it that way or think about it that way.

Well, regarding your first question on the other Hermes division, as you mentioned, it makes up jewelry and the Home universe. What I can tell you is that for jewelry, we haven't got the exact figure, but it's growing, and it's growing close to double digits, whereas the Home universe and Tableware suffered a bit more of the slowdown and the current context in the Middle East.

So jewelry to conclude, continues to grow strongly and to drive the growth of the group, and there's no changes in the trends here. Regarding price increases now. So as we always say, we remain true to our principle of passing through our input costs as little as possible. We've increased wages of our employees. We've paid out bonuses. We have a free share plan as well. So you need to bear that in mind. And then for divisions like silk, we had great performance. And our conclusion is that it's really the quality of the collections, the colors, the formats that really make a difference.

And we don't see any issues pertaining to price increases right now. I think that was your question in a nutshell. And yes, that's all we have to say on that. Alexandra says, no, I think we've answered that question.

And the next question is from Carole Madjo from Barclays.

Two questions on my side. First of all, on Middle East. Now the region is quite profitable. So how is that going to impact your margins for H1 and for the full year. And then on ready-to-wear, there's a slowdown in Q1 because it has remained flat. Could you tell us why there is this slowdown? Is it because of shoes, belts? Are they underperforming compared to others? And how can you maybe foresee growth in this area for Q2 and the rest of the year?

So at this point, the impact of the slowdown because of the Middle East is not significant on profitability. It remains to be seen whether the events continue for a month or 2. But if it's just 2 months, I think that we can absorb this impact without too many difficulties. Regarding ready-to-wear and accessories, we are indeed flat for Q1. But here, the developments are slightly changer. Men and women's ready-to-wear are slightly growing. But conversely, fashion accessories are slightly down and shoes are growing slightly.

Overall, what we can say is that for ready-to-wear and for shoes, these divisions are strongly impacted by the slowdown in the Middle East and the slowdown in tourist flows towards France. But shoes, be it the sneakers and the Oran sandals are very successful in the Middle East. So that had a huge impact in Q1. And as I mentioned at the top, we've got a great sell-through rate for the new items for spring/summer collections for both men and women ready-to-wear. And we have low level of stocks for these novelties because of sell-through rates that are beyond our targets.

So we've got healthy stocks overall. And what I can tell you is that the fundamentals for shoe and ready-to-wear are very solid. So strongly impacted that division by the developments in the Middle East.

The next question is from David Da Maia from CIC CIB.

My questions have been answered actually, but a quick question on the sequential performance across Q1. We see that LVMH and Kering have spoken to an improvement of trends in March, excluding the Middle East. Have you seen the same?

Well, if you exclude the impact of the Middle East, we are, yes, slightly improving in March, but January, February, March are all, yes, months where we've grown homogenously, a slight improvement in March.

The next question is from Zuzanna Pusz of UBS.

I will stick to 2. So first of all, on the tourism exposure. I appreciate -- I guess I'm just a little bit confused. I mean, having followed the company for over a decade, you always said you had a very low exposure to tourism and that actually majority of your sales were locals. And I guess now there is some impact. So I appreciate this is something you didn't want to quantify before, but I guess, given how material it seems to be now, is there any chance you could tell us what percentage of your sales in Europe is to tourists. Other companies say on average is, I don't know, half of their sales in Europe. So any number would be very helpful for us and I think for investors to really understand the situation.

And secondly, maybe specifically on France. I know that I think in the French region, you sometimes book also wholesale sales and travel retail. So would you be able to tell us what -- let's say, what is actually France region in terms of the actual retail performance. I'm asking because I wonder if this is not a region specifically exposed to people coming in because they know, well, at least that's sort of what people argue on social media that it's easier to get a bag in France in some of the stores by buying ready-to-wear and shoes. But obviously, it's just all anecdotal, but -- so I guess my question is what is actually France retail.

So regarding tourists, the region which is more impacted is France, where it's more than 50% of our sales are linked to sales to tourists. And in France, as I mentioned before, we have a strong decrease of the Middle East customers, which is partly offset by a significant increase of the American customers. In Europe, to a lower extent, but we observed the same trend, decrease of Middle East, offset by Americas and Greater China customers is slightly higher, but this is not significant. Regarding France, we -- so you can see minus 3% for the first quarter. If you exclude sales to Travel Retail and concessionaire, the decrease is only minus 1%.

Excellent. Just to follow up on tourism. So you said more than 50% of sales in France is tourism. But if we took all Europe together, would you be able to quantify just so we can compare it to other companies. Is it less than 50% for all of Europe or also roughly 50% for all of Europe together with France.

More than 50%. And what is important is that in France and in Europe, sales to local customers are increasing. And even in Europe, it's double-digit increase.

The next question is from Melania Grippo of BNP Paribas.

This is Melania Grippo from BNP Paribas. I've got 2 questions. First, I wanted to ask you regarding your store openings in Q2. I think I recently saw the openings of your store in Beijing. Could you please give an update of the stores, especially the large ones that you are going to open in Q2. And then I would like to understand if when talking the performance of leather was homogeneous across countries.

So Alexandra will give you the main perimeter impacts we expect for the Q2, Q3 and Q4 because we had a very few -- very limited number of perimeter impact in Q1, while we have quite a big planning for the remaining part of the year.

Yes, exactly. So as Eric said, pretty negligible impact over the first quarter. And then for the rest of the year, I would say that we have around 20 projects in the pipe for the coming quarters. In terms of opening, we have a few. I can give you some examples, 3 openings projects in Americas, 1 in Chicago, and 2 in New York, namely one in Williamsburg and one in Manocet.

Another project that we have in Japan, an opening in Nagoya in Q2. And the last, an opening that just took place at the beginning of April of a new store in Beijing in Sanlitun that we talked about. Maybe talking about renovation with enlargement of stores, I would say that there are 2 key projects that we've already communicated about. One is beginning of mid-June in the U.K., in London, in Bond Street. So it's actually moving a store from one location to the other. But it will be a very nice Maison that we will open mid-June.

And maybe another project that I could name is the one in Geneva, where we will actually open a new store in Q4 this year. But obviously, we have other projects in Americas, in APAC or in Japan throughout the year in terms of renovation with enlargement. And maybe just to give you a sense of the impact that it will lead to over the year in terms of growth contribution that should limit to a bit more than 1% contribution on sales for the whole year. So -- because as you know, we have -- when we do open new stores, sometimes we close other. So I would say that net-net, it should be a bit more than 1% contribution.

So regarding your second question on -- we have the same pace of growth by region, except for Middle East, where it's a little bit higher due to the circumstances that you can understand.

The next question is from James Grzinic of Jefferies.

Two questions, please. First one, can you please clarify that point that you made on air freight challenges. Did that only impact the wholesale channel. Did that impact also retail inventories in Asia in the quarter. And if so, is that included in the 150 basis points impact that you quantified for us from the Middle East?

Secondly, it would be great if you could please unpack the Greater China slight growth in Q1 performance. Can you perhaps differentiate by product category. Should we think of leather, for instance, at mid-single-digit growth in Q1 for Greater China. That would be very helpful.

So the growth of plus 6% for the first quarter, as we said, is a plus 7% in the retail activity, and it's minus 7% in the wholesale business. Where does it come from? It's mostly from Travel Retail and sales to concessionaire. As I explained when speaking about Middle East, Qatar, Bahrain and Kuwait are today concessionaire, and we had to stop or to postpone our deliveries. So it's more for the concessionaire business for Travel Retail, it's more a question of postponement than cancellation for the time being. It's timing.

Okay. I just wanted to clarify perhaps for translation purposes that there wasn't any impact on availability of air freighting via the Middle East to Asia that may have impacted inventories availability in Asia on leather. Just wanted to triple check that.

You mean if we had difficulties to deliver our leather products to China.

Correct. Yes.

No, not specifically. No, it's very much linked in the wholesale, I would say, to the Travel Retail. So obviously, less travelers impacting Travel Retail. And on top of that, we have part of the business that we do operate in the Middle East that is still under concession. So that goes into wholesale as well. So the Qatar, Bahrain and Kuwait stores, we have one store in each of those place, I would say, and that are part of the wholesale as well. So obviously impacting negatively the business in Q1 of the wholesale.

Very clear. I just wanted to exclude a second derivative impact. So that's clear. yes. And on that Greater China, perhaps if you could unpack leather versus non-leather would be super helpful.

So in China, the growth of leather is more or less in line with the non-leather businesses, which is good for us. It's a slight increase combined of leather and non-leather business.

Okay. Great. Thank you very much. I think, Eric, maybe you would like to conclude.

Well, thank you very much for your kind attention and for all your very interesting questions. I'm going to conclude by saying that in this uncertain geopolitical context, the fundamentals of Hermes make us an interesting proposition, a differentiating also feature.

[Interpreted] Ladies and gentlemen, welcome to the 2025 Full Year Results of Hermes International. I'm now going to give the floor to Mr. Axel Dumas, Executive Chairman of Hermes International; and Mr. Eric du Halgouet, Financial Director. Gentlemen, over to you.

[Interpreted] Good morning, one and all. Thank you very much for joining us for the year 2025 full year results. We are very happy to have you here over once again at our Sevres store. After a good Q4 with a 10% growth at constant exchange rate, I'm very happy to present you the robust results for 2025. Our 9% growth rate has allowed us to exceed the EUR 16 billion mark for our turnover and also we've improved our current operating profitability. 2025 was marked by more uncertainty, but Hermes maintained the course, kept the right balance and remain true to its value. The solid results of this year reflect the success of our creativity. The care we put into our material know-how and vertical integration.

We continue to invest to ramp up our production capacity and to secure our supply chain. We continue to grow our distribution network across the world to support long-term growth.

In 2025, operational investments reached EUR 1.2 billion. We also created new jobs and trained our staff. Hermes onboarded an additional 1,300 people, 60% of which in France. And true to our belief that we need to share the fruits of growth. Hermes announced a general wage increase of EUR 120 with additional individual bonuses for all employees in French. Moreover, Hermes will be paying out a EUR 3,000 bonus to each of our 26,000 employees across the world for 2025.

Let's now talk about the highlights. Every year, the teams are inspired by the theme of the year. In 2025, it was drawn to craft. There were many striking examples. For example, the So Medor bag, the Seau Mousqueton, the Haut a Courroies a relier that you can see on the screen, which were all very successful.

The Home department was also very successful at the Milan Fair as well as the launch of the new Tableware service Hermes [indiscernible]. Men and women's Ready-to-wear were also very well appreciated in Seoul, Hong Kong and Shanghai during the shows. And I'd like to thank Veronique Nichanian, who contributed immensely with her talent to the Men's Ready-to-wear division over the last 37 years. It was very emotional to see her present her final collection in January 2026. Her talent, conviction and sense of fun shaped the destiny of Hermes Men's Universe with great style.

To reinforce our vertical integration, we continue to invest in our production capacity across all divisions, in 2025, we inaugurated our 24th leather workshop, L'Isle-d'Espagnac. We are going to be integrating this year a new leather workshop in Loupes and construction is underway in two other locations, Charleville-Mezieres and Colombelles, and they will be opening respectively, in 2027 and '28.

At the end of January 2026, we also announced the opening of a new leather workshop in Andelys in 2030.

We have also increased and invested in the production capacity in other divisions. For example, we have a new site which is under construction in Couzeix for Tableware, and we invested also in our watchmaking capacity.

We continue to secure our supply chain with our long-standing partners and continue to grow these sectors of excellence, especially in France.

Moving on now to our exclusive and integrated distribution network. We continue with our multi-local strategy. In the U.S., we have two new stores that were inaugurated in Scottsdale and Nashville.

We have about 15 extension and renovation projects. Among which, Florence in Italy, Knokke, Macau and Changsha.

The creation of Hermes also finds it's expression in our communication. In the second half of 2025 with Hermestories. We invited people in Milan to discover the history of Hermes through a theater play. Hermes in the Making stopped off in Shenzhen, Istanbul and Taipei. More than 66,000 visitors met the craftspeople of Hermes and discovered our know-how.

In 2025, the eighth collection of high-end Jewellery was presented in Hong Kong, Singapore and Tokyo. So the formes de la couleur and petit h Taichung, Seoul and Vancouver.

Moving on now to our responsible CSR approach. True to its social model, the Hermes pay out EUR 328 million to its employees for 2025, including bonus, incentives and profit sharing. Hermes also pursued its actions at aiming at strengthening inclusion and diversity. And henceforth, has 49% remain in the top 100 positions.

The strategy -- the environmental strategy has been pursued. Deployment of plans for decarbonization for all the divisions has allowed us to reduce by 69%, the emissions of Scope 1 and 2 in absolute values compared to 2018 and by 58% and intensity for Scope 3 in the same period. We continue to draw on local know-how unemployment, namely in France. And thus, the group has created 1,300 jobs in 2025, of which 800 in France. Over 3 years, this represents 6,200 jobs, a figure, I'm particularly proud of.

We've also opened two new training schools, they call Hermes Ecole des savoir-faire, totaling a number of 12 training schools with the CAP diploma.

Environmental ambition is also embodied in the responsible development of the production capacity of Hermes with the inauguration in last September of the leather workshop of L'Isle-d'Espagnac in Charente. Developed on a rehabilitated Brownfield site, this high energy efficiency building is exemplary -- has exemplary sustainability and reasserts a local anchoring.

The environmental and social commitments of Hermes have been recognized by the main nonfinancial rating agencies, such as the confirmation of the inclusion of Hermes in the A List of CDP, placing Hermes amongst the companies deemed to be the -- have the best performance worldwide on the environmental issues, improvement of Sustainalytics rating and finally the Transparency Award, which reward the quality of the financial information in regulated information publications.

Let me now come to the activity. In 2025, Hermes achieved a remarkable performance. The revenue in 2025 exceeded EUR 16 billion, up by 9% at constant exchange rates and 5.5% at current exchange rates. All the regions with the exception of Perfume, Beauty and Watches have recorded a solid progression.

In Q4, sales amounted to EUR 4.1 billion, progressing by 10% at constant exchange rate, the same pace as the previous quarter on a high comparison basis. All regions have had sustained growth. Europe, Japan, America and the Middle East are progressing with a double digit, while Asia, excluding Japan, has grown by 8% in the fourth quarter.

Let us look at the activity by geographical area over the year. In 2005, all geographic region recorded sustained growth. France plus 9%. Europe plus 11%. Flat solid progression carried by the loyalty of our local customers and the dynamic of tourism flows. Japan plus 14%, pursues its remarkable momentum, thanks to the loyalty of its local customers and its exclusive retail network. Asia, including Japan, plus 5%, recorded beautiful performance. In all the countries of the region, all posted growth.

America, plus 12% recorded excellent year in the U.S.A. as well as the other countries of the region. And finally, other zones, including the Middle East, mainly strong growth of 15%.

The geographical breakdown of our revenue remains well balanced with a slight rise in Europe and in Japan as compared to last year.

Now let's look at the revenue per division. In 2025, Leather Goods and Saddlery plus 13%, pursued a sustained growth in line with its annual objective, carried by the strong desirability of our models and the increase of our production capacity. Clothes and Accessories division confirmed its dynamic movement plus 6%. Silk and Textile division, plus 5% after a good Q4, progressing, thanks to the diversity of the formats and materials.

Perfume Material division, minus 8% with a lesser performance. Watches, minus 2% after a first semester, which is difficult, but good growth in the second half of the year.

Finally, other divisions of Hermes plus 11%, which includes Jewellery and the Home universe pursues their solid progression.

The revenue by sector and division is quasi-stable as compared to the previous year.

I'm now going to give the floor to Eric du Halgouet, our CFO, who will present the solid results of the year.

[Interpreted] Well, thank you very much, Axel. Good morning, one and all. The group achieved a solid performance in 2025 as in 2024. Operating income is up 7%, exceeding the pace of sales in spite of negative exchange rate effect.

Net profit restated after the exceptional contribution for French large companies is up by 5.5% and our business cash flow is up by 11%.

Our revenue was in excess of EUR 16 billion in spite of negative exchange rate effects to the tune of EUR 500 million, which comes from the depreciation of the dollar-yen compared to the euro. Our gross margin stands at 71.1% versus 70.3% in 2024.

Negative currency hedge was offset mainly by the accretive conversion effect and a controlled increase of our cost as well as an improvement of our sell-through rates.

Communication expenditure reached EUR 620 million and make up 3.9% of sales. At constant exchange rate, they are stable compared to 2024, a year during which we launched the Barenia fragrance.

Sales and admin expenses include the cost of our distribution network and support functions and variable rent stand at EUR 3.1 billion and is up by 5%. The group beefed up its headcount in the stores to support growth and also invested in IT projects for the distribution network and logistics.

Other income and expenses are made up of depreciation of assets, right of use, stand at EUR 1 billion. The increase compared to 2024 is down to the speeding up of investment and to the increase in the social contribution from 20% to 30% on the free share plan, which was given out to employees in 2023.

Our recurring operating income, therefore, stands at EUR 6.6 billion and is up 7% versus 2024. On this graph, you have our high level of recurring operating profitability over the last 5 years in spite of the negative exchange rate effect. Our recurring operating profitability is up by 0.5 percentage points and reached 41% in 2025.

Net financial income is a total of EUR 207 million versus EUR 283 million in 2024. It includes the cost of currency hedging, income on cash and reached EUR 300 million versus EUR 400 million in 2024 because of lower interest rates.

Tax expenditure is impacted by this exceptional contribution on profits in France. This additional tax of 41.2% reaches EUR 330 million. It is equivalent to a 5 percentage point increase in 2025.

Net income of associates stands at EUR 47 million and corresponds to our share of results in the Middle East by UAE.

Net income group share stands at EUR 4.5 billion. And when accounting for exceptional contribution it is up 5%, 5.5% at the same pace as revenue.

Excluding exceptional contribution, net profitability stands at 30.3%, a high level, which was already achieved in 2024. Between 2015 and 2025, our sales CAGR and our net income CAGR stand respectively at 13% and 17%, and that is in spite of negative exchange rate effects over the last 3 years. Over the last 5 years, our revenue has been multiplied by 2.5 and net income by 3.5.

Operational investments reached EUR 1.2 billion in 2025. The group sped up its investment in the distribution network and production capacity. We devoted EUR 769 million versus EUR 611 million in '24 to securing our strategic locations to renovation and to growing our network in the U.S. with Scottsdale, Beverly Hills also in Europe with London, Geneva and also our Beijing Sanlitun projects.

EUR 226 million were devoted to reinforcing our production capacity mainly for new leather workshops in Charleville-Mezieres, Loupes and L'Isle-d'Espagnac as well as upstream in silk, hardware and the home department. And EUR 166 million were invested in real estate, digital tools and information systems.

Operating cash flow stands at EUR 5.6 billion. Restated after the exceptional contribution, it is up 10% versus 2024. Working capital requirement variation represents as in 2024, a limited use of cash to the tune of EUR 200 million, thanks to a good management in stock both in production and distribution.

Cash flow related to operating activities reached EUR 5.4 billion, is up 11%, excluding the exceptional contribution. Once accounting for operational investment and reimbursement of rent debts, our adjusted free cash flow stands at EUR 3.9 billion.

Financial investments correspond to shares bought up under our vertical integration and upstream downstream integration strategy. EUR 2.8 billion worth of dividend were paid out. Hermes International didn't buy back any of its shares.

After taking into account the negative exchange effect, our restated net cash flow position went up by EUR 700 million and reached EUR 12.8 billion.

The structure of the balance sheet remains the same as in 2024. Our cash makes up more than 50% of assets and equity, EUR 19 billion, more than 75% of our liabilities and the solid financial structure allows us to remain independent and to execute our long-term strategy.

The ordinary dividend, which will be submitted to the approval of the general assembly stands at EUR 18 per share. That's a 39% payout excluding exceptional contribution. It will be paid out on April 23, and an interim dividend will be paid on February 18.

Thank you very much for your attention. And back to Axel to talk about the outlook.

[Interpreted] Thank you, Eric. I now come to the outlook of the group that remain unchanged. In uncertain economic and geopolitical situation, Hermes deals with economic with confidence, thanks to a strong integrated artisanal model with well-balanced retail network and creativity of its collections and loyalty in the world. We pursue our momentum carried by the enthusiasm of our teams in the world.

We stay our course theme of the year, venturing beyond is an invitation to discover new horizons and renew its curiosity. We pursue a dynamic momentum in job creation as well our investments in production capacity, mainly in France. This year, we will open the 25th, leather workshop of Hermes in Gironde.

2026 will be a dynamic year for our retail with several openings and enlargements such as Beijing and Geneva as well as London with the opening of the new [indiscernible] in New Bond Street.

I'd like to thank very warmly our customers all over the world for their trust and loyalty as well as all our employees, because it is their commitment and enthusiasm which makes for the shared adventure, so enriching.

We are now available with Eric to answer your questions.

[Interpreted] Edouard Aubin from Morgan Stanley. I got a couple of questions. First of all, could you go back to the beginning of the year trend? I know that there's the Chinese New Year and the timing of the Chinese New Year, which makes a situation difficult to maybe interpret.

A question to Eric now on the level of stocks, I believe that they've gone down to the tune of 20 days. Could you tell us about December 2025? I think that you are at the bottom of the range when you look at the last 10 years. So could you tell us a bit more on that? And is it going to be complicated for the beginning of the year. You've got a limited number of bags, for instance?

And third question, on the fact that one of your peers, Ferrari, recently are going to slow down their increase in production capacity. They've given a guidance where they're going to slash production to keep up the desirability of the brand. You reminded us that you're going to be opening new leather workshops by 2029. Is there a debate amongst investors on the "ubiquity" of your bags?

[Interpreted] Okay. So I'm going to start off with your first question. It's not the first time you asked questions about trends on the beginning of the year. My answer is sadly going to be the same.

The Chinese New Year has a huge impact on our trends, as you know. So it's difficult to identify any trend before that happens, and the new year in China changes every year. Last year, it was end of January and now it's mid-February. So we won't really have a any clear idea before the end of Q1. So I encourage you to wait for the Q1 results presented by Eric later on in the year.

In any case, we had -- we were very successful with the Chinese New Year last year. For the rest of your question, there are no significant changes. In other words, you can see U.S. growing. Japan good figures as well. We're quite unique at Hermes in that we don't have any countries where we've seen any drops and decreases. It's quite rare, and we hope that we can continue on that same thing.

Now you asked Eric to answer your question on the stocks. It was probably very wise. But before he answers, I would just like to say one thing that I think is interesting at Hermes. First of all, we empower people at Hermes, and our distribution subsidiaries and especially since COVID, completely manage their own stores, their own countries. So that's the first thing.

Secondly, we are quite unique is that store managers are free to buy what they want. Twice a year, we have 700 people who come to Pontault outside Paris, and they choose what they want to buy and put in their stores. It's quite unique. And then there's a financial side of things, which is probably more interesting to you is that our stocks are managed in a very granular way at store level. The freedom of, yes, procurement for the stores.

Now regarding the stocks for most divisions, we are in line with our provisions and forecast. So this year was a year of normalization. At the end of December, we were perfectly in line with our objectives, especially for leather goods, because production was good in 2025. So we ended the year with a very comfortable level of stock to prepare for 2026.

Now going back to your question on Ferrari. I'm not going to speak for them. Of course, but Enzo Ferrari used to say that production of Ferrari is demand minus 1 car. Now there are always some tough decisions to be made. But I can tell you that I'm very glad and proud to create jobs across all of France's regions.

We are very proud of this. We have 12 training schools to train young people but also people who decided to change course in their career. It's very important that we are able to do this, especially in a world where people can lose their job very easily. We are there to help them find a new job and to change course. So this is why we have this important plan that runs until 2030.

But then there are two things I would like to add. Actually, three things. if I end up only saying two is probably because I had good instincts. So the first thing that I want to say is that we have a good balance between our different divisions. We don't sell the same as we did a few years ago. When I started at Hermes 13 years ago. Leather was 55% and today, it's 45%. So we also have this strategy of balancing out the different divisions. There are some divisions that grow very quickly, ready-to-wear, Jewellery, shoes, the home department. So we have this balance between the different divisions.

Secondly, I also asked the divisions to be balanced within themselves. So for example, for leather goods, we don't sell just one model. Likewise, for shoes, we don't have one model. We kind of balance out the desirability of our collection. So we ask our metier to renew themselves and to renew the collections. And there is this freedom to create, which is also very important, and it does sometimes lead to interesting debates between those who want to buy and those who create. And I think this is part of our strength. We've got a very diversified product offering.

When we are pitched new ERPs or new systems, we are told there are so many different models. We're not going to be able to fit that into our IT model. We have about 50,000 SKUs, which are active. And normally, you should be at 7,000. We'll never be at 7,000. It's not even something that we are aiming for.

And then thirdly, we are a company, which is based around craftsmanship, making a bag is 16 hours worth of work. So our volumes are quite low. And I'm not resting on my laurels. And as you know, I'm always quite worried about everything. But we have across people who make [indiscernible]. It takes some time. And our desirability protects us to some extent. And we are very demanding when it comes to materials, when it comes to know-how, and it's not always easy to find these great materials. So yes, as long as we can strike the right balance, there will be desirability. Yes, please.

[Interpreted] Hard to find somebody more confident than myself to pass the floor, Antoine Belge, BNP Paribas. Three questions, please. First of all, on China, Asia in general, what are the lessons learned from the end of the year. One talks of a slight improvement and not much more. Do you share that vision? And what are the interesting things to say about China?

Secondly, traditionally in the beginning of the year, Hermes has [ passes ] the price increases [indiscernible] system to calculate average amounts. But can you tell us how much was the average increase in prices in Hermes?

And the third question, the operating margin was higher than expected. Exchange effects maybe less high this year than expected. However, when you look at the minus 7% for the revenue in the Q4, that doesn't all go very well for the exchange rate. So what are the different sort of dynamic movements for the operating margin for 2026?

[Interpreted] I'll try and answer, and Eric, you will correct me when I say something silly. Anyway, for China. I -- we were always an improvement in China. It's worth saying is, do you see an improvement? Every year, we've grown. We've grown less fast, than in the past, but we grew.

What I see from my little store is the activity, recognized activity of Hermes customers that continue to come, excellent customers with value effect by expensive products and a drop in aspirational customers which are not our biggest customers. So we've always been able to grow.

I don't see the situation deteriorating. I see positive things. When will it be a structural change and not a trend-related change? I can't predict either the exchange rate or the trend every time, but I believe that there are positive events, in particular, in the way in which digesting the real estate crisis, which is weighing on things.

So I'm not crying victory, I'm not worried. I'm proud of the teams that have always grown. And I sometimes we don't emphasize this enough. And then is it the big turnaround? This allows me to answer a question that you haven't asked, but which is interesting.

What I believe is that we've returned to the 21st century as it was since I've been the CEO. Every 2 years, there's a problem, September -- there's SARS in Hong Kong. I won't go through all the problems Fukushima in Japan, terrorist attacks in Paris. So every 2 years, there's a problem in the world. And that's why we have this strategy of balance in the geographical areas. When Japan is not doing that, well, the others offset. When Japan is doing better and -- so we have the strategy that has really served us.

Now where the strategy found its limits was during the COVID? COVID it was all over the world. This figure that we shared with Eric, because we were the only ones in the office, during this period to decide what to do. We decided to keep everybody not take the state aid and continue to pay them. And we did our employees. 82% of our stores that were closed, it was not one zone making up for the other. What happened afterwards? All the zones, all the geographical areas function where we double the sales in a year's time. So now we're coming to something normal one. Problem in one area is offset by one, which is doing better.

So this idea of resilience and the balance of the divisions of the metiers that we've spoken about geographical zone, balance between the geographical zones. I think China will be the back and then we don't know which problem will pop up in the years to come, but that's part of life. So you have to sort of be ready for it. That's my strategy.

Full price, you haven't been able to modelize them. Well, same thing for us. Our strategy is the industrial cost price and the evolution of the exchange rate to offset. So we take options, but we try to smoothen out our exchange over the year -- our currencies over the year. So that's -- and then we do a weighted average, if we were between 5% and 6% of a price increase for 2026.

For the margin, and when I start talking about margin, Eric starts to tremble. We are a fixed cost company. We accompany with the fixed costs. We're doing better than expected in Q4. It goes to the margin. immediately.

Second thing is the exchange effect on the margin. It's very complex to manage, because you have what you expected the drop in revenue, significant, EUR 500 million. And then you have your cost that drops. You have an accretive effect as well. So sometimes a drop in revenue on a margin that you've hedged can give you a accretive effect. So I had a bit of a shock, because Q4, we did plus 10%. We spoke about a Q4 at minus 7%. You talked about the exchange currency effect, not to the group. The exchange effect, as usual, third year a bit negative and we think for other currencies to go up as compared to the euro. But 2026 exchange effect will be unfavorable for us. Luca.

[Interpreted] Luca Solca from Bernstein. I'd just like to go back to your earlier comments on demand and on aspirational clients. Over and beyond what is happening in China, we have a bit of a concern on this splits between your customer base. What is your perspective on demand all around the world? Because we see that the middle class is not showing up as much in this aspirational client base? And what about demand generally?

And just to tying to all of this, could you also say a word about Jewellery so that I better understand your perspective and your vision to grow the Jewellery division? And how are you going to serve an aspirational customer base if you go for this kind of high-end Jewellery? What is the right balance between the two?

And you also talked about upstream investments. Now you're probably in a leadership position when it comes to vertical integration. So my question is what can you do in terms of investment over and beyond leather workshops?

[Interpreted] Well, thank you very much for your question. The first one is quite difficult. The others are a little bit easier. So first of all, Hermes has got a large number of clients all around the world. And we have a lot of people in the middle class that can afford Hermes products. If we didn't serve the middle class, we would only have 15 stores around the world. So when we set up in a country, it's because we believe that there's a middle class that can afford and wants our products.

Now we set up these stores in areas where we had the aspirational clients, not always middle class, by the way. I'm not as worried as you are insofar as it's not true that the middle class is suffering all around the world. It is true in France for sure. But you can see that local customers turn up in Europe.

Look at the figures for Italy, for countries in the north of Europe. We have people in the middle class that shop in our stores and buy our products. So the middle class is not struggling all around the world. It's true for France, but not everywhere. If we are struggling a bit in Switzerland, it's because of our setup and the store, but it's going to, we're going to open up something bigger soon. So it will compensate that.

What we see from a structure point of view is that we have new clients who come, because people are getting richer in South Asia, Latin America also is improving. And then in the United States, we have a very broad customer base, which allowed us to have this plus 18%. So don't just look at global trends through the European lens.

Now Jewellery -- Jewellery is the first division that I managed at Hermes. There were 7 of us at the time. And at the time, I was told, don't worry if you get things wrong. It won't be noticed in the accounts of Hermes. It was not a very nice comment, but it kind of set me free as well at the same time.

Our very first jewel was produced in 1928. So as you can see, I know the history quite well. In 1937, the [indiscernible] designed by my grandfather, who saw it in a [indiscernible].

Now when I took over the Jewellery division, we were very lucky, because we had a fantastic designer. We talked about Veronique earlier, but there was [indiscernible] Jewellery and we continue to work with him. 95% of what we sell is made of silver. I came back -- I come back from Asia and Asia, they tend to buy gold more than silver, also because they are very humid countries and gold doesn't oxidate. So we launched a gold Jewellery at a time, which makes up roughly more than 2/3 of our revenue. So we grew Jewellery very quickly in excess of EUR 1 billion of income. So that's quite great.

On top of that, there's also this freedom to create, but we also wanted to create high-end pieces. We call it [Foreign Language] in French. Nobody really understood that particular name and concept. So that's why I'm reminding everybody of it. Since I created it, it's close to my heart. But if you see [Foreign Language], you'll understand that I would have lost that particular battle.

But what is interesting with Haute Bijouterie is that there's a lot of work on the design. It's not just one stone and then stuff around it. I only stayed for 3 years at Jewellery. Other people came over and have done a much better job. And have contributed to the great success of Jewellery at Hermes and it's the division at Hermes over the last 15 years that has grown the most, and I'm very happy and proud about it.

Now going back to your question on integration. We started buying up shares in Jewellery. And we now have shares in a few Jewellery companies. Now Jewellery is a fragmented landscape. We also have individual craftspeople who work for us. We've had partners for more than 50 years. We continue to work with them. We've invested in Italy, in shoemaking. There's a production workshop there.

For perfumes, we are also growing our activities with ambitious plans. We also have watchmaking at Hermes that we continue to invest in to ramp up our production capacity. So this is really the specificity of Hermes, whereby the main position at Hermes is the cross people. They make up 60% of the headcount. And it's a fixed cost. When it works, it works really well. And sometimes, we have to -- with these difficult situation. And we love to work with partners. We have to be modest and humble. And sometimes they are more agile and better than we are. So that's why we reach out to them. But yes, we do a bit more integration and divisions to protect these suppliers and partners.

For instance, if my grandfather, and father and uncle would come back to say, and you've made a huge mistake, it might be right, but not when we invested in Tanneries, for example. We invested a lot in this area in France. I think that it's paid off really well. When we are the only ones that can invest to preserve quality, then we need to do it. And when you work with great partners and we have fantastic partners who've been around for more than 25 years, and it's a greatest, great story and the third generation that, for example, has been working with the silk workshops in Lyon.

[Interpreted] [indiscernible] I have three small questions. One on China. On your network of stores, I think you've accelerated the pace of opening of stores in China. Can you tell us what will be the size of the network? Well, sort of dimensioned in China because you are now quite cautious in your openings.

Second question on perfume. You said a year that was not that great. At the end of the third quarter, it was a buoyant market. Then on the haute couture, a lot was said about it last year. I know you will explain to me that you're waiting to be ready.

[Interpreted] That's true says Axel.

[Interpreted] But you have better visibility. Do you have a better visibility on the date on which you will be ready?

[Interpreted] On China, we remain straight, I don't know. We remain straight on our strategy. You have [indiscernible] on the call in the first row, who heads the retail network, who headed China as well and he's great. Everybody I know who compliments the team. So I want to do the same.

And so what did we decide a few years ago? In China, we asked ourselves the question around [indiscernible] saying do we increase? Do we remain with the number? Then we said China is a territory of conquest, but we have to remain reasonable. The idea is not to go everywhere. So as a strategy that we've been pursuing for the last 10 years. So not too many stores, and we tried to conquer, put sales in a new town once a year. And we follow that. We follow that.

And then, of course, between the problems of construction, sometimes it's in a year. Sometimes when I open one in Shanghai, then it's big -- so we don't open another one that following year. So we have 32 stores in China today, and we remain on something that is quite stable. It will grow at our pace slowly.

To be sure, we have a long-term vision. We're not stop and go. What's interesting is with regard to the China situation for several years, we haven't cancelled a single project. We continue to roll out our plan as we have worked on it.

Perfumes, fragrances, I prefer to be honest saying that it's -- in the half shades as it were. My teams are [ pulling a ] face. On fragrances, interest, difficulty on perfume as such and not on makeup and beauty.

I think there are things that we can do better, frankly. I always tell the teams what can we do better. People will say, "Oh, the market", yes, but we do have levers. There are certain things that we can do better, and we're working on it.

The second thing, contrary to the rest of the group, they depend a lot on wholesale retail distribution in duty-free with distributors. So everybody is not doing as well as Hermes, and sometimes you have partners that have preferred to buy less to manage their inventory. So we continue our perfume development strategy, which is to grow to have the necessary sort of mass to have autonomous subsidiaries and to launch ourselves in the three industrial areas perfume makeup that we've launched and tomorrow skin care.

What will come before skin care and haute couture, which one will come first? I would say on haute couture, we started with something that we like. We recruited workshops, we recruited seamstresses. And then we'll be ready when we'll be ready. Again, I'll be [ called ] what I saw was superb. I'm quite excited because, look I'm really quite excited. And I'm very proud of what the teams have done. And then it has to be finished at the right time. And -- but it's on its way. Yes, please. Yes.

[Interpreted] Tom Chauvet from Citi. Three questions. First of all, Axel, you mentioned the current trends in China and the fact that you're sticking to your guns from a strategy point of view. Could you tell us about the changes in customer behavior in China? We see that the domestic demand is lower, that there's more tourist demand in Japan, for instance. And you have some local brands as well. 15 years ago, you created Changsha, a local brand. You were a pioneer in this area. What do you think of these local Chinese brands, a brand that you've discontinued since?

Secondly, just to go back to the margin and price increases, that increase of 5% or 6% in January, does it offset the exchange rate effects and the increase in prices in labour costs and raw materials? In the past, you gave us annual forecast on that. Could you tell us more maybe this time around?

And on net cash flow, which is at EUR 13 billion, you have the biggest net cash position in the business but also the company that has the less appetite for acquisitions. So over and beyond vertical integration and organic investments, what are the major opportunities that you see to invest this cash. Are you going to buy back shares invest in real estate? Tell us a bit more on that.

[Interpreted] Maybe I'll start with the margin. Are you scared about what I might say on the margin? On the margin, as Axel said, we have a price increase, which sits at 5%, 6%. And that was calibrated to cover our production costs. There are some materials that are more expensive like gold, for example. And then there's also the EUR 120 bonus that we pay out to all employees in France. So that's also a production cost, and we kind of compensate this with a price increase.

And then there's the exchange rate effects. Of course, we've got the hedging strategy, which helps us to compensate the negative impact, but it is nonetheless a negative impact of EUR 200 million for 2026.

In 2025, we enjoyed a conversion effect, which is not predictable because it's down to the average rates, but it helped us to half the hedging effect. But for 2026, no one can predict the level of the yen or the dollar at the end of the year.

[Interpreted] Well, it's a good job that Eric answered because I would have probably said more and probably a bit too much and got [ tored ] off. So to answer your question on China, there is one thing that I believe has changed since the beginning of the year 2010. And that is the fact that the appetite for spending on luxury items has got nothing to do with GDP, but rather has a lot to do with the stock exchange and the change in the real estate market. So -- and actually, this is what you see in China. GDP continues to grow, but there is a lot of concern about people's wealth, their financial investments. We see that financial markets are going back up in China. But I think this is a trend which then allows you to understand people's appetite for luxury items, more than GDP in any case.

In China, we see that leather goods are performing really well and is a very solid pillar. And then we have two other divisions that work very well. Women's Ready-to-wear and Jewellery. In other words, divisions that are high-value divisions for us. So that is the case today and will continue to be the case in the future.

And I think it's great to note that they are Chinese brands. I'm not part of these people who are glad when other people encounter problems. I believe that more our industry is successful, more brands are successful, the better we will all be. So I think it's great that China is growing brands. Brands that offer products that they're very different to ours. Like, for example, their jewels are very different. They're very Chinese. It's a different know-how as well, and I find it very interesting and amusing.

Now I'm going to be told off once again, but Labubu, for example, was quite amusing in New York Times. There was an article the headline was, could Labubu have existed without the Birkin? It's quite amusing if you think about it. And then there's some Chinese brands that you see breaking into Europe as well. And I saw so in the press in sportswear that there are some Chinese brands, and we're already very strong in China. And now they are conquering markets outside of China. So I'm not trying to be the only brand in the world and wanting everybody to come to Hermes. No, the more brands they are, the more appetite there will be, and that appetite at one point will be valuable for Hermes. So I think it's a positive sign more than anything else.

And then your third question was on cash. So I'm going to answer this one on cash. Eric, is that right? Yes. So yes, it's true that Hermes continues with its strategy when it comes to cash. We use our cash flow, roughly 1/3 for dividends, 1/3 for investment and 1/3 for our cash flow so that we can be resilient in the future with strong financial structure and remain independent.

This year, we don't have an exceptional dividend. Otherwise, it wouldn't be exceptional, because it would have been the third year on the trot. So it will remain exceptional, and we'll probably make a comeback in the future, but we've increased the ordinary dividend which is perfectly in line with our traditional way of doing things. So our net profit was a bit lower, but not the one before tax. So we continue a bit like with foreign exchange rates, we continue with our usual strategy.

[Interpreted] Well done for these results from HSBC. I only have two questions. I wanted to come back to the growth long-term growth algorithm, because I had understood that with the development of new production sites of until 2030 continue to develop higher volumes by 6%, 7% from historical average. The 5%, 6% price increase this year does one consider that as being exceptional because of the cost threshold fixed or catching up with increases that were less moderate elsewhere? In the long term, do we consider that you are in 6%, 7% of volume and less in price in the long term?

Then real estate, we've foreseen many projects, quite impressive projects in luxury in the U.S.A. with very big openings in all the brands, Moncler, Dior, Vuitton and I have seen an announcement this morning on a project that you had in Rodeo Drive. I was wondering whether you could explain to us why according to you, there are such big projects. And what does it tell us about the potential that the U.S. represents in the future?

[Interpreted] Very well. Price policy, you're right. Now I repeat what I said, for us it's first the cost, the production cost. This year, we made an increase beyond inflation. I spoke of EUR 120. We're very manual. So that's part of the industrial cost price. So this is increase in and then a loss of EUR 500 million a year in sales because of currency effect, and that was the case in other years.

So the years where you have a depreciation of the euro positive, then the appreciation of the dollar, we have less price increase, because we needed less to offset. But there is -- there's a [ question ] we sell a lot in France, including in Europe, including in France. So I don't need to add the price for the exchange rate.

But we have a specificity which makes us cautious in the currency management, is we've never dropped up, reduced our prices. We never do. And therefore, you have to be careful when the currency goes up and down. And when you don't come to our price positioning at the local currency, which becomes too complex. That's our strategy. We continue with it, but we have to recognize the fact and congratulate Eric, that our currency hedging has stood good despite, and the world where the currency volatility has become quite strong.

The second question on the U.S.A. And sometimes we find it difficult to read, but for the U.S.A., well, I feel like saying that our strategy. We have a strategy with [indiscernible]. We don't need more stores, but we make bigger stores, more beautiful stores, better place if need be in order to present all the divisions, all the materials. May I remind to the [indiscernible] -- when I started as CEO, the stores were 313. Today is 297. We don't need more stores. We need them to be bigger, more beautiful. We opened a new store in Madison several years ago, which is the second largest of the group. So it's really quite marvelous. And we're very happy with this maison, which is a lot of character. We'll be opening another maison this year. We're very excited in Bond Street, which is a building that we had bought 13 -- 18 years ago. So we really do see things in the long term, and we are very happy to open it. It's at 166 New Bond Street, and it will be on the 166 at the address of 166. Yes, 16th of June 2026. So you see how much superior intelligence we deploy for the opening date.

The rule of the stores dates back to [indiscernible]. It's the customers who pushed the walls of the stores. In Rodeo Drive, Beverly Hills, the store that we love, we're owners of the store is becoming too small. We don't have the right to increase it upwards. So for the future, we made a significant purchase which will allow us in the future to have a project that we deem will be great, but there are tenants at the moment. So maybe it will be a gift.

When we bought Asprey, I thought it would be for the seventh generation. And finally, we're doing it. Rodeo Drive, will it be for the seventh generation? Will it be for us? We'll see. But the idea is to think in the long term and obviously, the success of certain of our stores, Rodeo Drive is part of this, the store is too small to receive enough customers and the stock that we need to present and ideas not to have more stores, but better stores. Maybe a last question.

[Interpreted] [Operator Instructions]

The first question is from Zuzanna Pusz of UBS.

So I have two. I hope you can hear me. First of all, I was just wondering why the marketing expenses were a little bit lower last year. I think that maybe throughout the year, you were guiding to something around EUR 700 million, and it ended up being around EUR 620 million, also lower as a percentage of sales. So I was just wondering if this is maybe the new level of marketing we should expect going forward? Or maybe some of it got pushed out to this year? So that's my first question.

And second one is on leather goods growth, sort of the volume you're expecting in the long term. I think you've previously commented that you expected volumes to grow 6%, 7%, which -- I'm just wondering if this is something how long this can continue for? Because you are obviously investing in a lot of new workshops. And at the same time, there is at some point, scale, sort of effect of the size, and we are seeing quite a few bags in the second-hand market, which I know you don't necessarily like, but it is what it is. And I think consumers can find on a lot of websites. So I'm just wondering, if you know at some point, you will be maybe considering changing that long-term algorithm of growth and just to protect the brand? And also how long -- how much longer for can you grow the volumes at 6%, 7%?

Right. Thank you. For the marketing expense, I think the level that you've seen 3.9% this year is quite good. We're not trying to spend for the sake of spending, because of the size of the group now. And I mean, I said the turnover, it's allowed us to have what we need and what we like to do with our communications team. So we are not short of budget, but so it's I think it's a good ratio. Is it going to be like that for all the year coming, I don't know, but you see more than EUR 600 million of marketing, et cetera, of communication, as we call them, expense has helped us to do what we wanted to achieve with that.

Regarding the leather goods, our perspective is unchanged. It's complicated to have a figure for you that makes sense, because we are hiring around 250, 300 new craftsmen per year. We cannot do that much more, because we need to train them. And it's very important to train them. We have some of our best craftsmen who stopped producing and we trained them. So we calculated in our own model that, that was the right level of training for them.

Then actually, one thing that changed also across the year is productivity. I would say, to be a good craftsman at Hermes, it takes you 8 years. You will learn at least for the 8 years to do all the model, you will want to do other kind of skin. You will do a lot of things. So it's not just a question of arithmetics about how many new people you put. It's also about how well they are able to change and move. So that's why we are quite confident that our growth that we announced in the [indiscernible] can be sustained in the near future.

And you've seen our plans so far that I explained, we are up to 2030 so that gives us also a little bit perspective for us. Thank you. [Interpreted] And now a couple of questions just to wrap up.

[indiscernible]. Can you maybe go back to Europe because the bulk of customers what locals or tourists, because one of your peers are very pessimistic about Europe and about tourist customers because of foreign exchange rate effects?

[Interpreted] Well, we are very optimistic when it comes to the euro zone, because we have a very strong local customer base in these countries. For our distribution subsidiaries, their objective is to have a strong relationship with local clients. And that is something that's quite unique at Hermes, that people will buy in their local store. In China, for example, Chinese customers mainly buy in China. You will have noticed that the figures for Japan are still great. It's because we have a very loyal, local customer base there.

Now if you just want to take a more granular look at Europe, you could say that France depends quite a lot from tourist clients, but the rest of Europe has a very strong and dynamic local customer base. But we are very much optimistic for the Europe area, Eurozone and non-Eurozone, which is a good news because we are opening a big flagship in Bond Street. And in Geneva.

[Interpreted] Carole Madjo from Barclays. Another question on the U.S. market. The market then grew a lot in 2025. What do you think the sentiment is in the U.S. a very polarized market? What is the customer behavior as you can see it there? Do you think that double-digit growth is possible in 2026 when you take into account pricing effect and with new stores opening in the U.S.? And final quick question, on the tax rate in 2026. Could you give us a forecast on that.

[Interpreted] Question on tax will be for Eric. For the U.S., I'll take that question. Sometimes we overlook people or countries that do well. It's probably a French bias. The U.S. market is doing very well. There is no change in the trend as we see it. And what is very positive is that all areas in the U.S. are performing really well. We were slightly affected the year before that with the fires in California. And I mentioned these events that can't be foreseen. It was the case for California. But otherwise, California is doing very well. Scottsdale and Nashville great opening. So there's a strong momentum in the U.S., and it's a very broad momentum as well, but yes, we don't see any changes in trends for the U.S. And the question on tax. Back to you, Eric.

[Interpreted] The strength of the U.S. is to have this very well distributed growth across divisions and across the regions in the U.S. Now on the normative rate, we'll have this additional tax at least next year. But if you take away the 5 percentage points that I mentioned earlier, we are at a normative rate of 28.5 without including that additional tax, just to clarify, but this additional tax will be carried over to next year.

[Interpreted] And we'll see how long this exceptional tax will remain exceptional. It's likely the exceptional dividend. We hope that it just happens for a couple of years, but maybe this exceptional tax will be a feature in years to come. Thank you very much. It's always a pleasure and have a great day.

[Interpreted] Ladies and gentlemen, the conference is now over. Thank you very much for taking part. You can now sign out.

[Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]

[Interpreted] Ladies and gentlemen, welcome to the Q3 Analyst Conference for Hermès International. I now give the floor to Eric du Halgouët, CFO; and Antoine Riou, Head of Investor Relations. Gentlemen, over to you.

[Interpreted] Thank you very much. Good morning, one and all. Thank you very much for joining us. In the third quarter, sales continued to grow and reached EUR 3.9 billion, up 10% at constant exchange rate, a slight improvement compared to Q2, particularly in Europe, Americas and Asia. Hermès kept the course, thanks to solid growth in spite of a high comparison basis. Indeed, Q3 sales last year were slightly above that of Q2. The group's consolidated revenue amounted to EUR 11.9 billion at the end of September 2025, up 9% at constant exchange rates and 6% at current exchange rates.

Currency fluctuations represented a negative impact of EUR 254 million on revenue. At the end of September 2025, the Leather Goods and Saddlery and the Other Hermès sectors achieved solid growth. The Ready-to-wear and Accessories and Silk and Textiles sectors accelerated in Q3. Hermès is maintaining its course, thanks to solid growth, thanks to our investment, thanks to our creation of jobs to support our growth. For 2025, our outlook remains unchanged. The group confirms its ambitious growth target for revenue at constant exchange rate and continues to grow with confidence.

Over to Antoine for the geographical and métier breakdown.

[Interpreted] Good morning, one and all. Moving to the geographical breakdown and the evaluations will be given at constant exchange rate. As Eric mentioned, at the end of September 2025, all the regions posted growth. First of all, Asia, excluding Japan, is at plus 4%. With strong growth in Greater China in the third quarter, the region benefited from the house's value strategy, the loyalty of local clients and the qualitative development of the network. The renovated and expanded store at the Central Embassy mall in Bangkok reopened in January, followed by the Taichung store in Taiwan at the end of March. In June, the renovated and expanded Four Seasons store in Macau reopened its doors, followed by the Galleria mall store in Seoul in August.

Japan, plus 15% after a solid Q3, maintained a sustained growth, driven by the loyalty of local clients. Americas plus 13%, still a strong momentum with a slight acceleration in Q3, thanks to the U.S. The new Scottsdale store in Arizona opened in September, and then we had Nashville in Tennessee last week. In Mexico, the Molière store reopened in early October after renovation and expansion work.

Europe, bar France is at plus 12%. So solid growth there in all the countries of the region. France, plus 9% with still strong activity in all the stores. In Italy, the Florence store reopened in February after renovation and expansion work. The other area, plus 15%, which mainly includes the Middle East, pursues its momentum.

Moving on now to the métier or the division breakdown at constant exchange rate. Leather Goods and Saddlery post great performance with plus 13% in line with its annual trajectory, supported by strong demand for iconic products and new collections. The new equestrian-inspired models, Tablier Sellier and Besace Trotting as well as the return of the iconic Plume are enjoying great success. The increase in production capacities continues with the opening of the 24th leather goods workshop in L'Isle-d'Espagnac in the Charente region in September. Over the next 3 years, three additional leather goods workshop will open: Loupes in 2026, Charleville-Mézières 2027 and Colombelles in 2028. They will be reinforcing the 10 centers of expertise located across the national territory.

The Ready-to-wear and Accessories sector posts a strong growth at plus 6%, continues on its strong momentum with speed up in Q3. The Men's spring-summer 2026 show held at the Palais d’'Iéna was very well received. And in September, we presented the autumn-winter 2025 collection. And the women's spring-summer 2026 collection was successfully unveiled in early October at the Garde Républicaine.

Silk and Textiles, plus 4%, good growth supported by bold creations, exceptional materials and diversity of formats. Perfume and Beauty is at minus 5%. It's impacted by a high comparison base due to last year's launch of Barénia. The Perfume collections have enhanced with two new Eaux de parfum intense this year, Terre d'Hermès and Barénia.

In a challenging environment, the Watches métier continues its development with the success of the new versions of the Hermès H08 line and the reinterpretation of its iconic complication, Le temps suspendu. In July, Hermès also announced plans to strengthen its production capacity with the expansion of its Noirmont watchmaking site by 2028.

The Other Hermès Sectors, Jewellery and Home universe continued to deliver strong growth at plus 11%. The eighth Haute Bijouterie collection, Les formes de la couleur, was presented in July in Tokyo. And at the end of May, Hermès also announced the first stone being laid down for the new Couzeix workshop dedicated to Tableware.

Thank you very much. Now we're happy to take your questions.

[Interpreted] [Operator Instructions] We have Charles-Louis Scotti from Kepler Cheuvreux.

[Interpreted] I've got two questions. First of all, could you give us an update on trading and an outlook on Q4 because the organic revenue has increased by EUR 350 million, in line with Q2. Do you think that you can keep that pace in spite of a comparison basis, which will be more complicated for Q4? Could you tell us a bit more about your confidence going forward, especially for Greater China? And then on the leather goods growth, it has slowed down, although it's still in keeping with annual target. Have you built up any stocks in Q3 to support growth in Q4, where the comparison basis will be particularly tough for leather goods?

[Interpreted] Well, thank you very much, Charles-Louis. Well, look, as you say, Q4 will be a higher comparison basis. We are, yes, something like EUR 200 million more than in Q3. The trends at early October means that we are confident in spite of this comparison basis. Yes, we're confident across all the regions. Leather goods at plus 13%. That's in keeping with our annual target. And I'll also recall that our deliveries is not linear for our different stores. So it's really delivery effects. And our stocks have been rebuilt and will be at a similar level to that same time last year to prepare for the end of the year and for the Chinese New Year.

[Interpreted] Next question from Anne-Laure Bismuth from HSBC.

[Interpreted] Two questions on my side. First of all, on the specifics, bar Japan, we've seen a slight increase in the percentage. Is that down to China, mainly? And how do you explain this slight improvement when some of your peers have seen a better improvement in Q3? Is there still less footfall in the stores in China? And second question, have you completed your price increases for next year? And can you tell us more on that?

[Interpreted] Okay. So for Asia Pacific, for South Asia, we have seen a speed up in growth. We're looking at double-digit growth in Malaysia, Korea, Australia, and similar growth between Q3, Q4 for Singapore and Thailand. For Greater China now, I'd just like to remind you that we grew over the whole year in 2024. And there, again, this year, we are posting growth since the beginning of the year up until the end of September. So there will be no huge changes in that trend. We continue with our value strategy. There is a slight improvement in Q3 this year compared to Q2.

There are two encouraging signs, which make us optimistic from a macroeconomic point of view. First of all, there is more stability in real estate in Tier 1 cities in China. So that's a positive signal. And secondly, we have another reason to be optimistic. It's the pickup of the financial markets in Continental China and Hong Kong, which is also, yes, a good sign.

And for the first week of October, which was the Golden Week in Continental China, we saw quite strong and dynamic business. We can't extrapolate this for the whole quarter, but nonetheless, it is encouraging.

Regarding Anne-Laure, your second question on price increases. We have our budget process, which is underway. So it's too early to give you any indication on that. I can only tell you that it will be below the price increase of this year. That's the only indication I can tell you right now that the budget is still under discussion.

[Interpreted] Next question, Luca Solca from Bernstein.

[Interpreted] My question is on the demand trends for the different segments of your client base. You can see that the most affluent parts of your client base is very dynamic at the moment. I was wondering if this is a trend that will continue in the future. Is it going to also drive demand in China? It seems that wealthy and affluent people are also going to be a key driver there. And then could you give us a little bit more detail on the demand dynamics that you currently see in the U.S.? Is it a demand that is very broad that encompasses the whole customer base? Or is it driven by the more wealthy individuals, given the cryptocurrency market trends at the moment?

[Interpreted] Well, first of all, for our Chinese client base. Outside of Greater China, we haven't seen a speed up particularly for wealthy individuals. So the two client bases that we believe are more important -- the most important in Europe and France, it's people from the U.S. and the Middle East who travel over. And we saw it in Q3, a slight uptick when the events between Israel and Qatar were the -- probably the tensions were at its highest. But yes, we've gone back to normal levels since then.

Now as you've seen Silk, which is a volume-driven division and clothing and fashion accessories that has sped up a little bit. And we've seen these divisions benefit from a slightly higher footfall, including in the U.S.

And now Luca your second question. So we had very good Q3 in the U.S. growth that was driven by jewelry, silk, shoes, watches by pretty much all of the divisions, an increased footfall and also a growth that is well distributed between the East and the West Coast. Over and beyond the U.S., Mexico and Brazil also have sped up their growth. And also a reminder, the U.S. is a country where we'll be focusing our development. And in October, we opened a store in Nashville, Tennessee. And so we're going to continue to focus the development of our network in the U.S.

[Interpreted] Next question, Thomas Chauvet from Citi.

Two questions. Question number one on Ready-to-wear and Accessories. Grace Wales Bonner was appointed yesterday to follow up from predecessor. A lot has been said, but is it going to mean a more modern, more casual look to the men's ready-to-wear collection? And how much does the menswear weigh in the total revenue?

And second question on Perfume and Beauty, which was at about 3% of the revenue. It's about, what, EUR 500 million over the whole year. This is a business which is more and more strategic for other players in the luxury industry. What is the weight of makeup 5 years after its launch? And are you thinking about floating a new line of care products? Are you happy with the profitability of this venture into makeup? And tell us a bit more about the vertical integration for perfumes.

[Interpreted] So regarding the appointment of Grace, it really is in keeping with our desire to continue on the momentum. I think that Grace has got a lot of things in common with Véronique Nichanian, a lot of craftsmanship, for example, and a very contemporary outlook on fashion. So she will be bringing her own signature to a new chapter for men's ready-to-wear, and her first collection will be presented in January 2027.

Regarding perfumes now. So as you've seen a slight decrease in Q3. Now in the press release, we said that it was down to the high comparison point with the launch of Barénia in Q3 and Q4 last year. And there's also a new Hermès stores that was launched and the new chapter for Loupes, which opened last year. And some of our distributors also had to reduce their stocks in Europe and in the U.S. So there's a decorrelation between our delivery and the end sales to customers. And the end sales continue to increase in France, Germany, Italy, et cetera. The takeaway here is that our pillars, Barénia and Terre d'Hermès continue to grow.

And then for your final point on care products, this is a project that we're still working on, but for 2028 onwards.

[Interpreted] Next question from Mr. Antoine Belge from BNP Paribas Exane.

[Interpreted] Two questions on my side. First of all, for clothing and accessories, it's a category that is, well, a two-pronged categories with different dynamics. You mentioned at Q2 that some accessories like belts, for example, were bought by tourists and that because there was less tourism, it explained the drop. So could you tell us a bit more detail on Q3 for clothes on one side and accessories on the other?

Second question now on your operational margin rate for this year. Do you think that you'll be around 40% or above? Is that still achievable? You talked about the negative exchange rate on the revenue for Q3? I imagine it will be the same for Q4 generally when you're impacted on the revenue in 2025, you'll be maybe also impacted going forward. So if you could tell us more on that?

And then the third question, there was some controversy on Cucinelli and on some sales in Russia. So could you maybe tell us what you do or don't do in Russia and with the Russian client base?

[Interpreted] Now clothes and accessories indeed covers men's ready-to-wear, women's ready-to-wear and fashion accessories. Growth is driven by ready-to-wear for both men and women. And for the rest, it's a bit more complicated for fashion accessories. It's a division that is very much about volume.

Now regarding our operational margin, I'd just like to remind you, you've seen it over the years, the profitability in Q2 is always lower to Q1 simply because we speed up our investments during the year. This year, we've got an exchange rate impact, which is quite homogenous. But we have also made some gains on our hedging, but there's been the depreciation of euro. We're going to speed up also our communication investments in Q2.

And for recruitment, we're also very conservative at the beginning of the year. We always wait for the general trend to crystallize before we can start recruiting. So yes, recruiting would also be a bit faster from now on. So yes, that's the different elements to bear in mind, the different elements that are there to support the growth of the group. And then just a final point on our IS, our Information System. We invest for the future, although it's booked as an expenditure. But yes, we are preparing for the future as well.

Regarding sales in Russia. Well, we are one of the first groups to have pulled out of Russia and closed our stores after the beginning of the war. All of our stores are closed since the war started. We've kept the stores, but we are now exiting the leases so that we only keep one store in Stoleshnikov just to host the couple of people who are in charge of legal obligations and maintenance. But we have no business in Russia anymore.

[Interpreted] [Operator Instructions] Next question from Edouard Aubin from Morgan Stanley.

[Interpreted] Two questions. For the store openings, Eric, we've seen the trends over the last 2 years. The total number of stores is pretty much the same or even a tiny bit lower, but with a bigger average size for the stores. In 2025 and 2026, are we going to be seeing the same trend? And could you maybe tell us even a vague idea of the percentage increase in square meters?

Secondly, I imagine that for leather goods, you're looking at capacity over the next few years. And in light of that, the 6% to 7% growth that you've enjoyed over the last few years in leather goods, is it going to be the same for 2026, 2027? So do you think that you keep that rhythm of plus 6%, plus 7% over the next 2 years?

[Interpreted] Okay. So regarding the development of the network, Edouard, you've summed up very nicely the strategy of the group. We move to larger stores, stores that are generally more than 500 square meters. Now for 2026, we have two large projects, which are going to be completed. First of all, we've got the renovation and the extension of the Geneva store, which is a temporary store at the moment. And then there's another big project where we'll be opening Bond Street in London. It's a very big project, and it will be a very original store, and it will open around the summer a bit before.

Then we have also a store that we'll be opening in China, a market that we invest quite a lot on and in the U.S. But this year and next year, we always have three to four opening of stores and about 15 projects of renovation and expansion.

Regarding leather goods capacity at plus 6%, plus 7%. Well, we are going to be in line with that for next year with the opening of a new leather workshop, but also with the extension of some older sites that have reached maximum capacity, but we keep to our role of having sites with 300 people maximum, 250 of which are craft people. So yes in 2026, we're going to continue with our capacity increase around plus 6%, plus 7%.

[Interpreted] Next question from David Da Maia from CIC.

[Interpreted] A quick follow-up question on China. You mentioned a slight improvement in Q3. And I'd like to know whether that is attributable to an increase in footfall as you highlighted for the U.S., for instance? Or is it your value strategy that is paying dividends in China? It's not so much down to footfall or value strategy?

[Interpreted] Well, actually, it's a little bit of both. There is a slight increase in footfall, and our value strategy is also paying dividends. Our value strategy aims at selling products of higher values. So for jewelry, for example, we sell larger items. Likewise, also for watches. We sell more items with complications. So it's the combination of both, which explains this improvement, which speaks to this good improvement in early October. But you need to, of course, remain humble and conservative, but there are some positive signals in China with the financial markets that is recovering. And also the real estate in Tier 1 cities in China, which is stabilizing.

[Interpreted] We have no further questions for the moment, it would seem.

[Interpreted] Well, in that case, we'll be closing this conference. Do not hesitate if you have further questions. Thank you very much, and see you soon.

[Interpreted] Ladies and gentlemen, the conference is now over. Thank you very much for taking part. You can now sign out. Thank you very much.

[Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]