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Good day, and thank you for standing by. Welcome to the Kering 2026 Third Quarter Revenue Conference Call. Please note that today's conference is being recorded. I would now like to hand the conference over to Armelle Poulou, Chief Financial Officer of Kering. Please go ahead.

Thank you. Good evening to all of you, and welcome to Kering's Third Quarter 2026 Revenue Call. I will be reviewing our performance and will be joined by Philippine de Schonen, Head of IR for the Q&A session.

I will start with the key highlights of the quarter. Against an uncertain macroeconomic backdrop, we continue to roll out our [ ReconKering ] plan, tackling step by-step the changes needed to build a more resilient and integrated group and giving us the agility to better navigate this increasingly challenging environment.

First, our houses keep on deploying their strategies with product execution being the clear priority. This was, for example, visible through the recent fashion shows, which gave each house the opportunity to translate strategic choices tangibly.

Second, we continue to strengthen our leadership with appointments at Bottega Veneta, Pomellato, [ DoDo ] at group level. These moves reflect our focus on building leadership depth, combining the recruitment of external experts with the promotion of internal talent.

Finally, as part of our long-term commitment to nurturing the craftsmanship and talent that underpin our houses' industrial base, our Kering Academia of [ Excellency ] launched its first full academic year, welcoming more than 1,500 students across program developed with our houses and seven partner schools across Italy. Taken together, these actions mark continued progress on our road map.

I will now turn to our financial performance in more detail. On Slide 5, group revenue in the quarter reached EUR 3.3 billion, down 1% on a comparable basis and flat as reported, reflecting the positive impact of the U.S. dollar and the Chinese yuan, partially offset by a negative impact from the Japanese yen. There was no scope effect.

The quarter reflects phasing effects at Gucci, together with a more pronounced seasonal effect at Kering Eyewear, a demanding comparison base as last year's sequential progression from Q2 to Q3 was particularly strong and more challenging macro trends.

Traffic remains the main constraint across the group. However, other retail KPIs were supported by various initiatives, reflecting solid engagement from clients visiting our stores.

As anticipated during our H1 call, Gucci's performance in Q3 is impacted by the phasing effect of our collections before benefiting from the ramping up of our ongoing work on products.

In the meantime, the group can rely on the strength of its portfolio with Saint Laurent, Bottega Veneta and Brioni as well as Kering Eyewear and Kering Jewelry, which continue to extend their strong trajectory.

Overall, against the current macro backdrop, we remain focused on the levers within our control. And our priority is clear: execute better, move faster and remain relentlessly focused on desirability, product and client response.

Moving on to our quarterly revenue in more detail on Slide 6. The performance remains uneven. By segment, Kering Fashion and Leather Goods was down 3% on a comparable basis and down 1% as reported, with Gucci down 6% on a comparable basis and 4% as reported as the house continues its turnaround.

Kering jewelry increased by 11% on a comparable basis and by 12% as reported, supported by strong performance at Boucheron and Pomellato. Kering Eyewear grew 4% on a comparable basis and 6% as reported, confirming the resilience of its business.

Corporate and Other decreased by 5%, both on a comparable basis and as reported, reflecting the end of rental income following the real estate deals despite the continued strong performance of [ Ginov ] 1735.

Overall, our geographic mix stays well balanced with the main shift being a lower contribution from Asia Pacific amid mixed regional trends. Mainland China is our major headwind as consumer confidence stays subdued and customers are increasingly selective, while South Korea continued to grow.

On Slide 7, let's review the top line by channel. The split by channel remains stable with retail, which represents 75% of revenue, down 3% on a comparable basis. Within retail, e-commerce grew 3% year-on-year on a comparable basis and represented 11% of retail sales, a rather stable proportion.

Traffic remained under pressure overall in our stores. This was partly offset by better conversion across most houses, supported by stronger product execution and improved client engagement, together with higher average unit retail price and average ticket. These indicators point to healthier product dynamics and reinforce our focus on product transformation.

Our directly operated network now counts 1,614 stores, a net reduction of 105 stores since the end of last year, including 25 net closures at Gucci. With this, we have reached our objective of 100 net store closures before year-end. The group now anticipates at least 125 net closures for the full year 2026.

Alongside closures, we continue to open stores in selected locations. At the same time, we keep focusing on maximizing the productivity and appeal of our existing network with store refurbishments, strengthening expression of each house and elevating the client experience. Wholesale and other increased by 3%, in line with the previous quarter.

When zooming in on distribution split per segment, Kering Fashion and Leather Goods retail sales declined by 4% on a comparable basis. The sequential slowdown reflects a more challenging environment, a less supportive contribution of Gucci and lower traffic this summer, especially in Mainland China. Wholesale increased by 1%.

Kering Jewelry was driven by the strong retail performance of our jewelry specialists posting 18% growth, while wholesale declined by 5%, affected by softer performance in Mainland China and retailization in the Middle East.

Kering Eyewear, whose revenue entirely derived from wholesale keeps on enjoying positive momentum with revenues increasing by 4% on a comparable basis.

Moving on to retail regional performance on a comparable basis on Slide 8. Western Europe was flat and posted its third quarter of sequential improvement with both local and tourist spending improving sequentially, driven by Saint Laurent and Bottega Veneta.

In North America, trends have softened this quarter after several quarters of strong growth. Performance remained strongly positive for most houses and the region posted a 1% growth on a comparable basis despite normalization in consumer demand.

Japan eased this quarter, posting 4% growth, boosted by the dynamism of our jewelry houses in the country. Tourism dynamics became less supportive than in Q2.

Asia Pacific declined by 8% in the quarter with the low traffic in Mainland China being the main headwind, partly offset by continued strong momentum in South Korea. Nevertheless, in-store indicators were more encouraging. The dedicated China plan remains focused on rebuilding desirability. I will get back to this in more detail later.

Finally, Rest of the World declined by 5%. The Middle East continued its sequential recovery and posted a positive growth in Q3.

Let's now move to Kering Fashion & Leather Goods on Slide 9. Revenues stood at EUR 2.7 billion, down 1% as reported and 3% on a comparable basis. Excluding Gucci, the segment grew by 2% in retail with Saint Laurent, Bottega Veneta and Brioni enjoying momentum. This broad-based contribution highlights the strength and diversification of our portfolio, helping to partially offset Gucci's current transition.

Before turning specifically to Gucci, let me first say a few words about the other brands within the segment. At Saint Laurent, the House keeps benefiting from strong traction driven by sustained growth in North America and Western Europe and engagement from VICs and core clients.

Bottega Veneta continued to outperform, supported by sustained brand desirability, solid traction across key markets and continued strong momentum in leather goods with successful product introductions.

The House also advanced its diversification strategy, notably in ready-to-wear, while benefiting from strong engagement among VICs. This performance confirms the methodical rollout of the house strategy unveiled at the Capital Market Day with growth increasingly driven by value.

At Balenciaga, performance was more challenging as the house works through its creative transition. Leather goods remains the engine of the house, while ready-to-wear and shoes remain key areas of focus. Basket size improved both in value and units.

McQueen continued to execute its repositioning and the reset of its retail network. The house is refocusing its identity as a British tailor and its latest show in London further reinforce this renewed focus on its British roots.

Finally, Brioni maintained its solid growth trajectory, supported by its highly personalized approach to client relationships and the strength of its bespoke offer. Wholesale and other revenues were up 4% on a comparable basis. Royalties and other revenues recorded very strong performance, driven by the beauty and eyewear licenses of our fashion houses.

Focusing on Gucci now on Slide 10. The House recorded sales of EUR 1.3 billion in the third quarter, down 4% as reported and 6% on a comparable basis year-on-year. Retail ended down 7% as reported and 9% on a comparable basis. This performance reflects several factors, an 11 percentage points tougher comparison base this quarter and a less pronounced unit effect than in Q2, partially offset by the first benefits of our ongoing work on product development from creative teams to retail excellence.

On phasing, Primavera started to reach stores in mid-July and was fully deployed in September with advertising rolling out from late August. The collection contributed positively to newness. Being fashion forward, it primarily speaks to a fashion-led clientele. It is now being complemented by Gucci Core, which is more focused on the core [indiscernible] and will begin to reach stores in November.

Traffic remains a main constraint across regions with Mainland China, our key headwind. That said, conversion, average ticket and average price continued to improve.

This quarter was primarily about execution. We continue to reshape the product architecture, sharpen category priorities and improve pricing and perceived value while bringing new collections into stores.

Handbags are at the forefront of this work with a richer offer and a clear price architecture. Ready-to-wear and shoes remain key areas of focus. The recovery will be gradual over time as we keep on working towards progressively translating improving dynamics into traffic and sustainable growth.

Wholesale and other revenues were up 35%. Wholesale, which represents around 9% of sales or EUR 120 million in the quarter was up 45% on a comparable basis, reflecting a low comparison base and order book effect as new collection came through.

On Slide 11, Kering jewelry again delivered a strong performance, reaching EUR 239 million in revenues. Sales were up 12% as reported and 11% on a comparable basis. Sales in the directly operating network increased by 18%, while wholesale and other revenues decreased by 6%, both on a comparable basis and as reported.

The segment is benefiting from a growing retail footprint and the first effect of the integrated platform supporting synergies.

Boucheron posted another strong quarter, driven by the continued strength of its iconic collections, [ CA ] and [ Serambom ] and good performance in Japan and South Korea.

Pomellato also benefited from positive momentum, supported by strong traction in Japan, thanks to the [ Noodo ], [ Iconica ] and Together collections.

Performance at [ DoDo ] and [ Kim ] was mixed, though the houses continue to advance our product initiatives, notably with [ Kim's ] successful launch of [ DoDo ] Purple Jade.

Beyond the quarter, Kering Jewelry is confirming its role as a structural growth engine for the group. The category benefits from strong underlying fundamentals and from the disciplined way we are scaling it across houses and regions. We are also investing in the communication of our brands. With strong desirability, a growing retail footprint and an increasingly integrated industrial backbone, we are confident in jewelry's ability to increase its contribution to group revenue over time.

We will present our key priorities for the jewelry business during the Kering Jewelry Day, which will take place on the 2nd of December in Paris.

Moving on to Slide 12. Let's focus on the revenue of Kering Eyewear, which posted another quarter of solid performance. Sales reached EUR 373 million and were up 6% as reported and 4% on a comparable basis, reflecting strong demand across the portfolio and the anticipated more pronounced seasonality effect during the second half of the year. This performance highlights the strength, resilience and scalability of the eyewear platform across geographies.

Growth was supported by a combination of several product launches, including [ Maui Jim ] Fall/Winter 2026 collection and the continued rollout of the activations supporting [ Lindberg's ] 40th anniversary. Commercial and marketing momentum remains strong, supported by a successful spring/summer 2027 sales campaign and media investment across key brands and targeted activations.

Beyond the quarter, eyewear is demonstrating again the relevance of our integrated model. With its diversified brand portfolio and recurring demand profile, Kering Eyewear is a highly attractive and reliable growth engine for the group.

On Slide 13, I will make a few comments about the Corporate and Other segment. This quarter, revenue from Corporate and Other amounted to EUR 27 million, down 5% as reported and on a comparable basis, primarily reflecting the end of rental income following the real estate transaction despite the very strong double-digit growth delivered again by January [ 1735 ], highlighting the continued progress in brand development and desirability across key markets.

On Slide 14 and before concluding, I would like to step back from the quarter and show the steady progress we are making on our transformation brick by brick.

Clearly, the performance of the third quarter is not where we want it to be. But beneath the top line, the actions we have taken are becoming increasingly visible.

First, at Gucci, our priority is to rebuild desirability. Creative renewal is underway. The store show in Milan at the end of September brought the house strategy fully together, building on Primavera and Gucci Core presented earlier this year. The collection stood out for the diversity of its look, products and style across both men's and women's.

We have also sharpened the organization around creativity with product, merchandising, marketing and retail now working more closely together. At the same time, we are increasing media investments, strengthening communication and intensifying [ clienteling ] in Q4, making sure our actions resonate more strongly with clients. We are already seeing tangible results with improvements in conversion, average ticket and average price.

Traffic remains a missing piece. We are also working on retail excellence, deploying our new store concept, optimizing the network and stepping up sales force training.

Second, in China, we are tackling the challenge head on. On the operating model, we are adapting our organization and leadership with more decisions now taken locally. On client relevance, we are putting Chinese clients more firmly at the center of our actions, stepping up outreach to top clients, timing major product moments around local occasions and conceiving campaigns in and for China rather than adapting global ones.

As part of this effort, I am pleased to announce the launch of a content factory in China for China. And on the network, we remain disciplined. We are optimizing our stores while investing in refurbishment and restyling. Format and visual merchandising are the levers we hold on traffic itself, and we are using them first where footfall has fallen most.

Third, we are enhancing the offer across the [indiscernible]. Product and price architectures are becoming clearer, quality is being upgraded, and we are reducing the number of SKUs.

Buying is becoming more responsive to actual demand. This also supports our objective to reduce fashion and leather goods inventory by around EUR 1 billion by year-end.

And finally, on efficiency, we are building an integrated group. Our shared industry, client and tech platforms are increasingly supporting the IOs from manufacturing and procurement to client engagement, forecasting and inventory management.

On change management, we are embedding a stronger culture of execution with clear accountability, faster decision-making and a collective mindset.

And on cost discipline, we are further reducing our cost base without compromising investment in our Houses. CapEx remains disciplined, and we confirm full year OpEx below last year with H2 2026 below H2 2025.

Before turning to the outlook, a word on creative leadership, which sits at the heart of our model. At Saint Laurent, we are opening a new chapter from a position of strength with the House back to growth, a clear strategy and solid momentum.

At McQueen, we will build on the repositioning already underway, sharpening the house focus on what makes it distinctive, British tailoring, women's ready-to-wear and occasion wear.

In both cases, our approach is the same, a creative vision fully aligned with a clear house strategy and supported by the strength of the group platform. We look forward to sharing more on creative leadership soon.

So while the benefits of the transformation are not yet fully visible in our revenues, the actions behind them are well underway.

To summarize, our focus is on rebuilding desirability, improving retail productivity and translating these changes into healthier and value-creating growth.

As you know, we continue to operate in an uncertain geopolitical and macroeconomic environment with limited visibility in some of our key markets. This is weighting on our short-term revenue trends. Nevertheless, we continue to prioritize the quality of our revenue with several of our brands showing strong momentum and the recovery at Gucci gradually taking shape.

On profitability, we confirm our objective of improving recurring operating margin in 2026. This will be supported by the continued implementation of our efficiency measures while maintaining strong investment in the desirability of our houses.

Today, our focus remains firmly on the execution of our strategic plan with agility, discipline and flawless execution. concentrating on the levers that are within our control. We are clear eyed about the work still ahead. Q3 reinforced the necessity of our transformation, but it does not change its direction. Our priority is to translate the progress we are making across our houses and the group into sustainable growth, stronger profitability and cash generation. And with that, we are ready to take your questions.

[Operator Instructions] and your first question today comes from the line of Anne-Laure Bismuth from HSBC.

My first question is on the performance for the Fashion & Leather division ex Gucci. So it was flat in Q3. Can we have a bit more granularity about the performance of Bottega Veneta and Saint Laurent if it was above average? And yes, it would be good to have that granularity.

And the second question is about the consumer reception of the Primavera collection, if you can share a bit of feedback on that.

And then as the core collection has been rolled out a bit earlier in some of the locations globally? And maybe a last one, I know it can be a bit premature, but can we see a bit of an improvement on the back of this collections being in stores in Q4 for Gucci?

Thank you, Anne. So first, let me comment on the fashion and [ leather wear ] brand [ ex ] Gucci. Yes, it was flat. It was up 2% in retail. Very happy to see positive momentum at Saint Laurent, driven by North America and Western Europe. We saw a very strong traction in ready-to-wear and shoes, supported by a lot of newness that was very successful.

And also, I would say, a very interesting traction on the VIC. You remember that's part of the strategy to elevate the part of VICs at Saint Laurent, and we had a very good recruitment of new VICs at Saint Laurent over the quarter.

Regarding Bottega Veneta. Bottega Veneta delivered another high single-digit growth in the quarter. despite tougher comparison basis. Leather goods remains the key driver, supported by the India, but also by new launches. We are also happy to see the good reception to the ready-to-wear collection, which allow diversification to develop at Bottega Veneta. And at Bottega Veneta, we are also seeing a double-digit growth of our client category.

For the other brands, Balenciaga and McQueen, the quarter was a bit more challenging. Balenciaga is seeing very good results on the leather goods with the city and the Rodeo and we just launched a new bag, the new [ Howard Glass ] avenue that has a very good start. And at the same time, it's suffering on the ready-to-wear and shoes where we need to focus on introducing new lines and new products.

McQueen, it's working on its repositioning, but it's making good progress on the network optimization, the restructuring of the company and the repositioning with some early good signs in women's ready-to-wear and formal footwear.

Brioni delivered a very strong growth with a large success of the bespoke offer. And also here, again, a good development of a very highly personalized client relationship.

Your second question was on Primavera. So Primavera gained traction throughout the quarter. It's a collection that was very fashion-led, which for us was very important because the objective, you remember from the beginning of the year was to regain visibility at Gucci and to get Gucci back into the conversation, which we did with generation and then core. The objective of the next collection that is coming, as you said, in Q4 would be to enlarge the appeal of the collection. It is going to introduce more daily wardrobe and it should resonate more to a larger audience of our clientele.

Asking how is it doing for core, it's really too early because I think is just arriving in the store. The full deployment in store will be done over the month of November. So it's a bit early to give a feedback on core.

And then, of course, you've seen the shoe of the store and that will be the next step with here again, a collection that will be even more large in its offer across category and size. And you ask me...

Your next question today comes from the line of Antoine Belge from BNP Paribas.

[ Francois ] at BNP. Three questions, if I may. I know it's probably difficult to estimate, but you think that there is a calendar impact from the phasing of the collection on deliveries. So is it possible for you to try to get an estimate of how much it weighed in the quarter and maybe it's not possible until you get the answer about the new collection. But if there is at least an internal view on that, I'd be interested to know it.

Question number 2 is about the performance in retail. So there's been a deceleration. So can you maybe give a flavor by the key clusters for retail? And also maybe in conjunction with my first question, which maybe there is a particular region that suffered more from less newness?

And finally, on margins. So you said that you're conferring a full year target of higher margin. But if I'm not mistaken, there was also a target on the H2 margin being higher than H1, which would mean above 12.8%. And if they have been achieved or would be achieved, that would mean 170 basis points more for the full year.

So can you comment a bit on -- I mean, is it fair to say that now you're abandoning this 12.8% for H2? And if that's the case, maybe I think you gave a bit of flavor on OpEx, but also, I mean, gross margin, which was down 110 basis points in H1. It seems that the three drivers that drove the decline are still there, the China mix, the gold price and the investment in better quality.

Thank you, Antoine. On your first question, it's a tough one, of course, because it's very difficult to measure precisely. What is sure is that we are introducing those new collection one after the other. And there is both, as I was saying, the calendar effect of the collection coming to store in September and the fact also that remember, in Q2, we had two collections, we had [ Generation ] and [ Lafamila ] both in stores.

But for us, what is important is to continue to deliver the plan and to enlarge, I would say, the breadth of the collection, one collection after the other. So difficult for me to give you a precise answer.

In terms of retail and the deceleration where we had the most headwind was in China, as you probably well imagine, for sure, even -- so that was true for the Chinese cluster as well. We also had a deceleration -- your question is on Gucci. For Gucci, we also had a deceleration in the U.S. But in terms of performance, that's China that weighted the most on the performance of Gucci retail in Q3.

I cannot say it was linked to less units in a region or in another. It was more linked to the dynamics of traffic. Now even in this environment, in every region, we are pleased to see that we had an improvement of the conversion, an improvement the average ticket and average unit price and also cross-selling. So difficult traffic. But once the customer is in the store, good reception with the newness.

On margin, yes, we have done some further improvement on our discipline on OpEx, which is a good thing. We are not going to -- and we confirm that we can improve margin for the full year in 2026 versus 2025. We will not improve H2 margin versus H1 margin considering the challenging environment, but we will still improve the full year margin, which was what we indicated at the beginning of the year.

This is driven, as I said, by good discipline on OpEx. Even if we continue to strongly invest in communication behind our brands, we also strongly invest in the refurbishment of our stores.

But we do some efficiency efforts in other areas. The same area I mentioned many times, but -- and it's always said it was not one-off effort. We are raising the efficiency within the company in every house, but also leveraging on the group platform to be more efficient as a group for our Houses with more and more mutualization of services for the brand.

Gross margin, you know that we are not guiding on gross margin. It's true that the element you mentioned on the regional mix, the raw material and the investment of quality still remains. Over time, you know that we are counting on the group platform over time to have some efficiencies. Some of it, we will reinvest in the product as the product is an absolute key priority for us.

Maybe just a follow-up on the clusters because at the group level, that's usually where you communicate. I'm looking at my notes in Q2, I think the Mainland Chinese, they were down around 10% and American up high single digits. So is it possible to have these two clusters for Q3 at the group overall?

Chinese, we were sort of low teens in Q2 and we lost, I would say, around 5 points. And Americas, we were high single digit and we lost sort of same number of points roughly. So deceleration in both clusters, but America still is a positive region for us.

Okay. All right. So I thought mid-teens down was for Gucci in Q2, not the group. I might have one more.

Which one you're saying for Chinese?

Yes, the Chinese down mid-teens.

It was low teens in Q2...

Low teens in Q2.

Our next question today comes from the line of Thomas Chauvet from Citi.

I have two questions, please, and just a quick follow-up on the slide deck. On the first one, coming back to the cost, you've explained well. You've taken a lot of cost out of the business since the end of '24. As you shift from restructuring towards investments, ramp-up of new collection, new designers coming at Saint Laurent and McQueen, should we expect a more normal pace of OpEx growth next year? I see consensus is currently assuming around plus 4 for the OpEx at reported rates. So a very different number from both H1 and H2 '26.

And then secondly, on your guidance, very clear on the margin comments you just made. It seems you have removed from the last slide of the deck, the sales growth target for the year that was provided in H1. The 9 months at group level are flat at constant FX, and you're not assuming growth anymore, I suppose. Is that because of this uncertainty you described earlier, the lack of visibility, maybe the France situation that you are not comfortable with delivering growth in Q4? Perhaps if you could comment maybe on how October has trended?

And just thirdly, on clarification on the Europe performance. Western Europe was flat retail in Q3, but Gucci was down -- sorry, Fashion Leather was down 5% and Jewelry was also down in Europe. So how does that reconcile? I must be missing something. It's been a long day with a lot of reports and probably [indiscernible]. But I just can't reconcile that performance in Europe with the fashion leather and jewelry that are both down in Europe.

On your first question on cost, first, the efforts we are doing on cost are, as I was saying, are based on efficiency effort. It's also coming from the optimization of the network. We are continuing to work in that direction in next year. It's really early for me to give you any indication on the OpEx for 2027.

Regarding the outlook, it's true that we are in a very uncertain environment at the moment in France, but not just in France, also in other part of the world. And so we want to concentrate on the quality of the sales. That for us is the most important. We are working on what we can control, and it's very important for us to concentrate on the execution of the plan and on the quality of the [ sales ].

Was there anything...

No, we don't guide on quarterly revenue now but I can tell you the quality and the transformation are progressing. Now your question on October, what I can say is that for the moment, broadly, it is in line with the Q3 trends in most of the regions.

Your last question on Europe. So it's -- you're taking me by surprise. I'm sure the numbers are right. Let me come back to you, Thomas.

Your next question today comes from the line of Luca Solca from Bernstein.

It's Luca Solca from Bernstein. I wonder if you could summarize how you're seeing the new Creative Directors coming on board and when they could potentially be launching their new collections.

In the brands where you have announced recent departures, do we expect the new Creative Director to be preparing the Fall/Winter collection for Saint Laurent to go on the cut walk in early '27? And is that going to be the same for [ Alexander McQueen ].

I think that there was a lot of media reports about potential changes of Balenciaga. So if you could confirm that [indiscernible] is staying, that would be very helpful. That is my first question.

The second question is on off-price. I remember you have announced a significant ambition to reduce inventory. I think that part of that is getting inventory or old inventory out of the system through factory outlets. I wonder how that is proceeding. And if you could give us any update on how you're realizing your ambition and how the off-price channel contributed to the retail performance?

Okay. On your first question, we are very happy to welcome shortly two new designers. And I'm not going to announce their name today, but we should be able to give you more indication very shortly. [indiscernible] were well anticipated and planned. That's why we are very positive on the impact we have with the brand. The situation are a bit different because Saint Laurent is starting from a strong momentum situation. So it's more the opportunity to open the new chapter and to unlock all the still area of growth that we see at Saint Laurent and that we explained at the CMD.

And for McQueen, it's also going to help the repositioning of the brand with a British selling approach with a very bold point of view. I'm not going to give you more detail on the collection and the timing. It's a bit early, and you will see that later on when those creative designer will join the brand.

Balenciaga, I'm going to be disappointing, but I'm not commenting the remarks.

Regarding off-price, first, I'm happy to confirm that we are very well on track on our objective to reduce inventory for the year-end. This has been done in many ways. The most -- so yes, some products have been sold in out. Some products have been sold in family sales. But the most important for us is that we have reviewed completely the buying strategy.

It's not just the buying. We are mentioning from time to time the work that we are doing on the product architecture, number of SKUs, reducing the number of lines. I mean it's a full work of, I would say, [ S&OP ] where we try to improve the planning. We try to improve the industrial agility. We try to improve also the correct assortment by cluster of stores. And we have reduced quite importantly, the number of units we produced.

But because we are much better organized in terms of planning and distribution, we managed to reduce our leftovers along the year and to reduce the amount of coverage of our carry. That's really the way we want to proceed. So I would say there were -- of course, there has been some outlets and -- but I recall that our objective is really going forward to reduce the number of outlets and to reduce the share of sales that we do in outlets. And that's all the point of inventories, not just reduce the size of the inventory, but it's also to enhance the quality of the inventory and to enhance our capabilities in terms of [ S&OP ].

We have a strong project at group level together with the that we call [ IBP ]. This is a good example, I think, of where the group platform can help and influence our efficiency because this is a project that is held at group level, but it is done with the houses altogether, and we are quite satisfied to see already some improvement in some KPIs. Inventory is one, but sell-through and [indiscernible] coverage is another one.

And just as a follow-up, could you maybe also update us on your ambition to reduce the number of stores? And how is this proceeding just ahead of the full year-end?

Yes. So in terms of stores, we are proceeding well because we had announced at the beginning of the year, an objective of 100, and we are already at 105. That's why we are revising the ambition of 125. In this number, you have also some new openings because it's a net number. We have closed more stores, and we are also opening stores. And more importantly, we are accelerating on refurbishment.

We think it's extremely important, especially in the brands where we had the transition to make sure that not only we rejuvenate the product offer, but that we also refresh our stores. So having less stores, we also can concentrate our CapEx on refurbishment.

We have a strong plan in all brands. But at Saint Laurent, for example, this year, we have already deployed a new store concept in many new flagships. And at Gucci, we have also started refurbishment. The new store concept will be unveiled in November in [indiscernible], but we have a full program for next year where there will be some, I would say, strong large refurbishment, but also restyling of our stores where we will be able to be quite agile and quick in changing the look and feel of the stores without being too disruptive to the [ sales ].

Our next question today comes from the line of Edouard Aubin from Morgan Stanley.

So maybe most of my questions are on Gucci. Apologies to come back to that. But Armelle, you talked about the weakness in China, but I think maybe one of the biggest surprises is North America because you turned negative in Q3.

I get the point that the comp base is obviously more difficult for sure. But the -- you had talked about the brand perception remaining strong in the U.S. You did the show on Times Square in May. Kind of how -- what are you hearing from your teams in North America? What's the analysis of the contraction of Gucci in Q3? So that would be question number one.

Question number two is on Gucci wholesale. So you talked about the order book and so on. Are we going to see a bit of a reversal, i.e., wholesale at Gucci being down year-over-year in Q4? If you could give us a little bit more detail? And also, what's the regional push? Was it rest of the world? Or where was wholesale particularly strong in Q2?

And then in terms of the -- finally, on Gucci, there's a lot of talk about ASP potentially being down via either prices that you're taking and the way you play with the mix. Can you -- I have seen some figures on price cuts in the mid-single digit? And if you can comment on are these discontinued lines that you are heavily discounting to reduce your inventory and do a cleanup?

And also, if you can just comment on, a, the straightforward like-for-like price cut, but also the efforts you're making with the mix and the strategy because I think that's a key focus of investors these days.

Thank you, Edouard. So regarding North America, before I go to Gucci, I cannot prevent myself to comment on the fact that Saint Laurent and Bottega Veneta are double-digit growing in the U.S.

Regarding Gucci, I think the analysis we do at Gucci is when we look at the collection that were in store and also at the customer that bought it, we see it's a collection generation and to a lesser extent, but also [indiscernible] that was very much fashion forward. And that attracted more the higher end of our clientele.

And we saw in the mix more VICs, more resilience in the VICs than in, I would say, the core part of the clientele and the rational. And that's exactly why -- and that was the plan, the collection that you saw in May in New York that we come to the store in November as a break that is much more large and it's more daily than fashion forward. So this is for us one of the explanation. We had a very demanding comp base in the U.S. in Q3, but certainly more resilient and with the fashion forward clientele.

But for us, it's very important, but it's also what is putting back Gucci in the conversation. It's also what is going to help us gain traction. But then we need in the store to have a larger offer. So we know we need to work still on the product.

We are seeing good results on handbags. We know that on ready-to-wear and shoes, the new collection are going to bring some more newness and probably more attractive to a larger audience.

For wholesale it's always very difficult to where is a bit of phasing. So probably it will be -- it won't be as much up in Q4, maybe even a bit negative in Q4 due to some savings. But it's not our first focus wholesale.

And maybe coming back to your question on price, and thank you for asking the question because there has been a lot of talk about what we've done about price at Gucci. And I'm very happy to give a bit of explanation.

Our approach is really based on common sense. What we want to do is to give to our clients the right product at the right price. So yes, we have done some recent price cuts. They were done on a very limited number of SKUs, and there were seasonal SKUs from the previous activity. So not products that are reproduced. So that was part, yes, of the cleaning strategy.

It's also a way sometimes to bring some clients to store, and we actually -- it was very interesting to see that we did a lot of cross-selling between sometimes still valid -- all still valid and new products. But for us, the focus is really on creating desirable offer with the right pricing architecture and an improved quality perception and both are very important.

And that's actually why you see that we are happy to see that the AUR went up and it's in every region. It's because we also gain in handbag and also in the middle range, I would say. You saw the success of the [ Bo ] and the [ Par ] that are bags that are priced around 3,000. So we are not going through a repositioning in pricing of Gucci. But at the same time, we want to introduce new product creative with a higher quality, but that are perceived as good value for money for our customers, and that can be at the very high end at the end or in the middle.

Okay. And if I can just keep a quick one on your net financial expenses. How do you see the trajectory in '26 and '27 now that you've delevered the balance sheet? If you could comment on that, that would be helpful.

Yes. The cost of net debt is going to follow the size of the debt, so it's going to go down, which is good news. In Q1, the net financial expenses, we had also to some foreign exchange effect, negative effect. So that is very difficult to forecast going forward. But on the cost of net debt, it's going to go down.

Our next question today comes from the line of [ Aaron Ramberg ] from Goldman Sachs.

[ Aaron Ramberg ] from Goldman Sachs. I mostly have follow-ups now. I was wondering if within the quarter, you saw any difference between the beginning of the quarter and the month of September. Bizarrely, some of your peers have mentioned weather and other elements that weighed more on the beginning of the quarter before things got a bit less bad or even better in September?

Secondly, a follow-up on -- so your store closures, so you're well ahead of plan. Does it mean you're going more quickly in negotiating these exits? Or does it mean that you'll eventually go deeper, meaning you will, on a 3-year view, cut more number of stores that you had in mind? Or are you just quicker at doing it?

And then thirdly, and this is probably a question that's difficult to answer, but maybe you can give us feedback from the people on the ground. If you look at China, I'm just wondering what you are picking up in terms of what's weighing most on psychology because obviously, it's the entire sector, which is under pressure in China. Is it real estate? Is it equity markets? Is this new taxation law? Is it something else you have in mind that is explaining how sequentially this market has become a lot worse in the quarter?

Thank you, Aaron. So regarding your first question, September was slightly above the quarter.

Regarding your second question on store closure, I think this is a result of -- we've been cautious in the number that we communicated because we knew it was dependent on the negotiation, as you said, because we also closed store before the end of the lease.

And I think it's good news to see that our real estate team has been very efficient in the negotiation. We didn't change the list of stores. It's just that the negotiation went well, and we had been a bit cautious in the communication of the number because we didn't know at the beginning of that exercise how difficult it could be.

It's not always easy, but mostly it went well, which is good because you know that we are doing this effort at group level. This is also part of the benefit of having some mutualized function at group level for all our houses.

On China, of course, there is a combination of all the effects that you mentioned. What we can say is that and see that for us, the main headwind is the traffic. But regardless of the reasons that are creating a weak traffic, first, we are encouraged by the fact that conversion, average ticket and ticket are up nonetheless for us in China, average price ticket. But also what we do is that we focus on our China plan. We know we have a lot of work to do in China.

We know that we are starting from a position where we need to rebuild the desirability, especially of Gucci in China. And we are reviewing our playbook in China. And this plan that is led by Luca is looking at, I would say, many elements, but I will mention four.

One is the organization and the operating model, and we are evolving our operating model. We are going to strengthen the teams locally, but also empower them more in order to be able for them to take quicker decision and more relevant from a Chinese standpoint.

The second point is that we are working also on the products we need to make sure that the assortment of products that we put in store in China is relevant for the Chinese customer and something probably where we didn't pay enough attention in the past. We are going to become much more client-centric in the assortment. Here again, using much more the feedback of our teams on the ground.

Third thing is on marketing and commercial activation. As I said in the speech, here again, it's extremely important in China at the moment to be relevant, to be culturally relevant for the Chinese. And we are launching a content factory that will be based in China to ensure agility, speed, but also to be locally relevant in terms of content.

And then the last one we already mentioned is the store network. Very important also to make sure that when the client comes to the store, the retail experience is perfect. And store network by having a more concentrated store network, we will also do a lot of refurbishment and resizing of the store network in China. And we know that in some brands like Saint Laurent, but also like Gucci, it is much needed because you still have stores with a very old style coming from previous creativity.

I'm sorry, I just wanted to come back on the question of store. So the store shutting stores. So the negotiations have gone a lot better than expected. But if we look at the 3- or 4-year out plan, is the total number of stores shut going to be higher? Or is it just that you're doing better in doing it quicker?

So the plan is executed quicker, but the list is not staying the same. We are not increasing the number of stores to be closed.

Your next question today comes from the line of Charles-Louis Scotti from Kepler...

I have two. The first one regarding Gucci, down 6% like-for-like in Q3, 9% in [ DTC ]. Could you please give us an indication of the impact of the store closures to help us understand the underlying same-store sales trend, because given you are closing an increasing number of stores each quarter, I would assume that the impact is becoming more significant quarter after quarter. Could you confirm whether this is the case?

And looking at Gucci retail, it decelerated 7 percentage points sequentially in Q3 and your peers were down between 4 and 9 percentage points. So I'm just trying to understand whether on the same-store sales basis, Gucci may actually have held up better than some of your peers.

And secondly, just a quick follow-up on the Creative Director changes. This announcement obviously has naturally led some investors to question the position of other designers across the group who were also appointed before the change in management, including at Gucci. The market environment is obviously making the Gucci turnaround more challenging.

But could you confirm whether the new management team is currently satisfied with the recent collections and the brand new creative direction and whether Gucci overall trajectory remains in line with management expectations.

Thank you, Charles-Louis. So on your first question, yes, I'm going to give you some numbers, but not at Gucci level, at group level. So because also this network optimization is done across the group, not just at Gucci. It's true to say that the store closure, and it's very difficult, but we try to estimate the impact on sales.

It's not easy because it, of course, depends where you close the store. If you close the store in a city where you have many stores and one that is just opposite the street, it's very different that if you close a store in a city where you have only one or two stores. But I'm going to give you a rough number that are just an estimation.

We estimate that in H1, the store closure had represented a headwind of 1 point on the sales before sales recapture, it's important to say and in H2 of 2 points. And regarding your question on the deceleration of Gucci, here again, it's important to remind you that we are also facing an 11-point comp base from Q2 -- Q3.

Regarding designers, of course, I'm not going to comment apart from Saint Laurent and McQueen. But I think what is important to say is that we are working at the moment to set up a more efficient operating model around creativity. So it means that it's making sure also that we have product development, marketing and merchandising that are set up around the creative teams and making sure that we make the best of the creativity of our designer. And that's extremely important.

The creative designer is very important. It's also very important that the team is able to deploy and I insisted already on the importance for us on the enhancement of the product offer that we have a team and that early stage is working together. It's true for merchandising, but also marketing and product development in order to be able to translate the creativity of the designer the best way in the product offer and to make sure and in the campaigns so that at the end of the day, we have the best offer for the customers in store.

So this is, I would say, where the management is mostly concentrated at the moment is to -- and here, again, using also the help of the houses and the group platform altogether to see how we can optimize the model to give us more agility, more time to market, but also a better translation of the creativity in the product offer.

Your next question today comes from the line of Oliver Chen from TD Cowen.

This is [ Jonah ] on for Oliver. To the extent that you can give us any color, how should we think about your exposure to aspirational customer versus ultra-high-end income consumer, both across in China and other regions? If any color that you can give would be helpful.

Thank you, Oliver. On this question, as I said, we see that the high-end customer at the moment is more resilient. We are in a moment where the macro backdrop is waiting on confidence and discretionary spending and certainly uncertainty adds to the pressure on middle income customer.

Now we also know that those customers are very attracted by newness and creativity, and what we are doing at the moment in the price and the product architecture is to make sure that we have the relevant offer for all our clients from the health to the core and the aspirational customer in different categories and at different entry points.

And certainly, we are paying a lot of attention in all the categories because we know that the aspirational customers can enter the universe of our brands through categories like eyewear, like perfume, like small leather goods. And -- but what is sure is that we want to offer them extremely high qualitative product at the right price. It's true for the aspirational customer, but also for the other one. But certainly, at the moment, what we see is a customer that is facing more uncertainty for sure, and that is true all around the world.

Your next question today comes from the line of Victoria Petrova from Barclays.

I have very short follow-up ones. First of all, do you think it is fair to assume that now your sales densities are below EUR 20,000 per square meter, so down from last year. That at least looks like that, but maybe I'm missing something.

Secondly, you are talking about traffic not coming back. Do you see any indication in any regions that traffic is recovering and which we could use as a leading indicator?

And finally, on Saint Laurent, this is one of the best-performing brands. Why are you changing Creative Direction there?

Thank you, Victoria. On sales density, we see some improvement in some of our brands, but I will not give you a number. I think that you do your own math. Of course, what we do on the network as an objective over the plan is to increase the sales density. We are closing stores. We are rejuvenating the offer. And we know that over time, this is going to increase sales density, which is, of course, a strong objective of our CMD plan as it is also a strong lever for our profitability. It also come with the refurbishment plan that I was mentioning. So we are working on it, of course, in many different directions.

Regarding traffic, I would say difficult to call for a region another one. I mean traffic is quite soft. It may depend sometimes from some brands. One thing I could say is we see some encouraging signs in Europe for Saint Laurent, for example, but Saint Laurent is a brand that is resonating very well with the tourists in Europe, but also the European customers. But what we focus on is really to improve conversion, our average ticket because what we do is we work on what we can control. And for us, it's encouraging to see that once the customer enter our store, we see a better response.

Regarding your question on the change of Creative Director at Saint Laurent. Saint Laurent is experiencing a strong momentum, and we are very happy about it. The change of Creative Directors, it's opening a new chapter after 10 years of success. It's also good from time to time to bring a new point of view to the brand.

We know that we have, as you know, our priority and our growth levers at Saint Laurent is to develop the day to develop the mainline to be more relevant in China. And we are very confident that the new Creative designer together with the Saint Laurent teams will be able to contribute to the development of this plan.

Your next question comes from the line of Zuzanna Pusz from UBS.

I have actually just two or no, maybe you actually got to be quick. So first of all, on Gucci's performance in retail in relation to the inventory cleanup you're also still doing. May I just confirm when you look at Gucci's performance in retail, can you confirm if full price stores are outperforming or they're underperforming outlets? Because I know your focus is to sort of deemphasize outlet. But in the meantime, as you clean up the inventory, I'm just wondering what's the dynamic.

And secondly -- sorry, it was on Gucci. On wholesale, I -- unless I misunderstood something, but I think at the beginning of the year, you were talking about wholesale being slightly negative for the year. And then I believe every quarter so far has been actually positive. And unless again, I misunderstood it, I thought -- I think you said it's going to be still probably slightly positive or negative, slightly negative in Q4. So it looks like it's not going to be negative for the year.

What is the specific reason for that? Is it maybe regional mix that franchise stores are performing better? Is it the response of maybe wholesale to the new collection? Just I don't know, if you can give a bit more color on that.

And then final question, I mean, so you're making some changes to Designers. I mean, the two ones you've discussed. And I think it was mentioned before that you don't really expect this to have any impact on sales and sort of any disruption. But at the same time, I think you did mention that in Q3, the reason why Gucci was a little bit weaker because it had to do with the flow of newness of the products from Denmark. So I'm just trying to understand how that these brands are less driven by the designer. I just want to get an idea because I guess we're all a bit worried that those brands may also go for a bit of a transition.

Let me answer to -- I mean to answer to all your questions. Maybe I start with the Designer. Each brand is on a specific trajectory and each situation is very different. I was mentioning Saint Laurent and McQueen. We are not -- it's a very two different situation. What I can say is that those transitions were planned and have been well planned and anticipated, and they are coming on top of a strategic plan that is under execution that it is very clear. So it's not changing at all the execution of the plan for each of those brands. It's enhancing the execution of the plan.

The situation of newness of Gucci is different. We know that we have more work to do at Gucci on the rejuvenation of the offer, and that's the work that [ Dena ] is doing with the team.

On your question regarding wholesale, yes, actually for Q4, I'm expecting more negative number, but I don't think this is really what is important. Wholesale is only a small part of our sales. And it's a channel that can vary from one quarter to another quarter because of phasing, because of also the willingness of our partner to buy the product.

What is important for us is that it represents a very small part of our sales. Our focus is in our [ DTC ] stores, and that's where we are putting all our efforts that I mentioned before in terms of store optimization, refurbishment relocation and reinvestment in the store and the retail experience.

Then finally, your question on full price stores and outlets the direction going forward over the plan, our intention is to reduce the share of outlets because our focus is really to sell our product, full price in our stores.

I'm not going to give you some details. We never communicate on the split of the sales. But this is, of course, will be done through enhancement of the product offer, better engagement with the client. And as I mentioned before, first and foremost, more efficient [ S&OP ] within the company, and that's really the objective because the outlet is not a channel of sales for us. It's a channel for the leftovers. And of course, what we are focusing at the moment is to reorganize in a way. And it's a question of organization, but it's also something where we can lever on technology and AI, where we can increase substantially the efficiency of our production towards the client demand in order to reduce strongly the leftover at the end of the season. So that's the objective of the company going forward.

Sorry, just to follow up...

Sorry, I already moved on to the next question. Shall I get Zuzanna back?

Let me just get Zuzanna for you one moment.

Sorry, Zuzanna, [indiscernible] line.

Sorry, I just wanted to clarify that. I understand -- and I think that's totally the right strategy to deemphasize outlets going forward. But I was just more curious as we are -- as Gucci is performing now because the H1 gross margin was a bit weaker.

So I'm just trying to get my head around how we should think about the gross margin for H2 because, let's say, if you're still clearing the inventory through the outlet channel for Gucci, then we could expect a bit more gross margin pressure. So it was more -- like I understand your long-term strategy, but I'm just trying to understand what's performing well and outlets are outperforming or underperforming now for Gucci?

What I can tell you is that the pressure we had on gross margin was mostly coming from the regional mix and the fact that we lost market share or market share in the mix in China and the cost of the raw materials. So if that can help, that we don't know exactly what will happen in Q4, but probably those elements will stay there for the second half of the year.

So it wasn't the outlet in H1? It was just other aspects.

No, it was not the outlet. It was many elements. I mean we talked about the raw materials. We talked about the gold price. We talked about the...

Investment in product sales?

And you know also that we have -- yes, and so those were the main reason of the gross margin.

And you had some ForEx impact in nature.

As well. Your next question today comes from the line of Ndamase [indiscernible] from Avior Capital Markets.

I just have one on the Jewelry division. The North America sales growth in Q3 slowed to minus 10% from plus 10% in Q2. That's quite a significant deceleration. Could you give us some color on what led to that very sharp drop?

Sorry. Thank you for your question. So regarding jewelry in the U.S., you know that our position in the U.S. at the moment is very limited in terms of mix. This is one area for us of development for the future because we are mostly very strongly present in Europe, but very strongly present in APAC and in Japan.

In the U.S., the reason for that drop was I think that we had some very strong high jewelry sales at -- but in Q2 that did not anniversary in Q3. Conversely, Pomellato had a very good performance in the U.S. in Q3.

Our next question today comes from the line of Chiara Battistini from JPMorgan.

Just a couple of very quick ones. Firstly, actually, following up on jewelry and the Jewelry division because it was a broader slowdown sequentially, I guess, to the extent the comp got tougher. Anything to call out more broadly and a high level on the jewelry category that you've seen in Q3 versus Q2? Any changes in consumer behavior there? Or it's just a function of the comp base?

And second question on Bottega Veneta. As I think the CEO has now joined. So any early indication of his priorities or where it's focusing at the moment besides, of course, getting up to speed. Any first steps that we should be expecting from there?

Chiara, thank you for your questions. On the first one, it's mostly due to the comp base. We had a very demanding comp base in Q3 in the jewelry division. I would say some of our brands, but pretty small like suffered over the summer from the deceleration of the Chinese market. But the other brands did well, but it was -- the comp base was the main reason for the deceleration.

Regarding Bottega Veneta, very happy to have welcome [ Roma ] on board. what he is doing is, of course, executing the strategy that we have for the brand. It's not going to change the strategy is fully focused on helping the teams to deploy the strategy.

His priorities are to boost the brand visibility and awareness to elevate the retail network and experience. There is a point for China because Bottega is very successful in the Western world, but still not incurring that success in China. It's mostly a problem of awareness. So he has a lot of initiatives towards awareness, but also towards engaging with high-end customers.

And of course, he's also working on the consolidation of the brand success beyond leather good, notably in ready-to-wear, which is part of the diversification and the potential that we see at Bottega. You know that the very high-end clients generally are very fond of high-end ready-to-wear. So we see, of course, a lot of potential for Bottega Veneta clients in leather good to extend their purchases to ready-to-wear.

Okay. I think we are at the end of our call. I want to thank you very much for your interest and for your questions.

Before we close, a quick word for Victoria, who will be leading the IR team to join Group Communications at Kering. Victoria, thank you for everything you have contributed to and all the best in your new role, which will keep you close to the team. Philippine and the IR team remain available for any follow-up you may need. Thank you again, and have a good evening.

Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect.

Good evening, everyone, and welcome to Kering H1 2026 results. This presentation will be made by Luca de Meo, Jean-Marc Duplaix and Armelle Poulou. [Operator Instructions] Luca, the floor is yours.

Good afternoon, everyone, and of course, thanks for joining us. Before Armelle takes you through the financial results, I would like to share some thoughts on the first half of 2026 and obviously, also about the progress we are making across the group. So H1 has been about turning strategy into action and action into results. Three months of our Capital Market Day, we started to execute our brands playbooks, reduce inventories, optimized our store network, significantly reduce our net debt and improve our key operational and commercial indicators. These actions translated into tangible progress in our performance and, in fact, the group returned to growth in the second quarter despite continuing to optimize its store network. This is particularly significant as we completed 84 net store closures in the first half, falling 75 net closures in 2025.

So store optimization is not only about reducing our footprint. It is also about upgrading, renovating and elevating our most strategic locations. And the fact that we returned to growth while materially reshaping our network demonstrates the improving productivity of our retail operations. I think momentum improved across nearly all our houses. Gucci accelerated significantly on a sequential basis, and our operating margin improved. So more broadly, all the key levers that are within our control from brand execution and store optimization to cost discipline and inventory management are tracking in line with or ahead of our expectations. So we achieved this progress despite the market environment that, as you know, remains uneven and demanding. And in such environment, execution matters more than ever. This is why we remain focused on strengthening our brands and building a more agile, disciplined and effective organization.

Our first priority is to reignite the desirability of our houses. Across the group portfolio, we have sharpened brand trajectories with detailed brand playbooks, clarified positioning and accelerated the rollout of creative directions. At the same time, we continue to deepen client engagement and strengthen our client development capabilities across the houses. Our ambition is to translate creativity into desirability by ensuring that product, merchandising, pricing architecture, marketing and retail excellence work together as one coherent engine.

Let me now share some concrete example of the progress we have made since our Capital Market Day in April. Starting with Gucci. The Rinascimento plan is firmly underway. Most importantly, we are beginning to see encouraging signs in the business itself with Gucci retail improving by 7 points sequentially in Q2, and all regions showing better trends. Since the beginning of the year, we have accelerated the pace of newness introduction in stores from La Famiglia deliveries in January, followed by the launch of the prefall generation collection in April. And since mid-July, the rollout of Primavera, which, by the way, was the first Demna fashion show presented in Milan in last February.

On the desirability front, recent initiatives have been well received, the Primavera Fashion Show in the Gucci Core Cruise show in New York Times Square, generated strong global media rest and ranked first worldwide in earned media value. And this reflects Gucci's ability to be back at the center of the conversation. The creative road map is clear. La Famiglia was designed to reconnect with Gucci's roots. Primavera aims at reigniting fashion leadership and Gucci Core Cruise collection expands the house appeal through a richer and more balanced offer. In addition, we are reinforcing our Leather Goods strategy through a more focused and coherent offer. Recent launches such as Borceto or Paparatso, together with the carryovers like Gilio are supported by dedicated product-focused campaigns, generating strong engagement, especially in Asia.

We continue to bring Gucci's culture expression to life through La Gucci Vita, a platform that extends the house codes beyond fashion and strengthens relevance, engagement and, of course, desirability. We announced our partnership with LPN [indiscernible] from the 2027 season, which will lead to the launch of Gucci racing creating a new platform for visibility and cultural relevance with new products and experiences in sports as a territory of expansion.

Another important milestone came on the July 7 with the announcement of the exclusive beauty license agreement between Gucci and L'Oreal, one year ahead of schedule. Thus, we are creating a strong platform for long-term growth. These initiatives are different in nature, but they reflect the same objective, strengthening Gucci's desirability, expanding its cultural relevance and building new engines of growth and global reach to the new audiences. While rebuilding brand desired takes time, our teams, I think, are fully mobilized across all fronts to restore sustainable growth as quick as possible.

Switching to Saint Laurent, the House returned to growth in the first semester. We are consolidating fundamentals while working on the key pillars that will drive the next phase of growth. In Asia Pacific, we're sharpening execution through more localized campaigns and activations. At the same time, we are successfully scaling the men's category through a renewed product and retail strategy, which is also and already translating into stronger momentum. Product and marketing initiatives continue to support desirability, particularly in ready-to-wear and shoes, both of which delivered strong growth this quarter. In Leather Goods, our priority remains twofold, further strengthening hero products while preparing a rich innovation pipeline for early next year. Bottega continues to be one of the strongest growth engines within the group. Leather Goods remain at the core of the strategy. The House continues to enrich its product offer with the recent introduction of the new handbags, such as the Barbara or the [ Madison, ] further expanding the assortment while Dominion Damo has emerged as one of the houses strongest performing launches resonating broadly across regions, including China. Asia remains a strategic market for Bottega. The House is uniquely potion to capture the region's growing demand for craftmanship, exclusivity and cultural relevance.

Building on this, Bottega Veneta continues to deepen its local engagement through partnerships with leading culture institution in Thailand and in South Korea to reinforce its brand at equity in the region. So as we look ahead, I am also pleased to welcome Roman Spitzer, who will join Bottega Veneta as a CEO in one month's time and his mission will be to build on the House exceptional momentum and accelerate this success story.

Balenciaga is going through a creative transition as the house works to define the next chapter of development. Throughout this period, Leather Goods continued to demonstrate the strength and resilience of the brand delivering double-digit growth in second quarter and confirming the role is a core pillar of the business. At the same time, the house is progressively rebuilding and rebalancing its product offering with particular focus on ready-to-wear. The priority is to establish a clear and distinctive proposition reconnect with existing clients and attract new clients and new audiences through a more elevated feminine couture aspired expression of the Balenciaga Silhouette. The strong reception of the latest haute couture collection a few weeks ago, further reinforced Balenciaga's position as one of the few houses with genuine culture authority and creative legitimacy. Balenciaga is also enriching its footwear universe with new proposition, such the Radar, Jet and [ Triple S2, ] while continuing to perform strongly in markets such as South Korea highlighting the brand's relevance in one of the world's most dynamic luxury markets today.

McQueen. McQueen is executing its transformation plan focused on simplification and operational discipline while refocusing the brand on its unique British tailoring DNA. This includes the rationalization of the store network with 20 closures in H1 2026, a rightsizing of the organization and a greater leverage of group platforms and shared capabilities. The recent appointment of Jan Franco dates as the CEO in my opinion remarks, an important step in the next phase of the house development. At the same time, the decision to bring the fashion show back to London reflects McQueen's ambition to reconnect more closely with its heritage and reaffirm its unique creative identity.

Now Brioni. Brioni continues to demonstrate the value of its unique positioning in sartorial excellence while increasingly contributing its craftsmanship and manufacturing expertise across the group. This includes supporting know-how sharing and industrial synergies with other houses, notably Gucci and Bottega Veneta. The House continues to deliver solid growth, supported by the growing success of Maestria. This is the high-end bespoke offering, which grew by more than 30% year-on-year and now represents nearly 1/4 of store sales in H1 2026.

Let's turn now to Kering jewelry, which continues to grow double digit. At Boucheron, momentum remains particularly strong reflecting the growing desirability of the Maison. The launch of the Cat XS has been a notable success, especially in Asia, demonstrating Boucheron's ability to continuously reinvent its icons. Both Boucheron and Pomellato further reinforce their desirability through their latest high jewelry collections. At Boucheron, the human being collection stood out as a remarkable demonstration of creativity and technical innovation pushing the boundaries of traditional high jewelry while remaining deeply rooted in the Maisons [indiscernible].

At Pomellato, we are amplifying brand visibility through a series of high-profile activations, including a dedicated exhibition at the [ Paledo Tokyo, ] further reinforcing its positioning as a benchmark in contemporary fine jewelry.

At [ Jilin, ] we continue to strengthen the Maison unique position at the intersection of Chinese culture, fine jewelry and contemporary luxury market. Momentum remained particularly strong in Asia Pacific with outstanding performance in South Korea. As highlighted during our Capital Market Day, we also see significant growth potential in jewelry across our fashion houses. The recent high jewelry activation of Gucci in Times Square generated strong client engagement and illustrated the potential for expansion. At the same time, we continue to build a more integrated and scalable jewelry platform already delivering the first sourcing and industrial synergies.

In eyewear, we continue to build one of the most successful platform created in the luxury over the last decade. The launch of the first Valentino eyewear collection, supported by high-profile events in Milan and in New York, marks another important step in the pension of our brand portfolio. Performance in the first half was notably driven by Cartier and by Bottega Veneta, both of which delivered strong double-digit growth reflecting the exceptional reception of the latest collection and the continued strength of their brand desirability. Maui Jim and Lindberg also delivered solid growth, supported by product innovation strong execution and continued momentum across key markets. Kering Eyewear delivered another period of strong growth and profitability demonstrating the strength of our luxury portfolio and our ability to translate brand desirability into category leadership. Alongside our brand initiatives, we have been restoring operational rigor across the group. This includes tighter control of inventory, more disciplined management of our retail network, a continuous focus on operating expenses and greater accountability across the organization.

We have also evolved our leadership structure with the recent appointment of, as I already mentioned, [indiscernible], CEO of Bottega; Jean-Francois as the CEO of McQueen; and [indiscernible] Lopes of Saint Laurent in charge of product in this fantastic Mason. China is a top strategic priority for Kering. Last week, we were on the ground with our teams to launch a dedicated action plan aimed at accelerating execution and strengthening the relevance of our houses in that important market.

Our priority is simple. Put the client back at the center of everything we do. We are adapting our organization to better combine the global vision of our houses with the insights of our low teams and to increase local relevance across product communication, marketing and retail. We are sharpening our focus on products, clients and activations that resonate most with Chinese consumer while accelerating our capabilities in clienteling, digital engagement and retail excellence China is evolving, as you know, rapidly and spending more selective, more local and more experience-driven. And in this environment, success is increasingly determined by desirability, relevance and execution. This initiative is built around clear objectives and measurable milestone, strengthening our execution in a country which remains one of the most important growth opportunity for luxury over the long term, is one of my key priorities for 2026, and I will return with the team in November to review the first tangible sign of progress. This is also the rationale behind getting craft.

This is our partnership with Shanghai Fashion Week through a residency program supporting 10 promising Chinese designers. We are investing in the next generation of creativity while deepening local insight and connecting to the next generation of Chinese talents and clients. Restoring long-term performance is also about building stronger common capabilities across the group, I'm convinced. One of the most important changes underway at Kering is the construction of our group platform. Today, it is becoming operational, bringing together technology, client, industrial, sustainability and support functions to help our houses move faster, allocate resources more efficiently make better decision and scale best practice across the group. In an industry where investing in a stronger, more sustainable supply chain ecosystem to enhance quality foster greater collaboration across houses and unlock the full benefits of the group scale while preserving the uniqueness of each 1 of our houses.

We are beginning to mutualize expertise and production capabilities through dedicated hubs for selected activities such as belt manufacturing, bags, cutting. And this approach is already translating into greater collaboration across houses with Bottega Veneta, Balenciaga and Saint Laurent, leveraging selected Gucci industrial assets.

Beyond driving competitiveness, these initiatives also enhance traceability across our supply chain. So technology is becoming part of Kering operating system, helping us make faster, smarter and more informed decisions across the value chain. This is the ambition behind also behind augmented Kering, combining human expertise with data and AI to improve decision-making, enhance execution and scale best practice across the group. We are not starting from a blank page. The foundation are already in place. A single cloud-based data platform, digital twists across clients, products and supply chain and AI-enabled the use cases already delivering tangible results. We are notably deploying advanced planning and inventory management tools, improving visibility, replenishment efficiency and operational agility. These capabilities are helping us better anticipate demand and allocate resources more effectively.

And the next step is to build on this foundation by progressively deploying AI agents capable of supporting and orchestrating execution across selected processes. And beyond operational benefits, these tools contribute to our sustainability ambition of buying fair production through resource efficiency, producing closer to demand, reducing waste and making better use of resources across the value chain. In the first half, we have advanced our road map around fair production, material innovation and craftsmanship. Sustainability is an integral part of how we build long-term value at Kering. Through our material innovation lab, we help our houses identify and scale next-generation materials.

Today, the platform includes more than 11,000 sustainable materials, including 3,700 non-leather alternatives. We are also fostering innovation beyond our own organization through initiatives such as the Kering Generation Award, which supports and accelerates sustainability innovators across key regions like China, Japan or Middle East. Two pilot projects have already been launched with one of the winners from previous additions, and we will announce shortly the expansion of this initiative to a new country. Transformation starts with people. It requires a challenger mindset and fresh perspective. This is why we launched Accurin, gathering high-potential talents from across our houses functions and regions and exposing them to some of our most strategic challenges.

Several ambitious projects are already moving into implementation. These initiatives span product innovation, AI-powered solutions to enhance client engagement and decision-making as well as the design of a global event aimed at inspiring and connecting the next generation with luxury. Occurring is a powerful illustration of the energy, the creativity and the entrepreneurial spirit that exists across the group. Ultimately, the AI-enabled tools we are developing are transforming the way we engage with clients. Client advisers can access relevant client insights and product recommendation through natural language queries created tailored selections and deliver more personalized experiences.

To conclude, the first half of 2026 was about turning strategy into action. We continue to strengthen our houses, and we made concrete progress in building a more agile and disciplined organization. Now Armelle, it's time for you to take you us through the financial results in more detail.

Thank you, Luca, and good evening, everyone. Luca has just outlined the action, let me show you the results. The group is back to growth in the second quarter. Profitability improved, our balance sheet is now much stronger. And we did all of this while continuing to invest in the desirability and future growth of our houses. On Slide 16, you will find a summary of the key figures for the first 6 months. Revenue was EUR 7.2 billion, up 1% on a comparable basis, with a return to growth in the second quarter. Recurring operating income came to EUR 921 million, a 12.8% margin, up 40 basis points year-on-year and 300 basis points versus the second half of 2025, delivering on the progressive improvement we have targeted. Free cash flow from operations reached EUR 2.6 billion including around EUR 800 million from real estate net proceeds and the Gucci Beauty agreement. CapEx amounted to EUR 419 million. Excluding real estate investment, CapEx was EUR 260 million, representing 3.6% of revenue. Net financial debt stood at EUR 3.3 billion at June 30, down EUR 4.7 billion from year-end 2025. All those indicators point in the right direction.

On Slide 17, first half revenue was down 3% reporting and up 1% comparable. After a stable first quarter, the group posted comparable growth of 2% in Q2, a 2-point sequential improvement and the first quarter of growth in 12 quarters. This acceleration was reflecting was reflected in better trends across most of our activities. We achieved that while continuing to streamline our network. We ended June with 1,635 stores, down 84% since year-end on top of the net 75 closures completed in 2025. We remain and try to deliver at least 100 net closures this year. Beyond efficiency, these actions sharpen our presence, focusing on fewer higher quality locations and driving stronger store productivity. Foreign exchange remained a headwind. FX weighted on reported revenue by close to 4 percentage points over the half, largely concentrated in the first quarter.

In Q2, the drag is to around 1 point, supported by the appreciation of the Chinese renminbi and the South Korean one. Looking at our regional mix. North America increased its contribution to 24% group revenue. Western Europe remained stable at 30%, while Asia Pacific, excluding Japan, was broadly unchanged at 30%. Japan represents 7% of group revenue, and rest of the world decreased to 9%, mainly reflecting the situation in the Middle East. I will come back to this in a moment.

On Slide 18, you have revenue by segment for Q2 and H1, and sequential trends are positive across the board. Gaming fashion and Leather Goods was stable in Q2 on a comparable basis, a 3-point sequential improvement versus Q1, with trends at Gucci improving by 6 points versus the first quarter, leaving Q2 down 2% year-on-year. Gearing Jewelry delivered another outstanding quarter, up 18% comparable versus last year after 22% in Q1, confirming its role as a growth engine for the group. Kering Eyewear grew 8% comparable versus last year, accelerating slightly from Q1, once again, demonstrating the consistency of this business. Corporate and Other declined 6% on a comparable basis in Q2. Overall, the return to growth was broad-based.

On Slide 19, the top line by channel. Retail, including e-commerce accounting for 73% of group revenue. It was broadly stable versus semester on a comparable basis and return to growth in the second quarter, up around 2%. Traffic remained under pressure across most regions, but conversion improved, and both average unit retail and average ticket increased meaningfully more than offsetting lower volumes. Within retail, e-commerce grew 3% comparable and represented around 12% of retail sales. Wholesale and other, which accounted for 27% of total revenue was up 5% on a comparable basis in the first half although this reflects two different dynamics. Wholesale revenue from Fashion & Leather Goods was up 1% as we continue to prioritize our own retail network while working with a more selective base of wholesale partners. Growth was driven by both eyewear and jewelry.

Eyewear revenue increased 8% comparable reflecting the strength of a business model that is wholesale driven. Wholesale revenue was 7% comparable in the first half. After a strong first quarter with growth of 14% and Second quarter revenue was flat, primarily reflecting the conversion of some franchise locations to directly operated stores.

On Slide 20, closer look at retail by region. North America was once again the group's strongest region, up around 10% in the second quarter versus last year. After 9% in the first quarter with positive contribution from most of our houses including Gucci, where brand equity is resonating particularly well with hurricane consumers. Western Europe improved markedly. Retail was down only around 1 percentage in the quarter, a 6-point sequential improvement as former local demand offset still soft tourism flows, even though those lows improved quarter-on-quarter. Japan was up 9% in Q2 after being down 3% in Q1. We driven notably by the outstanding momentum of our jewelry houses and a more favorable tourism dynamic than in the Q1.

Asia Pacific was down 1% in Q2 with trends improving gradually. Performance remained mixed across the region, while Mainland China remained down, the rest of Asia and South Korea, in particular, delivered an excellent performance.

Finally, Rest of the World remained challenging, down 8% in Q2, mainly reflecting the instability in the Middle East, even as retail in the region improved sequentially month after month through the quarter.

The Middle East typically accounts for around 5% of group retail revenue. Its negative impact on group revenue growth was 1 percentage point in the second quarter, in line with Q1 when the disruption affected only 1 month of the quarter. Taken together, momentum improved across most regions.

Let's now turn to profitability on Slide 21. Current operating income reached EUR 921 million in the first half, with a margin of 12.8%, up 40 basis points year-on-year and 300 basis points versus the second half of 2025. Our margin is now above both the first half and the full year of 2025. Two things drove it. Better commercial momentum and the discipline now embedded across the organization. Not as cutting for its own sake, but smarter spending, ensuring every euro supports brand desirability client experience or future growth. We optimize our store network, reduce discretionary spending, accelerated procurement initiatives and simplified our cost base.

Group OpEx was down 5% in the first half at EUR 4.2 billion, driven in large part by fixed cost reductions that have structurally lowered our cost base. These are structural actions and their benefits will continue to build. Crucially, none of this came at the expense of our houses. A&P was maintained at around 9% of revenue sustaining brand visibility and supporting the momentum of our collections. That balance is deliberate. We are restoring profitability while continuing to fund creativity innovation, retail excellence and client engagement. And this is what gives us confidence in the durability of what we are building.

Let me now review our segments, starting with King Fashion and Leather Goods on Slide 22. Revenues stood at EUR 5.8 billion in the first half, down 1% comparable. In the second quarter, revenue reached EUR 2.9 billion, and the segment turned positive, 3 points better than in Q1. Beyond Gucci, which I will cover in a moment, momentum improved across several houses. San Laurent delivered a strong quarter in retail with growth accelerating across most markets. The house performed particularly well in North America and Western Europe, supported by strong client demand as the new collection continued to gain traction, better retail execution and stronger product availability drove robust growth among both VIC and core clients, while Mainland China and the Middle East remain more challenging. Bottega Veneta once again outperformed with retail trends accelerating across most markets. The acceleration was particularly strong in North America, Japan, South Korea and Western Europe, supported by excellent momentum in Leather Goods. Balenciaga faced a more challenging quarter in retail, as [indiscernible] continued to work through its [indiscernible] transition and rebalance its business. Leather Goods, driven by the [ City and Rodeo ] delivered a strong performance, a reminder that the underlying product engine remains sound.

McQueen accelerated the execution of its repositioning under its new CEO, strengthening the foundations of the brand and rightsizing its distribution network. [indiscernible] continued to deliver another quarter of strong performance. Segment liability also improved. Recurring operating income was EUR 828 million, a 14.3% margin, up 0.7 points versus the first half of 2025, reflecting cost discipline throughout the segment.

Focusing on Gucci, now on Slide 23. The House recorded sales of EUR 2.8 billion in the first half, down 5% comparable. In the second quarter, revenue reached EUR 1.4 billion, with a decline narrowing to 2%, 6 points improvement versus Q1. New collections continue to gain traction, driving stronger brand visibility, renewed client engagement and positive retail trends. Leather Goods returned growth in the quarter supported by the successful launch of Boseto and [ Papa Rado. ] Performance in retail improved across all regions during the quarter, with North America remaining the key growth driver. Western Europe and Asia Pacific showed encouraging signs of recovery, while Mainland China remained challenging despite a gradual improvement. The quarter was firmly execution-driven with a refocused product architecture, faster product introduction and continued upgrades to the distribution network.

The House recording 19 net store closures in the first half, while continuing to invest in the refurbishment of selected stores. There is still work ahead, but the actions taken across products, retail and organization are visibly paying off. Recurring operating income reached EUR 468 million, a 17% margin, up 1 point versus the first half of 2025. This reflects continued cost discipline. And importantly, it did not come at the expense of investment in the brand, as Luca showed earlier.

On Slide 24, Kering Jewelry was once again one of the standout performers. First half revenue reached EUR 521 million, up 20% comparable. In the second quarter alone, revenue reached EUR 252 million, up 18% comparable. Boucheron continued to deliver exceptional performance, reaching new record levels with particularly strong growth in Japan and Asia Pacific, supported by the successful launch of the new cat excess variation of the House iconic gas collection. Pomellato also maintained strong momentum, driven by continued strength in Japan as well as in North America and the sustained success of its key collections, though recorded a more challenging quarter against a demanding comparison base.

Finally, chilling growth moderated during the quarter, although performance in Asia Pacific remain outstanding, particularly in South Korea. Recurring operating income of EUR 30 million in the first half, a 6.2% margin, up 2.7 points versus the first half of 2025. In the quarter, these results confirm both the strengths of our jewelry houses and the scale of the opportunity ahead.

On Slide 25, Kering Eyewear delivered yet another strong quarter. First half revenue reached EUR 965 million, up 8% on a comparable basis. Second quarter revenue totaled EUR 476 million, also up 8% on a comparable basis, with growth supported by all major regions. Performance benefited from a series of high-profile product initiatives.

The Lindberg 40-year anniversary, capsule collection, the relaunch of the optical category at Maui Jim and the successful debut of Valentino's Eyewear collection.

The business keeps demonstrating the strength, consistency and scalability of its integrated model, and remains a reliable source of profitable growth and diversification for the group. Recurring operating income was EUR 222 million, a 23% margin, up 2.9 points versus the first half of 2025.

On Slide 26, a brief word on Corporate and Other, which is not material at group level. Revenue was up 1% comparable over the first half and down 6% in Q2, primarily reflecting the end of rental income following the real estate transactions despite a very strong performance, double-digit performance at from [indiscernible] The Corporate segment reported a recurring operating loss of EUR 152 million.

Now looking at the remaining lines of the P&L on Slide 27. Total nonrecurring items amounted to a net expense of EUR 223 million in the first half, primarily reflecting costs associated with real estate transaction but also impairment charges and penalties related to the store closures as well as restructuring measures. Net financial charges amounted to EUR 280 million, or EUR 160 million, excluding interest on lease liabilities. The cost of net debt amounted to EUR 122 million, down 26% year-on-year, benefiting from higher interest income supported by the group's strong cash position as well as lower interest expenses resulting from reduced average long-term debt.

As anticipated, the effective tax rate on recurring income is 32.5%, down 3.5% plc compared with fiscal year '25. We continue to expect the tax rate to gradually return to its normative range of 27% to 28% over the next 2 to 3 years. As a result, group net income from continuing operations, excluding nonrecurring items, reached EUR 355 million.

On Slide 28, a quick look at CapEx and free cash flow. CapEx amounted to EUR 419 million. Excluding real estate investment, CapEx totaled EUR 260 million, equivalent to 3.6% of sales. Free cash flow from operations reached EUR 2.6 billion. Excluding real estate net proceeds and the Gucci Beauty agreement, free cash flow from operations amounted to EUR 1.8 billion, up 68% versus H1 2025.

On Slide 29, you can see you can see a more detailed view of the free cash flow generation with one element I want to flag. The change in operating working capital amounted to EUR 62 million, representing an improvement of EUR 863 million year-on-year and reflecting continued discipline in inventory management. Reducing inventory remains a priority, and our EUR 1 billion reduction target for our fashion and Leather Goods, Houses by year-end is well within reach. Team is a healthier, faster rotating inventory base, freeing up cash while continuing to fund the newness our collections required.

This cash generation has allowed us to strengthen our balance sheet which I will turn to on Slide 30. At [indiscernible] 30, net financial debt stood at EUR 3.3 billion, a reduction of EUR 4.7 billion compared with year-end 2025. Three elements contributed, the EUR 4 billion proceeds from the disposal of Kering Boutique. And real-estate transactions completed over the period included -- including the EUR 700 million proceeds from the sale of a [indiscernible]. Net debt to adjusted recurring EBITDA stood at 1.4x, which we consider a healthy level. In the first half, we paid EUR 490 million in dividends in line with our payout policy.

Our capital allocation, [indiscernible] Galena unchanged. M&A restricted to selective Bolton acquisition, reinforcing supply and expertise and a disciplined approach to shareholder returns. So growth returning, profitability improving and a materially stronger balance sheet. That is the financial picture at the half year.

Luca, back to you.

So as you have seen, the action taken over the past months are beginning to generate encouraging signs. The return to growth in the second quarter was, I think, an important milestone. But we are still at the beginning of the journey. And we remain realistic, really realistic about the challenges ahead. So our priority now is to execute reconquering road map, to continue improving profitability and further strengthen the foundations of caring for the long term. On that basis, I'd like to take the opportunity to confirm the guidance we shared earlier this year. And the guidance was growth and improved profitability in 2026 versus 2025. I think we are now available, of course, to answer all your questions.

Now open the Q&A session.

[Operator Instructions] So we'll start with Edouard Aubin, Morgan Stanley.

Yes. CI think that's -- can you hear me well.

Yes.

Luca and team, so yes, congratulations for the -- clearly, the encouraging developments. So two questions for me on Gucci. The first one, Luca, you talked about progress in terms of product distribution capitation, et cetera. I mean, fundamentally, what makes you confident that Gucci now is really on the right track. So that would be question number one. And then question number two, in terms of the -- from a commercial standpoint and the trajectory of the recovery. If you look at consensus, expecting already whose despite a more difficult comp base, do you think that's within the possibility. And then you had talked initially when you charge the ball sheet being positive for the full year, which for now consensus does not assume do you think that's still achievable for Gucci to post a positive performance for the full year. So that would be my two questions.

Look, I think we see -- there is a lot of work going on at all levels in Gucci from retail to product to the industrial system, the work that's done on suppliers, et cetera, et cetera. What makes me confident is that Gucci is an incredibly popular brand. Of course, all the eyes are on Gucci. But when it turns positive, everybody will actually realize what's going on because everybody is looking at it. I think we have a strong management team there. They work very well together. They're becoming faster. There's a lot of things that they have to fix. Look at what we did in retail. I remember that we were guiding at not on Gucci on the overall on the group 100 store closures net by the end of 2026. We are already 84%. Part of it is the work done at Gucci. So they are rationalizing a lot. I think that you have to take into account that the real first complete collection of Demna is actually hitting the stores right now. We will start to communicate in the next weeks a lot with a very strong campaign. What we have done so far was activating a couple of collections that partial collections. When I look into the numbers, I can clearly see that newness works. I can clearly see the leather goods is very positive. So the thing is there's nothing you -- in fact, you have completely to reinvent about Gucci. What we need to do is to do the right things for Gucci. And I feel like we're doing them. Now looking ahead, I -- in -- through the year, I think what we can commit is as I said before, the growth. This is visible for the group. I don't think it's going to be linear. Potentially, we have a more unfavorable, let's say, comparison with last year on Q3. We see, at this stage, Q3 maybe being flattish. But we are people that are there to fix problems, find solutions and overcome the challenges. So far, it seems that the machine is under control. One of the things I'm more proud of is apart from the dynamic of the team internally, and the way we work with the brands is the fact that all the things that we can completely control the internal things, as Armelle mentioned before, from stocks to cash, to margins, et cetera, et cetera. We -- so far, we have been good at doing at least what we've promised. So I can for sure commit that the team will be fighting and even a Gucci team from now to the 31st of December to comply with the commitment we've made. But I feel based on what I said before, that it might not be linear, but that's to me, is not particularly important. Important is that we continue to progress as including Gucci, in the first -- in the second quarter as proved.

We'll now switch to Anne Bismuth from HSBC.

My first question is on Gucci. So just to confirm that on the recently launched Primavera collection, you are seeing continuing improvement on the back of this launch in July and if it took across all categories, so you talk about the fact that you are building the momentum for the long term, but along the turnaround of Gucci in China can take even that the bond desirability has been damaged. And my second question is for me about OpEx management. OpEx went down 5% in while it was guided to be flat for the full year. You said during the presentation that the benefit of cost discipline will continue to build. So should we expect the same decline in -- same decrease in OpEx for the full year, meaning around 5%.

Maybe you want to start or you want me to start with the Gucci. I'll start with the Gucci part. I think it's relatively soon to actually make an assessment we see very positive sign as much as we have seen that with the previous couple of collections, especially on newness. The collection has hitted the first story. It's a part of it on the 15th of July. We'll start communicating by the end of August. And by then, all the pallets and all the offer will be in the stores. So I think we'll be able to talk about that next time we see each other. But I think we -- let's say, we're pretty confident, as I said before, that is the first complete collection that the new creative -- the new Artistic Director as the performance is very important.

On China, you're right. There is a lot of work that has to be done, fundamental work. That's why we were there last week altogether. I think we -- the first thing we have to do is to make sure that we have -- we can clean this table from maybe an orthodox practices that we had in the past into that market. We have to respect that this is becoming one of the most challenging and competitive market in the world. But the good news is that we know the things that have to be done. And the point is somehow so low that I feel there is a lot of potential in China. It's going to take weeks, I don't think so. I think it's probably one of the most important handier we have, not only for Gucci, but for all the brands because, as you know, carrying in China, in general, has captured all the potential of the market. But it's an opportunity and an upside if you do it right. I think we deserve a bigger market share, even if we know that everybody is competing for that thing. But naturally, we should be better than where we are. and Gucci, for sure, the first symbol of that kind of return, but we are very committed to execute this project.

And also on OpEx, as you say rightly, we are very satisfied with the performance of the first half because we managed to decrease OpEx by 5%, and this was mostly done on fixed costs. So you remember rightly that we guided at the beginning of the year to flat OpEx. But considering the performance of our action that were done across the organization, notably in store expenses but not only, while -- and I remind you, continue to invest strongly behind the brands. We are quite confident that we can reduce OpEx on the full year.

So we now have a question from Oliver Chen, TD Cowen.

Regarding Gucci, what are the key catalysts in terms of the collections ahead? And would you expect the North America performance, which has been tremendous, I suppose, to outpace Asia Pacific and as North America has been somewhat super normal but very encouraging with so much wealth effect. Second question is on supply chain and artificial intelligence. How are you interacting with AI relative to driving both inventory management, which is a huge opportunity and cultural relevance as you've had that cultural relevance dashboard.

So the second one is a complicated one. Take me 1.5 hours to explain to you what are the main things we're doing. I would start from that one. I think that I mean, the objective is to make of carrying one of the company that better uses the opportunity of this new technology. I think the good news is that we actually have also compared to other companies, the right infrastructure to start and to become pretty core into pretty core application in -- of AI in our daily life. I think there are three areas where there is really potential. I'll use slogan as I tell to the people we follow the money. We follow the product and we follow the client. So these are the three areas where I believe that AI can really boost our performance, increased productivity, maybe more than double our speed on many of the things. And it's I wouldn't say -- I mean, it's -- again, it's the beginning of a journey that will last years, et cetera, but we are determined to take the advance and the opportunity for AI. And next time we meet, maybe we spend a little bit more time on the detail of the project, but it's a core activity for us as a team. As you know, we have also onboarded new competencies in the house. People that have already done that in other companies. So I'm very positive about it. On the Gucci thing is, yes, it's a process. The -- we were out with the collection at the beginning in the year like called La Famiglia. There was a way to kind of reconnect to the routes of Gucci. It worked very well. We had a generation collection, that was extending and enlarging the product offering not going only because I think Primavera was in probably 20 SKUs distributed in the beginning in a few stores. And of course, with the new one, we are covering the whole thing. So if I project simply the performance of the first two collection and multiply them by the variety of products that will come with the collection with the Primavera, I feel that we are in a better place. But it's not only this. A lot of things are going on Gucci. We have to become better at -- in many dimensions, which we are doing. I think Francesca is on many, many fronts. Part of it is the product, the merchandising, the retail merchandising, the pricing, the availability of product, the quality, you name it. So I think it's a big work, but we -- as I said a few minutes ago, I think we know what we have to do, and we are doing it.

If I may, I would add something, Luca. When it comes to the specific situation of North America because it was also your question. Of course, there is a wealth effect, but it does benefit to the whole sector globally. But what is very encouraging when it comes specifically to Gucci that where the brand equity is the most sound and it's true that in the U.S. or in North America, historically, Gucci brand equity, brand perception remains quite high. You see that there is an immediate impact of the new collections, which are very well received compared to some other markets where probably the brand image has been more damaged.

So we now have a question from Lucas Solca, Bernstein.

I have two questions. One is about your thinking on price and mix. We seem to see that some of your peers are struggling with the middle class aspirational consumers, especially in South Lake, there seems to be an affordability issue, that luxury companies are confronting. I wonder how you're thinking your strategic thinking is on where the core brands should be pricing I think you've shown your march to reach down to some of the aspirational middle-class consumers, and I wonder how -- you see the development going forward. There was in the past two years, a lot of emphasis on stretching upwards and pricing higher, but this seems to be the wrong thing to do at the moment. I wonder how you think about it anyway. Second question is about the remarkable achievement in reducing net working capital. I have a question on inventory. I believe you have voiced ambitious plans to reduce inventory by about EUR 1 billion in 2026. I wonder how the dynamic of inventory reduction is going to play out? How much is it connected to reducing inventory that was present in the company, how much is it coming from the ability to play more flexibly and in a leaner manner. And how this is going to impact the off-price versus full price mix? If you give us a bit of a granularity on the off-price channel at the moment, that would be fantastic.

On the pricing mix, I mean, both questions that would require a lot of time to be on because both of them are on multidimensional, let's say, issues. I think we have embedded in the plan, right, from the beginning, a scenario where inflation would not help us compensating from inefficiency in what we were doing. So I think that we actually took scenario where the inflation that was possible maybe a few years ago is not possible anymore. There is a lot of way of repositioning products. On one side, we are cleaning up and reducing everywhere we can. And in every way we can -- the off-price practices because I think we have to protect for price. This is the strategy. We are looking at as a very competent and analysts you -- I'm sure you have seen that the new collections on most of the Ventec, for example, Gucci is competitively priced on the new product. And we have also, in a few cases kind of reposition some of the products because I have the feeling that in some categories, we kind of went too far and play with the elasticity. And I have to tell you, I cannot kind of build details, but sometimes that had a very big impact on the volume. So the elasticity was not exactly linear, was exponential. So we continue to look at the pricing structure, and we are very much determined and trying to align pricing to intention to buy desirability. And at the same time, there is a lot of work that has been done so far, and it is embedded in the plan to push on quality content because that's the way you create desirability and you create. We are in the luxury market. So we are here to sell dreams here to sell excellence. So the best way you can do that is improve product quality and execution and the services. So my simple message is, we are very much aware of the fact that the market will not necessarily give us the the comfort of turning our problems into -- for the customer. We have to come up with a very competitive product, very high-quality product. very creative product at the right pricing. On the stocks, I have to say and then maybe I'll leave the word to Armelle because also to honor the work that has been done by the team. We committed to EUR 1 billion reduction on the stocks. We are on track on that. So we confirm that this is, let's say, our target for the end of the year. I believe that we have come, I would say, pretty fast on that. Of course, the first hundred of millions are easier and then you get to a system -- I mean, to a assent of this, where it's more difficult to reduce unless you don't change the system completely. This is what we are also planning. Now to give you an example, the way we are able to -- the the way we are able to produce, the way we're able to refurbish and to replenish, sorry. The stock is one of the discussions we are having on the industrial side. And Gucci, for example, is changing the way they are buying and integrating faster replenishment cycle, but it requires a kind of reengineering of the [indiscernible] process plus the ecosystem of the suppliers. But that's the intention. We want to continue to go down. And we know exactly where are the benchmarks at what level of the bench. And we are determined to build a carrying or houses of caring being amongst the most competitive in this field. The [ i8 ] stocks, I think it's not a good thing. So we will have to design a machine that is different. Right now, we are drawing the machine very, very well, and we are hitting all the, let's say, the target we gave ourselves. It's also true that I cannot reveal exactly the number, but it's also to that we made some very brave decision on reducing production for this year. And I'm not talking about a few percentage points. So this is part of the story. Challenges, of course, is in the next months to continue to sell, to increase sell-through so that we can continue to go down and work on the quality of the stock. Do you want to add something, Armelle?

Maybe what I can add is that this achievement has been done by teaming people from the different brands altogether. I think that was a great opportunity to benchmark the practices between brands and at the end of the day to decide to have one process getting the best of each of the brand experience. And I think it was -- it's very important. And now we are really working improving the integrated business planning within the group, also investing in [indiscernible] that we can leverage on all the different brands, even if each brand keeps its specificity. So for me, it was very interesting experience in how we can team between the brands behind a very strong and demanding target. And that's really what we are doing in many different directions.

And maybe to conclude on that question, let's say that the performance of the quarter or the semester has not been driven by discounted sales. The full price sales have been very robust in terms of growth, especially across the board and two important message. We had presented some ambition during the Capital Market Day in terms of reduction of store footprint, including the outlet network. And this ambition is still the same, and we are closing some outlet stores. So that's still part of the journey we are engaging in.

So let's now switch to Antoine Belge, BNP.

It's Antoine Belge, BNP. Congratulations on those results. I know the focus is on Gucci, but I think Luca yourself, you said that the group is not just about Gucci. And in as much as I hate to call them non-Gucci run. So it seems that the other brands curated were up 2% in the quarter. Maybe there is some rounding, which would be the similar growth rate than in Q1. So I mean, could you say if the maths are correct, and which brands may have accelerated and maybe another brand might have decelerated notably on the main one, BV, Saint Laurent, Balenciaga. And the second question is I think before the results you had indicated that the H1 margin will be lower than H2. So with this very strong beat in H1, are we reconsidering this like it was a conservative assumption. Could we think that 12.8% is like a floor and then yes, you will be at least doing 12.8% in the second half. And if you could say something on the gross margin evolution, that would be great.

Look, I think all in all, you're right, so all the non-Gucci as you called on Gucci banter growing 2% is a mix thing. Saint Laurent and Bottega Veneta are doing great. on the fashion side. Balenciaga is in the middle of a creative transition. So I think we have a very good performance on Leather Goods, and we're trying to find ourselves more on the ready-to-wear and on the shoes. So we have to give the team time to regain a certain positive dynamic. But San [indiscernible] Bottega very, very good, I have to say. And then don't forget the jewelry part that Jean-Marc is leading as a division now and the Kering Eyewear. They're giving us a really positive surprise, very strong and very solid measurement of those two categories. That's what I can say. And the -- we commit to growth in 2026 to 2025. We told you that will be better also in terms of profitability. The good thing is we -- in H2 '25 were, I think, at 9.8%. So this is -- we're 12.8 million on H1 2026. So we keep going -- Armelle told you that we continue to reduce the cost in an intelligent way. It's also important for me to say that if you look at the numbers, the cost reduction is not actually, let's say, impacting the -- our ability to invest in the brand. If you look at the money we're putting on communication or investment we're putting on refurbishment and relocation of stores, et cetera, et cetera. I think we'll continue to do that. So it's not that we were cutting on the flash, if you want. So we keep investing. So if you look at that, you can expect us to continue to work on a profitable -- a profit for 2026.

Yes, maybe to answer to your question, no, we confirm that we expect H2 margin to be higher than H1 margin.

Maybe on the gross margin, I don't know...

Yes, sorry. On the gross margin. Gross margin is very difficult to forecast. What we see is that -- on one hand, we have some positive from the channel and the product mix, especially recovering in Leather Goods and handbags. And then we have probably some -- in terms of regions, offering in China is less sensitive for gross margin. But all in all, we see ups and downs, but in the gross margin, and nothing very special to comment.

So we'll now switch to Evan [indiscernible] from Goldman Sachs.

Evan from Goldman Sachs. Congrats on stabilizing sales and delivering higher margins on fashion leather. So two questions, please. One on nationalities. I'm wondering if you could tell us about sales growth by cluster, the Europeans, the Chinese, the Americans. I'm wondering if think that the renminbi means that Chinese are maybe doing a bit better broad than at home. Similarly, our Americans growing more abroad than at home. And I think, Luca, you mentioned a few times, Korea as a standout is the weight of the ran nationality relevant and are you seeing any volatility in terms of demand given the volatility in terms of wealth creation in that market. And then secondly, on channels, you have wholesale and fashion leather relatively aligned or even slightly better than retail. Does that mean that channel is clean and should we expect also in H2 to be aligned with retail trends? And if I can squeeze a little 1 more on channels, the retail down dining, so net closures of 100 units this year. How are you seeing that next year? I think you said, Luca, that you were executing very quickly on that. Maybe you have a clearer view of how many you might shut in '27.

Well, I think I'm going to ask last, let's say, start from the last one, maybe then leave it to Armelle or Jean-Marc, if you want to for the other 2. But I think we're going relatively fast. One thing that's important is that the all work, of course, we do it with the brands, but we have pretty much centralized the whole discussion on real estate under Jean-Marc's leadership, okay? So we have a system where it's not shopped brand by brand. but we are able to coordinate with the brand and make this kind of decision and execute the plan. We said a few months ago at the time of the -- in April that we would look at closing 250, let's say, stores across brands by 2028. We did 84.

2030.

2030.

Sorry, 2030. And the -- but we were -- we are faster right now. There's no reason why we shouldn't look at all the opportunities. I think we can do at least a similar thing in 2027. But of course, the first one is easier. The last one are more complicated. But the good news is that we are doing it. So it's not like a promise that stays up in the air is real. At the same time, we also committed to relocate or renovate 2/3 of the network. So all the brands and Gucci and Saint ran and Bottega et cetera, also accelerating the plan of renovation of the thing or relocation. So it's something out and something in store. So we'll try to keep the pace. I think that the drag -- I mean, because 84 stores is like on the papers like 5% of the entire network, right? And the drug of this staying having less sales point has not particularly impacted the H1 result. It shows that we're doing the thing properly, and moving people from one store to another and finding other solutions. So we are confident that by doing that like this, we can continue the process in a healthy manner without impacting fundamentally the performance. And if possible, and this is the plan to make it all better because we're going to close outlets like Jean-Marc said or places that are not productive, okay? Then you have a question on whole sales dynamic and nationality.

Yes. So let me answer to you on the nationalities first. So American -- so actually all nationalities improved sequentially to Q1 albeit in the buying degrees. The Americas improved. Now they improved actually to high single-digit positive both locally, but also as tourists, especially in Europe, but also in Japan. Other regions, mostly driven by Korean turn positive, like European customers also turned positive in Q2. And Chinese customer as a clientele stayed negative, but improved from Q1 sequentially as Japanese and middle Ion customers. So basically, all nationality improved with a strong high single-digit positive for American customers, both locally and when traveling. Regarding wholesale, you sometimes have some phasing like in wholesale. So it's not always very easy to forecast, but the idea is roughly to stay roughly flat in H2.

Maybe I will add a few colors, both on the retail network and on the wholesale. First, regarding the retail network, just as a reminder, during the Capital Market Day, the idea of reducing by 250 was phased the following: 100 in '26, around 100 in '27 and '28 and the remaining stores around '29 and '30. What is clearly -- what we clearly is that we can move faster. And as said by Luca, clearly, if there are some opportunities because we need always to assess the risk and reward of closing a store, the risk being -- not being able to repatriate the demand in another store and close the cost to close the store. So we try to balance everything. But I think that reasonably, we could go faster than the initial plan in terms of reduction. When it comes to wholesale, I will just add that beyond the figures and your expectations for the rest of the year. What is here interesting is that there was a cleanup globally of the wholesale because we did it, but also because there was a natural cleanup of the wholesale distribution with a few distributors which have disappeared. So in a way now, there is a more clear picture when it comes to the quality the qualitative distribution. So after a phase of plateau, probably, we have no [indiscernible] with Luca when it comes to distribution, be it online or wholesale will be some opportunities to regain some market shares and business with some wholesale accounts gradually.

I just wanted to follow up with Armelle on the Chinese cluster, just at home versus abroad. I don't know if you're seeing benefits from a stronger renminbi, how thing Chinese brought [indiscernible].

We saw sequential improvement both at home and when traveling.

And let's now switch to Thomas Chauvet, Citi.

The first one, maybe, Luca, on production and quality at the CMD, you explained how product quality was to drive client trust, how you wanted to be more powerful as a group to to impose better quality standard to your suppliers. Could you give us a bit of color on what you've already initiated and also remind us the gross margin implication. I remember you said it would have a negative impact on '26, maybe '27. Secondly, on jewelry, could you quantify if this was material, the tailwind of the conversion of, I think, franchisees from wholesale to retail in Q2, is that going to last for more than just a few quarters and which brands and regions benefited from that as a big gap in growth between retail and wholesale, particularly in Q2. And just maybe for Armelle clarification, OpEx, you said down on a full year basis now rather than flat. So is it perhaps flat in H2, so down low single digit on full year? Are you also working on reducing costs in H2.

So I'm going to take the quality part, and then I'll leave it to the second one to the master of jewelry that is sitting on my left for you on my right. So what -- let's say, what we did is, first of all, it's important to say that we have established a central industrial platform, okay, or a team who is taking care of different topics, including manufacturing standards, suppliers, purchasing design of, let's say, engineering the ecosystem of supplier, logistics and quality, okay? So which we never had before. And the objective being trying to have one approach, a luxury approach to quality, okay, which of course, we had here and there because otherwise, we would not have some of the best houses on the planet, but there was a formal expression of the practices and the standards to them. Very important thing is that we -- I feel, and I felt like right from the beginning that we need to have a different, let's say, set up between us and the lie. We need to die and this is what we're doing what we make, what we buy on the different categories. We have a plan to integrate almost, if I remember the numbers correctly, but almost, in some cases, double the percentage of things that we produce inside of our plants also because we need to fill the capacity because we have something like 37 plants in Italy, that are not completely utilized. So I will reintegrate part of the tank selectively. When you do this, it's easier to control the quality standard and to set methodology of doing it, especially also because you can embed right from the beginning, the concept into the product. I think there is room to reduce the span and the numbers of suppliers. When I was in Florence, I told you that we had more than 4,000 suppliers across the, let's say, the brands. I'm talking about the fashion, Leather Good part. 25% of them would do 98% of the production. So there's a long queue into it. When you have is less easy to control. So we're going to concentrate our flection, our externalization on a smaller number of suppliers and they would give us a chance to set very, very clear standard and to have rule of engagement with the supplier. That are clear to everybody. The other thing that -- given that the supply chain in Italy has a lot of layers. I think it's probably the 3, 4 layers supply chain. We probably to consolidate and basically flatten the supply chain. And this will give us a chance to secure higher standard in quality. Last thing I want to say, you say that this quality push, et cetera, would have an impact on 2026. What I said at that time, is that we have embedded into the plan, let's say, the idea that we could spend more COGS to improve quality, okay? That's what -- and this is still true. That means I don't want the industrial people to take the excuse that they don't reach some quality let's say, levels that we need and we pretend just because of money, okay? And that's already in the system. And that is changing a lot of things. I mean we are taking Leather Goods where some famous bags where we have originally had a certain quality of leather. And then someone decided a few years ago that we should change the quality. And now we're going back and we're putting something that is even better than what it was at the beginning. This is an example, but there are 10s of examples like this in the house. I mean we are a luxury house. So there is only one level of quality, this is excellence. It's very simple. And we have to ensure it.

You have the one on Jewelry.

Yes. What Armelle said about wholesale for the Fashion and Leather Goods brands, it's also true for jewelry in the sense that in the trends you see, you have also some phasing effect, especially at idni and DoDo. When it comes to your specific question about the integration or the utilization of part of the business, it's a Boucheron. We have changed the way we operate in the Emirates at the end of '25. So that we have now a direct operations while before it was a franchisee. That being said, for the performance of Boucheron in retail. Besides this retailization, the performance is still outstanding. If we restate from this retailization, and if we look more specifically at the wholesale performance of Boucheron, here again, if we look just at the business with the dealers, so besides the franchisee, it's strongly up. So it's very coherent in terms of performance for Boucheron. So difficult, of course, to predict for the following of the year. Even if I guess that H2 should be less dynamic in terms of wholesale [indiscernible] and DoDo, especially shining because we had a lot of deliveries at the beginning of the year after a year where at the end of 25 or distributors, especially in Asia, were a little bit short in terms of inventories.

Armelle, on OpEx?

On OpEx, I confirm that OpEx will be down for the full year, and I won't give you more deals at this stage.

Reminding that something which was very important in the presentation of me was that in in euros, but it's minus 3% in constant currency. So depending also on the evolution of the currencies during second semester, at the end of the day, the decrease of OpEx could vary a little bit.

We now have a question from Charles Scotti, Kepler Cheuvreux.

I have two. The first one on Gucci. Given the large number of stores closure and with sales down only 2%, I believe Gucci comparable store sales growth as finetuned positive again. Could you confirm whether that's the case? And if so, by roughly how much? And I was also quite impressed by the Gucci 9% retail comparable services growth in APAC what were the main drivers of this improvement and which market contributed the most? I assume Korea was supportive, but if you could provide some color on the performance in China and also indicate by how far -- it was below the regional average, it would be helpful. And my second question is on Gucci, the Gucci raising Formula 1 team in partnership I think I understand the tragic rationale and the potential benefit of this partnership for a luxury brand like Gucci, but could you elaborate on how you intend to leverage it beyond simply having the Gucci name displayed in Formula 1. And also, we have seen a wide range of estimates regarding the financial commitments involved, some of which seem quite speculative. But could you give us an indication of the size of this investment or at least whether it represents a meaningful portion of the Gucci in [indiscernible]?

I'll take maybe on the first one. What I can tell you, we want to be extremely, let's say, granular on this. But what I can tell you is that One of the things that we did is we actually concentrated on on Gucci on 100, 120, what we call laboratory of excellence in retail 100, 120 top stores. So just by -- to be pragmatic, and we start focusing on that part of the network that is the more, let's say, performance and therefore, also the more reactive to new initiatives. And on those stores, Gucci is doing well, okay? And then the growth there are so many channels thanks. The situation is very difficult for you -- for me to answer in a very specific way without giving you too much of the information. But the good news is that on the best part of the network, Gucci is reacting very well with the new collection, et cetera, et cetera. Maybe at the second question, maybe you can give an answer. I take the Gucci racing thing because, of course, I like the question very much, and I'm going to give you the chance to tell you a little bit about what the project means and the potential of this thing. You want to take the second one?

Yes. For Gucci and APAC, yes, there's been an improvement very quite important improvement in the region. Mainland China remained soft but improved significantly quarter-on-quarter. Greater China also improved with Taiwan turning positive and Hong Kong being a bit softer. And as I said, also Gucci had a positive performance in South Korea, even if it was probably a bit below the pace that we saw in that market.

So F1, I think I know the topic pretty well. I know the potential of this platform. We actually see it as a platform, just more than a sponsorship. You have to I have to remind you that there are at least 100 million people looking at 24 Grand Prix every other week around the world. In at least 20 markets out of the 24, where we have commercial presence so that we can link the event to our retail, et cetera, and create a lot of initiatives. The contract was structured, I think, in a very innovative way where we -- it is not about just sticking putting a sticker on the car. It's the old complete image of the team. And we also control the merchandising. And based on that possibility, what we're doing is that we have created a small division but a very competent team in Gucci that we call Gucci racing that will be responsible to develop also products that we will be able to sell with the Gucci racing thing. That means this is for us a way to engage in a smart way into the sportswear category and everything that comes [indiscernible]. So I believe that there is a real opportunity to make business out of it. And I'm convinced that with that business, we'll probably even more than compensate the cost of the sponsorship. That's the target. This thing Gucci rating will start with Formula 1, but it's also about an umbrella and for any sport active or tennis or other initiatives that Gucci will take, okay? And I can tell you also that from a cost point of view, from a question point of view, I really make sure that the money we would invest in this thing is at the right level because I know very well the numbers in Formula 1, okay? And I can guarantee you that what I've heard and seen in the press is higher than what we actually invest into thing. And this is important, but not a fundamental part of the A&P budget of Gucci. I think we can do something really good, is innovative. It's giving us the chance to touch global target and to be on a platform that will create vividness and presence of Gucci, in an interesting manner because we are under track. So we compete there will be weekender win, the we begin where we lose, and it's also part of the drama and part of interest into -- in such kind of thing.

In fact, among the classes delivered by Armelle and by Luca, there is also the question of being discipline in terms of cost but also efficient. And I think that a message that has been already shared is that we have a work of selecting the investments which are delivering a return reallocation so that at the end of the day, the A&P budget of Gucci will not be materially impacted by this investment that will be, for sure, absolutely productive and deliver a high return.

So we'll now switch to Vic Petrova from Barclays.

Congratulations on the results. I have two questions. First is on Gucci sales densities and like-for-like performance. I understood you commented that it's up. Could you comment on sales densities in this context as well? And should we -- did I understand that correctly that you are likely to open more than 100 stores this year? My second question is...

Closing them. Not opening.

Closing, closing, of course. And from our credit analysts, there is a question. If you -- with your obviously, cash generation in place, do you expect any gross debt reduction, any buyback. And just two clarifications for confirmation. When you talked about flattish third quarter, is [indiscernible] Gucci organic or Gucci retail organic growth, it's a reference to Luca's comment? And my final just confirmation, are you keeping your guidance of old brands being positive in 2026, or it's now a group guidance.

Sales density, of course, we're doing the work to some more sell more in full price, reducing the number of stores and the square meters. So of course, one of our target is to increase the sales density. So -- and we are seeing some positive signs here and there that this thing is happening. Do you have a second question on cash?

Gross debt reduction. On growth, any plan to reduce gross debt and go through any...

It's all right. You can answer to that.

Yes. I mean we had, of course, a significant reduction in H1. In H2, you should expect a further reduction coming from cash flow generation.

And yes, you asked about the flattish Q3. I think it's probably I mean, again, this is what we see right now. But every day, we fit to actually do better, but we see a kind of flattish of Q3 for the group or as I said, maybe this thing is not going to be completely linear, but what matters is that at the end of the year, we are there where we have hoped and committed to. So that was the nature of my comment. And then you have another question is -- yes, I went through it, yes.

No, but you mentioned share buyback. I think we want to be very clear. We had we had insisted on the capital allocation during the Capital Market Day. Today, the priority is to invest in our brands to continue the deleveraging of the group. So at least for this year, there is no plan of share buyback.

And we now have the last question from Zuznna Pusz, UBS.

Were taking my questions sorry, mine a bit boring is the good questions are gone. So maybe First one just...

Then not on Gucci's then, maybe change your brand.

That will be on follow on. So it doesn't count that's more than 2 or 3. May be the first question, just on inventory. So you've mentioned that you're still committed to the EUR 1 billion reduction, but unless I'm completely wrong. I mean when I look at inventories in H1 as a percentage of sales, they seem pretty similar versus last year. So I'm just wondering if maybe there's something related to like for opening jewelry? I mean, anything that kind of could be maybe inflating that number? Secondly, again, this is a boring one, I'm sorry, but I think when I look at the numbers, the corporate and other costs went up quite a bit. So I'm just wondering, is there any -- I don't know, any kind of reallocation of costs that we should just take into account this remodel going forward. And then that is actually not to Gucci, but it's another follow-up. On the Q3 being flattish and as you said, that's what you're seeing right now, can I just check was it retail for the group or retail and wholesale? Because I mean you're clearly doing so much better in Q2. So just wondering what could be driving that expectation for flattish in Q3. Maybe there is some wholesale timing or maybe you're just being cautious? So these are my 2 questions and the follow-on.

You want to go for it?

Yes. Regarding the inventory target. First, it's important to remind you that this is an inventory target for our fashion and less good brands, and it's from September 2025 to December 2026. So you cannot read it completely in the number, and we are confident in delivering this target. That was for the first question. So you may have some increase in the other segments. But what we are working on is really to decrease inventory for the fashion and lesser goods this year. But of course, we want to be more efficient going forward. in terms of the amount of net inventory to sales. And I think it's something we mentioned during the Capital Market Day that over the next 5 years, we will improve and decrease the percentage of net inventory to sales for the fashion, unless the good brands.

There is cost of corporate.

Okay. Cost of corporate, yes, we had an increase that is due to the rental that we don't have any more on the investment -- this investment that we did on real estate. If you correct it from that, it's roughly stable. The corporate costs are fertile.

So sorry to follow up on this. So we should forecast it sort of as a percent of sales as we look at H1? Or is it kind of like a one-off? Just to understand how we should model that line going forward for [indiscernible] let's say.

On corporate? No, on corporate, I mean those rental expense, we won't have them neither in H2. So basically, what you see now is the cost of corporate going forward.

I think there was a question about Q3 dynamic, if I'm correct. So do you want to jump on...

No I want to answer this.

We are fighting to answer to this.

I'm just joking.

Do you want to take this one?

No, I think -- no, you can answer, no problem. Go ahead.

So I think as was mentioned by [indiscernible], there is [indiscernible] in Q3 that is [ natural mending. ] We also know that in terms of product units, Primavera is rolling out in store as of the second part of July, and we will have a strong marketing campaign at the end of August. In Q4, we will have much more product units because we will have the two collections, the [indiscernible] and the one of [indiscernible]. And also, I mean, last point, you see the macro environment is still very volatile. So it's -- we are also careful in an environment that remains volatile.

Thank you, Luca, Jean-Marc, Armelle and thank you to all of you who join us tonight. Of course, we are available to answer all your questions in the coming days, if needed, and have a good summer.

Thank you, have a good summer.

Thank you.

Ladies and gentlemen, dear shareholders, a warm welcome to the new Kering Annual General Meeting. Thank you for joining us here again this year at Lanc or online. As you know, this meeting is a special opportunity, and we are absolutely delighted to welcome you here at the company's headquarters. Joining us today, Luca de Meo, CEO, on my right; Jean-Marc Duplaix, who is the Chief Operating Officer and CEO of the Jewelry division; Marie-Claire Daveu Head of Sustainability and Corporate Affairs; Armelle Poulou, who is our CFO; and Mr. Eric Sandrin, who is the Secretary of the Board and General Counsel and soon the secretary of this assembly as well.

So we will now proceed with the constitution of the Board, I will be chairing scrutineers will be -- do these scrutineers will be formed by the shareholders who present the largest number of votes representing Artemis. We have Benedito Fund for Amundi, Mr. Frederico -- with the approval of the scrutineers, I suggest Mr. Eric Sandrin, be appointed Secretary of this meeting. And the bureau is -- the general meeting is now open. And as in previous years, this meeting is filmed. It is recorded and streamed on Kering's website and we are also providing simultaneous subtitles. Without further ado, I'm going to give the floor to Eric Sandrin, who's going to review the legal provisions and present the agenda.

Thank you, Francois-Henri. Ladies and gentlemen. Dear shareholders, you've been convened to this combined general meeting pursuant to the meeting notice and invitation published in the BALO on April 5 and May 11, 2026. The quorum required to hold this meeting has been reached. The meeting is therefore declared duly constituted and may validly deliberate. As always, the final quorum will be confirmed to you before the voting starts. All documents that are required by law were made available to shareholders and were sent to those who requested so. The documents are on the table. I have them with me right here, the social and economic committee received in a timely manner all documents and information submitted to the general meeting and has no -- not raised any objections.

The various reports prepared by the Board of Directors for this assembly are available on the company's website -- and they have been included in the notice and the 2025 universal registration document. These 2 documents are also available on the voting tablets provided to you upon registration. As every year, in the interests of today's debates and proceedings, I propose that we do not go through the reading of the full reports. And as every year, Lemercier who is a judicial officer is present at this general meeting, he conducted various controls and verifications regarding the proper recording of votes. This being said, I am now going to take you through the agenda of this combined general meeting.

We have a total of 22 ordinary and extraordinary resolutions. All are displayed on the screen behind me. Please note that no shareholder has exercised their right to add items or draft resolutions to the agenda. Regarding the ordinary resolutions as for every year, we need to approve the accounts and the appropriation of earnings resolutions 1 through 3. The composition of the Board of Directors, including the renewal of two members and directors and the appointment of two new directors respectively, Resolutions 4, 5 and 6 and 7. Resolutions on compensation of corporate officers, say-on-pay resolutions 8 through 14, the appointment of Ernst & Young as our independent auditors responsible for certifying the financial statements and sustainability disclosures and it's alternate Auditex. Resolutions 15 to 17 and last but not least, the share buyback program, Resolution 18.

Moving on to the extraordinary resolutions with the renewal of the authorization to grant free shares to employees and/or executive officers. Resolution 19 employee access to the company's capital Resolutions 20 and 21 and coming back to ordinary matters, we have Resolution 22, the traditional powers to carry out all legal formalities following this general assembly, general meeting.

I'm going to now briefly take you through the outline and the agenda for this meeting. We're going to start off with a speech by Francois Pinault, the Chairman of the Board of Directors, a speech by Luca de Meo, our CEO, we will have a presentation of the 2025 annual results by Armelle Poulou, Chief financial officer. We will have an update on sustainability by Marie-Claire Daveu, Head of Sustainability and Corporate Affairs. Then Francois Pinault will give a presentation on governance in his capacity as Chairman of the Board. Veronique Weill will present on executive compensation. She is the Lead Director and Chair of the Compensation Committee. Our statutory auditors will present their conclusions, the conclusions of their reports, we will then have our usual Q&A, and we will close with the final vote on resolutions. That's it from my part. Francois, over to you.

Ladies and gentlemen, dear shareholders, as you will recall, we gathered here on September 9 last year, notably in connection with the appointment of Luca de Meo as the Director and Chief Executive Officer of Kering. And it was at my initiative that last year, the Board decided to separate the roles of Chairman of the Board and Chief Executive Officer. It was a pivotal moment for the company. And it seemed essential to me to reinforce the efficiency of our organization and the balance of responsibilities. Thereby entrusting the executive management with action and execution and the Board of its -- and its Chairman with the strategic direction, oversight and long-term vision. In accordance with best practices for publicly traded and listed companies. This clear division of roles gives the Board its full meaning and enables it to fully carry out 3 essential missions.

The first is to define the company's broad strategic directions. It requires both a deep understanding of markets and our houses as well as true ability to anticipate future trends. The second mission of the Board is to support management by insurance decisions are properly executed while remaining attentive early warning signs and providing the necessary experience and perspective. Last but not least, the third mission is to foster an environment based on trust. Indeed, profound transformation can only successfully be carried out. If leaders know they can rely on solid and lasting support. It is precisely to better fulfill these missions that we propose to further strengthen the Board's expertise and commitment through the candidates, we are submitting for your approval today.

Thus, the Board is giving Luca, CEO since last September and his teams, all the freedom they need to implement our strategic choices and make necessary adjustments. I can already tell you that the first 9 months, we've been working with Luca fully confirm the governance decisions we have made. This trust is naturally based on constant accountability and dialogue, the Board has to remain attentive to the consistency of the decisions that are made, their results and management's ability to stay on track. So we need a balance between support vigilance, accountability, and that will make it possible to sustain a transformation of the magnitude we -- of the current changes. In a moment, Luca will present his road map to you. You will see that it is very ambitious because the situation requires it to be ambitious and because Kering has the resources it needs to complete its ambitions above all, -- it is credible, credible in its approach in its time line and in the choices, it makes including the most difficult ones.

As you know, Kering has been built since 2013 by prioritizing the international development of each of its houses. More recently, with Luca, we embarked on a new journey. The construction of a more integrated company, leveraging significant synergies between the houses and capable of both combining entrepreneurial agility with the power and the strength of a global organization. As you also know, a strategy no matter how relevant it is, is only as good as its execution. That is why the Board will be very demanding and attentive to the results achieved, the commitments made as well as the performance indicators and signals, whether positive or not.

Gucci will naturally be at the center of our focus, given its significance and the importance of its sales for the company. I can tell you that the actions undertaken for Gucci are based on very solid foundations and will enable the brand to return to a path of sustainable growth rapidly. Gucci has always been a very unique house with a very strong creative identity. And on several occasions, in its history, Gucci has demonstrated its ability to reinvent itself without ever compromising on its values. So it is this capacity for reinvention that the strategy presented by Luca is based on today. Our company is not limited to Gucci. I deeply believe in the potential of all our houses with no exception. They all have significant potential for growth. And beyond our houses, I really believe in the growth levers, the growth drivers we've identified.

We will continue to develop them drivers such as in Eyewear, which has already become a leading player in this industry or our recent partnership with -- in beauty and longevity with L'Oréal, which opens very promising and transformative opportunities. I also have full confidence in the huge potential of our jewelry houses. This is why we recently consolidated them into a separate division under the well-informed and seasoned leadership of Jean-Marc Duplaix, who is going to further accelerate their development. Our company has already gone through many phases of transformation. And each time it has been able to question itself, challenge itself, adjust its course when necessary and always consistently emerged stronger. The company has successfully evolved and adapted in a constantly changing environment, drawing strength from this history.

It is our responsibility to stay on course with clarity and composure. In a context marked by a lot of international uncertainty, major geopolitical tensions, I am convinced we shouldn't give in to impatients nor lose sight of our objective. I'm also profoundly convinced that Kering with its beautiful houses, it's exceptional talent -- it's heritage history and with you, its shareholders. It holds a unique place in the world of creativity and luxury, and we'll continue to play a leading role. It is in this spirit that I chair this board and that I invite you to support the strategy we are presenting to you today and which Luca is driving with great talent and energy. Before giving you the floor, I would like to share a short video with you.

[Presentation]

Ladies and gentlemen, greetings. I would first like to thank you for your presence today. And for the trust, of course, you are placing in us. I would also like to thank Francois-Henri and the members of the Board of Directors for their support over the past 8.5 months that have just passed. And I would like to thank the team, the teams everywhere in the world for their engagement -- they are highly demanding, and they're doing high-quality work on a daily basis. So you entrusted me with Kering's operational responsibility of Kering, 8.5 months ago. I've spent a lot of time in the field, in the workshops, in our stores with our partners to understand how the group works in reality. My conclusion is that Kering has outstanding assets in hand, an iconic house, many iconic houses, unique know-how and extremely high-quality professionals. And it's on that basis that we are moving forward.

And what makes me particularly optimistic about the transformation we have now engaged in because in these 8.5 months, we have taken some pretty strong decisions. First, we have reorganized ourselves to make our management model more empowering, more effective, faster. The group is now articulated around 4 core businesses, fashion and leather goods, jewelry, eyewear and what we have chosen to call Kering next, which is preparing for the growth drivers of tomorrow. All this is based on a cross-functional platform group-wide platform structured around 5 priorities: industry, customer, sustainable development, technology as well as the support functions, of course. The Executive Committee now meets on a much more regular basis with a dual strategic and operational oversight and is highly demanding in terms of execution.

That has changed the way in which we work. Decisions are now taken faster, responsibilities are better defined. And the follow-up and monitoring is much more rigorous. And beyond the organization, we have also made progress on 7 further priorities, culminating in the construction of our strategic plan. First, debt. We have significantly reduced it in 2025 by around EUR 2.5 billion last year and even more this year. Armelle, I'm sure, will be telling you more about this. I truly believe it was essential. This gives us additional leeway to act, to invest, to prepare for the future in the right conditions. We really did not want debt to hinder our transformation. And I believe that, that is no longer the case. Another key priority, our retail network. After an initial phase of rationalization on third-party retail conducted by Francois-Henri Pinault at the time, we are now continuing the optimization of our own network at the end of 2025.

The total was 1,719 points of sale, down 75 over 1 year in 2026, we shall be amplifying the movement with at least 100 additional closures. Each closure comes with a plan to refocus business on stronger points of sale with better locations the ability to offer a high-quality experience, much more consistent with the standards of the luxury sector. And this is why -- in parallel, we are investing in our retail network with a renovation plan that should affect up to 2/3 of our boutiques since -- by 2030. As for inventory, we have initiated a significant plan in order to reduce it by around EUR 1 billion over 12 months. And more importantly, we are transforming our processes. We are implementing integrated planning tools based on improved coordination between teams and stronger forecast capacities, thanks to the power of AI.

Our target is to produce more accurately earlier and with less complexity. I believe that is a key performance lever but also a lever for desirability. Reducing volumes also means protecting -- we have also initiated a reorganization of our pricing structure, architecture, pricing and product architecture. The offering is being simplified with collections that are more legible at a clearer hierarchy between iconic, seasonal and essential products. This allows us to better express the identity of our houses to strengthen consistency and to improve full price sales.

In parallel, fundamental work is being conducted on quality, materials, manufacturing, features, durability, because in the world of luxury, legitimacy is built on -- essentially on product excellence. I truly believe that. We have also chosen to work on marketing efficiency. We started by rebalancing our investments towards high-performance media. The idea is not to reduce the resources because, of course, this is essential in a highly competitive environment, but to use the resources precisely targeted way. These actions should generate the equivalent of around 1 percentage points of operating profit, which will be reinvested in our houses to sustain that growth and development.

And finally, we have created the conditions, as Francois-Henri said, for Gucci's rebirth but more about that in a moment. All of these actions create the foundations of the new strategy we presented in Florence last month to the financial community and part of the press. The strategy, which I shall be describing is the result of collective work, I must say so, conducted with all of the group's teams -- it allowed us externally to clarify our vision. And I'm reassured to see that it was deemed both credible and ambitious. That's the balance we were seeking to strike. -- in house. Importantly, it allowed us to align all of the team around clear, consistent and very concrete principles.

Our first priority is, therefore, to restore profitable and sustainable growth. And this will be essentially driven by our houses that are singular and complementary and which now have a road map, allowing them to build on their strengths. Gucci, first of all. Gucci is engaged, as you know, in an in-depth transformation. It now has a new management team, a more agile organization and the essential work will be continuing. This will take a simplification of the brand's offering with a reduction of around 20% of SKUs also refocusing on the fundamental codes of the house, relaunching creative momentum and strengthening quality levels to ensure a flawless product experience. But more importantly, we have returned to the essence of the house, what makes it unique, instantly recognizable and culturally relevant.

The first reactions to the La Familia and Larimavera collections, very encouraging, notably for all the most influence customers, which helps to boost desirability and set the tone. Likewise, analysis that we have conducted in women's fashion confirm the momentum and for the first time for a number of years, the Gucci Show was #1 in terms of media impact. The crews show in New York 10 days ago also confirmed Gucci's ability to echo and to be at the heart of people's conversations. All of that has led us to set powerful ambitions for Gucci, for instance, generating EUR 1 billion in additional revenue for leather goods by 2030 with a more distinctive and iconic offering.

So basically, the rebound will take time, but it will be sustainable because it is based and grounded on very strong fundamentals. [indiscernible] house that you know very well with a very powerful identity and a recognized authority in the world of fashion. Our priority is to amplify what makes it unique First, by enriching its expression, a daywear collection that is more developed, more menswear and leather goods positioned on higher high-end segments. And in parallel, we are creating the conditions to double the volume of business in Asia by 2030 by making it more relevant locally and by increasing its visibility with a particular focus on China, in order for to really talk to China and be fully recognized on that market.

Bottega Veneta will continue to ramp up in the world of deep luxury, deeply rooted luxury based on discretion, excellent craftsmanship and scarcity deliberately. Our priority is to strengthen this positioning by affirming the iconic codes, the famous Intrecciato, the woven leather. -- that is part of the house's soul. We are also gradually expanding the universe beyond leather goods with more fashion, both for women and men, and the momentum should allow us to double nonleather goods revenues by 2030.

Balenciaga, is playing a key role in our ability to talk to younger generations, a house that has a unique ability to influence culture and set the trends. Our aim is to transform that influence into sustainable growth. first, by strengthening our key categories, notably goods, where there have been some fine successes the womenswear offering, which we wish to double by 2030. All of this by continuing to build all the potential of menswear. And finally, the brand also has high development potential in many geographical areas beyond Asia, where it has proven extremely resilient.

At McQueen, we are going back to base to the sartorial roots, strong in womenswear and key categories like tailoring and occasion wear. We are simplifying the offering rationalizing the network and strengthening the execution discipline with a clear priority, return to profitability. Brioni standing out in the world of ultra-luxury based on unique expertise, tailor-made and the art of tailoring. At the heart of the model, the personalization platform called Bespoke, which is a key lever to generate value and loyalty. The house has a level of integration that is outstanding, with 660 Craftsman and manufacturing that has been entire -- that is done entirely in-house on formal wear. It's on that basis that it is gradually expanding its wardrobe, preserving extensions of excellence and exclusivity.

Brioni also aims to become the reference within the group in the world of sartorial know-how. Alongside fashion and leather goods, we are also developing additional growth levers Jewelry, is the first key lever. It is both resilient, highly emotional and still largely underexploited within the group. We have, of course, solid foundation with houses such as an Pomellato and Chime but also a significant development potential within our fashion house including Gucci, with Kering jewelry, the revenue should be doubling medium term and the gradual integration of Italian manufacturer, RoseliFranco. Our ambition is to create a truly integrating platform that goes beyond the scattered initiatives from 1 house to another.

Kering Eyewear is a second structural pillar. That is already a great success, a testament. And only it only took around 10 years. But beyond the current performance, it's the potential that is important. We now have a true platform that can boost growth based on innovation, product quality, strictly controlled retail, and we should be able to continue to grow revenues, which reached EUR 1.6 billion last year in under 10 years. It's also a great playground for new usages, the crossroads of luxury and technology, notably around smart eyewear, which opens up very promising prospects for the future. The future, Kering Next, this is what is going to bring together with growth drivers as of tomorrow.

Our ambition is not to diversify just for the sake of diversification, it is to identify segments where the group has true potential and where we can generate value in a sustainable manner. We have included Ginori 1735 of course, an old house, which has a unique heritage. It's the oldest house in the group, but we want to develop it as a reference within the group in tableware and as a key player in experience-based luxury. Beauty is another promising business line. The strategic partnership with L'Oréal allows us to grow very strongly in that field by combining the power of a global leader with the potential of our brands. We're also exploring long-term opportunities in other segments such as wellness and longevity. And with House of Wonders, we now have a tool that can serve to accelerate the development of emerging brands by giving them access to the group's capacities while preserving their identity.

We are still highly selective, and that is what has driven into take a minority stake in I-CYCL, which is a true nugget among luxury and fashion, Chinese houses. The strategy we have presented also in order to return to growth as a consideration for new geographies. China would, of course, remain a key market for our industry. But it's a market which is entering a new phase, a phase that is more demanding, more selective with a more local anchorage. Growth will be more qualitative, less driven by an expanding retail network and more by brand desirability and their relevance to local culture.

In parallel, we have identified markets which have a very strong potential in-house, we call them the 6 pack, India, Asia, Southeast Asia, Brazil, Mexico and the Middle East around the Emirates and Saudi and Africa, essentially Nigeria. These are high-growth markets driven by the expansion of new customer bases, often younger, and by favorable local dynamics. Taken together, they are already a significant growth driver, but success will not come naturally. These are heterogeneous, highly demanding markets. which require a highly structured approach, and that is what we should be working on. to restore growth. But there is a second need.

We need to improve efficiency. That is why we are constructing cross-functional platform that is group-wide, industry, customer technology, sustainable development and support functions, and this should allow us to avoid loss of value. In industry, we are fortunate enough to have a European ecosystem of outstanding know-how, which is at the heart of our product quality. But that ecosystem is driven in a fragmented manner, house by house. We are, therefore, going to be implementing a much more integrated steering of all of this to allow us to adjust volumes much more precisely to use our capacities much better and to reduce inefficiency.

We can already say that we are now able to go much faster between the design of a product and its marketing without losing our precision and accuracy in parallel. We are also deeply changing our supply model. We're transitioning from multiple suppliers to a logic of most favored partner. A favored partner is a partner with which we work in the long run. We are highly demanding with them. but we also provide visibility and mutual commitments. That is what allows us both to secure their know-how to elevate quality levels and to improve efficiency. And this should lead us to 1 percentage point of the -- of improvement of Kering's operating margin in the coming years. It's a first landmark for our new Industrial Director. And I'm sure that we will be able to do even better. There's going to be a change of scale through a program we have called Core, which is our customer knowledge platform.

It consolidates proprietary data from our houses and enriches them with external sources to build a much more integrated vision of customer preferences and behaviors and to guide our decisions from the product to the activation and allocation. To take the example of the clienteling pilot program launched at Gucci, the value generated by the use of intelligent use of data and artificial intelligence has nearly doubled, with approximately twice as many sales resulting from targeted in-store initiatives, twice as many customers making purchases following outreach, in particular, strong traction in mid-tier and entry-level segments and more broadly in terms of technology, we're going to integrate more systematically data and AI in our processes. This will allow us to better anticipate demand, optimize product allocation and better manage overall operations.

It will also allow us to simulate scenarios adjust decisions more quickly and reduce organizational complexity. Finally, on sustainable development, Marie-Claire, it's been one of Kering's strengths. -- for many years. I will give the floor to you, Marie-Claire in a moment. But just a quick word on the subject. I'd like to say a word about the transmission of knowledge. Last month, we launched the Academia della Pelletteria, which will enable us to train the talents of the future in key business areas, leather goods, jewelry, craftsmanship -- and the academia relies on a network of schools in Italy, which is really the heart of our industrial ecosystem. And groups of people every year.

This is truly necessary investment for the future. And as you well understand now, the key to the future is execution. We, therefore, must demonstrate our ability to deliver. We will run this transformation with the Board's oversight using specific metrics, growth, operating margin, return on capital employed as well as the brand desirability. In the medium term, we aim to gradually outperform the market in terms of growth. We expect to more than double our operating margin rate compared to 2025 in percentage terms and increase our return on capital employed to over 20%. And at the same time, we will maintain strict discipline in terms of capital allocation, and we will keep investments under control. representing anywhere between 5% and 6% of sales.

Last but not least, we will demonstrate consistency towards you with an annual dividend payout ratio of around 50% of the net current income group share. So those indicators all point into the same direction. Our ambition is to build quality, controlled growth, which will create long-term value. Yes. The 2025 performance did not meet this ambition, but Q1 '26 has showed encouraging signs. We know that transformation this magnitude will take time. I'm confident our strategy was developed on the ground by our teams. And this is generally how you can build the greatest successes. Thank you very much for your attention.

Thank you, Luca. And I'll give the floor to Armelle Poulou, the company's Chief Financial Officer, who is going to present the 2025 results.

Thank you, Francois-Henri. Thank you, Luca. Ladies and gentlemen, dear shareholders, I'm going to present the 2025 results before we review the preliminary 2026, as you know, following the strategic partnership, we launched with L'Oréal in the connection with the sale of Kering Beauté, which was finalized first half of 2026 Kering Beauté operations have been deconsolidated from the 2025 financial statements in accordance with IFRS 5. Subsequently, all 2025 figures exclude Kering Beauté. The 2024 income statement has also been restated on this basis to allow for appropriate comparison. The key figures for fiscal year 2025 are presented on this slide.

Sales for 2025 amounted to EUR 14.7 billion and recurring operating income at EUR 1.6 billion which represents an operating margin -- current operating margin of 11.1%. The company's free operating cash flow stands at EUR 4.4 billion. or EUR 2.3 billion if we exclude the positive impact of real estate transactions. The company's net debt was reduced to EUR 8 billion at the end of December 2025. We will come back to this in a moment. So in many respects, those results mark a low point for the company. But let's be clear. These figures establish the starting point from which we are now driving our turnaround discipline that underpins our strategy.

Revenue for 2025 declined by 10% on a comparable basis and 13% on a reported basis compared to '24 with a stronger euro. It is important to highlight the sequential improvement we have achieved in the first half with the final quarter showing a clear acceleration to minus 3%. This indicates that our actions are starting to pay off with our customers, which is a first encouraging sign. Our geographic footprint remains balanced, although we have observed some adjustments in the mix over the year. Asia Pacific, down 2 percentage points to 29%, while North America and Western Europe have increased by 1 digit point each. Japan and the rest of the world maintain stable shares. Recurring operating income is EUR 1.6 billion, down on a year-over-year basis, the current operating margin of 11.1%, certainly reflects the pressure on revenue, but it also reflects the operational discipline implemented now over the past several quarters. rigorous cost management, clear arbitrations, targeted investments.

Our disciplined provides a sound financial foundation, which we -- our turnaround is built upon. As a result, we achieved EUR 925 million in savings in 2025, reducing our operating expense by 9%. These are not just cuts but they are actually effective reallocation of resources aimed at increasing the company's efficiency while preserving its creativity and restoring our ability to invest in our houses. We accelerated the store network, fewer stores, but in better and more strategic locations. I would now like to take a look at the performance of our houses. Gucci's revenue in 2025 amounts to EUR 6 billion, down 19% on a comparable basis. Direct-to-consumer sales accounted for 92% of revenue with a sequential improvement in Q4, primarily driven by North America and Asia Pacific as well as a number of new product launches.

The launch of Le Familia collection, along with related activations, has begun to put Gucci back into the spotlight. Recurring operating income reached EUR 966 million, representing a margin of approximately 16%, driven by strict cost control and network optimization with 32 stores closed. San posted revenue of EUR 2.6 billion in 2025, down 6% on a like-for-like basis, with sales continuing to improve in Western Europe, Japan as well as North America. The momentum is strong in leather goods, Women ready-to-wear as well as footwear. Recurring operating income is EUR 529 million. That's a robust margin of 20%, thanks to efficiency gains and very targeted investments in strategic locations in stores.

Finally, Bottega Veneta posted a 3% increase on a like-for-like basis with revenue of EUR 1.7 billion. The House posted strong performance in its own stores, which accounted for 86% of total sales. Annual recurring operating income reached EUR 267 million, up 5%, representing a margin of 15.6%, driven by an improved gross margin and investments in communication, marketing and store network to sustain the brand's strong momentum. The revenue of other houses was down 6% on a like-for-like basis with contrast performance. Balenciaga showed sequential improvements with positive direct-to-consumer sales in the fourth quarter in Asia Pacific and a good momentum in North America.

Alexander McQueen is still under pressure with an ongoing restructuring plan, which includes 21 store closures in 2025. Brioni, another solid year with Q4 showing strong double-digit growth. Last but not least, jewelry houses are confirming their excellent momentum. Boucheron posted exceptional results with particularly strong performance in Japan and Asia Pacific. Pomellato and Qeelin are also growing. Jewelry remains one of the company's most dynamic growth drivers supported by ongoing investments and selective network expansion, in particular for Boucheron. The recurring operating income for other houses posted a loss of EUR 112 million weighed by a flat performance of Balenciaga and losses at Alexander McQueen in spite of the restructuring program.

Last but not least, Kering Eyewear generated sales of nearly EUR 1.6 billion, that's a 3% increase on a like-for-like basis, driven by sustained growth in Western Europe and the optical category. Operating income reached EUR 252 million, representing a solid margin of 15.8%, which is slightly below last year's level due to higher tariffs and continued strategic investments in Maui Jim to support its international development. Please allow me to briefly review the other items on our income statements. Other nonrecurring operating income and expenses totaled EUR 584 million, primarily -- consisting primarily of real estate losses, impairment and restructuring charges as well as a fine from the European Commission.

Net financial expenses totaled EUR 594 million, which is a slight improvement with net debt costs flat at EUR 328 million and an average coupon rate unchanged at 3%. Corporate tax amounted to EUR 354 million, which is significantly less with an effective rate of 36%, primarily impacted by losses in the U.K., Alexander McQueen and the reclassification of Kering Beauty as discontinued operations. Finally, net income attributable to the group from continuing operations, excluding nonrecurring items, amounted to EUR 532 million.

Operating free cash flow, excluding real estate transactions amounted to EUR 2.3 billion, down 35% compared to 2024. Operating investments, excluding real estate transactions totaled EUR 0.8 billion, down nearly 30%, or 5.4% of sales focused on the transformation of our store network and highly selective developments. The net debt continued to drop confirming the company's deleveraging. Thanks to disciplined capital allocation, company's net debt was reduced by EUR 2.5 billion, standing today at EUR 8 billion at year-end, representing a leverage ratio of 3.4 in the first half of 2026, Kering bout transaction and other real estate refinancing deals significantly accelerated the company's deleveraging, resulting in a strengthened balance sheet.

Let's now quickly move on to the balance sheet. Assets held for sale were reclassified for a total of EUR 5.2 billion, including EUR 3.7 billion. net related to Kering Beauté, which was disposed to L'Oréal and the completion was announced on March 31 and EUR 1.3 billion for the Via Monte Napoleone building, the transaction which was announced April 1. The net debt-to-equity ratio improved to 51% compared to 67% last year, benefiting from real estate refinancing transaction. inventories dropped by 8%, while the operating working capital requirements increased to 17.7% compared to 16.9% a year before. Reducing inventories is still a priority with confirmed continued decline through 2026.

Let's now turn to the initial performance highlights for 2026. During the Q1 revenue presentation, we introduced a new segmentation of our businesses aligned with our strategic priorities and organized around 4 operating segments, Kering fashion and leather goods, including Gucci, Saint Laurent, Bottega Veneta, Balenciaga, McQueen and Brioni. Kering jewelry, including Boucheron, Pomellato, Dodo and Qeelin, Kering Eyewear and Corporate and Other, including Corporate Services and January 1735. Gucci is also the subject of a separate communication, Q1 '26 has showed encouraging signs with group revenue totaling EUR 2.6 billion, which is stable on a like-for-like basis compared to the same period in 2025 in spite of a complex and uncertain environment. The 6-point currency effect explains the decline in reported figures. Performance across various segments remains contrasted, but all are showing sequential improvements compared to the quarter before.

The Fashion & Leather Goods segment declined by 3% with Saint Laurent, Bottega Veneta, and Balenciaga posting growth, while Gucci continued its recovery. Kering jewelry is confirming its role as a driver of sustained growth, particularly supported a Boucheron. Kering Eyewear grew by 7% and corporate and other by 10%. Regional trends are improving. With the exception of Western Europe and the Middle East, which were unfortunately affected by the conflict, which has had a 1-digit point impact on performance. The Middle East has, of course, been the subject of increased vigilance since February. The safety of our teams there has always been a priority, and the network is fully operational.

Elsewhere North America stands out with strong acceleration, Asia Pacific, improving sequentially and Japan, which continues to grow, thanks to jewelry. The quarter has also marked significant progress in the company's strategic execution and balance sheet strengthening. And as you noted, the creation of Kering jewelry, the gradual integration of Razelli Franco, 1 of the largest independent luxury jewelry manufacturers, the closing of the partnership with L'Oréal in beauty and the new real estate refinancing transactions. Meanwhile, the company continued to optimize its network and strengthen discipline regarding investments and costs.

In this very uncertain geopolitical and macroeconomic environment, we remain focused on both agility, discipline and excellence in execution. Based on the brand strategies presented by Luca earlier. In 2026, our goal is to resume growth and improve margins. The chart you're seeing illustrates the performance of Kering's share price over the past 12 months. Rest assured. All teams are fully committed to improving the company's performance to make sure that this is -- and make sure that this is reflected in the company's stock price. We are confident in our reconquering plan presented at April 16 to sustainably reposition the company as a leading challenger in the industry.

The Board of Directors is proposing a dividend of EUR 3 per share as well as a special dividend of EUR 1 per share related to the sale of Kering boutique to L'Oréal. Both dividends are subject to your approval today. Shareholder remuneration is 1 of our top priorities in terms of capital allocation. Our ambition is to resume a dividend of dividend growth trajectory starting in 2026, in line with the expected improvements in our performance. Thank you for your attention.

Thank you, Armelle. Now Marie-Claire Daveu, who is going to tell us about our new road map in the world of sustainable development.

Thank you, Francois. Dear shareholders, greetings to all, 2025 was a crucial year in the field of sustainable development to this year marks the end of a chapter that opened 10 years ago, that of our strategy based on fashioning the luxury of tomorrow, and has now entered a new phase. New steps that are even more ambitious where sustainable development by strengthening the desirability of our brands and risk control, becomes increasingly and more than ever, a powerful performance and value creation lever for our houses and a key element in the reconquest reconquering strategy of our group. Kering is now recognized as a leader in sustainable development. And based on what we have already built and driven by the vision of our new CEO, Luca de Meo, we are now creating new momentum. Our ambition is to go even further, even stronger for our customers, for our houses and for our shareholders to continue to create flawless, innovative luxury that is therefore more desirable.

Over the past few years, we have rolled out an exemplary and ambitious road map in the face of increased regulatory pressure. We have integrated the latest scientific advances, and we have taken account of our customers' expectations. We have fine-tuned our targets, our actions to allow our houses to be on the cutting edge. Our environmental and social commitments are reflected in concrete and measurable initiatives based on data and aligned with international scientific references and benchmarks. We have transformed our model by integrating sustainable development into the key functions of the group and more importantly, within our houses. We have gathered many international and national accolades, which have continued to encourage us. The impact of our action is essentially environment. In 2025, we reduced our global emissions of greenhouse gases by 34% across Scopes 1, 2 and 3. Since 2021, we have stuck to our commitment to animal welfare. The use of animal fur has now been entirely banned.

We have also strengthened traceability within our value chains. Our rate of traceability is now 97% for our key ingredients. And we're also contributing actively to the regeneration of vulnerable ecosystems through the creation of a regenerative fund for nature alongside Conservation International, a project that covers more than 1 million hectares in many countries. Our impact is also social. We have strengthened the social standards, of our suppliers and those of our employees through a parental policy that guarantees the same rights worldwide. We provide training to our employees about the challenges of the seasonal development, but also our future employees with the Institute Francois de la Mode or the London College of Fashion or Tsinghua University in China.

The transformation of the luxury and fashion model requires collective action and Kering has played a major part in creating and launching sectoral initiatives such as The Fashion Pact or more recently, the watch and jewelry initiative 2030, which was cofounded with Cartier. And finally, we consider innovation is an essential lever for the sustainable transformation of our model. By collaborating with more than 225 start-ups, by contributing to create innovation hubs dedicated to materials and jewelry to identify test and deploy revolutionary solutions with a clearing generation awards through which we can support in China, in Japan and now in the Middle East and North Africa, the best local startups and the most promising young talent. And finally, we explore new models through investments made through Kering Ventures.

Our houses themselves are increasingly creative. A few examples. Boucheron for instance, reinvented the jewelry case with new boxes based on just 2 natural materials, namely aluminum and wool felt, which reduces their weight by 75%, while getting rid of plastic altogether. Gucci is supporting farmers in their transition towards more sustainable practices with a number of dedicated projects on key raw materials such as wool, cotton and silk to increase the share of regenerative materials in their collections. Bottega Veneta is continuing to explore innovative materials with woven mycelium, which is a mycelium drawn from very low impact process, combining sustainable innovation and craftsmanship. Brioni reopened its school in Penne in Abruzzo to secure the transmission of its outstanding know-how.

So what is the way ahead? Thanks to Luca de Meo, we have a very clear purpose, accelerate our transformation by integrating -- by further integrating social and environmental concerns in the group's strategy and therefore, in our decisions. Our desire is to boost the group's performance and the desirability of our brands and their products. Indeed, Customers are increasingly demanding in terms of transparency and impact, and luxury must deliver on that by being absolutely flawless. And by integrating sustainable development, we optimize our operations and strengthen the resilience of our value chains in an international environment that is unstable and complex. In order to increase our performance, we have selected 3 strategic priorities for the coming years.

First, strengthen the efficiency and accuracy of our production. Luca mentioned this earlier. We are accelerating our transition towards a demand-driven production in order to have volumes that reflect sales to preserve the exclusiveness of our products and also to reduce our environmental impact. In order to achieve this, we use digital tool with highly advanced data processing. In the field, we are creating a KPI that measures efficiency between production and sales. We are developing an architecture of the collections with greater discipline, factoring in eco-design from the early onset of product design. Second priority, investments in talent, in know-how in the value chain because luxury is, first and foremost, a business driven by men and women.

We shall continue to strengthen our social standards, and we shall focus on Craftsman, creative talent and sales teams, notably by developing training initiatives. I won't go into details because Luca has already told you about the Kering Academia Perenco, which will be opening at the end of the summer and that will be based in Milan. We also wish to work with preferred partners, namely strategic long-term partners within our supplier ecosystem. They will be selected based on highly demanding criteria based at group level in terms of excellence and know-how, but also in full compliance with the best environmental and social standards.

Third priority, materials and models of the future. We are accelerating the use of alternative materials even more desirable that are either by source or regenerative while strengthening traceability and responsible supply. We're also developing high added value services, involved in the circular economy, repair, certified, resell or digital product passports, the so-called DPPs. These priorities come with very clear and measurable targets. We have confirmed our ambition. We wish to reach net zero by 2050 with an intermediary step of a reduction of 50% of our emissions by 2033. We are aiming for 30% of regenerative materials, 40% and 30% by 2035. And we can, therefore, reduce our dependency on leather by around 30%. This can be measured in square meters of lever per million of sales.

And finally, we are committed to reach 100% traceability and alignment of our raw materials with the Kering standards. And to have a positive impact on the priority water ways in line with science-based targets for nature. As you will have understood, we are determined. We are even more strongly determined and committed to playing an important part to move forward the sustainable development agenda within the luxury and fashion sectors. With our teams across all of our houses and in close collaboration with our partners, we are continuing to face the challenges of sustainable development through creativity, pragmatism and a sense of urgency. And this often paves the way to new solutions.

I would like to thank very warmly thank all of the teams who have worked hard on a day-to-day basis. their pioneering spirit continues to guide our action or ambitious action to create the luxury of tomorrow. Sustainable development is more than ever. an important lever for performance and resilience. It's indispensable if one is to create exceptional products that make people dream. It increases trust and desirability. It creates value for our customers for our group and for its shareholders. Our action plan is an essential contribution to Recon Kering our road map. Being committed to a more sustainable luxury is respecting the heritage of our houses, building on their future nourishing true luxury and investing in next luxury. Thank you for your attention. And now back to Francois-Henri Pinault.

Thank you for this brilliant presentation. Dear shareholders. Let me now tell you about the activity, the composition of the Board of Directors which, as you know, is a crucial part of our new governance based on the separation of the functions of Chairman of the Board and Chief Executive Officer. Governance in place, as you know, since September 15. The Board of Directors is, of course, fully mobilized to support this new transformation phase, a phase that requires constant rigor, consistency in action and also the robustness of the work conducted by our Board of Directors. So the quality of the Board is crucial. Over the years and with your support, we have set up a very robust Board of Directors with a lot of expertise, a diversity of expertise and the extreme quality that is there. It is deeply committed and deeply engaged and collectively works in the best interest of the group.

The setup goes far beyond standards that could be expected from a control group and reflects our will to lead by example. The great value of this council is due to its hard work and see the introductions between directors themselves and the management team. So in 2025, the Board met 13 times not to mention the committee meetings, of which there were around 20. The Board took part in the structural initiatives of last year and notably the Recon Kering road map. We worked very actively to define the priorities to define the targets and to support top management in the execution of the strategy.

At the same time, we provided attentive follow-up of the group's performance of all of its houses. And with a focus on the main levers, sales momentum, execution, discipline, financial discipline, and piloting of investments. It's work that takes place in an international environment. traversed by uncertainty on the commercial, political, geopolitical side, and we're, of course, closely monitoring the situation, particularly when there are impacts for the group. Our discussions with top management are regular, transparent, very fruitful. And everyone is working for the group's success. The 4 committees of the Board fully contributed to the momentum. The Audit Committee, the Appointments Committee -- and Governance Committee, the Remuneration Committee and the Sustainable Development Committee.

Each of these committees worked in depth on the issues under the remit to allow the board to take well-structured decisions in these various fields. Our action is, of course, an essential foundation for the quality of our governance. Two of these committees. the compensation and benefits and the appointments and government committees are led by 2 independent directors, Madame Veronique Weill and Mr. Serge Weinberg, who is term of office is to be renewed today. Their experience and quality of their contribution are essential to this, and I would like to thank them very warmly. Veronique is the Pivotal Director, she chairs the Compensation and Benefits Committee and plays a very important part in the dialogue with institutional investors. She contributes what they have said to the Board. And this truly helps to enlighten our decisions. through the fine understanding of the medium and long-term expectations of our main investors.

She also discusses with other directors on a regular basis, which, of course, improves and the quality of our exchanges and the decision-making process. As for Serge, who is in charge of the Appointments and Governance Committee, he, of course, took part in the work, which led to the change in governance and the recruitment of Luca as group CEO. His experience in Boards of major listed global groups and his knowledge of government and his outstanding career as a business leader, is extremely valuable.

The 3 of our directors will be leaving the Board after this General Meeting. Maureen Chiquet, Yonca Dervisoglu, and Mr. Jean-Pierre Denis, who's decided to resign for personal reasons. I would like to thank them very warmly for the work they have put into the Board. I would like to thank them on behalf of the group and in my name. Maureen contributed an in-depth knowledge of the world of luxury Yonca told us about artificial intelligence, digital strategy. And I would also like to say a few words about Jean-Pierre due Jean-Pierre was for almost 18 years, a Director of the group. He supported us. He's extremely rigorous and demanding, particularly as Chair of the Audit Committee. He was also a pioneer in terms of commitment to sustainable development, which very early on became a part of our strategy. His personal investment at the service Kering was for our group, for my family and for myself personally, extremely valuable. And we are hugely grateful to him. I would like to thank him very warmly today.

Finally, we proposed the appointment of Mrs. Marie-Helene Chenut and Laurent Kleitman who are 2 highly experienced executives in the luxury industry. They both share experience in the luxury industry and in managing prestigious brands. Marie-Helene spent more than 35 years at Chanel, where she led the hot Couture division for nearly 10 years. She held roles in marketing, talent development and transmission of know-how and expertise. Laurent Kleitman leads the Mandarin Oriental Group a leading player in the hotel -- luxury hotel industry. He has built his career with major companies, including Christian or Parati and Unilever. He brings to the Board of Directors more than 30 years of experience in both luxury beauty and consumer goods. So those appointments reflect our continued commitment to provide Kering with the governance structure that is best to do its challenges. I hope they will receive your support to dear shareholders. Thank you for your attention. I would like to invite Marie-Helene for a few introductory remarks.

Ladies and gentlemen, dear shareholders, I'm very happy and deeply honored to stand before you today. As Francois-Henri said, for over 35 years, I have held A number of operational strategic leadership roles, namely at Chanel, one of the leading houses in the luxury industry. My initial training as a doctor of pharmacy and then later a degree in business management and marketing. Let me join the Fragrance and Beauty division, where I initially held international roles in marketing and product development. This first experience provided me with fundamental values, which helped me throughout my entire careers. -- standards rigor and a constant focus on quality. I then took the role of Head of International training with the mission of supporting sales teams, to develop their expertise and improve the quality of customer relationships through innovative training programs and programs that are truly adapted to the needs of the industry.

In 2011, I joined the fashion division to establish the European fashion training school. This was a truly strategic initiative within an integrated distribution network. Sales teams represent the house, but also convey the messages of the house and play a vital role in the customers' experience. Between 2017 and 2025, the end of 2025, I was responsible for Haute Couture as well as the Haute Couture ready-to-wear ateliers -- with this role, I was able to be involved in the entire value chain, from design all the way to collections, to their development and marketing, including the transmission of know-how, craftsmanship and ongoing celebration of excellence.

In this world, creativity exclusivity excellence, desire, storytelling and economic considerations all combined to offer a unique and lasting experience. So 35 years, 35 years of passion, constant learning and discovery and even today, I remain driven by a true sense of curiosity, I wish to understand and ongoing passion. So if you approve my appointment to the Board of Directors, I will be committed to provide my expertise in crafts, their development and their transmission, my understanding of creative processes as well as the challenges of excellence, my expertise and knowledge of expectations of demanding international clientele. -- as well as my vision of the luxury industry, which is going through profound change with new dynamics, codes and codes that are constantly being redefined. Thank you so much for your attention.

Thank you, Marie-Helene. I would now like to invite Laurent Kleitman to introduce himself.

Mr. Chairman, CEO, ladies and gentlemen, dear shareholders, hello. I'm very pleased to be here with you today. My name is Laurent Kleitman, CEO of the Mandarin Oriental Luxury Hotel Group. I'm very pleased to share some of my experience with you. For over 35 years, my career has been guided by a single passion brands and a single ambition, which is to develop and build strong brands with a global growth strategy to create exceptional experience, enhance desirability and perhaps most importantly, to support men and women artisans, creators, managers, professionals who bring them to life. I started my career with Unilever, where I spent over 25 years, we're working in marketing and then in general management roles, both in Europe and in Asia.

So that's where I became familiar with consumer goods sectors across different categories such as detergents, ice cream, especially a day like today, it would make sense to have some ice cream. -- industries where global competition is very fierce. I then joined the LVMH to lead all of its fragrance and cosmetic operations in Russia. -- as well as our Couture business. Then I went back to Unilever. -- to manage a strategic acquisition and lead its global hair care category. Then I took the management of Coty's Beauty division in New York. More recently, I spent over 4 years at the head of LVMH's largest beauty business as CEO of Parfaits. Today, I continue my career in the luxury industry, but on the experiential side, leading the transformation and global expansion plan of Mandarin Oriental which is a leading player in a rapidly growing luxury hospitality company.

With 46 properties to date, we're able to double our business in the medium term. And I live in Hong Kong, which is a location that really broadens my global perspective on luxury and new technologies. In Hong Kong, I also act as France's foreign trade advisor. I'm also Director of Her Harklinikken, which is a holding company of Harry Clinigen, which is a Danish startup company specializing in hair care. Last but not least, as a graduate of NEOMA I'm deeply committed to this very prestigious business school, and I'm serving on its Board of Directors of its foundation as a matter of fact. Their mission is to support academic excellence create ties with the business world and ensure social inclusivity and diversity in its recruitment.

I'm deeply honored to join if you give me the opportunity to do so, the Board of Directors of Kering Group, whose brands are reknown around the world. I hope I can give you my international contemporary expertise shaped by more than 30 years in the luxury industry, consumer goods and service brands. I wish to offer the Board with my experience in the development and brand transformation, combining respect for heritage, desirability, innovation as well as the culture of excellence and execution. My career also allowed me to develop deep understanding of luxury client. They're evolving expectations regarding creativity, service, the search for meeting and experience. I would like to extend my warmest thanks to both Francois-Henri and Luca de Meo for their trust, and I hope dear shareholders that I can also count on yours. Thank you.

Thank you, Laurent. Over to Veronique Weill who is now going to present the compensation of corporate officers.

Thank you, Francois-Henri. Good afternoon, ladies and gentlemen, dear shareholders. It is my responsibility to present to you the work of the Board of Directors and the Compensation Committee, which I have the honor of sharing regarding the compensation of corporate officers in which you are asked to vote. The past year marked an important milestone, which was characterized by the implementation of a new governance. 2026 has been -- is a year of strategic transition with the implementation of the -- of ReconKering the ReconKering plan. In this context, you are asked to vote on 7 resolutions covering both fiscal year '25 and the policies applicable to 2026. Resolution 8 concerns information regarding the compensation of corporate officers for 2025 as presented in the company's universal registration document.

Resolutions 9, 10, and 11concern the compensation of executive officers for 2025, which is a year which covers 2 periods of governance. With regard to the Chairman and Chief Executive Officer, his compensation has been prorated through September 14. It includes a fixed part of EUR 845,000 and an annual variable part of EUR 448,000. In addition, there is a payment of EUR 2.3 million under a previous multiyear plan, which will be fully settled in 2026. For the Chief Executive Officer, who took office on September 15, compensation for this period amounts to EUR 651,000 in fixed pay and EUR 1.21 million in variable pay, reflecting the full achievement of the objectives assigned. These objectives enabled transformative changes for the company with the establishment of a new organizational structure with 2 sectors of excellence, industry and client, the establishment of a jewelry business and the reinforcement of Gucci's governance around a new management team.

Meanwhile, major decisions were made to reinforce the company's strategic and financial flexibility and in-depth work with teams and partners have allowed us to develop a new strategic road map, which was presented back in April. Finally, this appointment was accompanied by the payment of a specific compensation package of EUR 20 million. 75% cash, 25% in performance shares, intended to compensate the new CEO for a potential lost earnings resulting from his resignation from his previous employer. With regard to the Chairman of the Board of Directors, his pro-rated fixed annual compensation amounts to EUR 207,000, excluding any other form of compensation related to this position. He also received a partial payment of the performance shares that had been granted to him in 2022. I would now like to move on to the compensation policy for 2026. The structure applicable to this CEO remains unchanged and, again, is largely based on the company's performance with nearly 90% of compensation being variable.

It includes a fixed component of EUR 2.2 million, an annual variable cash component ranging from 0 to EUR 6.6 million, depending on results and a long-term variable component in the form of performance shares. So this structure reflects a very simple logic. -- we want to make compensation a direct lever for strategy execution. The annual variable component is 60% based on financial targets. ROCE and EBIT with a performance threshold below which no compensation is paid for this specific component. The remaining 40% is based on strategic priorities. -- the implementation of the industry and client divisions as well as the Jewelry division. Enhanced desirability of the houses and equal pay between men and women.

Long-term compensation is assessed over a 3-year period. and combines financial criteria, stock market criteria, including TSR, which measures the total shareholder return as well as strategic criteria related to the company's climate trajectory. -- and diversification of the nature of its business. This is supplemented by benefits in kind and by the mechanisms governing the termination of employment, which remain unchanged. With regard to the Chairman of the Board, the policy remains unchanged with fixed annual compensation of EUR 700,000 growth, which constitutes its only and sole component. Finally, directors' compensation also remains stable with a total budget of EUR 1.4 million, 60% of which is contingent upon attendance. Ladies and gentlemen, dear shareholders, the proposals before you reflect the consistent approach. We want to closely align compensation with performance and the creation of sustainable value for the company. The aim is to establish a framework that is both clear, demanding, and motivating. -- to support the company's ambitions. Thank you for your attention.

Thank you, Veronique. Over to Mrs. [indiscernible] the Deloitte firm who is going to tell us about the conclusions of the college of auditors.

Thank you, Mr. Chair. Greetings to all shareholders on behalf of PricewaterhouseCoopers and Deloitte, I have great pleasure in reporting on our proceedings for fiscal year 2025. I shall not read out everything in detail. but I shall tell you about the key highlights. We have issued reports about the verification of Kering SA annual accounts and the consolidated group results at December 31, 2025. Our mission is to provide reasonable assurance that the accounts are sincere that they do not include significant errors that they apply accounting principles that they comply with all applicable legislation. We audited the group's main subsidiaries everywhere in the world our due diligence was adapted to Kering's organization to its specific features to the risks identified based on criteria that are both quantitative and qualitative.

This was conducted both on the accounts and on the internal control processes and we covered current operations as well as exceptional events in the year 2025, for instance, with the change of scope and strategic partnerships with L'Oreal and the disposal of Kering Beaute the refinancing of real estate assets. Two points were judged particularly significant and required attention. First, the loss of value tests made on spreads of acquisition and brands, which account for a large part, almost 30% of the consolidated balance sheet. The second one was for the depreciation in the evaluation of inventories, which features in the balance sheet. -- in the amount of EUR 1.4 billion. As for the accounts -- the annual accounts of Kering SA, we particularly noted the evaluation of equity in the assets of the balance sheet for a net value of EUR 15 billion. We examine the main judgments underlying the evaluation checked that the information was adequate. We also strove to examine the management report presented by the -- to the Board of Directors, notably with the financial and accounting information, information about compensation and benefits for the corporate officers and those that regard corporate governance.

We had regular discussions both with the Audit Committee and the Board itself -- and therefore, we had been given all necessary resources to conduct our mission, and we issued an unreserved certification both for the annual accounts for the mother company and that of the group. So again, for the ordinary part of this meeting, we issued another report about the regulated agreements that feature in the universal registration document. No new -- no such a new agreement has been signaled. So -- there is just that for the provision of services provided by Artemis to the benefits of the group in the amount of EUR 5 million for the year 2025. And finally, -- for the resolutions about the company's share capital, we issued 3 reports which feature on Page 72, 73 and 74 in the convening documents you received. These concern the authorizations or delegations of confidence to be granted to the Board of Directors to conduct a number of operations that have effects on the share capital and benefit of the group staff.

We have no further observations, although this falls under the conditions that the law wants and in order to allow you to appreciate the waiver of your preferential subscription rights. We also issued a certification report for information about sustainability. Our work consisted in providing limited assurances about three specific points. First, the compliance of the process implemented by the group to determine information, find information in the field of sustainable development. in line with the ESRS (European Sustainability Reporting Standards), the compliance of these standards in the publication of the information in the management report and the respect for publication duties of information. based on our verifications. We have identified no significant errors, omissions, or inconsistency. That is, ladies and gentlemen, my report. Thank you for your attention.

Thank you, ladies and gentlemen. Before we move on to the question-and-answer session, I would like to thank the Kering team who prepared this annual meeting. I would like to thank our auditors at Deloitte, who have worked with us with great professionalism and rigor for more than 30 years. And who -- there will be a vote on their replacement at the end of this annual meeting. So before we move on to the Q&A, Eric Sandrin.

Yes, indeed, we're now going to move on to the Q&A session. Before we begin, let me state that we have received a number of written questions, questions in writing. One from the FIR, the Fund for Responsible Investment, which sent a number of questions about environmental, social and governance topics to which we answered in writing. And our written answer was uploaded to the company's website prior to this meeting. We have also received 2 questions in writing from individual investors about the difficulties these individuals have encountered due to construction in a real estate asset, which shall be housing one of our -- one of the group's Maison. So although these persons are shareholders, these are questions about their own personal situation, and therefore, do not fall under the scope of this general assembly.

Of course, we understand their concern and we have made sure that persons in charge had indeed made contact with these individuals who are shareholders in order to provide the best possible support in the pretty serious situation in which they are notably in their discussions with the company that is currently still the owner of the property and in charge of construction. All of that said, before we open up this session, the only persons who can ask questions are shareholders themselves. To make the debate easier, of course, try to be brief, but please state your name and the number of shares that you hold. You may now ask your questions. Simply raise your hand to ask for the microphone.

Thank you, Brian Suven Ing. I just hold one share. I am deeply honored to be taking part in my first general meeting of Kering. And it's a great honor to be talking to you directly, Mr. Pinault, Mr. De Meo. I have a couple of brief questions. First one about the partnership with L'Oreal, Will that partnership change over time? And then my second question is about the share price, which is still very low. It is obviously undervalued. Do you intend to conduct share buybacks under Resolution 18 to support the share price. And then this is not really a question. It's a request. Can I take a selfie with you later on with Mr. Pinault and Mr. De Meo later on.

Shall I answer the final question. Certainly, with great pleasure perhaps Luca can answer your first question. And Armelle the other one about the share buybacks. Well, in fact, we are in a phase where we are kicking off operations for the brands that are part of the agreement scope. As you know, we have talked about that before. There's an opportunity created by the deal to expand our collaboration to a neighboring category, which is quite significant, namely wellness and longevity. So we're going to need to start to activate the project. Things are going pretty well. They're one of the best, if not the best partner in that field. And we have a lot of dreams in common and I want things to happen.

For the share buyback, our priority in executing the ReconKering plan has always been very pragmatic. We may again consider resorting to that when the conditions are met. What about the photograph, I don't know.

Thank you, Armelle. Number 9.

Hello, Jean-Fred Laurent, individual shareholder. I bought my first Kering shares in French Francs, in the previous century, the company was called [indiscernible]. Yesterday, the share closed at EUR 250.4 , plus 4.44%. EUR 354.20, EUR 160.16 those were the extremes of the year. In March 2022 Investir, the magazine said that last year, Apple launched a division by 4 of its share capital. A few weeks ago, Alphabet said it was dividing it by 20. Amazon is considering the same operation for May. A survey by Bank of America on split made since 1980 shows that the divided shares beat the index, the S&P 500. In May 2022, Benoit Potier, Chairman of Air Liquide said that it would be desirable to reduce the average age of shareholders with a share at EUR 160, that's a high individual share price. I think that for EUR 250, I will keep my shares but not buy any new ones. Do you think you could divide the shares, split the shares to boost the share price?

Yes, I bought my own shares in Francs, obviously. So you're not the only one. Jean-Marc?

Thank you, sir, for your question, which is rather technical. We do not intend to split the shares in the medium or short term because when -- if you split the share price and make it more affordable in a sense, but you're talking about essentially American tech giants, which have reached huge valuations. But splitting the shares creates more dynamics, obviously, a better circulation. In this particular case, nothing seems to indicate. It's interesting, what you're saying is interesting, but nothing seems to indicate that there's a problem of liquidity of the share. Trading of the share has not really very much varied. There's a lot of trading. All of that requires a lot of technicalities notably in conducting general meetings and so on. And as Francois-Henri and Luca just explain the priority for us is the ReconKering plan, and all of our energy will be dedicated to that.

Quite obviously, when the share price well, I never bought share prices in French Francs, although I was already born in those days, but the share price was much higher. And at the time, we had thought about splitting it. But EUR 250 at the current share price is really not encouraging us to do that.

Thank you. Question on the right number 8.

[indiscernible] I hold one share. I have 3 short questions. First, could you give us an estimate of the number of job cuts that are going to happen with the closure of around 100 doors. Just an estimate perhaps. I mean, globally, not just in France because of course, you have doors all over. Second, I was very fortunate to attend your Capital Markets Day that was fantastic. And to talk with investors who were somewhat disappointed. Of course, they are very much impressed by a lot of things, but they were expecting Mrs. Belletini, that she would explain her concept for Gucci doors because when you renew, renovate a point of sale with a new concept, it often boosts revenue, so perhaps you could tell me a little bit more about the Gucci store concept. When will it be revealed?

And then my third question. First of all, congratulations on choosing Mr. Laurent Kleitman, who is at the helm of a fantastic company where, in fact, myself organized an event ones. Should we expect a Gucci Hotel or Saint Laurent hotel because many brands are thinking about expressing their spirit in hospitality, it's very much the trend at the moment.

Thank you. Over to Luca. I wonder if he's going to answer.

Three things on jobs I'll let you do the math. If you look at the number of employees, each store has, you can multiply by the reduction in the number of stores, which we have very clearly stated, including during the Capital Markets Day. So it's around 25% of doors globally. We have also said that this year, we would reach 100 closures. It was 75 last year. So I'll let you do the math with a caveat. In retail, we have around 25%, 30% turnover a year. So it's a pretty fast-moving environment. People change brands, people change jobs, people change sectors. The big challenge for us, of course, naturally, loyal and to there are 25%, 30% of the sort of natural attrition. So there could actually be 0 impact on jobs. But the big challenge is to retain the best, those who are the most loyal and to put them in remaining points of sales that are high performance. So what we're trying to do is to, of course, keep the impact in terms of job cuts to a minimum. So I'm not really -- it's not really a concern for us. As for the Gucci store concept. I don't think there's very much to explain. I think you just need to see them. And I would say that the good news, as I was saying in my introduction is that as part of the ReconKering plan, there is, of course, a kind of a reengineering of retail, but also a lot of money has been put into renewing the stores. At least 2/3 of the stores will be renovated. And I believe that Gucci -- at Gucci will probably be even more. Sometimes it's just refurbishment. Sometimes we -- the store moves location or sometimes the entirely new stores. What I really want to do is that, of course, the concept that we're discussing with Francesco with Delma, with others. These stores need to express the brand's values first and foremost, to elevate the level of quality perceived as we determined to reposition Gucci in the place it deserves.

And interestingly, we are going to be very much focusing on defining the store layout in order to accommodate all of the new business segments, we're trying to grow and that they're in the plan. And one example, if we do jewelry at Gucci, very clearly, there's a huge opportunity to really have part of the store dedicated to the jewelry. You need to have secure doors, you need to have a reserved area and so on. So we're going to be very much focusing on ramping up on an upmarket move. There are a lot of stores that have a pretty outdated identity. And then the actual layout, the actual features of the store are important to maximize profitability per square meter. The hospitality sometimes brands say, why don't we do this all that Gucci San Laurent very clearly now that we have Mr. Kleitman on board, he's probably going to have -- he is obviously much more competent than I am. We might discuss that and discuss that.

There might be possibilities for cooperation. I believe it's a sector that, of course, it's trendy at the moment, but -- it's a real job. It's a different job. It's not necessarily more profitable than other product categories. It depends how you do things. But we don't want all of the additional business to be dilutive. We wanted to be relutive, there's no actual French word for that, but -- and I believe that we don't want to be followers or me-toos. I think a lot of players have already embarked on that in the luxury sector. But if I were to prioritize something, I would probably dedicate the energy of our managers of our team on categories that have very high growth. Hence, our commitment to longevity and wellness and jewelry, where we have very strong foundations. All we need to do is to is to put our foot down on the accelerator.

Thank you. Okay. We're going to take question #5.

Hello. Stanislas [indiscernible]. I have 30 stocks, minus 32%. you have many more than I do. So you have all my sympathy. Thank you so much for the presentation, especially the company's strategy was very interesting and very clear. I'm a bit surprised for two reasons, and I'd like to hear you on those. You talked about India in the 6 pack. During the Hermes general assembly, India was considered as a nonpriority market for tariffs because of the tariffs, very high tariffs for luxury product imports and major distribution, retail difficulties -- what makes -- what place is Kering in a better position? And if you're successful, that would be good. But I'd like to understand how -- and likewise, in Africa and Nigeria.

LVMH has an African strategy, which is focused on spirits and luxury articles, prestigious articles with an entry ticket, which is much lower than jewelry and hot good here, about EUR 50 for a bottle of champagne, which is typically the kind of products you don't have in your portfolio. So, I think it's a good idea to go there. The question is how? it's not very clear since your presentation.

Thank you for your question. Luca, would you like to pick up the question?

Well, this is a strategic discussion. I don't know if this is the right place to do so. I don't know if we really have enough time to dive into the details. I think that exploring these growing markets is interesting. And I think it reflects our interpretation and how we see luxury in the 15 to 20 years. We think luxury is going to emerge in different categories and in new geographies. So I think this moves illustrates the fact that we at Kering want to be as prepared as possible for the future world of luxury. And those countries, this country with its population and also looking at where money trends are around the planet. I think it's in our interest to operate in those countries.

I think we're very modest, very humble in our approach. There will be a discovery phase, a learning curve. But if you take India, some -- there are 100 millionaires that appear every day. And they want to consume. I'm not sure the product mix product categories there will be the same as in the Western world or as in China, which is a much more mature market. Our objective is to serve customers who have a high purchasing power, no matter where they live around the globe. And I think this is really what the team must be working on. We will do so in the months to come. And hopefully, during the next general assembly, I can be more precise, more accurate as to what we intend to do at this point. I don't really want to share information, especially with our competitors.

If I may look up. I'm going to add one thing. You mentioned distribution, which is difficult in India, and it is complex indeed due to the configuration of large cities. Very fortunate -- sorry, very wealthy customers in India, travel. About 15 to 20 years ago, Mexico was a very difficult market for the luxury industry. Yet we opened stores there. Initially, they were not very profitable. Mexicans were traveling a lot. They would purchase in North America. Today, our store network is doing quite well in Mexico. So there are countries where we've been operating for a number of years, South Africa, Brazil, India, for that matter. And where Gucci is -- has been quite successful so far even, again, if the market is quite modest, customers travel they go to London, they buy in Paris. They buy in London, they go -- they travel to other geographies.

Therefore, we must invest. We're going -- we have to precisely measure what the growth potential is. I'm quite convinced that these countries, these geographies are accelerating, especially with -- due to the tech industry, we're seeing a new population. They travel less than Indian millionaires. And so I think there are different opportunities, different options to distribute in India, including e-commerce. So we have to investigate those markets very closely. They are emerging markets for some of them, but they really have long-term potential. -- especially when it comes to the fact that they travel.

Thank you Jean-Marc. Let's take question #6, please.

I'm a young shareholder. I have one share and -- which I acquired about a month ago. I was very impressed, especially by the subtitles. -- very good work. I would be unable to do it. And as a matter of fact, I would actually like to meet that person just to understand how it works.

I think it would be good if we could have a shareholder club to visit some of the company's sites. As a matter of fact, I've never been in this location. I think it would also be great. Some of us could attend shows, fashion shows. The Gucci fashion show, I'd love to attend, I'd like to meet new people. Why not? And I would love to take a picture with you.

Thank you for your question. [indiscernible], this site is open during the Journees du patrimoine I believe it is in September. Jean-Marc would you like to take the question?

We always wish to have a dialogue with all shareholders. And we do have visits quite recently. We organized the visit of the Hotel de Noce which is where Boucheron is headquartered, it's Place Vendome. We have our fine jewelry workshops and -- it is a place where we host visits of our prestigious customers. I think it would be a bit more complicated to have you on the fashion shows, but you can attend the fashion shows online. In terms of communication, we communicate with our shareholders in multiple ways, mainly digital. As a matter of fact, I encourage you to read the latest letter sent to shareholders, it's digital and therefore, contains a lot of content. You have access to all kinds of information and the website, our website also provides all kinds of information. There is a phone number of point 1 45 64 65 64 or [email protected]. So you have multiple opportunities to interact with the company -- at this point, we have no plans to create a shareholder's club, but this is a point which has been raised in the past. So we'll look into it. We have someone who is also in charge of Financial Communication, a new person, and we've discussed this, and as you know, the company likes to innovate.

So there will be new visits. There will be additional events -- and during those events, you -- there are opportunities for everyone to interact. So we will organize many more of those, but no shareholders' club to date.

Question 8, please, on the right side.

Thank you so much. Vanessa Ruis, Hernandez. I'm a Spanish National and Colombian Spanish. I came a bit like many foreign students to France to -- with the hope to maybe join a company like Kering. I completed my master's degree. Unfortunately, I was not able to get an internship. I have some experience now and I would like to apply. And who knows? Maybe find a job. My question is the following. What are the profiles you are seeking to hire? What does it take to join Kering? And my last question is, I would also love to have a picture.

Luca or I. One share, it's Luca, 2 shares, the questions for me. But maybe you could take the question.

Yes. I don't see you, but thank you so much for asking your question. We have a lot of diversity. And we are constantly looking for newcomers. We are looking for people who are passionate, who have ambition and who are willing to be part of a new journey. we have positions in retail. And for retail, our retail employees, we have wonderful career opportunities depending on your background, depending on your education, we also have positions in communication, in finance sustainable development, sorry. And we, of course, apply local rules and regulations.

And for data privacy reasons, we would like to -- for all applicants to apply online, we will -- we screen all applications we try to get back to all of them and not always favorably, but we strongly encourage younger generations to apply. It's definitely one of Luca de Meo's priority, to open the door to newcomers because you represent the customers of the future as well.

I can't tell if it's 1 or 7. 1, I believe. Thank you.

Hello, I'm a shareholder. I have -- I hold 4 shares Kering is still relatively young, relatively young luxury company. I was reading the universal registration document and ReconKering and I saw a willing to integrate with a more readable structuring around jewelry, eyewear leather goods and in the future, beauty. My question is the following. Do you want to turn Kering the leader in luxury in the next 10 to 15 years, the first integrated luxury company in the world. And do you foresee 3 complementary business, a creative model around leather jewelry and fashion, the more recurring business, generating royalties based on eyewear beauty and licensing system and a third more experiential vertical based on wellness longevity, hospitality or potentially new forms of luxury. The company is going to become more resilient. Is that what you want for Kering moving forward?

Well, thank you for your question. I think you've just captured the ambitions of the company. Luca?

Well, first of all, let me tell you that it is a pleasure to see you in person. We've been interacting by e-mail. We've had questions from you in the past. And I think that this is pretty much the mission that was assigned to me by Francois is. It is to integrate, integrate the different businesses and brands. I believe there is a lot of complementarity I have experience in different industries that are more integrated. And I think I can bring this fresh perspective with the team. So that is indeed my mission. As you can imagine, it is not something we are going to do in just a couple of weeks. -- but it's the ultimate target. I'm not going to develop the 3 categories you mentioned. What I can say is that some topics require a different approach of things. A different handling.

When with Jean-Marc, we decided to create the Jewelry division. We did so because it's very different from ready-to-wear. Procurement is done differently. Many things are done differently. And I think we need to have a different approach of each division when it comes to how you view the value chain. I'm not going to reveal more because I don't want to give away the information to our competitors. What I can say, however, is my obsession is that it's important to look at things and by putting yourself in the shoes of a customer. We must be customer-centric in everything we do. we must design an organization which can meet all the requirements and all the dreams of luxury customers.

It's a battle that we call share of wallet in English. I think we are at 20% to 25% of what people are willing to spend in luxury, which means there is a big gap between 20% and 100%. We need to become a company which creates enough desire and temptation in people's lives. That's the rationale. This is not philosophy. I mentioned core, this customer database, and that database is all about becoming more customer centric. Customers have to be in everything we do to generate business. Thanks for your question.

Thank you very much. Let's take question 9 on the left side.

Hello, [indiscernible] , I'm an individual shareholder. I bought shares very recently. And I'm here to discover the company. I have two comments. One for Mr. Pinault, I would like to thank you, congratulate you for creating this wonderful company. And I would like to thank Mr. Luca de Meo. Thank you for presenting your strategic plan. I wish you all the best. My question is the following. You've shared the financial results with us. And operating margin is 11-ish percent, which is not very high for a luxury company, which is something you know a lot better than I do. I just looked at the numbers of two of your big competitors, luxury companies, one has posted operating margin of 35%, another one above 40%. -- what do you think is the potential of Kering. And do you think that those numbers should be your ultimate goal?

Well, during the Capital Market Day, we were quite clear our 2030 plan is to more than double operating margin. So you do the math. This pretty much tells you where we expect to be 4 or 5 years from now. I think we are on track to do so and very much on track when you benchmark Kering with its competitors. And I would like to remind you that all Kering managers, all of them starting this year are measured. Their performance is measured on brand desirability, EBIT, which is exactly what you said. and return on capital employed (ROCE), which measures the quality of capital allocation. Those rules apply to everyone. And we've added one additional items, which is important for me. A large part of variable compensation of our staff in all brands should be connected to the company's performance. This is unprecedented because we want to create a true team spirit between all entities, all companies. Again, profitability -- is my #1 priority. And my objective is to double profitability in the next 5 years.

May I just add one quick comment. -- in the past, profitability has been very high, and we were very close to 30%, 29% says Mr. [ Duplaix ]. When you operate in a very volatile environment in industries that are very cyclical, I've asked Luca to create a much more sustainable company. when business slows down, you realize your fixed costs are very high, and that leads to deleveraging. So -- and the opposite is very true as well. when things pick up again, profitability also increases can increase very quickly -- what is important is to avoid cycles, cyclical effects. We want to have long-term sustainable profitability.

Let's take question #7, please, in the back of the room.

Thank you very much I bought a share recently when Luca de Meo was appointed because I liked what he did -- what you did at Renault. You're going to make the smart glasses. Are you going to partner with Apple, Google, like other competitors have done and how are you going to preserve Kering's DNA while embracing new technologies.

Well, I'm a little bit limited by questions of or issues of confidentiality. For our contract with Google, they will be our partner. That information is public. So I can't really tell you much more. We perceive a significant potential. There are, of course, different institutions or banks that have pretty significant estimates. But there's a great variety of estimates. So I wouldn't want to embark on a precise forecast of the potential size of the market. I can't -- it could be significant. Just a very simple point. I would say that in that particular field, it's a product that contributes to the aesthetics to the style of a person. So I don't really see how one product, as is the case in other categories, such as phones and so on. How one product on its own without a certain diversity be purchased by millions of people. Everyone wants their own glasses, different shapes of frames, different aesthetics.

What is the benefit that we have independently of technology. We can provide the brands we can provide the product design. And that's what we do at Kering Eyewear. And that is one of the things that could be beneficial to our partners. I'm very sorry that I can't really dig deeper. Maybe you will have two shares next year -- and then perhaps next year, I can answer much precisely.

Question number 5.

Greetings. I am a shareholder and also a co-owner of 235 Rue Saint-Honore, where the next Gucci store will be. Mr. Sandrin you were kind enough to take our questions into consideration. Would you have five minutes at the end of the meeting to give me the contact details of the person who you say is finally going to take care of us.

Certainly, Number 8.

Greetings Mr. Chair. Ladies and gentlemen, I have 2 questions. One, which is a pretty minor question, but something that I thought rather striking. When I asked for an admission card, I receive that. And what does it say Societe Generale. So I thought it was Societe Generale a general meeting. And then in small print, Kering, why does Kering advertise for Societe Generale. Societe Generale is not a key thing. We received a document from Societe genaral. I almost could not find my admission card because I put it in my Societe Generale file. Well, for any other admission card that I received for other companies, it's always the company itself that the headline, not Societe Generale. Second one about competition. If I understand correctly, there are some Chinese companies that are also embarking in the luxury market. The Chinese, of course, very long-term plans. What do you think of this current or future presence of the Chinese in this market.

Thank you for the admission card. I think we also need to make progress. I'm very sorry if that was confusing. And we shall try to make sure that, of course, the account holder logo is smaller. But I'll tell you right on principle, Luca, about the Chinese competition. Well, I think you are discussing subject that -- my answer might be not interpreted correctly. I think there's even beyond the luxury sector fear of Chinese competition. I worked in the automotive sector, as you very well know. And China is now no longer a production base. It's also a land of innovation. They have talent, they have skills, they have technologies that they're pretty impressive. I have a feeling. Some data shows that. But in the Chinese market, there's a kind of pride in Chinese culture. -- that is going to mean that a lot of local brands are going to grow over there. I'm still not quite sure the Chinese brands will be invading other markets as happened in other sectors because I believe that luxury is very much linked to individual cultures.

I would say that China has given a lot to us over the past 20, 25 years. It's a market where all major luxury groups benefited and it will remain a super-important market. Obviously, there is competition. And maybe we will have competition from over there rather than elsewhere. -- maybe they will generate excellent products. After all, that's the very principle of competition. What we did with ICICLE is also a manner for us to give back to China. And what we did with our craft initiative, where we invite young Chinese designers to understand how luxury is done in the old world. To try to regenerate and to give back to a market that has given us a lot, and it also very much boosts our credibility within the local ecosystem. But I would say that for ICICLE, for instance, I'd say it's a great company, a great business because it opens a window onto the Chinese ecosystem.

It helps us to understand through them the mindset of Chinese customers, what type of ecosystem underlies all of that and what we need to do. So I mean, we're more friendly than we were a few weeks back, and it's really helping, too. It's helping our business in China. Competition is part of the gaming business. We just need to be better, and not just better than the Chinese, better than all of the others who are attacking us. It's a competitive race. It's true that with Kering, we developed a Chinese brand in China in the early 2010s. Jean-Marc had very strong ambitions there. No, it's not the first move made by Kering on that market through an acquisition. It's been done in jewelry.

Question number 6.

Yes. Hello, Mr. [ Jean De ] I have a number of questions Kering purchased a lot of real estate, which it disposed of with Ardian. There are perfumes that were disposed of with L'Oreal. The scope has changed quite significantly. And I'm thinking about fragrances with L'Oreal, the Gucci license. Have we lost money or made money on the whole in terms of the disposal of part of the scope? And then for the fragrance agreements with L'Oreal, there's an exceptional dividend of EUR 1. My question is because in the annual report, Page 479, there's around 6% of Artemis shares, around 16% of Artemis' stake because it holds 43% -- is that one of the reasons why you are handing out the dividend so quickly? And then I have another question about the general meeting of September. There are around 150 million votes. There were 2 resolutions. The first one about the compensation of the CEO. Out of the 150 million, Artemis family has 105 million, meaning that the minority shareholders is 45 million. And out of the 45 million, around 33% voted against. So I mean, that's okay, but for Resolution 2 for the comp and ben of the Chairman, 23 million votes voted against, more than 50%. So what is the Board's position about the figure, which, of course, the resolution passed. But if you remove the family, you would say that on the whole, minority shareholders voted against. How do you interpret that? Is it a sign of defiance or not?

And then aren't we in the habit of buying things that are too expensive. The Renault report, Page 352, the variable compensation of Mr. de Meo, I don't know if it's Renault that was particularly cruel, but out of the 135% of variable comp and ben on the financial part, none of the criteria were met, 0% for Mr. de Meo, just a comment.

And well done for the Wi-Fi. Well, before I yield the floor to Luca, a couple of words about the real estate. I was in charge at the time. What we're talking about, all of these property purchases served to secure strategic locations in the best locations in the world. And every time we said that this was intended to be refinanced. I'll let Jean-Marc tell you about the financial impact. For beautyé, the creation of Kering Beauté happened at a time when no one was really interested in the group's licenses. I think people tend to forget. And the group's response was to say, let's create our own beauty division. We started to -- how can I put this to, as I mentioned, we started by acquiring. It's true it was expensive, but we acquired a superb brand called Creed. And after that acquisition and after the kickoff of operations at Bottega, Balenciaga, all of a sudden, we became more desirable and people came along, and this led to the deal Luca negotiated with L'Oreal, which was a great deal for the group, not just in terms of short-term financials, but also for the future of the group where we needed to reach a critical size. So that was to answer your first question.

As for what happened in the general meeting of September, I can't quite remember. Eric, do you have anything to say?

Well, I understand your concerns, sir. Indeed, if you remove Artemis, the results are not the same, but Artemis is 60% of voting rights, and that's the way it is. And you're going to need to buy a few more shares if you want to compete with Artemis. That's the way things work in a listed company. Well, in any case, everything is done in full compliance with the rules of proper governance, including on the front of compensation and benefit. You don't need to worry. Maybe Jean-Marc would like to add something about real estate or compensation benefits.

Well, we've had this debate in September. What is for sure is that the governance is perfectly in place. We have a comp and ben committee, and I can assure you that the contribution of each of its members is perfectly functional. If we look at the Chairman and CEO and the questions at the time, it was essentially about the preservation of long-term shares, and we benchmarked with other CAC 40 companies who made the same decision, and we considered that Francois-Henri had been in charge of the succession plan. He had anticipated things in advance. We did not see why we should have prorated the shares. So it's one of the reasons for which the vote against was so high.

I could perhaps tell you a bit more about the real estate aspect. You even have the page number. And of course, it will not have escaped you that there were losses taken on some of these assets because as Francois-Henri said, the idea was to secure strategic locations, strategic properties, and that is protected in a sense for our brand because we have preserved our ability to have exposure in absolutely crucial locations, Fifth Avenue in New York, Via Monte Napoleone, which is the world's most expensive street in Milan and the most strategic for luxury brand [indiscernible], no comments about the importance of such location, or one near [indiscernible] to which [ Madam ] was referring. So the part of the value onboarded through these elements. And as you said, these deals were conducted with financial partners, meaning that we are exposed to 40% value creation.

So we may indeed have bought it at a peak and then divested at a moment when the market was less good, but we're only exposed -- we're exposed at 40% for future value creation. So concluding that it was a bad deal is a little bit premature. Let me remind you that we also divested other assets. For instance, we had a building in Amase-Sando. The capital gains was EUR 104 million. So that's how real estate works. These are really high-quality real estate assets. And at the end of the day, we will have an ROI that might not be exceptional, but it will be pretty good, and it will've allowed us to preserve these locations.

[indiscernible] asked about beauty about the acquisition of Creed. What I can tell you, and I said so, about the L'Oreal-Kering deal is that across the entire Kering Beauté deal, the group will make a profit ultimately when all of the deals will have been carried through. You talked about the fact that we included the Gucci license in the deal. I had to specify that because officially, it's not the case. The Gucci license is reaching the end of its teller in 2028, and therefore, for the time being, Gucci is not in the scope.

Number 9.

So you seem like challenges in comparisons. I have 5x more shares of one of your competitors that's on the Charlo and Lizay. Isn't there a problem with Gucci's designers? If you think about a scarf, a watch, a fragrance or a handbag, it reflects a brand image. And it's something that I don't -- I no longer find at Gucci. Shouldn't there be an iconic product at Gucci or another Kering brand that would automatically trigger desirability and bring in affluent people who would consider that it's a must-have. Is it a problem of not have -- of having a flagship or not having an iconic product?

I don't really know how to answer that. I think that's your personal opinion. Creativity is, of course, an individual matter. We consider that the designer or the designer duo, studio and designer, is one of the most experienced in the sector. It has already demonstrated its ability to grow business, and we fully support our team, and we are convinced that Gucci will return to the place it deserves.

Again, everything is not entirely based on iconic products. Of course, in 2015, 2017, 2018, it's true. We did benefit from that, but it creates huge instability. It's very important. And as what [ Emma ] showed in her first collections, we need to create an iconic product base across all of Gucci to create robust foundations in order to then create products that are much more spectacular in the following collection -- subsequent collections. And that is what led us to choose Demna with -- who's been with the group for more than 10 years.

Well, these aren't perceptions. These are figures. According to our figures, our data, Gucci is still the second best known brand in the luxury sector globally despite the difficulties in recent years, and it's still in the top 5 in desirability. That's a hard fact. It just needs to be turned into business.

[indiscernible]. I hold 2 shares. I have 3 questions, very brief questions. First, congratulations for the partnership with Alpine. What's the ROI expected? It's an alliance that's just emerged. I suppose the entry point was your own personal career, Mr. de Meo?

Second, do you want to leave your brands in outlets? I'm thinking about La Vallee Village where Saint Laurent is and Gucci and others?

And third, hospitality, there was a question about that earlier. I would have thought that to strengthen the brand image, it would be interesting to have perhaps a loyalty program for customers who -- for significant customers, perhaps that would build loyalty and perhaps they could come and discover Paris. And I think it might be interesting to look into hospitality from that angle.

Yes, well Formula 1, of course, is you. I could answer all 3 of them. Hospitality, again, I think I've answered already. For the outlets, the trend and the plan that's pretty accurate will lead us to cut down our exposure to that retail channel over time, including with brands, they're going to reach almost 0 retail infrastructure. So what you can expect is a reduction in the number of outlet sales. For Alpine, of course, it's pretty obvious. I facilitated links between Kering and the Renault Group because I know everyone over there. I agree we have started the [indiscernible], but that type of decision is -- it's not a decision you take on your own.

We decided that with a lot of enthusiasm from the Gucci teams because they're at work on this sponsoring platform and experience-based segment. And I would say that the world of Formula 1 has now become so sophisticated that very clearly, we have all of the data we need to forecast an ROI for this type of investment. We would never have done that if we didn't have hard evidence or a very strong sense that there would be an ROI. And then, of course, it depends whether you win or if you come in last, which is pretty complicated. But investing in Formula 1, we all know the result. It's not philosophical or abstract. I can tell you that we've negotiated for them and for us a great deal. And we have a Gucci team that is deeply convinced that this is a true opportunity for them to go out there and reach a very broad audience, but also a high-quality audience with more than 40% women, average age 32 currently. So it's become one of the very first media platform in the world, and I'm very happy that we have that opportunity.

Now fingers crossed, my former friends in the Alpine team, I hope that they'll be competitive so that we were on screen all the time. Luca told us about that in the Board. And what he said was pretty striking because I'm not really well versed in the world of Formula 1. But he says, you're so soon to be surely. Formula 1 is 1 of the 5 events with the biggest audience with the World Cup finals, the Super Bowl, the Tour de France, the Olympics. But these only happen once a year -- once every 4 years, while Formula 1 is 24 times a year. And there are only 11 teams in total, no more, no less. So there're very few people in the game and very few partnerships.

And then, of course, it's not just a question of visibility, although it will be very important. It's also a case and the Gucci team is working on it, to activate that and to transform that visibility into particular items that will be developed. So it is truly an outstanding opportunity that we managed to seize, thanks to Luca. The Board was absolutely delighted by yesterday's announcement.

I think we've answered all of the questions. There is one final one over there.

Yes, so we need to keep the questions short if we want to have time to vote.

Number 9.

Greetings. Thanks for your presentation. I am Mendez. I have 200 shares, which I own personally. It would seem that as part of the cost-cutting initiatives in the group, you wish to dispose of certain iconic assets such as the Saint Laurent townhouse, where the Couture House was created in Paris. Could you reassure us about your will to go back to the basics and values of the group's brands.

For those of you who are not familiar, it's a townhouse in Rue Spontini, where Mr. Saint Laurent's first fashion show happened in January 1962. The building was vacated by Saint Laurent in 1974. So it's a part of Saint Laurent's history, and we returned to it a few years ago with a lease. We don't own the building. A certain number of teams work there on -- with a floor space of 700 square meters. We're deeply attached to our heritage, of course. You know that we have strong links with the Saint Laurent Foundation. We are committed to heritage in the sense that it might be an opportunity for to visit it because there's a superb head office of Saint Laurent in a townhouse in the 7th arrondissement of Paris, which we contributed -- where we contributed the renovation. But it's true that at the same time, we are going to need to make efforts in terms of efficiency. And currently, Saint Laurent locations were scattered here and there, and we also want to repatriate the Saint Laurent archive that's outside Paris now to allow young designers to go and have a look. And we're going to be investing in order to allow access, but it's not 700 square meters Rue Spontini, that will do that. Of course, it's true that, that building that we just leased has -- is valuable in terms of heritage, but will probably be rationalized. And yes, the Saint Laurent team will be leaving that particular location.

Thank you, Jean-Marc. I think we've answered all questions. Let us now vote. Over to Eric Sandrin.

Thank you. Indeed, let's move on to the vote. The quorum is 80.88 -- 80.80, I'm sorry, which is sufficient for the deliberations. As in previous years, you will be able to vote using the voting tablets, which were provided upon registration.

I suggest we take a look at this video to show you how to use the tablet.

[Presentation]

So we will now proceed to the vote of the resolutions. The text and all the information along with the resolutions were provided before this meeting and in the information in the documents you received. I'm not going to read the resolutions in full. I will just read the main title, which is also what appears on the screen. So the resolutions are going to be voted for, the first resolution on the approval of the financial statements for the year ended December 31, 2025. Please vote.

[Voting]

End of the vote. This resolution is adopted.

Resolution #2, approval of the consolidated financial statements for the year end December 31, 2025. Please vote.

[Voting]

End of the vote. This resolution is now adopted.

Third resolution, the appropriation of net income and setting of the dividends, ordinary dividend as well as the exceptional dividend of EUR 1 per share. Please vote.

[Voting]

End of the vote. This resolution is now adopted.

Fourth resolution on the renewal of the term of office of Mrs. Veronique Weill as Director. Please vote.

[Voting]

End of the vote. This resolution is now adopted.

Moving on to the fourth -- sorry, fifth resolution, renewal of the term of office of Mr. Serge Weinberg as Director. Please vote.

[Voting]

End of the vote. And this resolution is adopted. Moving to the sixth resolution, appointment of Marie-Helene Chenut as director. Please vote.

[Voting]

End of the vote. This resolution is now adopted.

Moving on to the seventh resolution, appointment of Laurent Kleitman as Director. Please vote.

[Voting]

The vote is now closed, and the resolution adopted.

Eighth resolution, approval of the information referred to in Article L22-10-9 of the French Commercial Code relating to the remuneration paid during or awarded in respect of the year ended December 31, 2025, to corporate officers. Please vote.

[Voting]

End of the vote. And this resolution is now adopted.

Moving to the ninth resolution, approval of the fixed, variable and exceptional components of total remuneration and benefits in kind paid during or awarded in respect of the year ended December 31, 2025 to Francois-Henri Pinault, Chairman and Chief Executive Officer, for the period from January 1 to September 14, 2025. Please vote.

[Voting]

End of the vote. This resolution is now adopted.

10th resolution, approval of the fixed, variable and exceptional components of total remuneration and benefits in kind paid during or awarded in respect of the year ended December 31, 2025 to Luca de Meo, CEO, for the period from September 15 to December 31, 2025. Please vote.

[Voting]

End of the vote, and the resolution is adopted.

11th resolution, approval of the fixed, variable and exceptional components of total remuneration and benefits in kind paid during or awarded in respect of the year ended December 31, 2025, to Francois-Henri Pinault, Chairman of the Board of Directors, for the period from September 15 to December 31, 2025. Please vote.

[Voting]

End of the vote. The resolution is now adopted.

12th resolution, approval of the remuneration policy for the Chief Executive Officer for 2026. Please vote.

[Voting]

End of the vote, and this resolution is now adopted.

Moving on to the 13th resolution, approval of the remuneration policy for the Chairman of the Board of Directors for 2026. Again, please vote.

[Voting]

End of the vote. And the resolution is now adopted.

14th resolution, approval of the remuneration policy 2026 for directors. Please vote.

[Voting]

End of the vote, and this resolution is now adopted.

15th resolution, appointment of Ernst & Young Audit as principal statutory auditor responsible for the certification of the financial statements. Please vote.

[Voting]

End of the vote, and this resolution is adopted.

Moving on to the 16th resolution, appointment of Ernst & Young Audit as statutory auditor responsible for the certification of sustainability information. Please vote.

[Voting]

End of the vote. This resolution is adopted.

17th resolution, appointment of Auditex as alternate statutory auditor. Please vote.

[Voting]

End of the vote, and the resolution is adopted.

18th resolution, authorization for the Board of Directors to purchase, retain or transfer company shares. The maximum purchase price is EUR 700. The rest is based on legal provisions. Please vote.

[Voting]

End of the vote, and this resolution is adopted.

18 -- sorry, 19th resolution, authorization for the Board of Directors to award free ordinary shares of the company, either existing or to be issued, subject as the case may be to performance conditions, for the benefit of employees and executive corporate officers of the company and related to companies or certain categories thereof entailing waiver by shareholders of their preferential subscription rights to shares to be issued. Please vote.

[Voting]

End of the vote, which is adopted.

20th resolution, delegation of authority to the Board of Directors to issue ordinary shares reserved to our employees, former employees or eligible corporate officers who are members of an employee savings plan with shareholders' preferential subscription right waived in their favor, only to be used outside of public offer periods. Please vote.

[Voting]

End of the vote. This resolution is now adopted.

21st resolution, extraordinary resolution, delegation of authority to the Board of Directors to issue ordinary shares reserved for named categories of beneficiaries with shareholders preferential subscription rights waived in their favor only to be used outside of public offer periods. Please vote.

[Voting]

End of the vote. This resolution is now adopted.

The 22nd resolution, ordinary resolution, powers for formalities. Please vote.

[Voting]

End of the vote, and this resolution is now adopted.

Over to you.

All proposed resolutions have been adopted. So on behalf of the Board of Directors, I would like to thank you once again for attending this assembly. Before you leave, I would like to inform you that when you return your voting tablets, you will receive 2 tickets to the books to commence, they're skip-the-line tickets. They will allow you to discover or rediscover a beautiful site of Paris where there currently is a wonderful exhibition called Clair-obscur.

This is the end of the session. I will see you -- we will see you again for the -- for another general meeting. Thank you, and bye-bye.

[Statements in English on this transcript were spoken by an interpreter present on the live call.]

So ladies and gentlemen, welcome, and thank you for joining us. I wanted to start today's event by presenting to you the team behind the preparation of the plan. So the people who will be leading its execution in the next years. So we have our group functions, our CEOs of the bank, our directors. But you know the transformation we're driving, it's not the project of one individual, it's a project of a group of an entire group. Our collective target will be to bring clarity and I would say, decisive action and to ensure that execution and not just vision defines our ambition.

So I would also like to say how pleased I am to our Chairman, Francois-Henri Pinault, with us today. Welcome. Francois-Henri, as you know, after leading this organization operationally until September 2025, he has continued to strongly support us and in his new role, ever since, I would say. So that's where we are. We will start the thing. So thank you, ladies and gentlemen. Please take back your seat, and let's start the journey.

So I have to say that to anticipate that this thing will last probably a couple of hours. So make yourself comfortable, fasten your seat belt, enjoy the flight of the caring hall. Good. So it is a pleasure for me to host you in Tuscany. This is a region that is not just a backdrop, but I would say, the beating art of our system. This is where our leverage cut, where our creations basically take shape and where Saga meets technology and where the heritage and creativity fuse into product.

In other words, Task is the bidding heart and the essence of who we are and a reminder of what I would say also we must protect. 7 months ago, I joined Kering, and I did it with humility, I think, determination and a deep sense of responsibility towards all the stakeholders, including, of course, the media and investors. I are fully aware of the challenges we are facing, but just as convinced of the strength of our houses, our talent and our ability to reinvent ourselves, I would say, once more. Kering is not just a company. It is one of the most remarkable entrepreneurial success stories in Europe and not only in the luxury industry. It is a success that is built on the boldness and I would say, long-term mindset of the Pinault family and of all of those who have supported and surrounded them over the years. 25 years ago, we were a French retail group.

Today, we are a global luxury powerhouse. And this transformation did not happen by chance. It happened because they dare to take risks to believe in creativity and scale it. When we acquired Gucci, a few, I would say, could imagine what it would become. Gucci has multiplied its size by nearly 10x and ranks among the most powerful luxury brands in the world. And the same entrepreneurial spirit drove them to invest in Saint Laurent, Bottega Veneta, Balenciaga, brands that were acquired at below EUR 100 million in revenue and each one now going into the billions. Today, we operate at the heart of the global luxury market, serving clients whose expectation in quality, creativity and meaning are rising and also changing.

Our houses span the key pillars of luxury, leather goods, ready-to-wear, shoes, jewelry, eyewear and beauty with one consistent ambition to create products and experiences that combine craftsmanship, desirability and responsibility. But to me, luxury is not an end in itself. Everyone in our industry talks about luxury. For me, beyond desirability, the world that truly matters is excellence. Luxury is a perception. Excellence is a discipline. Luxury can be claimed. Excellence must be earned every day in every detail across the entire value chain.

At Kering, excellence will mean uncompromising creativity, of course, but also flawless execution. It means exceptional products, but also industrial rigor, consistency and responsibility. It is excellence in craftsmanship, in quality, in service, in sustainability, in technology and decision-making. Excellence is what legitimizes luxury. It is what creates trust with clients, pride for our teams and durability and sustainability for society. This is what truly unites and should unite our houses, not a single style, but the shared culture of excellence.

We give each house, of course, the autonomy to express their vision while providing the strength, the expertise and the discipline of the group. But even the strongest stories reach turning points. And today, we are as one of them. After a decade of exceptional growth, bringing in, I would say, new consumers and consumption habits, the personal luxury industry has entered, in our opinion, into a reset. Since 2023, the market has been flat to slightly negative.

China contracted by around 20% over the same period, and the rebound has not yet materialized. In this context, Kering has been more severely impacted than most of its peers and the financial consequences have been significant. Between 2022 and 2025, Kering revenues declined by EUR 5.7 billion, while EBIT margins dropped from 27% to 11%.

Return on capital employed collapsed from more than 20% to 6%. Net debt moved from 0 to around EUR 10.5 billion before decreasing approximately at EUR 8 billion at year-end 2025. At the same time, our business has become structurally unbalanced. Fashion now accounts for more than 80% of sales with Gucci alone representing over 40% of the total.

Some brands have seen a decline in desirability, while others have not scaled despite their, I would say, creative potential. In a nutshell, a model that worked for a decade is no longer effective. For us, growth will come first from gaining share, restoring pricing power and executing better than our peers. This is, first, a market share game plan, independent of any upside from a market rebound.

Over the 7 -- I would say, the last 7 months, we have completed a transparent, brutal and share diagnostic and decided a targeted reset of our foundation, organizational, operational and financial to restore our balance sheet and to rebuild resilience, creating, I would say, the conditions for sustainable performance. And now we are moving to reconquering mode. not promises, but proof points already reshaping how Kering operates.

First, we simplified the organization. We launched a transformative evolution of our leadership model, more accountable and designed to accelerate decision-making. Today, the organization is structured around 4 strategic businesses: Kering fashion and leather goods with Gucci, Saint Laurent, Bottega, Reneta, Balenciaga, McQueen and Brioni operating with focused brand stewardship and dedicated growth levers. Second, Kering jewelry, bringing together Bouchon, Pomelato, Chile and Dodo, consolidated to accelerate scale, vertical integration and global expansion. Third, Kering eyewear with its portfolio of fantastic 15 brands.

And Kering Next, this is our innovation engine incubating tomorrow's growth pools, hosting, you will see Ginori, Beauty, longevity and Wellness and House of Wonders, which I will come back to. Behind these businesses, we are building a streamlined group platform structured around 5 hubs. Industry, that's the first. sets common industrial rules, planning frameworks and shared foundation at the group level across purchasing, manufacturing, supply chain, quality as well as research and development, while houses remain fully responsible for creative direction, product development, go-to-market and, of course, brand expression.

Second, client provides shared data, tools and client intelligence, enabling houses to faster and better commercial decisions from creative studios to client link activation across marketing, merchandising, sales NOP, sales and operational planning, which is sales NOP without -- I would say, as important for me without centralizing execution.

Then you have technology out of the 5 apps, the third one. This is the group shared tech hub, combining a cloud-native data architecture, augmented digital twins and agentic AI to continuously streamline operation, enable predictive insights and support faster, better informed decision across the whole caring.

Fourth, very important, sustainability is, my opinion, a nonnegotiable execution discipline across all decisions from design and collection planning to sourcing, operations, capital allocation and governance with measurable KPIs and no trade-off accepted between sustainability and performance.

And last one, our support functions that they are partnered with the houses and business teams to bring rigor, clarity and consistency to decisions, ensuring the group's priority are embedded in the day-to-day execution. Now this new organizational model is changing the way we operate.

The Executive Committee now meets every 2 weeks with a focus on both strategy and operations. Decisions are taken faster. Ownership is explicit, follow-up is systematic and accountability is uncompromising. In parallel, we have aligned on a common KPI framework to track performance, which is reviewed monthly.

Second, we reinforced the balance sheet. In 2025, we acted decisively by monetizing assets through partial sales of real estate and by postponing the put call option for Valentino's acquisition, resulting in a net debt of EUR 8 billion at the year-end, as I said at the beginning, so down EUR 2.5 billion year-on-year. This amount excludes the EUR 4 billion cash inflow from the L'Oreal strategic partnership received 2 weeks ago as well as the Monte Napoleone real estate operation recently announced. This confirms that our deleveraging is firmly on track, and our ambition is to move toward a net debt-to-EBITDA, I would say, around 1.5 by year-end 2026.

Third, we are rebuilding our retail network, so fewer, better, stronger. By year-end 2025, retail included e-commerce accounts for -- let's say, I would say, including e-commerce accounts for 76% of group sales and even 86%, excluding Kering eyewear, which has a different structure of its distribution by nature. That's the result, and I want to say it, of a successful long-term strategy to regain control over distribution and reinforce exclusivity. Now that wholesale rationalization, I would say, is largely completed, our focus shifts to the retail network with a shared and centralized practice and governance, balancing group optimization with the brand needs.

At the same time, we had to resize and strengthen our footprint. The network expanded too much impacting productivity with sales density, I would say, well below the benchmarks. So we launched a structural reset, closing or transforming low-return stores, renegotiating leases and rebalancing wholesale. By year-end 2025, again, our retail network stood at 1,719 stores, which is a net reduction of 75 versus last year's. In 2026, we will accelerate to at least 100 net closures with more, I would say, under review. We will close the most dilutive doors and use, I would say, a city-by-city format-specific recapture plan so that the stronger store absorbs the activity of the one that we close, protecting the P&L and lifting sales density.

Net-net, fewer doors, better doors, higher productivity. In parallel, we are adopting a more strategic approach in terms of store clusterization, focusing on client experience, service excellence and business potential in each one of the locations. Between now and 2030, we have locked in a CapEx to renovate up to 2/3 of our boutiques. We are also investing selectively in high-impact flagship, such as Bottega Veneta, Bangkok Central Embassy or the future Gucci Montenei in Paris, which are designed as immersive brand environments that reset expression and upgrade the client experience when we feel it is necessary to make a statement on the ambition we have for the brands.

Our new real estate strategy will deliver higher sales productivity and stronger conversion. but also it will act as a media and the cultural assets, amplifying brand desirability far beyond the sheer size of the footprint.

Fourth, we are taking control of inventory. The challenge is not only the volume, but also the quality of the inventory. We created a multi-brand task force and initiated a structural reset that is already visible. Our target, EUR 1 billion reduction within 12 months starting last September. And over time, a group operating with 2/3, I would say, even more arm of the current stock ratio. But this is not a one-off reduction. It is a fundamental shift in how we manage inventory underpinned by a complete revision of our governance, processes and tools.

We are implementing advanced capabilities such as sales and operation planning and AI-driven forecasting to anticipate demand sooner and run a leaner, more productive inventory. Over time, this will bring us, I would say, closer to the best-in-class industry standards. This discipline is not only critical for performance, it is also central to our sustainability commitment, producing less and producing better and to a much more rigorous management of capital employed, ultimately supporting, I would say, stronger returns. But we will come back to this a bit later.

Fifth, we began rebuilding pricing and product structure. We identified a misalignment between perceived value and pricing, which was impacting profitability and brand equity. Across the group, full price sell-through was below expectation, while off-price penetration had reached level we considered unsustainable. So to reinforce pricing power and restore clarity, we launched a comprehensive reset based on elasticity and client value. This includes simplifying SKU architecture. For example, Gucci reduced its SKU counts, I would say, roughly 20% versus average in the past years. redesigning product grids to sharpen assortment strategy and deploying AI-enabled tools to optimize pricing and allocation.

In parallel, we are increasing investment in product quality and craftsmanship to strengthen perceived value and support our long-term pricing power. But I will come back to this more in detail later when discussing about our brand strategy. So where this approach is, I would say, really embedded brand by brand.

Sixth, we have strengthened our marketing productivity. We are correcting structural imbalances in marketing spending, where cost reduction had disproportionately impacted on working media while nonworking and structural costs remain very, very high. We are optimizing our events and flight activation, reviewing our agency contracts, tightening asset creation planning and rebalancing budget toward high-impact media. In parallel, we are exploring AI adoption to structurally improve effectiveness and cost discipline without degrading our creativity and client experience. These actions of efficiency and improved marketing ROI will already generate benefits this year and are expected to represent roughly 1 point of EBIT margin starting next year, fully reinvested in our houses.

And seven, finally, 7 in 7 months, we recreated the condition to reboot Gucci. Even though Gucci, I would say, should not carry the whole group alone, it remains a brand poised to play among the leaders of our industry. That is why it became one of my priorities in my first months together with Francesca. Gucci had lost some of its shine and performance. Performance has deteriorated, as you know. So we acted, I think, decisively. We renewed the leadership team, restructured the operating model, clarified business priorities, presented Dana's first collection and reactivated core clients. These actions are already translating into tangible early signals with sequential improvements in performance and a clear trajectory emerging, I would say, if you look at the numbers quarter after quarter. Gucci's recovery will be real because it will be structural.

I will come back to Gucci in more detail as well to our other brands. But before that, let me take you one level up and share how these actions are reshaping the group as a whole. These 7 moves are not isolated decisions. They are opening the, I would say, moves of, I would say, a much deeper transformation. The real question now is how we turn this progress into a durable competitive advantage and how we build a group that grows faster, performs better and stays ahead in an industry that is being rapidly redefined. And this brings me to the next chapter, how we will build the next Kering. We are pursuing a strategy that is, I would say, bold, but actionable, that's important, and anchored in disciplined execution. It is a transformation designed to secure Kering position as the undisputed challenger in luxury industry.

I use the word challenger deliberately, not because it's fashionable, but because it reflects a mindset. Leaders tend to protect what they have built. Challengers focus on what will still need to be invented. They question habits, move faster and remain uncompromising in execution. This is a mindset we want in Kering, one that allows us to outperform, to innovate and to capture opportunities others do not see or cannot size. And it's rooted in our belief that we should stick to the idea that we are building a group well anchored in true luxury, the luxury that starts with creativity, craftsmanship, cultural relevance and very important, product excellence. This is what gives our houses their legitimacy, as I said at the beginning. And it's the foundation on which everything else stands.

True luxury will continue to drive the growth, but we want to take the opportunity to create a system that better understands what next luxury will be, the luxury that embraces new technologies, new client expectations, new markets and new forms of engagement, a luxury that is more connected, more intelligent, more experiential, a luxury that innovates, that stays ahead of culture and ahead of time. And all of that, of course, before the others.

True luxury and next luxury frame the direction of the group. They define what we must protect and amplify and where we must innovate and accelerate. They are the lens through which we drive and we will drive our strategy. From these convictions, flow our 2 priorities of the group. First, reignite growth by restoring desirability as its source, creativity, cultural impact and product excellence. Second, boost efficiency to build a higher-performing group, which is leaner, faster, more integrated and able to scale what truly matters across our houses. These 2 dynamics move together and fuel the true and next luxury and strong economics fuel both empowering better creativity, better products and superior client experience.

So let me begin with the way we intend to reignite growth. Kering portfolio was particularly exposed to the luxury downturn due to, I would say, an above-average reliance on aspirational customers. Over time, the group brands have narrowed into more polarized categories and occasions focuses, overexpanded retail footprint, as we said before, and became too dependent, I would say, also on designer-led steering.

Together, these factors increased sensitivity to fashion cyclicality, weakened the client engagement and eroded desirability. The next chapter of our history is about building a more resilient and complementary portfolio of brands, expanding market coverage while reducing internal overlap, both within each house and across the group. but rebuilding growth requires a framework, one that restores desirability and it source and translates into growth that is more resilient, more predictable and very important, also value accretive over time. This framework is built around 4 value-creating levers.

Let me start with the first one, which is a consumer-centric brand strategy. We are building desirability by putting the client back at the center and aligning brand and product and execution around what drives emotion and purchase. At the group level, we have instituted, and this is very important, a consumer-centric portfolio framework that clarifies the role of each house, sharpens differentiation and removes duplication.

For the first time in Kering, we have developed together, together with the team and with the brands and under the leadership of each one of the CEOs, what we call a brand playbook. This goes beyond the brand books we already had, which define the brand's identity, the codes and creative territory. The brand playbook takes us, I would say, one step further. It is a detailed document touching all business dimensions where we formalize the strategy and the action plan. a sort of contract between the houses and the group that everyone has agreed and signed internally. The outcome is a clear brand positioning, greater consistency across all the touch points and the higher execution standards with measurable synergies, also a common segmentation of businesses and consumer, a common set of KPIs and therefore, a well-defined path to maximizing the full potential of the Kering portfolio.

This consumer-centric approach is underpinned by a strong focus on retail excellence, ensuring that in-store execution, service levels and brand expression consistently translate strategy into compelling, high-quality client experiences.

At the house level, this translates into ability to decide within a frame and full accountability of the business owners, sharp propositioning anchored in defined client targets, well-prioritized categories, value-driven pricing and tailored go-to-market plans built around end-to-end client journey. This is our first formal brand portfolio strategy, not a theoretical exercise, but a decision system that guides creative direction, assortment, pricing, client development and media house by house. The objective is very, very clear to everybody, lift relevance and mix quality, drive higher full price sell-through and compound margin over time while maximizing the portfolio's potential. But restoring desirability is only the first step. Client intimacy is how we make it last.

Our client strategy is built around 3 segments, which -- with distinct roles, but a single goal, build a more stable, more valuable client base over time. So we have first top-tier clients. There are few, but disproportionately powerful. They represent 1/4 of luxury spend and keep growing even when the market slows down.

Our ambition is to expand high-end offers and upgrade experience to double the business with top clients. Then you have core clients. They are the backbone of the luxury industry, sometimes forgotten, steady, consistent and resilient across cycles. Here, we are refining our approach to loyalty programs and to retention, sharper recognition, more relevant assortments and the stronger continuity of service to grow frequency, share of wallet and long-term value. Aspirational and younger clients, this is the third category. They remain critical for renewal, but they are structurally more volatile.

Our approach is selective and will be selective and disciplined, drive desirability, cultural relevance and targeted recruitment. Brands like Balenciaga, for example, they will play a key role here as a cultural entry point with the ambition to increase by at least 30% recruitment over time while protecting, of course, brand equity. Across all segments, growth comes from quality and stability of the client base. This is why we are investing in the most sophisticated database on luxury consumer that will include advanced CRM techniques powerful loyalty tools and access to unique experiences, a single client view, more targeted client telling consistent service standards everywhere and experiences designed to build lifetime value, not one-off transactions.

Client intimacy is not about doing more for everyone. It is about doing the right things for the right client consistently at scale at the right moment. But precision in client engagement can only deliver value if the product itself is right. across all houses, we are resetting collection architecture to restore clarity and impact. So fewer, stronger products and a clean balance between icons, heroes and essentials and explicit roles for each one of the segments. This discipline directly addresses the price versus sell-through equation where we have historically lost efficiency.

So icons, the first category are the brand symbol of authority, high pricing power, high sell-through, exceptional materials, and tightly controlled supply to protect long-term desirability. Then you have the heroes. They translate creativity into commercial momentum, the seasons core proposition that drives traffic and carry the emotional impact.

And then essentials, these are high rotation functional products designed to deliver structurally high sell-through, build loyalty and support productivity across the network. This clarity is accelerating the business. By simplifying decision and sharpening priority, we are cutting time from runaway to store with the ambition to roughly double speed to market while improving consistency and quality. This strategic reset translates into clear category priorities and, of course, associated investments. Building a more iconic leather goods offering across the portfolio, driven by a strengthened Gucci proposition and expanded high-end offer at Saint Laurent and Bottega Veneta and the continued momentum of Balenciaga icons.

Then we have accelerating men, building on Saint Laurent's strong potential on the category while scaling already visible traction with double-digit growth in men's ready-to-wear projected for the group by 2030. Consolidating the Classics territory, Classics by elevating Brioni's formal wear offer and expanding our comprehensive daywear wardrobing offer at Gucci, at Saint Laurent and Bottega Veneta, complementing the more seasonal collection. Fourth, unlocking jewelry growth with the ambition to double the jewelry business by accelerating pure jewelry Maisons and scaling fashion jewelry across the group, starting with Gucci.

Ultimately, product excellence will be measured through improvements in full price sell-through with the objective of structurally increasing it by around 20 points between 2025 and 2030. But even the best product needs the right market to scale its potential, which brings me to our final lever, which is new geographies. Some markets demand more than local execution. They require a coordinated group level approach, sustained capital commitment and strategic patience over time. Greater China will remain a critical market for luxury, but it is entering a new phase in our opinion. Growth will be more selective, more domestic, more experience driven, and I would say also more digital.

Success in China will depend less on expanding footprint and more strengthening brand desirability, cultural relevance and execution excellence. Our priority is to rebuild resonance with Chinese clients. This means a renewed China-specific brand narrative, dedicated campaigns and shows, a more local talent strategy and a fully integrated 360 activation designed for Chinese audiences. At the same time, we will sharpen our offer by developing hero product category aligned with local taste and demand.

In support, we are committing in the plan a double-digit increase in marketing and commercial activation budget for our leading houses in China to accelerate awareness, quality reach and conversion. We are also investing to understand and serve the market better. Through Cairn Craft, a creative residency for artisanship, fashion and technology launched in partnership with Shanghai Fashion Week, we are building a long-term creative and cultural bridge between China and Europe to nurture next-gen Chinese talent and deepen our local insights.

Finally, we will manage our retail network with greater discipline, rightsizing the footprint in China by around 130 net closures by 2030, concentrating on high potential accretive location and ensuring that every store delivers both brand elevation and economic performance. Beyond China, a new cohort of high potential markets is structurally gaining relevance. This emerging 6 pack includes the Middle East, notably the UAE and Saudi, India and fast developing Southeast Asian countries, Thailand, Vietnam, Philippines, Indonesia, but also Mexico, Brazil and new markets in Africa with Nigeria at the forefront.

Though it's heterogeneous, I would say, in a different stage of development, this market share common supportive underlying dynamics, rapidly expanding affluent population with a growing influx of young consumers first entering market, the luxury market and in many cases, additional momentum from rising tourism flows.

Taken together, this market represents a major growth relay for our brands. Today, they account for an estimated EUR 34 billion in luxury personal goods compared with EUR 42 billion of Mainland China. At the current growth trajectories, the combined 6 pack is expected to reach a size comparable to China in 2035. There is an opportunity for the group to play a catalytic role in the markets, particularly where scale will take time to build.

Our presence of the regions will lead the coordinated group level approach to accelerate growth in those markets. Together, these 4 levers realign brand strategy, client management, product architecture and geography focus around a single objective, improving sell-through, mix and capital efficiency. They restore discipline in decisions, what we design for whom, at what price and where we invest, reducing volatility, reducing markdown exposure and execution risk. With this framework set, let me now show how each fashion and leather goods house is executing it to restart growth, of course, beginning with Gucci.

[Presentation]

So as an Italian native, it's very easy for me to understand that Gucci is more than a brand. It is one of the most admired expressions of the culture of this country. If you ask ChatGPT what's the most popular Italian brands, it will tell you Ferrari, Gucci and Nutela and not necessarily in that order. This is the reality. Just try. We're talking here about an institution almost a monument. And I say this for 2 reasons because they tell us a great deal about both the challenges and the opportunities that lie ahead. The first reason is awareness.

Based on our data, Gucci is the second most well-known luxury brand in the world. And awareness is something you build with money and with time. Two things you cannot compress. Everybody knows Gucci. That's a huge competitive advantage. We do not need to invest to be known. The second reason is desirability. Gucci remains in the top 5 in desirability worldwide, down from #1 a few years ago. That is the place we want to reclaim.

Awareness is about money and time. Desirability is about doing the right things. But we must recognize with humility that over the past years, we have not always done the right things. created direction lack stability and clarity. Our offer became to uneven. We sometimes diluted our identity by trying to be everything for everyone. We discussed a lot of times with François-Henri about this. In some regions, we overextended our distribution, and we were not always consistent in the quality and execution that clients expect from a house like Gucci. We acknowledge these shortcomings, I can tell you. And we have already begun to correct them with focus and discipline. Gucci is one of the best reflections in the luxury industry of what this country stands for, warmth, color, sexy, witty, also cheeky. -- with all its paradoxes, it's contradiction, it's masterpieces, it's miseries. Sorry, but Gucci is not vanilla ice cream. It is spicy, sometimes better, sometimes super sweet. And that's what it makes it totally unique and precisely what always made it one of the most beloved luxury brands in the world.

The brand has suffered in recent years. It has been misinterpreted, but we understand Gucci, I can tell you. And we know what we have to do. As a team, we went back to the essence of the brand and to what people expect from it. In the U.S., people say, I feel Gucci to mean they feel good, attractive, optimistic, upbeat. In short, Gucci is a feeling, not just a logo. And this is what we need to give back to people. We call it [ Renachimento ] Gucci. If we want to relaunch Gucci, desirability is the starting point. It is the foundation on which everything else rests. Our priority is to make Gucci unmistakable again, not louder, not more complex, simply unmistakable. This work has already begun. We are refocusing the brands around fewer narratives, but narratives that are sharper, stronger and more coherent. Gucci's recognizability is one of its greatest assets.

And we are now codefying our signifier with a far greater discipline, GG, Interlock G, Web, Flora, Bambu, Horsebit, Jackie. In one second, you must know it is Gucci. And that does not mean covering the world in GG. Being unmistakable can also be quite discrete and refined, expressed through craftsmanship and identity codes that are immediately Gucci even when they are not there and they are just subtle. We are activating this renewed identity through La Gucci Vita -- this is our culture expression that turns codes into culture from Palazzo Gucci to Villatura, from sport to a femoral celebration and Generation Gucci.

Each of these territories is already bringing the Gucci feeling to life and projecting it back into the world. This is how Gucci becomes a missable again. icons made recognizable, culture made actionable and desirability made timeless. Reinventing our heritage is also, I think, essential. Our heritage is not meant to be preserved on the glass. It must be reinterpreted boldly with modernity, clarity and coherence. This evolution is underway.

We are injecting newness into our most iconic shapes and signature, Francesca and Dena, as we did it, for example, with the latest Jacky and as we will do with future expansion such as, for example, the Bambu, which I saw. This is how we reconnect Gucci with the stronger roots and make those roots relevant again. And we do it with ambition.

We aim to double the contribution of icons in women's handbags by 2030. Icons should represent around 20% of leather goods, up from 10% today. We will do it without losing as this important message, our fashion authority because at Gucci heritage and fashion must coexist. Restoring desirability requires also restoring strength in our product offer. And I think that begins with clarity. We are rebuilding the entire architecture with a structure that is consistent, legible and modern.

We have already reduced the number of SKUs, as I said at the beginning, by roughly 20%, a concrete step that simplifies the offer and reinforces clarity, coherence and impact across all categories, and we will continue. At the top of the product architecture sits now Gucci So. This is the highest expression of Gucci, craftsmanship and exclusivity. At the center, we are establishing a core offer, which is coherent, a coherent wardrobe that is already gaining tractions in the stores.

Core will expand its role structurally by 2030, anchoring Gucci in a more coherent and more profitable architecture. In leather goods, we are focusing on fewer families, stronger identities, more functionality and higher quality. We are anchoring the core of the business in a strong mid-price proposition between EUR 2, I would say, EUR 2,000 and EUR 3,000, elevating the top tier with richer materials and a distinctive details and redesigning the entry level without compromising quality. We are also rationalizing the carryover assortment by around 20% by 2030. The ambition is to deliver more than EUR 1 billion of additional revenues in the leather goods by 2030, powered by a more distinctive iconic offer.

In ready-to-wear, we are rebuilding the silhouette, of course, with Demna and the team with a stronger stylistic intent. We are improving fit, proportions and construction and bringing back reignitability in every single piece. In menswear, we are constructing a modern wardrobe anchored in refined essentials.

In shoes, we are rebalancing the offer around lifestyle models, refreshing iconic shapes and tightening the architecture across tiers. The ambition is to grow ready-to-wear and shoe by more than EUR 600 million by 2030.

In jewelry and watches, we are refining the offer, unifying codes and elevating the storytelling. Our objective is to grow jewelry and watches from EUR 200 million to around EUR 700 million, of course, creating EUR 500 million of additional revenues and making it one of the most dynamic engines of Gucci next chapter.

In watches, we will consolidate our proposition around pillar lines with a particular emphasis on the EUR 2, EUR 3,000 women's jewelry watch segment. So less noise, more coherence, less spread, more impact. I want to talk about quality and pricing. Clients notice quality. They notice, of course, inconsistency, and they remember. they remember. We are elevating quality everywhere and putting the money for it. materials, manufacturing processes, suppliers, finishing.

Bags are becoming more functional. Ready-to-wear now has better cost structure and better fit. Shoes offer great comfort and durability. The value proposition is visible from the moment the client touches a product. This quality upgrade will be very, very meaningful. Across core categories, full price sell-through will improve by around 20% 20 percentage points on average. In parallel, we are renewing the price architecture to ensure that perceived value and price remain aligned in every region. Quality and clarity in pricing are essential, of course, as you know, to rebuild trust and trust is essential to rebuild desirability.

All in all, talking about a more productive network and a rebalanced geographical footprint, I said before, all in all, we had too many stores, too much access, too much discounting. We have begun to correct all of this. We are rightsizing the network with fewer stores and better stores at Gucci. Worldwide, 2/3 of the network will be refurbished or relocated. Overall, selling space will decrease by around 20% and outlets will be reduced by 1/3 to protect brand equity and full price performance. Across the brand -- sorry, and the board, the footprint will be streamlined by around 1/3. This is a distribution model built for clarity, quality, productivity with sales density that are meant to double from now to 2030. Desirability is not the same everywhere.

In the U.S., Gucci regained momentum because the brand is understood. Its identity resonates strongly and its fashion authority remained relatively intact. Clients there instinctively grasp what Gucci stands for. And this clarity fuels both engagement and cultural relevance. We are using this renewed momentum as a springboard to strengthen our position in other regions where Gucci desirability often follows the cultural waves that begin in the U.S.

In Asia and especially in China and Korea, desirability weakened because our discipline faded. There, we will fuel desirability by shifting to high-yield activations, culturally relevant storytelling and high-touch client engagement. Across Asia, we are ramping up new collections and reinforcing core icons, pairing this with tighter distribution and improved clienteling. Everything I described depends obviously on execution and the execution begins with the client. Gucci should become and is becoming a truly client-obsessed organization with a very precise understanding of who we need to win now.

We are reconnecting first with fashionisters and opinionated clients. the style leaders and cultural voices who reignite fashion authority and desirability at the top of the conversation. And as the momentum builds, we are earning the loyalty of more discerning buyers, clients who expect quality, coherence and longevity across categories. To support this, we are embedding a customer-first mindset across everything we do, merchandising, assortment, pricing, clienteling and content, all guided by sharper segmentation. So data is becoming, in this case, I would say, an advantage.

Our AI-powered synthetic customer is helping us sharpen buys, allocations and client action with a far greater precision. Clienteling is evolving, too, with hyper-personalized rituals in the stores, deeper outreach, curated appointments, tailored looks and more thoughtful post-purchase journeys. Assortments are being constructed with a more explicit use and a more legible codes so that recognition converts to purchase in seconds.

Targeted acquisition programs are bringing new audiences into the brand and expanding them into multi-category clients. And at the very top of the pyramid, we are creating exclusive experiences for our most engaged clients with curated drops, made-to-measure propositions and privileged access to Gucci's cultural territories. This is what success looks like, stronger retention, higher value per client and the client base that compounds over time.

Retention is also improving significantly in the plan, and VAC contribution is progressing towards the 25% threshold that will anchor quality growth over the long term. In parallel, we are simplifying the organization with fewer layers, better defined roles and faster decision. Agility is becoming a core principle with more test and learn, faster cycles and teams that move at the right pace. And importantly, this new operating model is already delivering real speed. In the last development cycle, we reduced the time needed to design and produce a collection by around 6 weeks, right, Francesca. Technology reinforces the shift. Gucci is becoming the group's first laboratory for innovation in AI and client intelligence.

New tools are being tested and refined here before being scaled across Kering. We have already streamlined structures and refocused talent and product, client and execution. Execution is how we rebuild credibility. Gucci does not need to be reinvented. It needs to be refocused, reanchored and repositioned. We are not building a new brand. We are unlocking the extraordinary potential of the brands we already have with coherence, clarity and discipline. This is the meaning of Rennacmento Gucci, restoring desirability, rebuilding clarity, delivering results. We feel Gucci today, and we want the world to feel it again. today stands as a brand of exceptional desirability. This is what we see from the number, distinctive and deeply anchored in its Parisian couture heritage. The image is powerful and refined. And I'm saying that on data, not just gut feeling, built on instantly recognizable codes.

Saint Laurent is part of the fashion aristocracy because of its history. Saint Laurent is sharp, is well positioned. We know it again on the numbers. I think nobody will argue if I say that Saint Laurent was and is still today a fashion authority. It enters this next phase from a position of strength with a solid foundation to scale and reinforce its business relevance. Saint Laurent does not need to be redefined or to redefine what it is. What it needs to do is to magnify what already makes Saint Laurent pretty unique. Our focus and enablers are, therefore, very well defined. Saint Laurent has one of the richest reservoirs of authentic icons in the industry, a wardrobe of timeless signatures the Maison truly owns such as, for example, Takeido.

The next chapter is how to reawaken and reinvigorate these icons to transform them into iconic products that go beyond fashion cycle, give them renewed visibility, sharpen the storytelling and rebuild desirability over time. And we are already seeing proofs. The 2026 relaunch, for example, the Mombasa handbag originally introduced by Tom Ford in 2002 is already among the top 5 best-selling lines in our flagship stores. Our focus is on sustaining this momentum through a broader, stronger and more diversified portfolio of icons. In leather goods, these icons products should represent around 30% of the revenue in 2030.

Leather goods is a strategic key pillar for Saint Laurent and will continue to be developed across the full value ladder with a sharper focus on top clientele. The offer will be enriched, adding more functionalities and higher quality while continuing to nurture the accessible entry segment. Handbags will play a more central role in communication and in brand expression, reinforcing their place within the Saint Laurent silhouette and fashion image. This effort is supported by a strengthened design organization in leather goods and accessories. Quality standards will be further strengthened towards through high-end positioning and the ambition is to increase by 40% women's handbags revenue by 2030, right, Cedric.

Men at Saint Laurent as, we think, a significant untapped potential. The next phase is to make men a true pillar of the Maison. We will reassert men offer, building on momentum already materials that's we see it. We have double-digit growth year-to-date in ready-to-wear, luggages and shoes. The men's studio has been also strengthened with key appointments. In addition to the show collection, we are working towards the introduction of a new men's precollection, reconnecting Saint Laurent, Prêt-à-Porter routes, more wearable, more versatile with a compelling value proposition. This push will be supported by dedicated campaign ambassadors and high-impact activations.

We will more than double the segment and make it a core engine of Saint Laurent scale and desirability. Saint Laurent has a unique opportunity to deepen engagement with its existing clientele and expand its reach to a broader audience. That's what we know. And the top of the pyramid, our priority is actually to grow share of Wardrop. Saint Laurent already owns strong equity in occasion wear, built under the vision of Antony, Antony Vacarello over the last 10 years. We will build on this trend to expand the full 24/7 wardrobe in women's ready-to-wear and shoes with greater season-to-season coherence and sharper brand recognizability.

For VICs and core clients, we will drive stronger conversion through a full wardrobe, full category approach, reinforcing core pillars such as women's and bags and continuing to strengthen preceed quality. At the same time, we will accelerate recruitment with a more compelling accessible offer, leveraging to proven strength of eyewear and fragrance to broaden brand resonance, scaling small leather goods, accessories and lifestyle. We will also reinforce jewelry, as a true growth engine with the business set to triple by 2030, building on the house heritage, especially in custom jewelry and the group ability that we are building. In parallel, we are targeting a doubling of the VAC by 2030 to reach 25% without alienating the aspirational clients by having the objective to achieve more than EUR 500 million sales in an entry price category.

Today, Saint Laurent image presence and sales remain predominantly Western-centric. In Asia and particularly in China, we're still subscale relatively to the size of the opportunity. The next phase is about amplifying Saint Laurent global presence with a strong and deliberate acceleration in Asia with China, South Korea and Japan as the key priorities. We are doubling marketing investments in the region, supported by more locally relevant communication. A brand show in Asia, right, Anthony, will soon mark a symbolic and visible shift in the brand's global presence. We will strengthen our talent plan to build influence and proximity in the region.

Commercial and product activation will become more frequent and better tailored to local needs, starting with key moments such as GG. And we will reinforce and continue to reinforce brand expression in store, accelerating the rollout of our new retail concept. So over 1/3 of APAC stores within 12 months versus less than 20% today. Thus, we are building the conditions to double the business in Asia by 2030, driven by sharper relevance, higher visibility and a step change in execution, so that Saint Laurent speaks China and China recognizes Saint Laurent.

In short, Saint Laurent path towards and forward is not about transformation. It is about magnification in a way. It's about magnifying Saint Laurent, magnifying iconic global relevance, all while remaining, of course, Saint Laurent.

[Presentation]

Bottega has built a truly distinctive position in luxury, defined by an ethos of discretion, restrains and self-confidence built on Italian craftsmanship and defined by Intrechato iconic signature. The house has turned the position of global leadership in leather goods.

Today, Bottega is one of the most desired luxury brands among those who truly know. The next chapter is about scaling this deep luxury without compromising its essence under the creative vision and leadership of Luis Procter that is today with us. Discretion is our code, but discretion does not mean to be invisible. To recruit next generation of clients, especially in China, we must increase visibility by positioning Bottega Veneta as the ultimate symbol of luxury craftsmanship in leather goods without ever and repeated, ever compromising its brand expression.

We are accelerating the pace, a higher number of shows and high-impact global events and a continuous culture pulse. Venice will be firmly anchored as the house culture platform through partnerships and citywide activation that got the brand and its unique heritage. Communications will gain impact and coherence with stronger campaigns across channels, including social.

At the same time, the house will continue to develop targeted culture and artistic partnerships carefully aligned with its goes. At the end of the day, Bottega Veneta should rank among the top 10 luxury brands in brand equity. That's the target.

Looking ahead, growth will be driven, I would say, less by geography than by Bottega's ability to connect with emerging affluent and influential cultural elites wherever they take shape.

In markets such as China, where these communities are expanding very rapidly, we will accelerate through locally resident communication and refined brand expression. Marketing investment will increase selectively, I would say, by around 10% every year to sharpen visibility and influence within those circles. Client engagement will deepen through high-touch experience activation, including exclusive Bottega Veneta residences, designs for our most important clients. Leather goods will continue to power the house, Intrechataa will continue to sit at the center as the house ultimate icon enriched through new expression and interpretation.

We will deepen the offer for top clients, expand men and travel and strengthen our presence across key occasions. Creative codes will gradually extend beyond Intrechataa while preserving enduring icons that really anchor the desirability of the house over time. We will deliver steady growth through 2030, continuously fueling the category. So to unlock its full potential, Bottega will broaden its relevance beyond leather goods affirming its position as the ultimate expression of luxury craftsmanship across categories. This includes building a complete ready-to-wear and shoes wardrobe for women, for men, spanning day wear to evening wear, right, Luis, classic and collection pieces you want to invest in and you want to keep forever. That's the spirit. Jewel will be reinforced across both fine and custom jewelry, leveraging the platform that we are creating on the category.

The Maison will also structure a distinctive gifting and art of living proposition, targeting entry clients. The plan is to more than double non-leather goods revenue in Bottega by 2030. Client development will be firmly VIC led. Bottega Veneta will reinforce the top of the pyramid through targeted product offers, broader occasion coverage, including made-to-order and increasingly differentiated experiences. At the same time, desirability among core clients will be sustained through icons and cultural visibility.

Recruitment will come through carefully managed entry categories, small leather goods, custom jewelry and out of living, always protecting brand equity. The ambition is to increase the share of VACs by 50% by 2030. In essence, Bottega future lies in scaling through a deeper exploration of what true luxury means, exclusivity, excellence and desire.

[Presentation]

I think it's one of the most distinctive houses in global luxury. It was, as you know, born from Christoph Ball's heritage in Couture and it has been continuously reinvented through successive creative as that revived, reshaped and reinterpreted the legacy.

Very few houses have shown the same ability to create an entirely new market segment from redefining modern streetwear to shaping the global luxury sneaker landscape, Balenciaga has repeatedly been ahead of the curve. It also holds a distinctive strength in men when you look at the numbers, which remains, I think, a structural asset for the house. You can state that Balenciaga has become the most relevant luxury brand for Gen Z. That's what it is. This is a generation that will account for 20%, 25% of the luxury market by 2030 versus 14% today. They're growing, yes, but they were Balenciaga customers.

Over time, Balenciaga has built one of the most loyal VAC communities in the industry, representing 25% of their sales. This is a community grounded in emotional attachment, strong identity and deep engagement. And beyond product, Balenciaga commands real cultural relevance. It influences in fashion, youth communities and digital platform worldwide, and it has repeatedly proven its ability to create silhouettes that define entire eras and has been constantly innovating in marketing. Balenciaga, therefore, enters this new phase, I think, with credibility, legitimacy and a strong reputation for creating trains. The next chapter is about channeling Ballenciager influence with confidence and stronger balance between categories and genders. The house will reaffirm itself as an innovative house.

The uniqueness of Balenciaga lies in the fusion of culture mastery and cultural relevance. We speak to the new people that are willing to jump on the main stage in this world and want proudly to stand around. That's the claim. We want them to feel unique and relevant even before they will become. And what -- and this is, let's say, for everybody, everybody that wants to stand out independently from who they are or where they come from. Going more concrete, leather goods is rapidly becoming one of Balenciaga's most powerful engine of growth and its weight in the business will continue to increase.

We are scaling across segments and functionalities. We are building coherent leather goods families that drive repeat purchase, loyalty and long-term client value. And the proof points are, in fact, already there. We are delivering consistent double-digit growth with around 20% -- plus 20% sales year-to-date in leather goods, [ Gianfranco, ] if that's the case. We have 2 distinct icon is the Rodeo and City relaunch, both of which became bestseller in under 2 years. And now they have new lines like Bolero and 7 that they are already contributing to this momentum and broadening the architectural, let's say, depth of the category. This is the blueprint of our strategy. And so it's fewer, stronger families, iconic potential and disciplined innovation.

We will double leather goods business by 2030. Balenciagia has also built a strong structural foundation in men, as we said before. The next phase is about restoring balance and resilience by scaling women as a primary engine of growth. Men remain one of Balenciaga's structural strengths. The priority now is disciplined evolution, protecting our legitimacy while reigniting the spirit of innovation that has always set our -- this house apart. We will revamp men's ready-to-wear and men's shoes through new territories from technical wear to hybrid footwear, consolidating Balenciaga leadership in building the next wave of luxury segment. Women's ready-to-wear is central in our opinion to reassert Balenciaga fashion authority and expanding the role of women within the business.

The brand has already started to rebuild a distinctive women's wardrobe. Collection have been reanchored in kind of architectural shapes with a very distinctive outerwear and dresses, fully leveraging Crystal Ball's legacy while maintaining a sophisticated sportswear vocabary that bridges the house's different creative years. A more distinct and more readable feminine wardrobe identity is being codified across seasons. And the recent acceleration in leather goods is being leveraged to drive head-to-toe silhouettes, increasing cross-sell from handbags clients into ready-to-wear and shoes and strengthening both VACs and core client development. The first signals are pretty encouraging. Pier Paolo Polis first collection is already generating strong traction, resonating across clientele and generation and recruiting new women customers.

The ambition is to more than double women's ready-to-wear from now to 2030. Balenciaga will drive recruitment and desirability by activating the brand across 7 cultural territories. You have TV series, music, sports, wellness, gaming, innovation and patronage. These territories are how we expand our resonance with younger audiences, expand reach and sustain cultural relevance beyond fashion. Innovative brand engagement in these 7 territories will fuel recruitment across segments. Strengthen entrant categories and consolidate Balenciaga position as one of the brands that better understands the vibe of the new generations. Balenciaga maintains distinctive position in Asia is the reality, where the Maison has a very strong momentum.

The priority now is to strengthen balance across regions and increase overall resilience. It means accelerating development in North America, in the Middle East and in Europe. The plan is to nearly double the Americas business by now to 2030. Ultimately, Balenciaga enters in the next chapter from a position of strength with influence, with legitimacy and with creative depth.

The path forward, I think, is pretty well articulated. It reaffirms Cutera Authority, rebalance women and men, scale later gas and convert cultural affinity to use into sustained growth.

[Presentation]

So McQueen was built on a bold expression of, I would say, individual empowerment and a bit. And London bornouse, as you know, defined by sharp tailoring, strong silhouettes, emotional intensity and I would say, exceptional craftmanship brought to life through very powerful storytelling in British heritage and contemporary culture. Over time, this edge was diluted.

Growth became too dependent on a very narrow offer, mainly sneakers. At the same time, the brand overextended its network and its structure. Gradually, McQueen drifted away from its core DNA. Growth lacked substance and the positioning lost its sharpness. It became clear this model was no longer sustainable. We, therefore, launched immediately a deep reset of the brand, restructuring operations and reassessing the business model to make McQueen fit for the future.

The starting point is to reassert McQueen's legitimacy as the emblematic British luxury fashion house, and noncompromising brand, confidence and powerful with a unique ability to subvert breeze tradition and tailoring codes and always grounded in unconventional craftsmanship and brand expression. Women's ready-to-wear, sits at the heart of the brand. Tailoring and evening wear are anchor categories, sharp silhouettes, distinctive cuts, a contemporary attitude with strong emotional impact, mastery of tailoring codes remains, in our opinion, central to McQueen's identity. Leather goods, shoes and accessories must fully reflect also this uncompromising spirit. This also means simplifying and clarifying the SKU architecture, rightsizing collections, focusing resources on the category that really matter and driving a more disciplined assortment around SKUs, efficiency and strategic price bands.

McQueen doesn't need reinvention. It just simply needs focus and sharper choices, greater selectivity and a bold McQueen identity. So the latest show already signals the shift with stronger creative direction visible in the Fall/Winter '26 collection. Rightsizing McQueen is already underway. The next step is to push towards a leaner, more focused business model.

In retail, we are downsizing the store network, concentrating on a very selective number of key markets and locations. By end of 2026, we will have completing the rightsizing of our distribution network with 50% less store versus the year-end 2025, so half of them in a year. In distribution, we are rebalancing the channel mix by expanding wholesale only through very selective partners aligned with the brand position. In organization, we are reshaping the structure to match this reset, rightsizing all functions and refocusing the business on product, image and client experience. Headquarters were reorganized in Q4 2025. Italian operations are being restructured in H1 2026. Regional consolidation is progressing in parallel with the store network reduction.

So finally, McQueen is strengthening collaboration with the group, leveraging shared services to increase efficiency and to reduce structural complexity while fully preserving, of course, its creative identity. This is how McQueen reconnects with its essence, sharpens its positioning and builds a credible path toward long-term profitable growth.

Now the McQueen team has a window of opportunity to go back to the times when rooted in [indiscernible] so far away from here, its authority comes from unmatched tailoring where everything is about time, precision and human touch. This depth of know-how accumulated over decades and internalized across the house is what makes Brioni genuinely rare and actually globally credible.

At the core stands Brioni Maestria, our signature customization platform spanning from made-to-measure, made-to-order and bespoke is the purest expression of the house philosophy and the key value creation lever driving higher margins, stronger client loyalty and long-term brand identity and equity. More than 660 artisans craft 100% of Brioni's formal wear internally, an exceptional level of vertical integration and that anchors quality, scarcity and pricing power. From this foundation, Brioni's Sartorial intelligence now extends into a full lifestyle wardrobe, formal, leisure, evening wear. This is the natural extension of AltraSatthorea into every moment of a client life.

Brioni diversification beyond traditional formal wear presents an opportunity to enhance client value while maintaining the brand a very, very exclusive positioning. Every new product category is introduced with uncompromising tailoring standard and a premium pricing strategy. Women's is being developed selectively, rooted in the house tailoring DNA and representing a meaningful, I would say, a meaningful long-term opportunity for us. Clienteling is Brioni most powerful growth engine. Maestria goes beyond the athleer, Frank shows, private appointments, in-house services. We build long-term high-touch relationship grounded in intimacy, discretion and exceptional service. Brioni is, by nature, a house for those who lead global decision-makers, ultra-high net worth clients, men and women for whom excellence is actually nonnegotiable.

We will reinforce this authority selectively across key geographies where ultra-high net worth demand is structurally growing and the AltraSatthorea offer remains underserved. We will do this while preserving rarity through selective access and highly curated experiences, making Brioni the most desirable lifetime wardrobe in ultra-luxury. Brioni's mastery of tailoring and customization is unmatched within the group. It is, therefore, a strategic asset. Beyond its own development, Brioni will play a broader role as the natural reference for sartorial excellence within Kering, serving the needs of other brands when it comes to made-to-measure bespoke tailoring.

This means embodying the highest standards of craftsmanship and client intimacy, safeguarding and elevating the culture of tailoring, fit and service excellence across the group. Know-how and capabilities will be selectively shared where it strengthens the whole while fully preserving Brioni's autonomy, rarity and exclusivity. This is how AltraSatthorea will become a distinctive group capability with Brioni as its natural authority.

[Presentation]

So jewelry is a large and fast-growing category, as you know, representing around $30 billion globally for luxury jewels and the branded part of it and expanding faster than most of other luxury segment. It benefits from a powerful structural driver, rising self-purchase, demand for recognizable design codes growing unisex appeal and I would say, long-term premiumization of the product.

In 2025, jewelry proved to be the most resilient category within fashion and luxury goods. Jewelry also offer superior fundamentals, preserve pricing power, cultural relevance, resilient margins and exceptional emotional engagement that reinforces brand equity and drives client loyalty. Yet the market remains highly concentrated with room for challenges like us. Beyond a handful of global leaders, the category is still fragmented, leaving substantial runway for high potential players.

Today, jewelry is structurally underpenetrated across our fashion houses, representing around 2% of sales versus mid-single digit to low teens for peers. And this gap for us and for me, represent a significant upside. Kering already generated EUR 1.2 billion in jewelry with around 75% from Boucheron pomelatoo Chile. 4 houses, I think, with strong creative identities and complementary position. They have momentum, but historically operated without a unified strategic backbone, limiting scale and synergies. combined with a structurally premiumizing market and a $20 billion, $30 billion addressable 24 carat gold market in China at the category level, the conditions are firmly in place to scale jewelry through a coordinated group-wide approach.

So our priority is to unlock the full potential of each house by reinforcing what makes them unique and leveraging on what's already resonate. This means strengthening each house identity and creativity, scaling iconic lines and hero collections and expanding high jewelry as both an image and the value creator. Each house follows a differentiated growth path. Boucheron continues to consolidate its Avanguarde leadership on Plus Dome through the development of and animation of its pillar lines, the acceleration of high jewelry also and international scaling and a global scaling. Growth combined market share gains in core markets with expansion in some underpenetrated markets like the U.S. The opening of the Shanghai Xintiandi flagship at the end of 2025, I think it's a strong illustration of this kind of strategy, positioning Boucheron as a leading challenger in the global high jewelry. To support this growth, sustained and disciplined investment in communication, I think, are essential, Helen, this is the issue, both to fuel expansion in high potential markets and to maintain momentum and desirability in mature markets, including Japan and also Korea.

Finally, building on its existing offer and rich archives, watches represent an additional opportunity to extend Boucheron's creative territory and support long-term growth. And we have Pomellato. Pomellato is strengthening its role as the benchmark of contemporary, colorful fine jewelry rooted in Milan in Milan's craftsmanship and bold design. Growth will be driven by an enlarged and upgraded product, let's say, offer, increased store productivity and control distribution expansion. Dodo continues to reinforce its position in gifting, gifting jewelry, driven by strong recruitment, category breadth and sought for creation that carry emotion and connection.

First in its domestic market is Italy, obviously, and in selected international geography where the brand already has a meaningful traction. Then we have Chile. Chile built on an exceptional momentum right now, and I would say in the past decade with sales that multiplied by 11 between 2015 and 2025. The focus is now on enriching and upgrade the product portfolio, supported by higher investment in marketing, strong storytelling, cultural relevance and emotional connection. The brand still has a significant potential and to expand, especially in Greater China, while exploring, for example, the structural 24 carat gold opportunity, which is a major growth engine for the house.

Beyond our jewelry houses, we see also a major opportunity to scale jewelry as a materially larger contributor to our fashion houses over time, doubling to tripling its weight. So we start with Gucci. A few years ago, Gucci jewelry, including watches, was around EUR 600 million, EUR 700 million sales. Today, it's EUR 200 million, right? That is headroom we can recapture and grow, leveraging Gucci's global network and category equity. This expansion is a dual level. It lifts desirability and deepens cross-category engagement while also supporting margin expansion as jewelry structurally requires higher communication intensity than fashion and on the client side, creates an immediate opportunity to convert fashion VICs into high jewelry clients with the same brand. This is the dynamic already proven by leading peers and competition.

So what truly changes now is the way we operate. We are moving from 4 independent jewelers to one coherent powerful activity that is carrying jewelry under the, let's say, leadership and the stewardship of Jean-Marc Tuplet that everybody knows. This is a critical step in the gradual integration of Razllifranco group. This is a world-class Italian manufacturing partner, bringing exceptional craftsmanship technology and also end-to-end production expertise. This provides us the industrial backbone to scale jewelry across the group, including in-house sourcing and manufacturing of diamonds and pressure stones, which optimizes obviously, cost and enhances traceability. This is not about the standardization. It is about vertical integration.

Each house retains full creative autonomy and a distinct -- very distinct territory. The diversity of identity remains, I think, a core strength and a typical habit of caring. In short, what we do is one integrated jewelry activity, more scale, more margin, more speed and more brand power without ever losing the uniqueness of each one of the house. With this approach, jewelry complements fashion, eyewear and beauty in a pragmatic way and is positioned to make a meaningful contribution to the group's growth over time when we look at the numbers of the plan. And as I said earlier, the jewelry business is set to double in the horizon from now to the end of the plan with its contribution to the mix increasingly -- increasing by around 5 points in total on the mix. driven by the acceleration of our pure jewelry houses and the scaling of the fashion jewelry across the group, starting, again, I repeat with Gucci, while operating at market level profitability standards. So let me now turn it to a business where this approach is already fully at work since years, and this is Kering eyewear.

[Presentation]

So Kering eyewear entrepreneurial story from Northeastern Italy from Roberto and the team because around 10 years ago, we made a choice at Moten.rois made the chart that most people thought was impossible. It was to build a luxury eyewear company inside the luxury group. From scratch, we committed to leverage design excellence, product quality, distribution control to drive category integration across the Kering portfolio with Gucci at the time as a primary driver of global cross-brand synergies. That decision has positioned Kering eyewear where a few newcomers ever arrive. But the real story is not how fast we grew.

The real story is about how we built a distinctive foundation for the long term with brands, industrial assets, innovation and teams that make this business unlike any other in our industry. We started from a brand page, no design, no product development, no factories, no distribution. What we did was a conviction, everywhere industry deserved its own luxury house, so we built one. And an integrated model, end-to-end design, product development, supply chain and distribution under one roof. We partner with luxury powerhouse like Richemont, you've seen on the movie, who not only embrace our innovative business vision, but also strengthened our venture by enriching our brand portfolio with a very highly desirable top-tier brands, including Cartier, just as an example.

We invested in industrial capabilities. Then strengthened the platform with Lindberg and Maui Jim. These are 2 proprietary powerhouses. Today, we operate the most balanced and resilient portfolio in luxury eyewear, iconic houses, fashion accelerators and high-margin proprietary brands. And the result speaks for themselves from EUR 0 to EUR 1.6 billion in wholesale revenue with strong steady profitability, proving this model is differentiated, durable and it's scalable.

Today, Kering eyewear stands on a set of unique strategic assets. We operate a global portfolio of 15 brands. This makes us one of the most attractive and relevant partner for optical retailers and distributors worldwide. We manage a tightly curated distribution network reaching up to 60,000 doors, 60,000 doors, but this presence is managed brand by brand, with each Maison defining the right level of distribution to maximize desirability and productivity. We have built a flexible and balanced industrial platform, delivering world-class craftsmanship quality, speed and traceability.

We benefit from proprietary lanes expertise, giving us a technological edge that is unmatched in this industry. And we have developed a strong culture of innovation, which is not taking us beyond eyewear into AI-powered connected luxury products through our recently signed partnership with Google.

Looking ahead, we will continue to build every brand into a long-term platform. That means sharpening each front eyewear identity and storytelling, strengthening her lines, optical pillars and innovation cycle. It also means unlocking Valentin's eyewear full potential from day 1, leveraging all synergies with L'Oreal fragrances business and global footprint. We will accelerate Lindberg's global development, building on one of the most distinctive product proposition in the market. It's uncompromising quality, cutting-edge innovation and a unique design language, extreme customization, attracting a highly qualified and discerning clientele.

And we will build on Maui Jim's strength as a leading sunglasses brand supported by a powerful legacy in lens technology and optical performance, scaling its global footprint through hero products and optical launch and reinforced brand authority. Execution, not footprint. Growth will come from how we run the business, not from adding doors. We have 60,000 just enough. Higher productivity per door, deeper cross-selling, stronger luxury execution in store. We will build strategic subsidiaries only where control creates value. And we will harmonize training, trade marketing and service standards across every region.

Margin will expand through industrial mastery, we scale -- sorry, we scale proprietary lens capabilities as a structural differentiator. We will automate replenishment to keep best sellers always available. We'll enforce a strict cost discipline and best-in-class cash conversion, and we will increase the share of proprietary brands to reinforce margin resilience. In line with our ambition to stay ahead of the curve and strengthen our leadership in the luxury eyewear market, the next phase of our growth will also be driven by investing in technology.

So in this context, we aim to lead the luxury smart eyewear segment. The partnership we have established with Google will be instrumental in delivering the ambition, enabling us to build the first true luxury smart eyewear ecosystem desirable, wearable and meaningful. Our approach will be fundamentally differentiated from existing market propositions because by combining Google's unique technology and ecosystem with its leading position in search, video, AI and agentic e-commerce with Kering's eyewear unparalleled design capability, exceptional product development expertise and highly selective and controlled distribution model, we will elevate smart eyewear from a tech accessory to a fully integrated luxury product experience.

This will be further reinforced by the seamless integration to our Maisons ecosystem from boutiques to global communication platform, ensuring consistency, desirability and relevance across every touch point. Through this model, we will address the industry's long-standing challenge, the balance between design, battery, functionality, setting new standards for the category and defining the role of connected eyewear for our brands. In 10 years, we have proved eyewear is a true luxury business, and that's what we can -- something we can lead.

Today, we have the portfolio, the industrial power and the innovation road map to shape the next decade. Tomorrow, we will scale Kering eyewear from EUR 1.6 billion to a multibillion euro platform, setting the standard of craftsmanship, technology and desirability with the mindset of a challenger as they have always been, but at the same time, with the confidence of people that proved they could be a leader in that category.

So I think, Roberto, you're all ready for the next leap. Now I spoke about the brand, reigniting growth is essential, but sustaining it, it's sustaining it over time requires some strategic choices. So the ability to scale where it matters and the discipline to invest where we have a long-term right to win. The ambition I am about to -- and the ambitions that I'm about to share are not about diversification for its own stake. They are about unlocking new value pools, reinforcing the relevance of our houses and positioning Kering at the forefront of our luxury evolves. So let's begin with very old -- actually a very old brand, but reinvented. This is Ginori, and we have a small movie, I think.

[Presentation]

For me, Ginori represents the activation of one of the most singular assets in our portfolio. It's almost 300 years, craftsmanship, artistic heritage and cultural relevance. What changes today is how decisive we are activating these assets. Our strategy for Ginori is deliberatory do. We are activating 2 complementary growth engines at the same time, each one reinforcing the other.

So first, Gino is being built into a major global reference in fine force lane and tableware, consolidating its leadership in Italy and pursuing its successful expansion selectively across key international markets. So tableware remains the core, the economic creative and industrial backbone of the house. And around this core, Gino strengthens its industrial capability, including selective porce lane developed for all the caring houses. So thanks to this kind of task and heritage, it has built a close and long-standing partnership with Gucci typically and explore selective collaboration with other houses.

So intercompany activity only today represents 4% of the total of Gini business in 2025. So leaving a huge upside if we play the game differently. So second, Gini is expanding into a true home that's our wish and lifestyle design house rooted in Italian -- so with experiential luxury as a core expression of this evolution. So this evolution is a natural extension of its DNA. So we're working with Medi on the concept. And the house has a long tradition of collaborating with artists, with designers from Joon in the '50s to contemporary like Duke Ed Hall and leveraging design language, that kind of decorative know-how and cultural relevance. So I think the brand expands into different home and lifestyle category. We're also developing things like cafes, terraces, residences, et cetera. So through these initiatives, Ginori will act as we do in jewelry, just to make it clear, as an incubator for lifestyle and experiential concept for all the caring houses. This is the idea, enabling immersive brand expression and crossmaison opportunities. So this evolution is coherent. -- and design-led, not volume-driven and remains asset-light and I would say, partnership driven.

Over the past 5 years, Gini has almost multiplied by 4 in size and is on a critical path towards breakeven, okay? So looking ahead, the ambition is to deliver a 10% double-digit growth year-on-year over the next 5 years. So supported by also the activation we will do and the investment we do on the group. In a nutshell, Gini is becoming the Italian reference in porcelane, fine art, culture Maison with global reach, design-driven, craft-led with a distinct role in strengthening Kering's portfolio and long-term growth for everybody.

Then we have beauty, that's part of this Kering Next. The beauty is a category with tremendous potential for our houses. It is also a category where scale, science and industrial power determines the winners. So over the past 3 years, we have built, I think, a solid foundation with Creed and with the first launch of Bottega Veneta, Balenciaga. This led us to a conclusion that -- the conclusion was that to unlock the full beauty potential of our brands, the most value-accretive part is a long-term partnership with L'Oreal, thanks to the disposal of Kering Baquet, which we acted a few weeks ago. And why? Because this partnership gives us immediate access to the most -- to the world's most advanced beauty platform in research and development, in manufacturing, in global distribution as well as an unmatched media reach because of their investment. And it positions our brands for accelerated growth and long-term success while delivering meaningful royalty potential.

So as a result, both Tega Veneta and Balenciaga and later Gucci when the license expires, will reach their full beauty potential with a far greater speed, I'm convinced, with a far greater scale and with an impact that we could not achieve alone on our own. This is not a leap of faith. This is a proven model. So the extraordinary success of L'Oreal that L'Oreal has built with Saint Laurent Beauty, I think, is the clearest demonstration. They transform a strong brand into one of the most powerful and scalable fragrance businesses and beauty franchise in the world, a business that is now generating around EUR 3 billion, let's say, in annual revenues. This is really impressive. So the potential of our houses starting with all of them, but including Gucci, it's very substantial. And West Ell Beauty's scale shows what a strong brand can achieve. It is a benchmark of possibility, not a ceiling for -- particularly for Gucci. For a brand with the Gucci equity, the long-term opportunity is very, very meaningful.

So the choice we made is, therefore, a value-driven decision, faster growth, significant lower capital intensity and a far more powerful way to support our houses over the long term. But this is not the end of the journey, right? So this partnership gives us a strong foundation. What matters now is how we build on it. So living longer and aging better is becoming the ultimate need for affluent people alongside a shift from ownership to optimization, people want to feel better, not just own more. So supported by powerful demographics and valued around more than EUR 6 trillion as a market, the wellness and longevity market is one of the fastest-growing adjacency to luxury, driven largely by top-tier clients and showing strong natural complementarities with personal luxury in services, in experiences and in codes. So despite the size of the market, longevity and wellness remains a highly fragmented sector with today's offer falling short to provide an end-to-end always-on luxury experience.

Disconnected protocols, lack of standardization and experiences rarely meet luxury expectation. Destination clinics and urban services operate in silos with limited continuity, with limited integration of community. Our objective is to break this compromises and to develop urban and destination-based centers built on safe, scientifically validated and proven protocols, continuous monitoring and high-end frequency subscription approach that supports long-term engagement. So luxury client experience, human connection and community being really central to the experience.

So in a context like this, leveraging L'Oreal's expertise in beauty and caring know-how in delivering luxury experiences. So our goal is to combine personalized wellness and longevity programs with cultural experiences and exclusive product access anchored in privacy, in excellence and in community. So with Nicola, Nicolaus that I think everybody knows, we share the same vision, both for Kering Baé and for what we want to build in longevity and wellness, but I'll let you hear directly from him.

Luca, and hello to all of you from Paris. I hope you're enjoying your immersion into the world of Kering. Together with the L'Oreal Luxe teams, we are very excited to be entrusted with the beauty business of Kering's magnificent brands. They join us at a perfect moment as they will benefit from the momentum, drive and vision that Luca has instilled. This is a true win-win partnership. For L'Oreal, it represents a strategic reinforcement of our luxury leadership, allowing us to bring our unique beauty expertise to Kering's Couture DNA.

Adding these new jewels to our crown, including Creed, a true royalty in luxury fragrance creates a powerful engine for increased growth and profit. For Kering, this means higher royalties, enhanced global visibility for its iconic houses and the opening of new frontiers in wellness and longevity in partnership with the world leader in beauty. So we have every reason to be excited about the journey that lies ahead. And with that, back to you, Luca.

So L'Oreal, a very strong organization, very, very strong leadership. The only thing I beat him Nikolaj and paddle when we play together the rest the machine, marketing and product machine. So as you will have understood, Kering next wave of growth will not come exclusively from scaling individual brands, but also from expanding the portfolio. We will select actually emerging brands adjacent to our core as well as in new categories and new geographies. All brands will have to display strong future cultural relevance. Our mission will be to scale them to their full potential within their territory, but never beyond.

To support the strategy, we will set up a new operating model that delivers the platform effects of a large group to emerging brands across the entire value chain. So clients, marketing, real estate, manufacturing, supply chain, retail and of course, others. So -- and this is with the House of Wonders, -- that's the name we finally gave to the whole thing. Caring is kind of time traveling, right? So we will enable brands to achieve in 5 years what you normally need maybe the double or 3x the time while dramatically reducing execution risk.

Our objective is not to chase the scale for its own sake, but to support brands that complement our portfolio by addressing new categories, new geographies, new audiences, notably subculture and new business models. So our priority is, first and foremost, to invest in the development of our houses. I want to say it very loud and clear. But we also look ahead selectively backing the opportunities that will shape the future of luxury, and that's also very important. Our investment approach remains flexible, I would say, pretty prudent, ranging from minority stakes with strategic influence to majority position. And we -- so we will do it where this thing is relevant. maybe we will do some venture style investment, but always a strict return framework fully aligned with our capital allocation discipline and with investments that are sized appropriately for the group.

To this extent, we are also very pleased to announce a minority investment in iCycle. This is the most recognized luxury -- Chinese luxury brands today. And through this investment, we are not only backing one of the most -- one of the great success story of the Chinese luxury ecosystem, but also aiming at providing iCycle the capabilities to continue its development, specifically in Europe and the U.S. and maybe on to new categories.

So reciprocally, we are convinced that our operation teams can learn a lot from the high-tech manufacturing, logistics and supplier ecosystem iCycle has been developing over the last years, particularly in China. So the next phase of our journey requires, I think, more than creativity alone. It requires a leaner, more connected and technology-powered organization and operating with intelligence, discipline and speed of the world's best-performing companies.

So the ability to combine what I always say, art and science. Concretely, we are redesigning Kering with one integrated group platform, activating efficiency levers across the entire value chain from design to distribution so that every step becomes faster, more precise, more resilient. And this transformation is structured, in fact, around the 5 hubs I mentioned before at the beginning. First one is the industry. So for decades, Kering has built extraordinary craftroms, that's for sure, world-class Italian and European artisanal ecosystem and strong internal manufacturing capabilities. And so this highly specialized to fair patiently developed over generations is at the very heart of our product excellence, that's for sure.

Over time, however, we have also accumulated a lot of complexity. So industrial and sourcing models have been largely developed brand by brand, leading to a lot of fragmentation, duplication and limited scalability. To accelerate performance, we are fundamentally rethinking our industrial backbone to serve our houses while keeping their specificities. So concretely, what does it mean? It means that harmonized planning, industrial sourcing and purchasing processes, common KPIs and the simple ways of working across houses. -- across purchasing, supply chain, production. We are strengthening our product engine end-to-end with one ambition. This is better planning, faster execution. We are deploying data-driven demand signals, AI-based forecasting and real-time data sharing to improve our, let's say, order sizing, reduce waste and tighten capacity planning across all categories and across all sites.

We are also rolling out an AI-powered tool that dynamically rebalances products across stores, improving full price sell-through while raising client satisfaction. We are accelerating factory digitalization, deploying predictive analytics and centralizing governance to gain end-to-end visibility across all -- the entire industrial chain. This will strengthen decision-making rhythms, improve responsiveness to demand shifts and increase saturation of internal production capacity.

At the same time, dedicated capacity, AI-assisted planning and digitalized manufacturing allow us to materially shorten development and production cycles. So we aim to have the time to market for both collection and carryover products and improving cost to serve, let's say, through better sequencing and load management. And we are already demonstrating that what it means. For example, on the day of the Gucci show, there were already around 80, 77, 80 products from the runaway that were available immediately online and in selected boutiques, what we call the see now, buy now.

Behind that is part of the work that we are doing on the industrial part, and it, of course, will scale. So our supplier base is in global luxury. It embodies, as I said at the beginning, decades of highly specialized to fare that are essential to our brand desirability. But our evolution is, therefore, not about weakening this ecosystem. It's a very important message from my side because a lot of people will listen to that also outside, but about strengthening and preserving it through more solid long-term partnership.

Today, we work with 4,200 direct suppliers, 4,200 supplier. But here's the reality, around 25% of them, they do 98% of our purchase cost and operational risk. So this is why we are reshaping our supplier ecosystem around a more selective and more strategic partnership model built on the notion of preferred supplier, which, as a result, also reduces our reliance on subcontracting where control and compliance are more challenging.

A preferred supplier is not simply based on demanding group level criteria about excellence in quality and craftsmanship, full compliance with social and environmental standards, industrial reliability, agility and of course, the capacity to develop and innovate alongside us. This is a 2-way relationship with them, okay? By offering visibility, by offering them joint planning capability and long-term commitments, we position Kering as a preferred customer, the one that attracts and accelerate the best ideas and R&D from our supply ecosystem.

With these partners, we move away from short-term transactional relationship towards long-term multiyear partnership. This brings shared planning horizons, joint investment in skills, tools and sustainability and deeper integration into our industrial and sourcing processes. Volume concentration is the consequence of this choice, not the starting point. It strengthens control, improves resilience, secures critical know-how and gives supplier the stability they need to invest, innovate and grow responsibly. Today, our industrial -- internal industrial assets comprised 37 entities and workshops, covering all major product categories and represented around 20% of fashion houses production in 2025 in average across all categories.

Alongside this progressive optimization and saturation of our internal assets, strategic partnerships are a core pillar of this industrial transformation. We are building, as I said before, long-term collaboration with a limited number of industrial players who share our value and our standards. A good illustration of this approach is our partnership with moda. This is a leading industrial hub within the fashion ecosystem here in Italy. This strategic joint venture aims at investing in key industrial assets. So we will be built on shared priorities like excellence in chip, industrial skills, flexibility, supply chain, compliance and you name it. By saturating our internal assets and leveraging those kind of partnership, we target basically to double internationalization rate within Kering over the next 2 years. So the thing will be relatively quick.

The financial impact of this organization is expected to be globally positive. That's the math that we made, though not -- probably not necessarily linear. Investment to improve product quality and further enhance our standards when it comes to suppliers selection, supply chain quality generates -- will generate costs, that's for sure. But these are largely offset by the synergies and the efficiency gains that we see. At the group operations level, we expect at least 1 point of EBIT margin gain because of this movement, it includes everything. just for the senior change, just based on the senior, just based on supply chain synergies, logistic optimization and indirect procurement centralization.

This target represents the starting point for Stephane Noel, who just joined us from the automotive industry, who is our new Chief Industrial Officer sitting on the front line there with hopefully further progress expected for the future.

So the second hub is client. I think interesting message for you. Client centricity, as I said, will be at the heart of everything we do. from designing the most desirable products to delivering the most amazing experiences. But to ensure it remains at the core of our culture or it stays there while updating this vision, leveraging new technology, the group has launched what we call COR, okay, CORE. This is translation of caring omnichannel recruitment engine. Core ambition is to take our existing client database capability to the next level by building a fully integrated and comprehensive view on luxury consumers, okay? -- deepening our understanding of preferences, behavior across all categories, leveraging our brand proprietary data and enriching them with external behavioral sources. Yet CORE is not only about data and AI, but also truly about rethinking our decision-making process and our organization to put the client at the center of what we do across the value chain from product out to client in.

So core requires carrying around a single demand signal is the client, ultimately ensuring everything we design, we buy, we allocate and activate is inputed also by client data. Concretely, we have 5 identifying and activating the right audiences across acquisition channels, optimizing every euro we spend, in particular, leveraging first-party data to target high potential audiences and optimize spend allocation. So this first pilot that we made at Gucci in the U.S. are already delivering like 30%, 50% of ROI. So the thing -- the thing works, right? So second is client engagement, delivering personalized and contextual client journeys at scale, that's important at scale to drive traffic, conversion and cross-sell opportunity, especially leveraging AI and behavioral data to engage with high potential clients. This transformation has already been initiated, again, by Gucci, and I will come back in a minute on that because it's change.

But you have the client engaging, you also have the product and offer development. So addressing occasion of purchase that matter the most to current and future customer segments, reinforcing product offering and anticipating needs, more specifically leveraging internal consumer, social and market trend data to better forecast demand and optimize production stock level. That's the store experience and retail performance through refined engagement model, store layouts and visual merchandising by leveraging consumer and retail data, customer feedbacks, store journeys analysis to optimize client experience.

I think we target a 10%, 15% increase of productivity, which is massive, by the way. And yes, we are testing this. Strategy and portfolio expansion. So this is about prioritizing higher share of wallet of customers. So thanks to boosted customer intelligence like signal, services, panels, so it's about customer research, we will be able to design extended journeys for the Kering customer within Kering ecosystem and also our ecosystem partners. So finally, core will increase loyalty, very important.

And therefore, the value of every relationship over time through more relevant products, services and experiences by enabling us to innovate and offer high-value cross-brand client services such as exclusive events or exclusive products or multi-brand private concierge to our VAC, which also makes a lot of sense. As part of this transformation, we are developing a new clienteling model. objective is to systematize the intuitive and individualized selling approach by combining AI-driven targeting algorithms, disciplined store routines and enhanced client adviser capabilities. So we piloted that at Gucci first.

The program has already delivered tangible results by strengthening commercial animation, improving the quality and consistency of client activation and expanding the reach beyond VAC segment, notably leveraging new AI algorithms and technology. So stores that adopted the new approach delivered nearly double with approximately 2x higher outreach sales per store, 2 more multiplied by 2 purchasing clients following as an outreach and strong traction, especially across mid- and low-tier segments. So building on this momentum, we now expand and refine the program within Gucci. In parallel, we are scaling the program to the group, adapting the proven components to each house. The goal is to establish in this client journey, I think technology will be very central.

So let's talk about technology for a moment. We are building the group's augmented platform as operational backbones to provide the group with powerful accelerators without kind of uniformizing the unique identity of each one of the known. That is very clear to all of us. This architecture will be based on what we call augment complete digital double of the company. It's data, flows, business processes modeled and hosted in the cloud. to provide a unified real-time and actionable views of all operations and scalability standards. And that legacy infrastructure can no longer guarantee today. This is it's 2 rigid.

So we will have a completely different thing. So it will guarantee the state, in fact, it goes further because by layering on top of this kind of an hygentic AI level on those twins, it becomes possible not just to observe process but to kind of architecture in our opinion, are multiple. The first one is augmented products. So upstream in product design, the objective is to implement the tools and resource capable of anticipating sociological, ecological systemic and technological trends so as to feed the team well ahead of product conception.

Second, the objective is also to facilitate information flow, okay? And the -- let's say, and the end-to-endiality of each one of the houses. The complementary idea is to enrich the product life cycle, the metadata of the augmented product, enabling traceability and optimization of product referencing, think about theviation in a few years. And in an environment where talks out might become structural, -- the challenge is to preserve quality goods, jewelry and eyewear. In this category, stock optimization and traceability are very, very critical areas. Less assortment diversity also means that each unit carries a higher individual value, making logistical precision an absolute priority. The challenge is real-time sales signals and predictive models, integrated seasonality, purchasing behavior, launch dynamics would enable really a shift from a reactive logic to a proactive one.

So allocating the right product in the right place at the right time without overstocking or diminishing perceived priority. So for a multi-brand group like Kering, the challenge is even more complex. can remain very siloed within each house. with its own approach and tools. The growing pressure on media investment ROI and the increasing sophistication of customer, let's say, actually calls for a new operating logic in our opinion. The creation -- we will create what we call a client hub that will amplify capabilities. This hub talents that trace the collective level without diluting each one uniqueness.

Then we have retail experience, what we call it augmented with the experience, the clienteling tools on the market today already gives sales associates powerful capabilities. You have personalized client insights, you have product suggestions and you have real-time, let's say, interaction history search-related friction and consolidating everything in one place, the tool disruption.

And finally, we have an augmented resource planning powered by predictive footfall flows and local events that guarantees the right level of staffing at the right time, ensuring every client receives the attention they deserve. In this way, both the client adviser and the store managers see the luxury boutique is no longer just a point of sale. It's actually a collector of signals. -- is not explained by sales alone, but by the combination of dozens of exogenous and endogenous variables, weather, food trial, competitive density, seasonal tourism, you name it.

So crossing this anticipating footfall peaks, adapting assortments locally, optimizing staff or even adjusting commercial animation in real time. For a multi-brand group, this also obviously is an opportunity to build a shared infrastructure, geolocalization, external enrichment, a 360 view of the network providing each develop alone. So in conclusion, we have 10% as one. I want to talk about sustainability. I'm looking at Marie-Cla that is our most important expert in the whole industry. So the final hub of the group is sustainability.

Sustainability has always been, I think, a defining part of Kering's leadership. We did not enter this space to follow trends, and we will not step back from it now very clearly in operation in sourcing, in retail and in how we allocate capital. It must apply across all houses, all categories, all regions and at all level of governance, no exception. To deliver on this ambition, we are reinforcing our operational, let's say, operating model. Each house executive committee will include protect both our environmental footprint and our brand equity.

To achieve this, we are shifting towards, as I said before, towards precision manufacturing and more disciplined, let's say, collection architecture. The direction is set and execution is accelerating. And I would like to add 2 essential elements here. First, ecodesign must happen at the very beginning of our creation, embedding lower impact materials consistent with our target to get to net zero in 2050 and to have a 50% reduction already by 2033. These are not just like abstract target. They are day-to-day steering tools for our teams.

Our second priority is the environment and the culture to deliver long-term value. To get there, we must start but only if it is protected and nurtured. We are strengthening and operational excellence. We also enforce strict social standards decent and safe working conditions. In 2025, 70% of our supplier level of performance. And because this challenge cannot be addressed by any single company. We also, as you probably know, exercise collective leadership through action like defection path. To deliver on our ambition, we must invest in capabilities for the long term. That's why yesterday, I was here and we launched the Kering Academy of A in the Innovation District, close to the STEM University of Stale in the Expo area. And the academia will be firmly anchored in Italy with a network activated, I think, on 9 regions, Sabina.

So we create a network that's probably the biggest one in and a network of leading educational partners, including Caldus or [indiscernible] or Polytechnico Milano. It will offer training path ranging from 1 semester to 7 years to the kids. combining craftsmanship design, technology, sustainability with some programs leading to diplomas that are recognized by the Italian authorities the next generation. The idea we will start. So our boutiques are where desirability meets reality, where we earn or lose the client. So to reinforce this link, we are deploying a retail excellence model across all houses, aligning incentives with full price sell-through, sales density, VIC development and the client experience.

We're also introducing in-store immersion program for leaders. So I'm sending some of the in terms of management is another key thing. And we did -- we made a few decisions together, okay? We have built a new, let's say, management by objective scheme that was implemented this year. So all leaders in Kering are aligned on group level KPIs complemented by in-house and individual objectives. This is also very important sometimes for -- especially for the investors and for the analysts.

For the first time in Kering, in [indiscernible]. More broadly, we are also investing in careers. We have developed a tool that we call talent match that it's -- we are creating and group-wide. It's, again, AI-based framework that gives our people greater visibility of what's going on, what are the internal opportunities and encourages mobility across functions, across houses and geography and supports long-term career. This is also why we are launched -- we have launched what I call a Kering's sering. This is a new group program designed to identify and reveal emerging talent by assigning them high-impact, cross funny and fruitful process that we are running.

Finally, I would like to focus on a topic that matters deeply to us as a group and reflects a long-standing commitment of [ Francoisriino. ] And this is the place of women, not only within Kering where they represent more than 60% of our workforce, but in society at large. This conviction is expressed through the program that we call women in motion. which, by the way, recently celebrated its 10th anniversary and actually works to increase the visibility of women creators and leaders across cinema and the creative industry worldwide.

More broadly, this long-term engagement to women is embodied by Kering Foundation, which since 2008 has been fighting violence against women and children through very, very concrete on-the-ground initiatives around the world, notably in 6 countries for Kering. The foundation focuses on supporting survivors, preventing violence and striving for broad mobilization to end violence across generation. One powerful example is the Maison de Farm in France. which provides care, protection and long-term support to thousands of women victims of violence every year.

To give you a sense of the impact achieved over 18 years of 30 partnerships. It will continue to enable women and children to lead safe lives and to thrive in the years to come. Our third priority focuses on the foundation of our craft, diversifying material and inventing the next generation of luxury. Client pressure and animal welfare consideration requires us to broaden our material universe. Traceability and responsible sourcing are not negotiable at Kering. We are diversifying our material portfolio to reduce dependency on constrained resources.

We are accelerating the development of next-generation materials as exemplified by biotech and circular regenerative textile. And we are expanding value-enhancing service like repair, certified research and trust in our opinion, loyalty and desirability, okay? All in all, progress will be measured by through very few key indicators. You have full material traceability and full alignment with caring standards ready-to-wear and 40% alternative materials by 2035, very clear.

So a reduction of leather intensity measured as square meters of leather purchase per million of revenue in leather goods and shoes, allowing us to decouple our growth from leather dependency with a 30% reduction target by 2028, so already relatively quickly versus 2025. A positive nature impact in the water priority, okay, of our supply chain worldwide aligned with the targets.

And finally, a strong innovation agenda with 20% of the revenue generated from innovation by 2035, split heavily between material, but also process innovation and service and new business model. So let me conclude with the state in this section, and then we go into the financial outlook. At no point, we will allow a business argument on operational complexity to be used as a justification for failing to deliver on our sustainability commitment. This is how we build, we believe, resilient brands, nurture long-term trust and deliver performance that last.

Now we come to the money, and we finish. Everything we have presented today has obviously a purpose. First one is restore sustainable top line growth driven by desirability and mix. rebuild profitability ROCE. Fourth, improve cash conversion through leaner operation and better working capital management. Delivering on this is what matters to me. And when we do, the results will follow, both in revenues and in margin. But I want to start again from brand desirability and how we measure it, and I will explain why it's so important.

Brand desirability is a strategic asset and one of our leading indicators of our future growth. We have, therefore, adopted a robust brand equity framework developed with a recognized independent firm that's called EFO which serves as a shared compass to assess and steer the desirability of each house as well as the group as a whole. Rather than relying on a single metric, this approach provides a holistic and integrated view on brand equity structured around, I would say, 3 complementary pillars. One is visibility. So we measure through spontaneous and aided awareness as well as current weight of brands in public conversation, ensuring desirability is grounded really in market presence and recognition.

Second is appeal. So visibility, appeal. Appeal is captured through indicators such as steam, willingness to own and wear. And then you have image strength, okay? So these 3 things combine the formula. By combining these 3, we obtain a robust and really comprehensive measure of desirability, and that reflects not only how much our brands are wanted, but also how they are perceived and experienced in the market. Each house is measured independently through a large-scale survey among luxury consumer benchmarked against the market and the competitors and consolidated at the group level. A house showing a positive momentum will be supported to accelerate.

A decline in brand equity will trigger immediate corrective actions and the reassessment of priorities and investment, okay? People will be paid on that. Part of the bonus will be on this one. So it's a serious stuff at Kering. Top line growth. We are building a group designed to deliver sustainable, profitable growth with gradual market outperformance. Our priority is to rebuild the strongest possible fundamentals, those that underpin desirability, pricing power, operating -- operational discipline and cash conversion.

With this foundation firmly in place, we are confident in our ability to deliver sustainable growth driven by sharper execution, a more relevant, higher quality product offer across all categories, supported by sustained brand desirability. And at the same time, we are actively reshaping our distribution model to enhance productivity, brand impact and long-term, let's say, value creation. So starting from 1,719 directly operated stores at the year-end 2025, we are transitioning towards a more selective, smarter and more productive retail. This resizing, which is pretty material, is being conducted in a highly strategic manner with dedicated initiatives in place to preserve and recapture sales from the stores that have been closed.

We expect a minimum net reduction of 100 stores in 2026 followed by the further reduction of net-net of 100 stores in 2027 and 2028, okay? By 2030, the group will operate a leaner and higher performing net with at least 250 fewer stores overall, around half are in Gucci, a footprint that is better aligned with our ambition, planned expectation and profitability objective. Over the same period, we will significantly upgrade the quality of our footprint with around 2/3 of the stores that will be refurbished or relocated to stronger and more relevant location.

Talk about EBIT, very important. So Kering will deliver according to the plan, steady year-after-year EBIT margin improvement driven by every house. We are targeting midterm to more than double full year 2025 recurring operating margin percentage, supported by stronger mix, disciplined execution and operational rigor across the group. We are rebuilding profitability methodically, structurally and sustainably.

Our EBIT expansion engine will rely on 3 structural levers. One is it begins with full price discipline. We have a clear ambition. This is to lift full price sales through desirability. We will enforce strict channel discipline, outlet penetration down 7 points, wholesale penetration down 3 points and the rightsized network delivering twice the level of sales density. And we are restoring inventory health with a sharp reduction of excess and aged stock normalizing levels in line with demand and materially reducing off-price exposure with a target of 7 points reduction in net inventory as a percentage of sales, thanks also to improve sell-through across the board.

Third, operational power, running the business smarter, faster, better. We will deliver continuous productivity gains year after year, reducing OpEx and the percentage of sales across the group with notably specific actions on industrial synergy and marketing efficiency. As outlined earlier, this will translate at group industrial level into at least 1 point of EBIT margin improvement in the years to come, driven by supply chain synergy, logistic optimization and the centralization of indirect procurement that we will operate.

At the same time, marketing will become more efficient. We'll continue to invest roughly the same percentage of sales, but far more effectively with a sharper targeting, stronger content impact and improved ROI. These are expected to represent around another point of EBIT from next year onwards and with those gains reinvested directly into the brands.

Finally, we will run our store better, as I said mentioned before, stronger economics optimized staffing models and more efficient operating processes across the board. This is how productivity becomes a structural engine of margin expansion. And then we have capital discipline. This is essential, as you know, -- it's your money, the money of the investors. So we have to allocate it well. Every euro, let's say, needs to create value. Every euro we invest. CapEx will remain highly linked to returns with an uplift in ROIC on every major project. We will maintain a CapEx envelope around 5%, 6% of the revenue, focused on what truly moves the needle.

So high-return retail project, targeted refurbishment, core operation and selective technology investment only where value creation is really proven. This is how we invest with discipline and deliver strong return. I'll talk about ROCE. This is give you our ambition. ROCE above 20% midterm remains our nonnegotiable benchmark, the strongest proof that growth translates into real value creation. ROCE will be, of course, about portfolio discipline. Every brand will continue to be to -- will contribute to profitable growth.

So I repeat, every brand will contribute to profitable growth. But our resources will be allocated to houses demonstrating momentum, discipline and returns. Underperforming houses operate under a framework requiring them to reach EBIT breakeven within 2 years from now at latest. And we will strengthen cash conversion through hard tangible levers. We will restore inventory health sharply reducing excess and targeting net inventory at below 20%. We will enforce strict CapEx discipline and our free cash flow will improve driven by operational performance, supported by tighter inventory, selective investment and more predictable recurring cash generation. I want to talk about M&A because I think the question might come.

Our priority is very straightforward. We will invest, first and foremost, in our houses to restore growth and performance. That's very clear. That means investing in what makes them win, create a leadership, product excellence, sharper, more productive retail network. And it means raising our operational game, strengthening our supply chain resilience, accelerating our digital transformation and using technology to streamline processes and upgrade, let's say, client experience. M&A will remain in the next few years, highly selective and focused on bolt-on acquisition, such as Rai Franco. This is aimed at strengthening our supply chain capabilities. This transaction will be targeted, operational in nature, financially nonsignificant at group level and assessed against a ROCE targets that are set for each segment.

Our approach is, therefore, let's say, centered on precise complementary moves that will reinforce our industrial backbone while management attention stays firmly on today's priority, turning around and reactivating our houses and preparing in a disciplined manner for Valentino integration towards 2029, 2030, which could, let's say, cohesively complement, we believe, our existing brand portfolio. Our commitment to shareholders remains strong. Dividend growth will follow the improvement of the group's performance, supported by a payout ratio around 50% of recurring net income group share.

Let me highlight the sequence in which we will build it. by year-end 2026, we will be a rightsized reset group and back on a disciplined growth trajectory, a leaner operating model, a healthier cost base, inventories under control and strict discipline restored across pricing, cost and capital allocation. By year-end 2028, we will have built healthy, sustainable momentum, top line rebuilt through desirability and stronger client dynamics, growth engines fully reactivated across the portfolio. And as this growth strengthens, profitability and returns will follow structurally, not cyclically.

At that stage, growth is no longer fragile. It's repeatable, more predictable and value accretive. By year-end 2030, we will have reclaimed Kering's leadership as the next luxury leader, the next luxury leader, a group defined by desirability, powered by efficiency and built for the decade ahead. This is the financial trajectory of Reconrete, reset, rebuilt and reclaim. In conclusion, over the past month, we have taken the first decisive steps of Reconcrete, strengthening our fundamentals, restoring discipline, accelerating operational transformation and defining long-term perspective that is both coherent and actionable. Desirability remains our North Star, guiding every decision and helping us balance short-term imperatives with long-term ambition.

We combine art and science. blending craftsmanship and innovation with scientific discipline in business management to ensure sustainable value creation. We embed resilience into our model, restoring the right equation between retail clients, products while rebalancing fashion cycle and building a diversified and robust portfolio across categories and segments. We restore operational efficiency, optimizing our cost base at both group and brand level to improve resources allocation and deliver stronger ROCE, a key performance indicator for us. We leverage group synergies in client, in tech and operation, harnessing the complementarity of our houses to act as one integrated platform, not just a collection of brands.

We inject technology at every level of the organization, making Kering the most technological advanced luxury group with a fully integrated structure across industrial processes, technology, software, AI, data and talent. We create a fully integrated ecosystem built around the clients, fulfilling every expectation to leave an extraordinary life, a company built around the cloud, the cloud built around the client. We developed global models, global model, local relevance to global scale, combining a shared backbone with the flexibility to adapt assortments, storytelling and experiences to each market.

And above all, we invest in our people because they are the engine of Reconcurring. We are building a culture that rewards creativity, accountability and collaboration, attracting new capabilities in technology and data while nurturing the craftsmanship, the excellence and the passion that define our houses. Empowering and upskilling our teams is what makes this transformation sustainable and what will allow us to deliver at the global scale. Of course, the road ahead is demanding. -- but our direction is now firmly set. Semester after semester, you'll be able to measure our progress. This is not just a strategic plan. It's a collective ambition.

And I'm convinced that with the creativity, the expertise and the commitment of all our teams across the group and the houses, we have everything it takes to succeed and shape Kering future together. This is our journey. This is our momentum, and this is rec. So thank you very much for your attention.

So we will start with Q&A session. [Operator Instructions].

So 2 questions. The first one is a very quick one. So I'm here. The first one is a very quick one. Medium term, define medium term, should we understand 5 years, i.e., about 2030? I think that's kind of what you imply.

That was a quick one.

The second one is, so you talked a lot about how you -- the group is evolving from a holding company to a much more integrated group. Could you please share with us 2 or 3 very practical simple examples that things you're doing now that you were not doing 1 year ago to leverage the scale and the benefit of the group?

I'll give you one example because -- so we leave some room for all the questions. Real estate, so we moved the responsibility of real estate to the area of Jean-Marc. -- unfortunately, it's forced to do the bed boy and make the arbitrage between things and every brand will want this thing. Sometimes it's not perfect, like sometimes you have discussion, but it's very clear that you have someone deciding whether that brand goes there and not go there, and it's a dialogue. -- sometimes it's frustrating, but it's certainly accelerating a lot of decision, including all the store closures where we see that there was underperformance or for example, the move we made on the sellout of some assets that we had built with both a few years ago. So this is a very, very good example.

But we have to get organized now into S&OP. That's another typical thing. There are hundreds -- I mean, I can tell you, every day, it's getting more and more collective work. I mean you -- my thing is not about the group and the brands, right? It's about the collective work that we do. It's a we thing, right? And I don't know if it was clear for a thing.

The old story is we build a machine where the group is there to build efficiency, okay? And the brands, they have the mission of mastering growth. It's like in a football team, you have defense and midfield and you have attack. There's nothing -- yes, that's the way we see it. But we play as a team. That's important to me. And it's happening, to be honest.

Two questions, please. The first one, you -- at the start of your presentation, Luca, you mentioned the changing Chinese luxury market. You said more selective, more experiential, more digital, less outbound travel. You also announced this morning the investment -- minority investments in the Chinese ready-to-wear brand cycle. Can you give us some example how you adapt to that changing Chinese consumer on the ground, particularly at Gucci very concretely? And are you seeing any early signs of traction?

My second question on your financial ambition, your group EBIT margin target doubling from 11% last year. So let's call it, 22%. So that's 11 percentage points expansion cumulative. How do you break that down between gross margin expansion and OpEx leverage? You gave some levers earlier. Is that relatively balanced between the 2? Or would that be more gross margin, which has been quite depressed over the last 2, 3 years?

Look, I'm going to answer first to the second one. We said that we would more than double, more than double in percentage medium term. So at the horizon we mentioned before. That's what the models calculate right now. And I think the whole idea is a little bit like -- there is a lot of room for efficiency in -- also in OpEx, right? We are trying to reduce, obviously, the retail network because part of it was very inefficient. So the money that we save, we put back on the things that matter, right? That's why we feel that we can with the double effect of, let's say, of a top line that grows because the thing is the 5% or 6% is calculated in percentage.

And the fact that we become more efficient, this is true for many things, even on IT. I mean, when I discuss with [ Pierre ] also newcomer, things, I don't need more money. I think I can do that with -- we have the money that we can maybe have 7%, 8% productivity on the thing, and then we invest into the store. So that's a good news. So -- but of course, if top line grows as they should, okay, of course, the finance of the thing would come from the margin. You want to add something, Jean-Marc or...

Yes, improvement of EBIT margin.

Armelle is the CFO for the one, and I think she's very famous. She is very famous. Maybe I will.

So of course, the top line growth will provide some operational leverage. There will be also some cost efficiency coming from the store with the rightsizing of the network, we are going also to -- we are optimizing also the operating model in retail. And half of it will come from organizational efficiency and also the benefit that we will get from the group platform.

Luca already mentioned what we will benefit from logistics, supply chain, but also marketing efficiency that will provide also -- and in terms of brand margin, we will have some benefit, but we will also reinvest in the quality of the product. So all in all, it will be -- you will see some improvement, but most of the improvement will come from the OpEx.

On China, do you want to answer because the mention was on Gucci.

Yes, sure. How -- what are we doing in China? We basically apply deeper all of those functions. China for Gucci is a country where more than anywhere else, we need to restore brand desirability. You see our performance in America, driven by the fact that the brand desirability and the brand equity is super high. China is a place where from being high, we went down into brand desirability.

And we opened too many stores, and we didn't react to that. The point that Luca made is like the capability to see and to measure your brand desirability and react immediately when you see that it's going down, didn't happen and we are reacting now. Starting the stores and closing the stores that are unproductive, reclassifying the stores exactly like Luca said, with a new measure and classification of customers, the Fashionista, the opinionated investors that he was mentioning are being activated by zone in a different way.

Of course, for Gucci, the Fashionista component is important everywhere. But for sure, in China, the opinionated component is the one that we need to win over first. Adapting the communication. That doesn't mean changing who Gucci is. But for example, if you followed what we did with the launch of Lafamilia that was our first hint about the vision of Demna for Gucci, the communication for Lafamilia was absolutely adapted to the China market without changing the meaning of Lafamilia representing characters and archetypes. At the same time, we are reviewing the offer. What you sell at the best sellers in the China market are not the same of the rest of the market.

There is debate that is pretty common, but China is a market where icons have a value, and we have mistreated them a little bit in the past. So we are working very much on communicating our on better, working on our on better, not all of them, the specific products that work better, but also following the trends. It's a market where some new products performed really well. I can mention to you the Borsseto, the Boseto and black leather. It's a new item in handbags that is showing very promising sign. At the same time, icons on the past, best sellers from the past are being improved.

I can mention the Marmont where the leather has been improved, leat the quality of the accessories has been improved. Emblem, where some of the SKUs are very important for the China market because they represent what Luca mentioned as the core, those products that are not icon. They are not for fashionisters, but they are core functions and embedding the brand. There is work to do, but we are on the right track. And the measures that we are having is that in the stores that we consider the most important and then we call laboratory of retail excellence and where these actions are implemented first, all of the KPIs starting from conversion, retention, number of ticket, UPT are growing and they're growing faster than in the rest of the network. So this is for us a test and try situation that we're going to apply faster to the rest of the stores.

Of course, each one of the brands has different challenges. So maybe I don't know if Saint Laurent has a potential to grow because that is not very well known, and that's why we say I want to have a little bit more focus on China or Bottega Veneta also potential Bega is already strong. So it depends on thing. So I don't want that the Gucci case is specific, I think, to China. That's one of the area where we really have to concentrate to bring it back where it deserves.

Hopefully, you can hear me. Congratulations on 3.5 hours, I think, of marathon performance. Two questions, quick ones really.

I go to Milano the next time...

I had 2 questions. Firstly, if you can unpack that stunning number, the 20 points improvement in full price sell-through, is that core? Or is that group, only core sales or overall group sales? And within that, can you perhaps put that into context in terms of what it would have been like how much higher than 2025 the peak pre-COVID would have been so we can get a little bit of a sense of a context, historic context? And my second point.

I'm not sure I understand the second question.

It's the same question. Essentially, if 2025 full price sell-through was something like 70%, where would it have been pre-COVID at its highest level in essence, so that we can understand the 20 points trajectory, which is remarkable. And it sounds like given that it's not going to be a big lever for gross margin, there's going to be a significant reinvestment into quality of product.

And the second question is around where are you going to take from the marketing budget to reinvest into China. There's obviously a big redeployment in China. So what are you taking away from in order to make space for that?

The easiest one is the second one. I think when you look at the mix, investment mix in marketing, we were very much into below the line or things that would not necessarily drive traffic, just like -- so we have to -- we are renegotiating all the media contracts. We are negotiating the contract with the agency trying to concentrate typical things that don't go to the consumer. So there is a huge -- the huge impact, okay, coming from this money that we can reallocate.

Of course, you have also an effect of the top line going up because marketing investment is measured on percentage of the turnover we used to do until now because just for your, let's say, knowledge, but we actually didn't really have a marketing practice at the group level. I mean we would mix up communication and marketing. This I don't accept because these are 2 different disciplines, right? So we just had hired Federzaid.e was the Managing Director of one of our competitors, and he's actually establishing a real marketing practice. And as we said in French, marketing is [indiscernible].

So you need -- it's about exactly doing it and measure customer measure how you put the money. So I think there is a huge improvement that will happen, a lot of opportunities, which money we can reallocate. On the 20 points, et cetera, et cetera, the only thing if any of the colleagues who want to add because they are better than me and that, but the only built bottom-up with a very granular analysis of each one of the categories in every market in all the channels.

So I actually was very, very impressed because we did those brand platform playbook I mentioned before. These are documents of 400 pages each one of the brand team had to do in the last weekends and vacation, et cetera, et cetera. But they are very granular thing. So it was -- it's coming bottom up because they analyze. I don't know, maybe you can -- as you are very good at that, maybe you can give us the answer for everybody.

Maybe to build on this, just to add that thing about we sell what we produce and produce what we sell, which is a new mantra. Second of all, we'll give more incentive on our teams on the inventory at the end of the season, which is also going to be a game changer when it gets to inventory and sell-through management. And last is also at Saint Laurent, making sure the share of icons, iconic product, the ones that are permanent across all categories is increasing up to 30%. And I think that's going to be about making a difference.

I'm Laure Bismuth from HSBC. I have a question about the sales outlook. When you say that you see a gradual market outperformance on the sales growth, what is the industry growth you are assuming? And going forward, or do you see that evolution between volumes, price and mix? The second question is about the jewelry business. Today, the business looks very much skewed towards Asia in terms of shares of sales. Is there a plan to make it more balanced regionally? And could you continue some acquisition of brands in the jewelry business?

Look, I'm going to make a short answer because I see there are a lot of questions, so I want to leave the space. But we assumed the most conservative estimation on market -- total market development. I think it's like the lower part of the thing is around 4% growth of the market, okay? So it's embedded in the model just this, okay? Also, the other, let's say, assumption we took into the plan was not to count on inflationary, let's say, phenomenon, okay? So we actually -- we assume that price would not increase, okay? And this is the base of the model, right? I want to say one thing, which I always say also this to the people, don't worry about where the market goes, et cetera, et cetera, because the real rate is on ourselves.

Remember that we lost 25% of the business. So if you just go back to where we were in terms of market share, I think we'll be better off rather than worrying about what's going on in general, yes. So it's a market share game, this thing. And market share means that if you want to take market share from others in a constrained market, you got to be operationally better than your competitors.

That's why in the whole 2 hours, 3 hours, et cetera, I actually insisted a lot on many, many things that will make Kering stronger strategically because we have the right intuition, we're putting the money in the right places, but also that will become a much more performance machine. right? Because of this, it will be a market share or let's assume that. If we then are lucky one day, then the market goes back, but we don't count on it on the plan. It has to be very clear to everybody. It's an opportunity.

And jewelry?

Jewelry, I'll leave it to Jean-Marc.

Thank you, Luca. You're totally right, but I think that you have to -- I will start with the jewelry brands because don't forget that in the growth of the jewelry business, there is also a significant contribution of the fashion brands. And by definition, the fashion brands have a better, let's say, balance in terms of geographical coverage. And as mentioned by Luca, there is a big ambition on the Gucci side. If I come to the jewelry brands, of course, there is a distortion due to the fact that we have Selin, which by definition is principally Asian, but also because if we think about Boucheron, which is the main one among the jewelry brands, it's a brand that has been very successful in the past in Europe, Middle East, Japan and more recently, Korea in good development as well in China. However, the time horizon in jewelry is not exactly the same as in fashion.

So you need first to build more legitimacy to work on the product assortment. We have some iconic lines already. We have some legitimacy as well in high jewelry, as you can -- you may assume. But to penetrate further America, we need to continue to work on the lines on high jewelry. So it's part of the plan to expand in the U.S., but it will be very gradual. And let's first capitalize where we are already strong to continue to build legitimacy for our jewelry brands.

It's Antoine from BNP Paribas. So 2 questions. First of all, specifically on Gucci. I did the math from the slide. So by category, you seem to be wanting to add EUR 2.1 billion in sales. So am I correct to think that you're targeting EUR 6.2 billion equal EUR 8 billion...

Can you please...

For the Gucci brand, in the slide, you mentioned that you wanted to add, if I'm correct, EUR 2.1 billion in sales, adding the categories. So is EUR 8 billion the target by 2030? Or are there any other moving parts? And then assuming you reach the around 22% margin by 2030, what would be the ranking of opportunities.

Don't take it literally...

I mean let's be qualitative or just a picking order of which brand you think has the highest potential even beyond 2030 between Gucci, Saint Laurent, Balenciaga and Bottega.

Look, I mean, yes, we don't -- we actually don't give -- we don't want to give guidance on top line, right? I'd rather talk about the fact that the plan is a plan that tries to target first an improvement of the quality of our business. So we want to -- I mean, I think you define luxury brand because you make money, right? That's the first thing. So the whole thing is built to raise the level of EBIT to to a level, to a threshold that qualifies you into the category of luxury brand, okay? And I'm not going to be a little more precise.

When I look at the -- let's say, most of the brands, of course, scale matters, okay? So take a brand like Bottega Veneta will benefit from expanding its business because from a certain threshold onwards, then Bottega Veneta will be able to afford a decent investment in marketing in all the regions, a very good team, building offices, paying for the store, et cetera. So that's what we see. So Isla is a good position on profitability.

We will continue to improve because it's going to grow. Bottegaeneta will recover because they have a relatively low level of EBIT. And I want to bring them -- I think this is a brand that should be one of the most profitable because of the nature of the business. And for sure, Gucci has to be in the game when it comes to profitability, especially if we recover some and we do the right things and the right mix of products, et cetera. So that's what we see. So what you can -- in some -- first of all, you have all the brands profitable of the group, all of them.

Otherwise, I inject them from the system, okay? Or -- and all of them at the level that defines that we are a luxury house. So we make money. Is that fair enough? And this is what comes out of our, let's say, plan.

Oliver Chen, TD Cowen. As you think about aspirational customers, what are your thoughts for the magic and the logic and perhaps linking to healthy aspirational customers in the context of customer lifetime value? Second question is, as we think about Agentic AI and neural networks, how do you see that impacting the financials AI and a subtopic is longevity, luxury is longevity.

I'm not sure I understand the second question. It's very.

Well, AI, how will it have the most impact financially? And will longevity be a big deal or a small deal?

I think potentially longevity could be a big deal, but we are not at the level of maturity of our thinking also with our partner, to [indiscernible], to come up and tell you clearly this. What we see is a very fragmented market. And what we see that there's no, let's say, universal global trustworthy, scientifically proved protocol established by anybody, okay, with high frequency of interaction with the thing. Because if you go into a kind of longevity clinic every 2 years, 3 years, et ceta,'s not the same of entering really a daily protocol where you impact your health, okay? This is the ambition, okay, that we have.

And I think it's going to be a big thing, right? And I want Kering to be one of the groups that engages something because this is where -- if you look at the world from a, let's say, not from the perspective of the credit card of a person, but from, of course, the level of bank account, but the person itself, people will put money on this. We already see it. We see growth on wellness that is double digit, consistent, and it is coming from top-tier customer first and then going down. So I think that it's going to be big.

Second, on AI, simple concept. We structure the thing and also in terms of, let's say, infrastructure. And what I say to the people, 3 things: follow the client, follow the product, follow the money. So these are the 3 fields of application of AI. Very simple. So -- and yes, I think it can fundamentally have an impact, a huge impact on the -- I mean this is an industry that I don't want to -- but produces 2 to 3 products to sell. I would do that in the automotive industry. I would be bankrupt after 6 months.

So there is a huge -- when you start to center the production with the demand where you put the product, the speed of the thing. Of course, yes, the cost of the product is not as fundamentally because it's a function. But still, it's a machine that needs to run. And I think technology can help. I really believe that, and I see it from the numbers. And you had another question -- one of the message that we are giving is, of course, you need to have a balanced, let's say, structure of consumer. Very important for us is that we now have a similar segmentation in the whole group, very important.

So we had a different segmentation. This is not an industry where you have a kind of syndicate research, et cetera. So it's very difficult to -- everybody is its own thing. Unfortunately, this is the reality. So we had to build our segmentation. We try to do it with independent institution. And we actually have those main 3 categories. I believe that we have been focusing a lot on VACs and aspirational consumer in the last 10 years, maybe forgetting the core of the luxury, which is people with money that maybe they are not spending.

We gave them a bit of grant...

Yes, we gave them -- so I think we need to go back and refocus on the core luxury consumer. And yes, that's basically the message that I can give you now.

Battistini from JPMorgan. I have one question specifically for Gucci on Gucci. You talked about the overreliance on the aspirational consumer and the segmentation between among top-tier clients, core and aspirational. I was wondering if you could help us on understanding right now roughly where the split sits? And over time, where do you want to bring that segmentation to just roughly as an indication?

And then a question on margin progression, maybe for Arne. On the -- how to think about the cadence of this margin progression? Should we be thinking as more back-end loaded as growth accelerates later in the plan? Or maybe as the rents come out as you close stores, we could be thinking about a more regular cadence?

We don't give the split by customers. But what I can tell you is like most of the customers that have been lost within Gucci are the aspirational ones because attracting aspirational customers goes with brand desirability because they aspire to something that they desire. So whenever you lose brand desirability, the first chunk that goes away, talking about the brand itself and not the economics of the world are the aspirational customers.

So we have lost most of them in the areas where the brand desirability is the lowest, typically what we were explaining before, China and Asia. What I can tell you is that the part that at the moment is reacting the fastest is the top. Luca was mentioning the fact that Gucci has high teens share of the business made by the top and the aspiration is to get to 25% in general for Gucci.

We are trending in the right direction, very important in all the markets, which means that what we are doing resonates with the people that we know very well and then we know how to talk to. The part where we really have to concentrate is the core because by igniting brand desirability, aspirational will come. And in the slide of Luca, there was something very important. It was with an aspirational and younger because people tend to confuse aspirational just with young customers. What they have in common is the price point. But in reality, you can have aspirational customers at every age because they simply want to engage with the brand.

So what is more in our hands and where we have to perform is the core because those are people that have already shopped with the brand. But if you study and you try to engage with them a little bit better and all of the systems that we put in together, the trial that was done with AI for Gucci was focused on the core, helping the sales associates to engage with them will be the main focus for Gucci across the board.

Regarding margin improvement, so the improvement in margin will be gradual based on the top line, but also on the efficiency, partly on the rightsizing of the network, but also all the other elements that Luca mentioned. And it will start this year.

Let's go to #2.

This is Liwei Ho from CICC based in Hong Kong. I have one question on Wireceell. So you have an ambition to double your revenue in Asia by 2030. So given Wireceell's DNA emphasize onhoue,ress more of a formal at higher. But leaving in China, I felt this strong trend of casualization or dress down since COVID, which is distinctly different from what Wireceell represents. And some of your peers have tap into that potential and reap rewards. So this is a philosophical question to pursue this ambition in Asia, especially in China, to what extent will YceL adapt and localize. And so this is something that I think is very important to stay true to your own DNA, but also grasping the chance that you have in China. That's just one question.

Thank you for the question, which I also feel is fair. This is a question we are currently assessing at the brand level. It is true that the brand is a bit Western-centric. So we are gradually working towards making the brand more Asian, speaking more the language being more aligned with the culture and being more relevant for clients. It's also true that we are underpenetrated in Asia overall. When you look at China, for example, alone, -- we have started our first operation in 2010. So it's fairly recent.

We opened our first store in 2010 in a Tier 2 city in China, if I take China as an example. So it's about doing a catch-up, and we need to do this fast. Our plan is to execute a retail rollout of the new store concept. At this point, 30% of our stores have the new image by the end and at the horizon of the plan -- at the plan horizon, sorry, will be a 90% rollout in terms of store concept. And this is to build on the Landmark Hong Kong store, you may know, and also the one we opened in Beijing, San Laurent that are proven being successful with being flagship store, Tier 1 city and being with the new store concept. We'll also reinforce the main pillar.

Men pillar is quite important for Asia, especially for China. We'll also make sure we will be more locally relevant, back to your question, appointing and choosing the right talent to work on an influence that resonates more locally. And last, we'll make sure the brand is also more proactive into the local cultural moments such as what Luca mentioned earlier, Chi, Lunar New Year, where at this point, we are doing this, but we are not fully committed to it. And this is my commitment to change that. Thank you.

I may say, if I can add, you wouldn't want to make something that is not true to the image of Saint Laurent. Saint Laurent is very cheap, very. So you have to stick throughout the times and of course, adapt and do the things, but it's also true that you need to respect a certain identity of the brand and not just follow fashions, right, all the time. But there is a lot of things we can do, the team can do to adapt the thing. For example, we don't have a lot of offer in the daywear I think. So that's what we're doing. So that's what they're doing.

And we will also tell our story in the market and show ourselves in a different way. And you mentioned a brand event, a brand show in the coming months. So this is something we'll do as well to present ourselves in a different way, not compromising nor the brand image nor where we're coming for who we are and where we're going.

Petrova, Barclays. You talk a lot about your network optimization being central for a turnaround of Gucci as well as Kering as a whole. You also mentioned that some of the stores which went through these new initiatives are generating double of the sales densities. Do you think it's fair to directionally think about EUR 45,000 of sales per square meter for Gucci, the peak we saw in 2019 to 2021? And as a follow-up of the same questions, when we think about personnel expenses, you had headcount reduction of over 3,000 employees last year. Is it also fair to assume that store optimization program could lead to another 4,000 to 5,000 of employees of savings going forward?

And my second question is on all the AI initiatives, which obviously look very new and very impressive to us. What makes you believe and any anecdotal evidence would be great that the organization is ready for such a technological change?

The organization is not necessarily ready for that because we need to -- of course, we have some special inside, et cetera, et cetera, but I think it's some new thing that -- but I believe in it because I already did it in organizations that were resisting to such kind of transformation. I already did this thing, right? Not a long time ago. And I could see the impact on the way the system was working because of technology. So I'm a believer. -- right, into the thing.

And any nation, any company that refuse technological process -- progress. Normally, it never ends in a good way, right? Technology, it's the base of our modern society and why not using it. For the sales density, I think you can assume that, that's a level that defines a well working store. So yes, of course, we are bidding for all the brands to get back to a certain level, but also because the starting point for us is very low and in terms of average sales density. So we are the anomaly -- and by doing this, we will get to a normal situation by doing -- allow me not to speak about people reduction, et cetera, because this is very sensitive. I don't think it's the aim of the story. We also have to say that this is something I learned, but you still have -- in retail, you probably have 25%, 30% of churn every year, right? This is not true also for our brands.

So in 3 years, you change completely theoretically, right? The most -- let's say, the most challenging thing is when we close a store because in that street, it doesn't work, and there is another one at 4 kilometers is how I get the best people in the store that we close and I use it for other stores.

And one of the opportunity we have right now is that we are doing that, all of that at the same time between all brands, and we are favoring internal mobility between one brand and another, which we didn't do before, right? So maybe I close a Gucci shop and they have a very smart sales adviser, and I can move it to kind of a shop that is 200 meters away that is from Saint Laurent. We would have not done this. And that's the advantage also of the group. I mean they can even change category if they want, right?

Thank you, Luca. I will end this Q&A session with a very last question with #3.

Anyway, we are here even later, so don't worry.

[indiscernible] from Horizon Capital Milan. I have a question on the strategy on wholesale, but just because we see some bit more positive results. And how much is crucial to be well organized on that side. Also looking at the connection between the network and the store network, so the closure and the right wholesaler to give your product to sell for having a better control of price as well, especially for the grain market issue we know is a reality for every of you.

I mean here, you have big experts about the things. So maybe I'll let them maybe complement on what I'm saying. I think that in general, it seems that the wholesale model in some regions of the world is like entering in a crisis. You still have places like I was like a couple of weeks ago into Japan or Korea, where wholesale big malls thing are still holding a very strong position. So there's no way you get out of this thing because it's what the consumer wants. So it depends on the region, it depends on the thing.

I believe personally that having a long-term partnership with a very selected number of retailers in a qualitative way, it's a good thing. And it's also a way to pulse to feel the pulse of the market. What is working, what is not working, you're there in direct competition with others. So it's always good. So the idea of 100% retailization of the thing for me is a little bit too extreme.

And as much as like when in luxury, they tell you how about e-commerce, e-commerce. No, no, I think it's commerce is also important for reach. And wholesale is you feel how strong you are because you are 10 meters away from a direct competitor. So if you are good there, it means that you're doing things well. That's all important for me. Yes. I don't know. I mean, if you guys, some of you want to.

Yes, I can integrate. But yes, I mean, the wholesale network allows you to reach a customer that does not necessarily come to your stores. So it's a complement of a window, let's say, then, of course, allows for a closer competition. So you have also additional information that you need to steer the development of the future collections, et cetera. But then you need to be careful not to overheat the system with too much stock because the brand desirability applies also to their stock, not only to the retail stock that we have. And therefore, you need to control to prevent parallel and liquidation behaviors that you don't want to have.

Luca, back to you for the conclusion.

No, I want to -- of course, I want to applaud to your resistance even because it was a long section, very intense. I think Pier Paolo wants to go and smoke a cigarette like longer like this. Yes, go. You can go go. And I want to take, let's say, opportunity to also, of course, thank everybody, the team because behind this, there is a work of a lot of people, okay? And all the plan has been written not by me, but each one of the teams of the brands, the team of the function, and then we kind of orchestrated the thing. So it's a bottom-up story.

In my experience, when plans have done like this, they work because that's what the people have put black and white, not a top-down thing done by a limited group of people with a strategic consultant that this is done in a different way. And yes, so I want to take everybody that -- thank everybody for the work that technicians, Alessandro that made this unbelievable presentation. This is all 3D. I don't know the complexity of this thing. Filippine, Joel, everybody because everybody contributed Laurent and the team B, it was fun.

But now the most important part of the story comes, which is execution and delivery of the plan. But we are all united. We are all convinced, motivated, realistic, humbled by the task. But yes, that will be not my first turnaround in my career. And I hope -- yes, that can be the best one. I hope. So thank you very much, and thank you, Francois, for being with us.

Welcome to the Kering 2026 First Quarter Revenue Conference Call and Audiocast. Please be advised that today's conference is being recorded. [Operator Instructions]

At this time, I would like to turn the conference over to Armelle Poulou, Group Chief Financial Officer. Please go ahead, madam.

Thank you. Good evening to all of you, and welcome to Kering 2026 first quarter revenue call. We are speaking to you today from Gucci headquarter in France, just two days ahead of our Capital Markets Day.

I will be reviewing our performance and will be joined by Philippine de Schonen, Head of IR for the Q&A session.

Starting on Slide 5. We introduced our new segment reporting, which was announced on March 16 and reflects the group's strategic priorities. We are now organized around 4 segments: Kering Fashion and Leather Goods, including Gucci, Saint Laurent, Bottega Veneta, Balenciaga, McQueen and Brioni; Kering Jewelry, bringing together Boucheron, Pomellato, DoDo and Qeelin; Kering Eyewear as a stand-alone segment and Corporate and Other, which includes Group Services and Ginori 1735.

Gucci is obviously part of Kering Fashion and Leather Goods, but its performance will also be disclosed separately given its weight in the group's revenue and our commitment to a high level of transparency in the context of the transformations currently underway.

On Slide 6, group revenue in the quarter came close to EUR 3.6 billion, down 6% as reported, impacted by the strengthening of the euro and stable year-on-year on a comparable basis. The stabilization represents an important first milestone and a further sequential improvement. It was delivered in a challenging and uncertain environment with low visibility and continued pressure on consumer confidence.

Geopolitical tensions, notably in the Middle East, also weighed on traffic and performance during the quarter, a point I will come back to. Regional trends remained uneven. Western Europe continued to face headwinds, while North America delivered an excellent quarter with growth across all brands clearly standing out as the group's strongest region.

Q1 also demonstrated continued progress in terms of ambition and balance sheet strengthening. We executed several major strategic moves across jewelry, beauty and real estate, clearly sharpening the group's focus by significantly enhancing our financial flexibility.

In jewelry, we announced the creation of Kering Jewelry and finalized our initial 20% stake in Raselli Franco, one of the largest independent luxury jewelry manufacturers in Europe. This marks a major step in building a sizable industrial platform to support long-term growth in jewelry with a clear pathway to full ownership.

In Beauty, we completed our strategic partnership with L'Oreal with the disposal of Kering Beaute for EUR 4 billion in cash and continued cooperation through a joint venture to explore opportunities in longevity and wellness. In real estate, consistent with our commitments, we completed a new refinancing transaction for our Via Monte Napoleone asset in Milan, following similar partnerships in Paris and New York, enhancing balancing -- balance sheet flexibility while securing strategic locations for our houses.

In parallel, we continue to optimize our distribution network and stepped the vigilance on both CapEx and OpEx, while never compromising the actions required to preserve and strengthen the brand equity of our houses.

Moving on to our quarterly revenue in more detail on Slide 7. As you can see, performance remains uneven across segments, although sequential trends are positive across the board. Kering Fashion and Leather Goods declined by 3% on a comparable basis, representing a sequential improvement of 2 points versus Q4. Within the segment, Gucci was down 8%, also showing a sequential improvement as the house continues to make progress in its turnaround. Kering Jewelry delivered another very strong quarter, up 22% on a comparable basis, clearly standing out as a growth engine for the group. Performance was supported by strong brand momentum and solid execution across regions.

Kering Eyewear grew by 7% on a comparable basis once again, confirming the strength, consistency and resilience of this business driven by the breadth of the portfolio and continued operational execution.

Finally, Corporate and Other was up 10% on a comparable basis over the first quarter, notably driven by very strong performance of Ginori 1735. Overall, our geographic mix remains well balanced with only modest shifts during the quarter. Asia Pacific and Rest of the World, were down 1 point, while North America and Western Europe each gained 1 point.

On Slide 8, let's review the top line by channel and region. Retail accounting for 71% of revenue was down 2% on a comparable basis. Within retail, e-commerce grew 6% year-on-year and represented 12% of retail sales. Western Europe declined by 7% comparable in the quarter. Trends, remain challenging, particularly due to softer tourist flows, notably from Asia and Middle East. North America delivered a very strong quarter, up 9% comparable, clearly standing out as the best-performing region driven by a favorable mix skewed towards the high end with positive contribution from all brands, including Gucci.

Japan declined by 3% comparable, a marked improvement versus previous quarters. Performance continued to be driven by the jewelry houses. The tourist spending remained negative, reflecting a less attractive pricing gap, while demand from local clients turned positive. Asia Pacific declined 4% comparable, an improvement of 2 points compared with Q4 after 5 points between Q3 and Q4. Strong performances in South Korea, Hong Kong and, to a lesser extent, Taiwan, were not sufficient to offset the decline in Mainland China.

As in Q4, the Chinese cluster ended the period down in the mid-teens. Finally, Rest of the World declined by 8% on a comparable basis, mainly reflecting a deterioration in performance in the Middle East since the beginning of the conflict in the region. Our retail network comprising 1,672 stores showed a net decrease of 47 units compared with year-end. Over the period, Gucci store count declined by 11 net units.

In line with the commitments set out at our 2025 full year results, we reaffirm our objective to achieve at least 100 net stores closures by the end of December. Wholesale and other revenue accounting for 29% of the total, was up 6% comparable in the quarter with a continuing good momentum in Eyewear.

Let's now move to Kering Fashion and Leather Goods on Slide 9. Revenues stood at EUR 2.9 billion, down 9% reported and 3% comparable. The retail channel showed a similar trend, declining by 4% on a comparable basis. You will find the usual details by region in the appendix of the presentation. Before turning specifically to Gucci, let me first say a few words about the other brands within the segment. Saint Laurent, Bottega Veneta, Balenciaga and Brioni delivered year-on-year growth in the quarter, notably led by North America. At Saint Laurent, results reflected a very strong performance in shoes and ready-to-wear combined with the successful rollout of new products, including the Mombasa handbag.

Bottega Veneta showed solid trends in Asia Pacific, underpinned by a robust product pipeline and sustained brand desirability with good traction in the full-price network and an increase in average unit retail on handbags.

Balenciaga delivered another quarter of growth, supported by sustained demand in Leather Goods building on the success of the City and Rodeo lines. Brioni confirmed a very positive momentum over the period with particularly strong growth in bespoke. As expected, McQueen continued its rationalization, in line with the actions undertaken to reset the brand.

Wholesale and Other was up 2% with royalties and other revenue increased by 6%.

Focusing on Gucci now on Slide 10, the House recorded sales of EUR 1.3 billion in the first quarter, down 14% as reported and 8% on a comparable basis year-on-year. North America delivered a solid performance, up 7% year-on-year driven by strong newness and increasing AUR, providing early confirmation that the strategic reset is starting to gain traction. This momentum, however, was not sufficient to offset weaker trends in Asia Pacific and Western Europe during the quarter. Beyond the short term, the quarter was firmly execution-driven marked by decisive actions across product, distribution and client engagement. We have refocused product architecture, strengthened category priorities and are progressively rolling out new collections in stores.

The introduction of see now, buy now initiative, even though it applied to a limited number of products is designed to improve responsiveness, sharpen newness and better aligned product drops with client demand.

Looking ahead, upcoming milestones are meaningful. Our Capital Markets Day will provide better visibility on the Gucci roadmap, while the post-show in New York next month will be another key moment to showcase the brand's renewed creative energy and product direction.

While the recovery will be gradual, the fundamentals are being rebuilt in the right order, with disciplined execution, clearer -- clear creative leadership and a sharper focus on core clients and products, we are confident in Gucci's ability to progressively restore momentum and create long-term value.

On Slide 11, Kering Jewelry delivered an outstanding performance, reaching a record level. Sales were up 14% as reported and 22% on a comparable basis. In the directly operated retail network, sales grew by 28%, while wholesale revenue increased by 14%. Performance was broad-based across key regions with standout demand in Japan and Asia Pacific, notably in South Korea. Brand momentum at Boucheron was positive this quarter with the house delivering the highest growth within the group, supported by robust performance across its main markets.

Pomellato also posted solid growth, supported by strong traction in Japan and thanks to the Nudo, Iconica and Together collections. DoDo extended several quarters of sustained growth while Kering recorded a strong performance driven by Asia. Beyond the quarter, Kering Jewelry continues to confirm its role as a structural growth engine for the group. The category benefits from strong underlying fundamentals and from the disciplined way, we are selling it across houses and regions. With strong brand desirability, a growing retail footprint and an increasingly integrated industrial backbone, we are confident in Jewelry's ability to increase its contribution to group revenue over time.

On Slide 12, revenue of Kering Eyewear division. Kering Eyewear delivered a landmark performance, marking the strongest quarter in its history. Sales amounted to EUR 489 million, up 3% as reported and 7% on a comparable basis, reflecting very strong demand across the portfolio. This performance once again highlights the strength, resilience and scalability of the Eyewear platform. Growth was supported by a combination of high-profile product launches, including the first Valentino Eyewear collection developed by Kering Eyewear, strong sellout momentum and successful commercial execution around major industry trade events.

Marketing and communication initiatives across brands also played an important role, reinforcing visibility and desirability while execution remained consistently strong across key markets. Beyond the quarter, Eyewear continues to demonstrate the relevance of our integrated model, combining brand desirability, industrial expertise and disciplined execution. With its diversified brand portfolio and recurring demand profile, Kering Eyewear remains a highly attractive and reliable growth engine for the group.

On Slide 13, I will make a few comments about the Corporate and Other segment. In the first quarter, revenue from Corporate and Other amounted to EUR 30 million, down 7% as reported and up 10% on a comparable basis, with the variance mainly explained by scope effects. Within the segment, Ginori 1735 delivered a very good quarter with double-digit growth, reflecting continued progress in brand development, positioning and desirability.

Before turning to our outlook, let me briefly address the situation in the Middle East. Since the end of February, the situation in the region has remained an area of heightened attention for the group. Our priority is and remains the safety of our teams. To date, none of our employees has been directly affected. The region represents around 5% of our retail revenue with approximately 1,100 employees and 79 stores. The crisis unit was immediately activated and continues to manage the situation in real time.

While some areas experienced temporary disruption, the retail network is fully operational today. In the first quarter, retail revenue in the region declined by 11% after a positive start to the year. Beyond the local impact, the key consideration going forward relates to potential impacts on global tourism flows and the broader macroeconomic environment, which we continue to monitor closely.

Overall, we are operating in a still uncertain geopolitical and macroeconomic context. In this environment, our focus is on agility, discipline and flawless execution. We are equipping each house with sharper, more sustainable brand strategies and the operational capabilities required to accelerate progress. As we move through 2026, our objective remains to return to growth and improve margins. We look forward to sharing more details on our strategy and roadmap at our Capital Markets Day on Thursday.

And with that, we are now ready to take your questions. Operator?

[Operator Instructions] And your first question today comes from the line of Thomas Chauvet from Citi.

I have three, if I can. The first one on the performance of the various cohorts for Gucci in Q1 relative to Q4 for retail. So Americans look pretty strong, but perhaps the Chinese, Europeans, Japanese, of course, Middle Easterners, and the Q2 comp is quite similar to Q1. So are you seeing a change in trend in March or April with the other cohorts outside, of course, the Middle Easterners?

Secondly, you've talked about product newness and deliveries of first collection. If we take the 3 brands where you've had a new creative direction and the first collection delivered to store in Q1 to Gucci, Bottega and Balenciaga, how would you rank them in terms of the strongest customer response you received on that inaugural collection?

And finally, on your guidance that you will confirm, I know you'll talk at the CMD about the longer term, perhaps road map. But if we think just about '26, you reconfirmed it will be a year of constant FX sales growth and margin expansion for Gucci and the other key brands, how do you think about the phasing of that return to growth in light of the Q1 performance, the tougher comps in H2 and now the disruption to the Middle East and to global tourist flow, as you just alluded to?

Thank you, Thomas. Three questions, but happy to answer. So on the first one, what I can say on Gucci cohort by nationalities is that we saw improvement in most of the nationalities. If I start by the Americans, we saw a strong improvement of the American cohort in Q1 versus Q4, actually turning positive.

In Europe, we also saw a very nice improvement with European cohort still negative, but improving quite significantly from Q4? In -- I would say, we had also a nice improvement in, I would say, other regions. While Japan remained difficult for Japanese, and I would say for the Chinese, the situation was sort of flat to Q4, still negative.

Regarding your question -- your second question on current trading. So you know we are only 2 weeks into the quarter, but what I can say is that if I compare the beginning of the quarter and maybe the month of March, performance remains broadly in line with what we saw in Q1 at book level, but of course, we need to see what's going to happen in the coming weeks.

If I go to your third question regarding customer response on your new Creative Director. We are very happy with the response to our new Creative Director. If I start with Gucci, but maybe the main comment is to say that in the 3 brands where we have a new Creative Director, we see a good response to newness introduction. So this is, for us, a very good sign. As you know, it's the beginning of the new products rolling out into stores, it will increase progressively along the year. So of course, we are looking forward to seeing the confirmation of that in the next quarters, but the first signs are very encouraging.

Okay. Now I think you asked me a question on the FX rate and the guidance. So as you know, we posted Q1 flat, and March also was flat. Now if we consider the impact of the Middle East crisis and if we look at what would have been the performance without the Middle East crisis, March actually would have posted a 3% growth. Now so this is encouraging.

Now for the full year, as we've always said, we expect the improvement to be gradual and sequential along the year in a context that is extremely volatile.

Your next question today comes from the line of Edouard Aubin from Morgan Stanley.

Really looking forward to see you in Florence tomorrow. So three questions for me as well, mostly on Gucci. So I'm sure you're going to elaborate more in greater detail tomorrow, Armelle on that topic. But in terms of the product rollout at Gucci, I think La Famiglia, which was hitting the shelf in -- mostly in January was relatively small in terms of the assortment, about 7%, 8%, I assume. What should we see in terms of April, I think you have the so-called lookbook generation Gucci, I know how you call it hitting the shelf this month, to what extent is that going to be more material, and then Primavera in the third quarter? So that would be my first question in terms of the share of the assortment, which will be new and designed by Demna.

The second one is if you -- I guess you should have by now good visibility on your wholesale expectation for Q2. I think you were up 2% at Gucci and 2% Fashion and Leather Goods, as you said, in Q1. Do you expect more or less the same type of trajectory for Q2 for these two components?

And then lastly, you just talked about the divergence between China and the U.S. for Gucci. You gave us the performance by cohort. I think, obviously, most brands are doing better in the U.S. than in China, but Gucci is quite an extreme example in terms of the divergence, what's -- and I guess maybe you're going to talk about it more in tomorrow and Thursday in great detail, but how do you explain the fact that you're lagging in China? And what are you doing to get things to Gucci to trend better in that geography?

Thank you, Edouard. So let me answer on your first question. I think you very correctly mentioned the progressive rollout of new collections of La Famiglia, the lookbook and Primavera. Maybe the share of La Famiglia product was a bit higher than one you mentioned, higher in SKU, but even higher in sales, considering the good reaction to those new products. I would say, as a whole, we are so happy to see, of course, the traction on the new introduction with La Famiglia, see now, buy now, Primavera and that will be confirmed with the full collection of Primavera over the summer, but also, I would like to mention that we see a good resilience of our newness in the portfolio, which is something that is encouraging, both in terms of sales, but with also an AUR that is higher with the introduction of new products that are resonating better. But also at the same time, and I think that is also some very encouraging elements, if you remember, we had a very difficult performance, very negative of the carryover for many quarters. And I would say that the first quarter where we see the carryover performance getting better, much better, partially because we are now in the carryover, some of the introduction like the studio of the Emblem last year.

And also, we see -- we are very happy with the success of the introduction of the new Marmont. As you know, this product has been reintroduced with a better quality and slightly improved design. And those three products are supporting the performance of the Kering.

Your first question -- your -- sorry, your second question was on wholesale, if I remember correctly. Wholesale for Q2, it's a bit difficult to give you a right number, but it could be in the same area that what we saw in Q1.

Finally, you asked me a question on the situation and the performance of Gucci in China. And you are perfectly right that the performance of Gucci in China is quite different from what we can see in some of our peers. And we've been always very clear on the fact that we have been suffering in China from the fact that the market was not very supportive, but also from the fact that we have our own issues. We are actively working on that, fixing the issues with a dedicated plan for China. We are building the cultural relevance in China with sharper storytelling, stronger ambassadors and region-specific activation, while, as you know, we are also working to improve and upgrade our store network in China. But as you said, you will have more information during the Capital Markets Day.

And the next question comes from the line of Anne-Laure Bismuth from HSBC.

I have 2 questions, please. The first one is about the split of the performance between volume, price and mix in Q1 for the Fashion and Leather division. And the second question is about the performance of Gucci in the U.S. that improved a lot in North America, sequentially accelerated to 8% in Q1. Was the performance broad-based across product category or any product category doing better than the others?

And also, is it a question of initiatives taken in the U.S. or marketing campaign, resonating better with the U.S. consumer, leading to that strong performance in the U.S.

Thank you, Anne-Laure. So let me answer to your first question. We say that in Q1, we didn't take any actions on pure price increases, but at the same time, we had some improvement in the AUR, as I was saying, especially thanks to the good performance of the newness that was introduced with a slightly higher average AUR. And in terms of volume, as you know, traffic was still very soft. So basically, we suffered on volume, and we gained pricing through the mix.

Regarding your second question on Gucci in the U.S.A., yes, we are very happy to see these positive trends. It has been improving for several quarters, progressively as the performance of Gucci in North America is supported by the performance of the handbag. You remember the very strong success of the Ginori, for instance, but also new introductions are resonating very well in the U.S., but we have also positive trends in ready-to-wear and in shoes.

And I would say in terms of clientele, as it is the case for our other Maison, there is in the U.S., probably a slightly better resilience of the high-end part of the clientele.

Your next question today comes from the line of Chiara Battistini from JPMorgan.

A couple of follow-up questions on Gucci, please. The first question, actually following up on Edouard's point, and the different performance between China and North America. Besides China, the other regions also remain in double-digit negative territory. So I was wondering, really taking a broader picture on what is really differentiating your performance between North America and the Rest of the World, that if you could share more color. And I guess, indeed, we're going to hear more about that this week about thinking about the broader world rather than just China, what you're feeling that needs to change outside of North America? Or what are the learnings you're seeing from North America that you can apply everywhere else in the world?

Second question on the space closures in Q1, Gucci. I was wondering if you could help us with any impact from increased space closures on the Gucci performance in Q1 versus Q4, if there was an incremental negative impact there?

And finally, on -- maybe a question on Jewelry and the very strong performance there and accelerating performance. I was wondering to what extent that there's been price increases in the quarter that helped the acceleration and besides pricing, if you're seeing any accelerating demand underlying, and what's driving that in your view?

So on your first question, as you know, I think we are working on improving the situation at Gucci in many fronts, but probably, it's the traction and the reaction to those action starting better in the U.S., but we are confident it's going to happen across region with some time. You know that there is more work to do in China. We've been always very clear about that, but I would say, in general, we are working on the product architecture on the product offer. You know that we have simplified the number of SKUs. We are making sure we have a sharper offer. We are making sure also we introduce newness. And of course, we are working on communication as well as we absolutely need to work on the traffic to our stores. And yes, it's going to be -- to take a bit more time in China. In China that probably we've been hurt a bit more in terms of image and it was the case in the U.S., but we are tackling the issue one after the other.

In terms of store closures, yes, at Gucci in Q1, we have closed net 11 stores. So yes, it has a small impact on the sales, but as you know, we pay a lot of attention to recoup majority of the sales by working on the clientele of the store that we are closing by making sure that we transfer some sales associates for the closed store to the next one.

So it's quite difficult to actually have a clear number on the impact net-net. But yes, we are continuing on our plan, and we are very confident that we are going to execute the store closure plan for Gucci and for the rest of the houses as we planned at the beginning of the year.

Regarding your third question on Jewelry, yes, you're right. We -- in the context of the gold increase, we passed some price increases, for example, at Boucheron in Q1. And we know that in Japan and Korea, it certainly helped partially the performance in Q1. And it's important to note now that was not the only reason for the very good performance of jewelry in Q1.

I think the category is quite resilient. We have brands that have a very clear positioning, a very good execution. And also maybe to note in Q1 for Boucheron, we introduced a new ring in the cat line, which is the excess, and it was very successful in every region.

We will now go to the next question, and the question comes from the line of Antoine Belge from BNP Paribas.

It's Antoine Belge, BNP Paribas. Three questions. The first one being more like a clarification on the welding. So I think you confirm you want to return to growth. So I think you had said earlier that all brands would be positive in terms of organic growth in 2026. So is it confirmed for all brands, notably Gucci after the rather soft start to the year? Or does it mean that you want to be back to positive sometime in 2026?

My second question relates to the consensus for group operating profit, which was that you disclosed recently above EUR 1.9 billion. I think last year is a bit more than EUR 1.6 billion, EUR 1.9 billion is like almost 20% year-on-year increase. Can you confirm that the gross margin guidance is still for around flattish and also OpEx flat, so which would mean that any EBIT and EBIT margin improvement would come from the top line? And point number three is actually on OpEx on the assumption that OpEx flat is still the guidance. Can you maybe, one, comment a bit on the moving parts?

Are there some savings that will be found and reinvested, especially, and you heard about new platforms have been put in place? And also looking at the Middle East, are you taking some special action? Or are you waiting a bit to a bit more how the conflict will evolve before really changing OpEx and CapEx commitment?

So on your first question, I'm not going to comment specifically the consensus. But yes, this is the ambition to return to growth and to improve margin for all brands, excluding Alexander McQueen. Considering, and maybe to add some color on your question on OpEx, we have done a lot of work on efficiency, and considering the work that we are still doing actually, I confirm that I think we can at least maintain our margin stable even without growth. So this is probably a slight improvement on what we were expecting on OpEx.

Now the reason for OpEx savings are always the same. We are making a lot of effort on efficiency, on the support function, on the efficiency in the company in the group between the brand and the houses, on the procurement, on the transport cost on many elements. But at the same time, we are continuing to invest strongly in our brands in clienteling, in communication and in store refurbishment because it's true that we've been talking a lot about store closure, but I want also to mention that we are upgrading the network by doing some refurbishment and relocation when we can relocate in a better location, especially in the mall in Asia.

Regarding maybe gross margin, gross margin, how difficult it is to forecast ahead. So for the moment, no reason to change what I said. Now there are many moving pieces in the gross margin. But for the moment, we still keep the same forecast. And just one precision. The ambition is to go back to growth for each of our brands, excluding Mac business margin.

Okay. Maybe just one follow-up specifically on the impact of the store closure. So what is the impact on the EBIT margin if there is one already this year? Is that something that is hurting a bit the sales, but this has a positive impact on margin or not really anything about that?

Yes. So as you imagine, we closed underproductive stores. So actually, the impact on the EBIT margin is slightly positive.

We will now take the next question, and the question comes from the line of Luca Solca from Bernstein.

I was wondering whether you could help us understand what is working best at Gucci when it comes to seeing the green shoots of the brand working, for example, in the U.S., is it the higher end? Is it the fashion? Is it the remaining streetwear components? Or is it anything else that you start to see as a potential formula that you could export elsewhere? If we dig a bit deeper in the marketing mix and whether it's a product, it's an animation or anything else that you could potentially use as a template in other regions as well to produce a similar positive impact.

On a different note, I was curious to hear a bit more about Balenciaga. This seems to be a major departure with the new Creative Director at the helm of this brand. I wonder what reports you have on this change, which is making Balenciaga very different from what it was before, and how this is being received in various regions. And then maybe if you could also give us a little bit more granularity on what you think Gucci is missing in China.

You were talking about Gucci having problems of its own and some of the brand equity being damaged. I was wondering, if you could be a little bit more specific. Was it a matter of insufficient communication, inappropriate product execution, wrong locations, wrong social media involvement. Where do you think is the action point that you could potentially use to make the brand move forward in that region?

So on your first question, I would say if we look at the U.S. and North America, we have positive trends in handbag, but also in ready-to-wear and shoes. We see slightly better response in the high end, but that is, I think, across the board in the U.S. and not specific at least within our group, not specific to Gucci in particular. I would say that I think what is very important is the 360-degree approach that we are taking to both product, communication, clienteling and distribution to make sure that we align all elements, not just counting on the new creativity, but making sure that from the product introduction up to the retail experience in store, up to the clienteling, also our communication.

I think we've managed this year to have a strong fashion moment during the fashion show, but also not to rely completely on that and have a lot of commercial activations in stores. And of course, the work done by Gucci is to align all those elements in also probably with a very strong effort to have a very clear product architecture across categories, ensure that there is a coherent brand expression across the categories, across the price points, but with the offer that is relevant at different price points for different type of clients in different categories.

So this is the work that you will see developing along the year with the new introduction. I think we're happy to see the traction on the new products, but we are also happy to see that the carryover are much more resilient that the introduction also of last year are continuing to be successful.

I can mention -- I mentioned in Marmont, I can also mention Emblem. Emblem in fact is still ranking very well in our bag sales. And that's good news because it's good to introduce successful newness, but we also need to have a strong portfolio of products over time.

Regarding Balenciaga, yes. Sorry, maybe you asked for Balenciaga, but maybe I will go to Gucci in China to complement the first point. In China, what we consider is that we have to work to make sure that Gucci has a cultural relevance in China and disciplined execution. We are working more and more to localize a bit the storytelling in a way that resonates with the Chinese tumor. Having a stronger focus on some new products aligned with local demand.

We are working on distribution. We have overdistributed in China. We want to upgrade our network with less stores, fewer stores, but better store with a higher level of client engagements. And for that also, we continue to increase and better target our marketing investments. Maybe an example of that is Latin Media the only region where we did sort of interpretation of the movies with some Chinese actors. We had a very strong investment in China in terms of engagement on social media discussion. And probably, this was a very good initiative to act with the worldwide event of the La Famiglia movie, but also making sure it resonates with the Chinese in the country.

So this is really to find the right balance and making sure that we have localized go-to-market strategy, and that's very important, I think, going forward. Of course, it is also some other implication. At Gucci, the level of collaboration between the headquarter and the region is even more important than in the past to make sure that we both push the global strategy of the brand, but also making sure that we take into account all the findings and all the important element that the region can bring in to the headquarter.

And maybe you -- and also an example of that, I think we are happy with Emblem. Emblem is still doing very well in APAC. Emblem is aligned with some smaller bags. We also introduced the mini [indiscernible] and the small Ginori to make sure that we have products that are relevant for China, even if they are part of a worldwide line in terms of functionality, in terms of size.

Coming back to your question on Balenciaga, that Pierpaolo Piccioli brings a renewed direction to the brand. We think is going to help us to strengthen the house identity without compromising its edge. You can see if you've been into the store, but this impact is really already -- you can see it especially on the ready-to-wear collection, especially with clear silhouette, a stronger women proposition. You know that Balenciaga was very much skewed towards men, especially in ready-to-wear. We think we have the opportunity to develop the brand also in the women ready-to-wear.

And apart from the new category of Pierpaolo, we are also happy to see the handbag developing very well by saga. You know the brand was quite unbalanced in terms of our category and the handbags are developing very well, and again, I think that we can consider that Rodeo and City are really starting to become the same sort of icons. They are very successful in all the regions, which are very good news.

We will now go to the next question, and the next question comes from the line of Piral Dadhania from RBC.

My first question is on Kering Jewelry, which has obviously been the best-performing vertical within the portfolio. So congratulations on that. Could you maybe just elaborate a little bit on the performance by brand? Is there anything -- what are the specifics, if I could put it that way, in terms of where the momentum is coming from, is my first question.

And the second part to that is, I think there's a technical factor related to the Rest of the World, which I think grew 176% whilst the royalties declined by something like 50-plus percent. So could you just help us understand what's happened there in terms of how the business is structured in the Rest of the World? And then secondly, just following on from Antoine's question. I was just wondering if you're able to help us understand or quantify the magnitude of the cost savings that you expect to deliver in 2026. The reason we ask is we're just trying to understand whether you'll be able to deliver the level of margin expansion that the market is anticipating despite negative organic revenue growth, particularly in H1.

Thank you, Piral. So let me come back to Kering Jewelry. That is true. We had a very good quarter. I can try to give you a bit more color brand by brand. You know we had actually a very good and positive performance in all 4 brands of the portfolio, which is good news. Certainly, the performance was stronger in APAC, where those brands are actually very strong. Boucheron is strong in Japan, in Korea, but also -- and that has been one of the great development of the fuel last year in China. We just opened actually a very nice flagship in Shenzhen. Pomellato is also doing well, and Kering is doing well. I would say probably Europe was a bit more difficult. And for the U.S., you know that we are under-developed at the moment in North America for jewelry. We have a plan to develop Boucheron. Actually, the results are according to the plan in North America, but we also know that it will take time because we have to develop the awareness of the brand in the U.S.

Of course, you will have more information on jewelry during the Capital Market Day. So I'm sure you will have a lot of more color on this new business segment for us.

Regarding -- I think, your second question was on the performance of the Rest of the World. But this one was affected for sure by the event -- conflict in the Middle East. So we had a performance that was low double-digit negative, but it was actually concentrated on one month in the 3, so you can make your own calculation and imagine what it was doing in March. Our stores were sold at the beginning are actually today operational. But in the Middle East, it's a tourist flows that are suffering more than the locals.

In terms of cost saving, so you remember, I said that we were aiming in February, we were aiming to be OpEx flat this year, which means some efforts because to be OpEx flat while continuing to invest strongly behind the brand in terms of marketing, clienteling, product development and so forth. It means that we are doing some efficiency on non-client-facing areas. We are working on that. Of course, we are trying to continue to go further. I'm not going to give you some numbers at this stage. But of course, it's a continuous effort. We are developing some programs to be more efficient.

Here again, during the CMD, you will have more color on the organization of the group and the platform that we announced. And probably on the longer term, we expect that it will help us also be more efficient going forward in the coming years.

Our next question today comes from the line of Oliver Chen from TD Cowen.

Regarding Gucci, what are your thoughts or what's happening on conversion relative to traffic across the U.S. versus China? And any thoughts on what you're seeing on that conversion versus traffic angle? And second, on Gucci, and you continue to work on elevation. How should we think about the marketing and communication plans? And specifically, any thoughts on what's fixed versus variable, and what your plans are regarding what you're seeing in terms of that factor?

And then thirdly, on supply chain, what's ahead in terms of the intersection of speed and supply chain and as well as any bits on how you're innovating with AI in that context to drive a responsive supply chain, given all the change we've been all seeing in brands in different stages.

So on your first question on Gucci, traffic is still soft for Gucci in many regions with some differences. Of course, it's more positive in North America than it is in APAC, especially in China. What we experienced in Q1 is an improvement in conversion, which for us is encouraging because it means that all the efforts that we are putting in the product, but also in the training of our sales associates in the retail experience in store is starting to bear fruit. Of course, it does not completely offset the softness of the traffic, but it's a very good sign to see conversion going up and it's going up in all regions including China.

In terms of marketing and communication, I'm not sure I got completely quite your question. Maybe just to say that we continue to invest strongly behind our brands. We're going to keep an A&P that will be high single digit of sales. And we are working on the ROI of our action being more scientific, I would say, in terms of how we allocate the resources in communication and marketing to make sure that we get the best results on our investments. For that, we are -- here, again, we have strengthened also the organization at group level, and we are also working at Gucci to make sure that we allocate between the different pockets of communication with the best ROI, both in terms of media, but also in terms of regions, in terms of activations.

So this is really a very disciplined way to execute marketing and communication. Lastly, your question on supply chain speed. Speed and agility are very important. You know also that we have a strong objective to be more efficient in terms of inventory levels and supply chain and industrial production. As a group, it's not the only one, but it's also a role that is very important in the efficiency of our Maison. And of course, we rely a lot of new technology in that direction. But for that, you will have plenty of very interesting additional information at the CMD. So stay tuned.

Okay. One follow-up on Gucci. You spoke to this, but the handbag pricing matrix, are you comfortable with where it is now? And what are your thoughts on the price ranges in the families and making sure that you both elevate, but communicate value to the customer in the balance of doing both?

Yes. On the handbag, yes. I think if you look at the product architecture now is very clear. I mean we really make sure that we have an offer at a different layer in terms of price, but also in terms of functionality, in terms of client taste. And in terms of price, we have now some newness and strong proposal at the different level of the pyramid. That's very important. It's important in terms of pricing. You know also that we are very aware of the importance of -- for the customer of a good perception of the value for money. And at the same time, we also increased the quality of the product that's very important. So it's a combination of pricing, but also quality and creativity and innovation in the product at every layer of the proposal. And we really want to expand because we think that we can be -- Gucci is relevant both at the entry level at the core, but also at the high end.

Our next question today comes from the line of Charles-Louis Scotti from Kepler Cheuvreux.

I have three. The first one within the Fashion and Leather Goods division. All the brands grew 2% like-for-like in Q1. You provided some qualitative comments on each brand. Could you please specify which ones outperformed this subsegment, which ones underperformed?

My second question, I just want to make sure that I understood you correctly. Did you mention that the organic sales growth would have been around 3% in March at the group level, excluding the impact of the Middle East conflict? And is that excluding only the impact within the Middle East region itself? Or does it also exclude the Middle Eastern customer spending abroad?

And last question, you closed 47 stores in Q1, and your target is at least 100, so we roughly have already achieved after Q1 were closures front-end loaded? Or is the 100 target conservative in this environment, meaning you could go faster than initially planned on store closures?

So regarding the other brands within Fashion and Leather Goods segments. Saint Laurent, Bottega Veneta and Balenciaga, all showed nice growth in Q1 and all sequentially improved versus Q4. If I can give you a bit more color, Bottega Veneta posted the strongest growth and Balenciaga, the strongest sequential improvement.

Regarding your second question, yes, I confirm that March would have posted a plus 3% growth without the Middle East impact, and I'm talking about the Middle East itself, the region. And for the question -- third question, yes, we have closed the 47 net stores. And we mentioned -- we announced that we would close at least -- I mean, we are on the plan, and we are delivering the plan with confidence.

We will now take our final question for today. And our final question comes from the line of Zuzanna Pusz from UBS.

I had just one actually is a follow-up regarding the outlook. And sorry, following up on this, but it's quite important for us from a modeling perspective. Can I just clarify when you refer to objective to of sales growth in 2026 for everyone excluding McQueen? Is it that sales growth for the full year or that they return -- that the brand return to growth at some point during the year just because I don't think I got it. So it's just a very quick one.

So yes, just to clarify, yes, our ambition is to be back to growth for all brands except McQueen for the full year.

There are no further questions at this time. I will now hand the call back to Armelle Poulou for closing comments.

Thank you very much for your interest and for your questions. I'd like to remind you that Philippine and her team are available to go over any point that requires more clarification. We are all very happy to see you in 2 days. Have a good evening, and thank you again.

Ladies and gentlemen, thank you for joining. The conference is now over. You may disconnect your telephones.

Good morning, everyone, and thank you for joining us this morning. We are pleased to welcome you to our carrying 2025 full year results, we are here with Luca de Meo, CEO of Kering; Jean-Marc Duplaix, COO of Kering; and Armelle Poulou, CFO. This presentation will be followed by a q&a session. Luca, the floor is yours.

Thank you, [ Philippine ]. Good morning, everyone. Very happy to be with you today. Of course, 2025 was not the year we wanted. I think it's even reflect the full potential of Kering. And we all know it here. But what matters is our response, Swift, disciplines and unwavering. Since the second half of the year, I can ensure you, we have been taking action decisively to put the group back on the right trajectory. I think we are still far from where we want to be. We don't have everything in place yet, but we're building every day with focus. Our objective is clear, reignite desirability and prepare the next cycle of growth house by house, product by product, by clients.

So 2025 was a turning point, not because of the numbers, but because of the decision we started to take. And I want to thank Francois Marie and the caring Board of Directors for their trust, their support. This trust allowed us to move fast and to start shaping the strategy, we will present during our Capital Market Day in May. Over the last month, we strengthen our financial flexibility. We reshaped parts of our portfolio. And we made bold strategic moves to give our houses, the space and the time they need to regain momentum. A very important step, of course, was the partnership with L'Oreal. It allows us to accelerate the development of our Beauty business. We're the #1 player in the world, unlocking power that we could not reach alone and also prepare our entry into the high-growth wellness and longevity segment, a space where we want to play and where we know value and growth will be created.

In jewelry, the progressive acquisition of Razelli Franco, I think, reinforces our industrial capabilities in a category where we see tremendous potential. It gives us more control more know-how and more capacity to scale. And this is only the beginning. Sharing the full ambition of our jewelry strategy is, of course, also on the agenda of the Capital Market Day. In parallel, we started to reinforce our operational discipline while protecting everything that makes our houses desirable. 75 fewer stores in 2025, net a sharper, higher quality retail footprint, 8% reduction in inventories at the year-end and we will go forward further in 2026. EUR 925 million in cost saving, down 9% compared to 2024. And improving our agility and focus while preserving creativity and craftmanship.

On sustainability, I want to say that caring remains at the forefront in 2025. It's a real competitive advantage, recognized again this year with our CDP Type A rating for the third year in a row. But beyond recognition, we focus on delivery, closing our 10-year sustainability strategy and already shaping the next chapter, which we will present, of course, at the CMD. For us, at carrying sustainability is not in a separate agenda. It guides the way we create, source and operate the business, producing less, but producing better will remain a core principle to protect our brand equity, our clients and our environmental footprint. 2025 also marked the beginning of a creative renewal across houses, new creative leadership, new expression between heritage and innovation at Gucci and Bottega Veneta at Balenciaga.

I think the feedback is encouraging. We are not celebrating anything yet, but I believe the momentum is building step by step. And one conviction has become even stronger week after week, day after day, creativity is our North Star. It is what sets luxury apart, but creativity only becomes value when execution follows at the same pace, in retail, in supply chain, in merchandising and marketing. This is where we are putting our energy into. On the ground, the acceleration, I believe is already visible. I spent time every weekend in our stores, seeing the teams talking to clients, filling the product. And I can tell you there is energy coming back. Our products are reconnecting with our clients. We saw progress in Q3 and in Q4, with sales trends improving quarter after quarter. The momentum is real, early, fragile, but real. And I can guarantee you that we will build on it.

Before handing over to Armelle, let me highlight the key figures for the year. Excluding Kering Beaute, revenue for 2025 amounted to EUR 14.7 billion, down 10% on a comparable basis. with a clear sequential improvement throughout the year and Q4 at minus 3% on a comparable basis. This revenue level reflects the low point of the cycle and the starting point of our rebound. Recurring operating income reached EUR 1.6 billion, corresponding to 11.1% EBIT margin showing the impact, of course, of a difficult top line. Operating income will now start to benefit from the first effects of our work on top line and efficiency. Free cash flow amounted to EUR 4.4 billion, including real estate transactions. And finally, net financial debt decreased by EUR 2.5 billion to EUR 8 billion even before the impact of the L'Oreal transaction, which we will close in the first half of 2020. These results are not where we want to be, but they mark the bottom and the first steps of the turnaround we have initiated.

Armelle will now take you through our operational and financial performance in more detail. Armelle, over to you.

Thank you, Luca, and good morning to all of you. As you have clearly stated, 2025 was a turning point we did it. The figures I will present confirm this low point. But let's be clear, these numbers establish a starting line from which we are now driving our turnaround, and they are the evidence of the financial discipline that underpins our strategy.

Let's start with revenue on Slide 8. As a reminder, in accordance with IFRS 5, Kering Beaute has been deconsolidated from our fiscal year 2025 accounts and has been restated from 2024 figures to provide proper comparison. So all figures discussed in this presentation exclude Kering Beaute. Full year revenue reached EUR 14.7 billion down 10% in comparable terms and 13% reported. ForEx was a 3-point headwind mostly due to the strengthening of the euro against the dollar and the gain. The scope effect was immaterial, linked only to the turnover from the mall for 1 month dispose of in January 2025. But the annual numbers don't tell the whole story.

The critical point is the sequential improvement we delivered throughout the second half with Q4 showing a clear acceleration. This tells us our actions are starting to gain traction where it matters most with our clients. Our geographic footprint remains well balanced across regions. We see the stable profile. We saw some mix adjustment during the year. Asia Pacific declined by 2 points to 29%, while North America and Western Europe each gained 1 point. Japan and the rest of the world maintain their respective shares.

Slide 9 shows that throughout the year, we saw a gradual recovery with Q4 coming at minus 3% representing a sequential improvement versus Q3 despite a more demanding comp base. The acceleration in trend was visible across all segments. Returning to positive territory except for Gucci. At group level, in Q4, EUR grew high single digit with only a minor impact from pure price increases reflecting our actions to improve the mix within our brands. conversion rate improved slightly, which is also encouraging. On the other hand, traffic remains soft. December, despite facing the toughest comparison base of the quarter, delivered the performance slightly better than we expected and remain consistent with the overall quarterly trend.

On Slide 10, let's take a closer look at revenue by channel. Retail, including e-commerce, accounting for 76% of total revenue with the balance coming from wholesale, royalties and other. For the full year, Fitel declined 11% comparable with improved trends in the second half. After a 9-point sequential improvement in Q3, our retail channel, which is the part of our business, saw its performance improved by 3 points in Q4 versus Q3 ending the quarter at minus 4% comparable despite the tougher comparison base. This progression was driven by a strong AUR, but also by some improvement in volume trends. Included in retail, e-commerce was down 12% comparable in 2025 and represented 11% of retail sales in line with last year.

Online performance, also improved progressively throughout the year. Wholesale and other revenue declined 7% on a comparable basis in 2025. Consistent with our move towards greater exclusivity together with a challenging market situation in some regions, wholesale was down 19% for our luxury houses. We have delivered on our plan to strengthen the control of our wholesale distribution bringing down wholesale revenue for our luxury houses in line with the target we set in February 2024. In the fourth quarter, wholesale and other revenue were down 2% on a comparable basis. For our luxury houses, wholesale posted a sequential improvement with a decline contained to 9%.

Kering Eyewear reported a solid and consistent wholesale performance, up 3% in 2025 and in the fourth quarter. Royalties and other revenue were up 6%, both for the full year and in Q4.

Now turning to retail trends by geography on Slide 11. As you can see, we registered a sequential improvement in 3 of our 5 main regions in Q4 and a sequential improvement in all regions if we look on a 2-year stack. Western Europe was down 7% in Q4, in line with Q3, despite a tougher comparison basis. On a 2-year stack, however, retail sales in Europe have improved 4 points restated from Kering Beauté. Tourism remain weak, affected by the decline in Asian visitors. Local demand accounting for 51% of the total was still subdued, though not consistently across brands. [indiscernible] returned to growth in the region.

For the full year, Western Europe was down 11% on a comparable basis. In North America, Q4 delivered a 2% comparable growth maintaining solid momentum with only a 1 point deceleration versus Q3 despite a 5-point tougher comparison base. The higher-end segment performed better and importantly, Gucci was flat in Q4 versus last year, marking the end of the decline in the region. For the full year, North America was down 5% in retail with the U.S. cluster broadly in line with the region. Japan improved in Q4 to minus 7%, supported by a more favorable comparison basis. The risk purchases accounted for around 33% of sales in the country. Local trends were similar to Q3. The decline in tourist spending continued, but was less pronounced than in prior quarters.

We can highlight that in Q4, Bottega Veneta turned positive in Japan. For the full year, Japan Retail was down 16%. The appreciation of the yen, combined with the rebalancing of price gaps between geographical zones, significantly reduce the market's attractiveness for tourist customers. Asia Pacific showed a clear acceleration in Q4 at minus 6%, marking a 5-point improvement versus Q3 driven by Mainland China, Hong Kong, Taiwan and Korea. The Chinese cluster also improved slightly quarter-on-quarter, ending the period down mid-teens. For the full year, retail in Asia Pacific, was down 16%.

Finally, Rest of the world was up 3% in Q4, fueled by Middle East and to a lesser extent, Latin America. For the full year, retail in the rest of the world was stable, slightly positive in the Middle East.

Now let's move to results on Slide 12. At EUR 1.6 billion, recurring EBIT while down 33% year-on-year, representing a 340 basis point margin dilution and that was more contained in the second half with a 120 basis point decrease. While the 11.1% EBIT margin reflects the top line pressure, it more importantly demonstrates our efforts to protect our profitability in such a challenging environment its required very goes cost management and delivery choices. This discipline is precisely what provides a healthy financial foundation to fund our comeback. To support our brands, we continue to invest selectively in key areas while maintaining strict cost control in others.

We delivered EUR 925 million in savings this year. reducing our OpEx base by 9%. This was not about blind task cutting. It was a small reallocation of our resources. We successfully protected creativity while boosting our efficiency, which is precisely how we are rebuilding our firepower to invest in our brands. At year-end, our store count was 1,719, a reduction of 75 units fully in line with our plan. and reflecting our strategy to upgrade the quality of our footprint, fewer stores, but in stronger and more strategic locations.

In 2025, we opened 58 stores and closed 133 resulting in these net 75 closures. Our store network is being assessed constantly and we have accelerated its rationalization by closing stores that no longer support our ambition to strengthen sales density. This is why in 2026, there will be another reduction of the retail footprint with 100 net closures already planned and more still under discussion. In the fourth quarter, we closed 18 stores, but we also continue to enhance the quality of our retail network with key openings, including the studying salon flagship on [indiscernible] in Paris, a new Bottega Veneta saw in New York's bitpacking district. We also expanded the [indiscernible] in the UAE with openings in Dubai and Abu Dhabi.

At EUR 2.3 billion, free cash flow generation, excluding real estate transaction, was down 35% compared to 2024 including real estate, it amounted to EUR 4.4 billion. CapEx, excluding real estate transaction at EUR 0.8 billion was down almost 30%. The CapEx to sales ratio was 5.4%, declining 1 point versus last year. We prioritize investments to upgrade the store network of our brands and selectively expand its footprint. Net debt stood at EUR 8 billion at year-end, down EUR 2.5 billion versus last year, confirming that our deleveraging strategy is firmly on track and that financial pressure continues to ease.

In addition, the EUR 4 billion cash inflow from the [indiscernible] deal will further strengthen our balance sheet in the first half 2.

I will now comment on our houses, starting with Gucci on Slide 15. Revenue for the full year came in at EUR 6 billion, down 22% reported and 19% comparable. Retail, down 18% comparable accounted for 92% of sales. Wholesale decreased by 34% and royalties declined 2%. In Q4, retail was down 10% on a comparable basis, showing a clear sequential acceleration driven by almost all regions, except Western Europe. The 3 points quarter-on-quarter sequential improvement was supported mainly by North America and APAC, the launch of La Famiglia collection together with the surrounding activations has put Gucci back at the center of the attention.

New net trends, including revamped carryovers continue to strengthen, reaching 60% of the mix the AUR increase, thanks to the improvement in the performance of handbags. There was nearly no pure price increase. Wholesale was done 4% on a comparable basis for the year, reflecting the strategic rationalization of this channel and the reduction in the number of doors. In Q4, wholesale was down 14%. Gucci posted a full year recurring operating income of EUR 966 million, resulting in a 16.1% EBIT margin. There was a negative operational deleverage from lower sales but it was partially offset by substantial efforts on the cost structure while reinvesting in product development.

Over the year, the house continued to elevate its retail footprint stores, mainly in Asia Pacific and Japan. This is part of its strategy to reinforce its presence in prime location and offer an increasingly exclusive experience with clientele with exiting lower contribution side.

Some highlights on Saint Laurent, Slide 17. Saint Laurent delivered EUR 2.6 billion in full year revenue, down 8% reported and 6% on a comparable basis. Retail declined 6% comparable and wholesale decreased by 14% as continued to streamline and elevate its wholesale network. Focusing on Q4, retail was flat year-on-year marking the third consecutive quarter of sequential improvement, supported by better trends in Western Europe and Japan, while North America remained positive. In leather goods, new launches and reinterpretations of iconic bags were very well received, even if that did not fully offset for the softness in carryovers.

Women's ready-to-wear and footwear collections delivered strong growth, fueled by the success of the latest collections and new introductions, particularly in footwear, such as a lower and babylon. Traffic remained under pressure in Q4, but this was offset by a higher average ticket and stronger conversion. Wholesale grew 5% comparable in Q4, reflecting a phasing effect. Full year recurring operating income reached EUR 529 million, delivering a robust 20% margin. The house maintained its profitability through efficiency measures that help reduce the cost base. The year was also marked by major investments in impact retail locations with several flagship openings the relocation of Avenue Montaigne in Paris, inaugurated in Q4, has been performing exceptionally well and the reopening of the [indiscernible] flagship in Milan, further strengthen thus footprint in prime luxury destinations.

Moving to Bottega Veneta on Slide 19, with full year revenue was EUR 1.7 billion, up 3% comparable. Retail activity remained robust with revenue accounting for 86% of sales, up 4% on a comparable basis. Wholesale decline by 6%, in line with Bottega Veneta strategic focus on selective distribution. Royalties delivered a strong 25% increase, benefiting from the initial launch of Bottega Veneta fragrances. In Q4, retail posted a solid plus 5% comparable despite a very demanding comparison base. North America was a key contributor, delivering mid-teens growth in the quarter. Performance continues to be driven by the strong appeal of the leather goods offering, while the brand expanding across other categories. In Q4, Bottega Veneta recorded double-digit growth in ready-to-wear and shoes.

Revenue also benefited from a sustained increase in AUR and from the recruitment of new VAT clients. Wholesale declined 9% in Q4, consistent with the brand's disciplined approach to distribution. Full year recurring operating income reached EUR 267 million, up 5% year-on-year resulting in a 15.6% margin. Gross margin improved and the brand continued to invest in communication and store upgrades to support its strong momentum and reinforce its positioning.

Comments on our other houses are full on Slide 21. At EUR 2.9 billion, 2025 revenue was down 6% on a comparable basis. retail, which represented sales declined 4% comparable, while wholesale decreased 15% comparable as our soft luxury houses continue to strengthen their control over the distribution. Retail revenue was 6% on a comparable basis, while wholesale was down 9%. Trends across our soft luxury brands remain contrasted. Balenciaga delivered a sequential improvement with retail turning positive in Q4 in Asia Pacific and maintaining solid momentum in North America for Alexander McQueen the year and Q4 remain challenging. We are taking firm and decisive actions to restore sustainable performance. The restructuring plan of the brand is well underway.

It included the closure of 21 stores in 2025. Brioni delivered another strong year with Q4 revenue up double digits, driven by excellent traction in Western Europe and rest of the world. Our debit analysis once again posted very robust trend in Q4, confirming the strong desirability and resilience of our houses. Boucheron achieved outstanding momentum with revenues up in the mid-20s on a comparable basis and outstanding performance in Japan and Asia Pacific. Pomellato pursued its steady trajectory with solid resilience in Asia Pacific and line growth in both North America and Japan. Killing had another sound year up in the mid-teens with a clear acceleration in the second half.

The Jewelry division continues to be one of the group's most dynamic growth engine, supported by strong brand equity consistent investment in creativity and craftsmanship. At the same time, Boucheron expanded its geographic footprint by opening new stores, notably in Los Angeles, how they will drive Shanghai, in Kandi, Abu Dhabi and 3 openings in Dubai. Recurring operating income for the other houses amounting to minus EUR 112 million in 2 a soft revenue performance at Balenciaga and losses at Alexander McQueen weighted on profitability despite ongoing deep restructuring efforts. Conversely, Boucheron delivered higher results over the period, supported by strong brand momentum and disciplined execution.

Now turning to Kering Eyewear and our corporate segment, which no longer includes cannot. On Slide 24, revenue at Kering Eyewear came close to the EUR 1.6 billion mark this year. Comparable revenue was up 3%, both for the full year and in Q4. Performance was driven by sustained growth in Western Europe as well as in the optical category. Kering eyewear, operating income stood at EUR 252 billion, reflecting a solid operating margin of 15.8%. So slight moderation comparative to last year, mainly stems from higher custom duties and continued strategic investment in Marijn to support its development in new markets. As for corporate costs, they were down EUR 10 million year-on-year, reflecting ongoing efficiency initiatives.

The remaining lines of the P&L are summarized on Slide 24. Nonrecurring result was negative EUR 584 million. This reflects a combination of items, including Capital losses on real estate deals in Paris and New York, offset by gains from the sale of a building in Japan and the disposal of the Board. Impairment and restructuring charges related to the streamlining of our store network and organizational optimization initiatives. Adjustments related to the building at a [indiscernible] in Milan following its reclassification under assets held for sale. And finally, the European Union Commission fine on which we communicated on in October. Net financial charges amounted to EUR 594 million compared to EUR 614 million last year. The cost of net debt at EUR 328 million was broadly stable with the average coupon on our bonds remaining at 3%.

Corporate tax amounted to EUR 354 million down substantially from last year. The tax rate on recurring income was 36% above our normative tax rate, mainly due to the losses generated in the United Kingdom by Alexander McQueen and by the one-off impact of the reclassification of Kering Beauté into discontinued operation. For 2026, our best estimate so far is a tax rate around 33%. We will be gradually back to our normative tax rate of 27% to 28% in 2 to 3 years. Net income group share amounted to EUR 72 million and to EUR 532 million, excluding discontinued operations and nonrecurring items.

A few comments on free cash flow on Slide 25. Net cash flow from operating activities reached EUR 3.1 billion, down 34% versus last year, in line with the decline in recurring operating profit benefited from lower taxes paid, but the change in working capital was more limited than in the previous year. Excluding real estate transaction, free cash flow from operations was EUR 2.3 billion.

Slide 26 illustrates our disciplined capital allocation in action. This year, we focused on strengthening our balance sheet through sound cash generation and real estate refinancing, we achieved a significant EUR 2.5 billion net debt reduction, bringing our year-end position to EUR 8 billion. This demonstrates our commitment to a strong financial profile with a resulting leverage ratio of 3.4%. The net debt reduction will continue this year.

A quick look at our balance sheet and financial structure on Slide 27. You will notice that we have reclassified EUR 5.2 billion in assets held for sale. Corresponding to EUR 3.7 billion net for the Kering Beauté division to be sold to L'Oreal, closing expected in H1 and 1.3% for our building via [indiscernible] as we expect to close the transaction in 2026. Our net debt-to-equity ratio stood at 51%, an improvement from 67% last year reflecting the positive impact of the real estate refinancing operations. Inventories decreased by 8%, and our operating working capital ratio increased by 0.8% year-on-year. It stood at 17.7%, up from 16.9% last year. Reducing inventory remains a key priority for the year and we expect to bring them down further in 2026.

My final comment relates to the dividend on Slide 28. The Board of Directors has proposed a dividend of EUR 3 per share. In addition, an exceptional dividend of EUR 1 per share will be proposed related to the disposal of Kering Beauté to L'Oreal. Both dividends are subject to shareholder approval at our next AGM. Return to shareholders is a key priority in our capital allocation framework. Our ambition is to resume dividend increases as of 2026, in line with the expected improvement in our performance.

This ends my remarks. I thank you for your attention, and I will turn the mic back to Luca.

Thank you, Armelle. So as you can imagine, we still have a lot of work to do. Of course, not all the foundations are in place yet. But the good news is that we are moving forward with speed with discipline and with a lot of determination. 2026 will be an important year for Kering a year of construction, reconstruction and certainly a transformation, a year in which we aim to return to growth and improve our margins, of course, step by step. We ended this year with a very clear view on the challenges ahead, we know that the environment remains uncertain, but we also enter with a lot of fighting spirits we are convinced that our rate is against ourselves. No matter what happens around we have to raise our own bar strengthening our fundamentals and executing better day after day.

On April 16, at our Capital Market Day, we will present the strategy of the group, the strategy of each of our houses and how they will rebuild the viability and regain momentum. And the road map milestones and operational drivers that will support this transformation. I think we are building a leaner, more agile organization powered by a strong group platform, bringing together industrial excellence, client expertise and tech and AI, sustainability and support functions, all aligned behind the same objective. And at the core of this platform, we will embed innovation in products in client experience, in operation and in technology, innovation that enhances creativity, accelerates execution, strengthens our houses and brings new value to our clients.

This group platform will give our houses the scale, the clarity and the capabilities that they need to focus on what creates really value, desirability, craftmanship and top line momentum. And above all, we will drive this transformation as one team with aligned leadership, accountability, empowered people and the real culture of excellence in execution. On April 16, we will show ambition, but ambition we can deliver with humility with intensity and with the determination that is typical of a real challenge. So thank you very much for your attention. I think we are now available to answer all your questions.

[Operator Instructions] We have the first question from Luca Solca, Bernstein.

I wonder when you look at the brands in the portfolio and you look at criteria such as how prepared the vision is and how appropriate the vision is what is the momentum that you are seeing in the market at the moment? What is the state of organization and leadership in place in these brands? What is the cost profile or the CapEx requirements whether you see that, as you said, Luca, you have a lot of work to do in a relatively uniform way, whether you see that some of these brands are further ahead and some of these brands have more work to be done?

I'm trying to focus on the current snapshot rather than sort of trying to steal the thunder from the Capital Market Day when you will tell us the plans. But just an assessment of what you think the starting point is by brand, if you were to force rank them in terms of which ones are already prepared and which ones further behind. Maybe a similar assessment on the broader business. We'll give sort of highlighted efficiency ambitions. Where do you stand on this efficiency program at the moment? Do you think that the bulk of it is yet to be realized? And for example, when it comes to the number of stores that you're planning to close what would be the floor space reduction that you're aiming to achieve? And what are the other cost buckets that could potentially contribute to making the bottom line [indiscernible]

Okay. It's a very broad question. Look, I'll try to be as sharp as pursue. I would say Bottega and Laurent are very sharp, very desirable brands when you look at the -- and attractive brands when you look at the numbers, I think the challenge or the opportunity that's put like this with those 2 brands is actually to enlarge and to grow them. This is -- so I think we are pretty much in the place where we should be from a position point of view. And I believe that we have a lot of potential in terms of growth, both geographically but also in the product offer. This is exactly what we're doing internally. Gucci is -- used to be in a different situation. You know that Gucci was a brand that had suffered in the last years in terms of desirability.

I think we have a you probably noticed that we have apart from the nomination of Francesco, we have basically completely changed the executive company. I think it's one of the best teams in the industry right now, just look at their track record and their experience. We are working, of course, on the brand strategy for the Capital Market Day. But in fact, they moved very, very quickly and making some clear decision, and we already see some signs on Gucci seen also that into the numbers. that Gucci is kind of rebounding from the lowest point. But of course, as much work to sharpen the position to get back to what Gucci is expected to be in the market.

Concept is not very complicated. We have to execute it properly at all levels from product to distribution to marketing to create dividend innovation. You have Balenciaga could be, let's say, that kind of movement from also the change on the Creative Director. Both are great people but they have a different style might, let's say, induce the idea that we have a question mark on Balenciaga. But what I could learn is Balenciaga is a very powerful brand. And it's my opinion, a bridge to the next generation. This is one of the brand that brings young people, alternative people, people that really like Avangard fashion to the group. So it has a very, very, let's say, important function into the portfolio.

You have -- so these are the big brands. On the jewelry business, I think we are there where we should be with Boucheron. We have to grow it. I think that the acquisition of Brazil will give us that kind of industrial product development power that will enable us to really do bigger business with jewelry because I think it's underrepresented in our business mix. So we are, with that category slightly above EUR 1 billion in terms of turnover. I think we can do much more. And then you have cases that are a little bit more complicated like McQueen, where the brand is making losses, important losses. And there, the -- I think the solution is very simple is that we have to restructure. We have to get back McQueen in terms of cost structure and investment where in a coherent way to the potential of the brand.

That's the first step and we will see then later what we will do with it. But we are already going to the kind of process. I think we're closing stores, for example, because Main was with more than 130 stores owned stores, and this was simply too big for the potential of the brand. So we have to reopen the positioning and lower down the breakeven on the thing. It's a simple from a business point of view, a simple decision to conceptually to make, and now we are executing. This is a little bit quick the kind of analysis of the thing on the brand side. On the broader business, we already mentioned restructuring of the dealer network. Probably the perimeter in terms of numbers will go down progressively from the highest point around 20% in point of sales.

I'm not sure that this will reflect exactly the same numbers in square meter because sometimes, for example, we have to close the store and open something that is a little bit bigger for some brands where more surface is needed. Take, for example, Bottega, Bottega in China has a lot of small stores. probably we need to close some. But in the moment, we go for a new one, we need to have something that represents the ambition of the brand and can fit all the products that we are developing. We are looking at everything, Luca, everything. So I can confirm you that, as I was saying into the introduction, we are very clear in our mind the opportunity of this crisis for us that we have experienced in the last years is that we can cushion everything from scratch. This is what we're doing.

So we are looking at investment. We are looking at how to improve, let's say, our performance on media investment and marketing investments. We are reducing stores. But we do it -- we are looking at a lot of potential on the what I call the upstream, that means everything has to do with manufacturing, with logistics, et cetera. So I think this part has a lot of potential carrying because, in fact, in the past, we tended to more look at the downstream and I believe that we are putting a lot of attention. This is also a little bit my special because I come from a sector where the industrial part is very, very important.

So I've looked at and spending a lot of time on how to reorganize the upstream of caring. I think one of the key is teamwork. So there is a lot of potential in kind of mutualizing and making sure that the brands can work together to find synergies, especially on the back office and that's what we're doing. It's hard work, but it's very interesting. It's fun, and we can clearly see the potential. I hope I could answer in a reasonable time to your question.

We have another question from Edouard Aubin, Morgan Stanley.

Yes. I have one question on the short term and one on the more medium to long term. So on the short term, apologies to ask the question, but I guess, investors care is there is some chatter in the market that maybe the group is off to a slightly soft start of the year. And I know things are really difficult to read given the timing of Chinese New Year. But if you could comment on that and regarding Gucci specifically [indiscernible] to know how material has been kind of the traffic of the top line inflection since [indiscernible] products have hit the shelves.

It seems that things have certainly improved and accelerated, but I'd like to get an update for you if possible. And I don't know if you're going to be willing to share with us, but related to that, I know you guys don't give guidance, but do you think Gucci could be up or down or is likely to be up or down in the first quarter. So that's the short-term question number one. And then on the more medium to long term is on management, look how much of an opportunity for the group is for the group to kind of promote and hire talent over the next 12 months? How material changes will likely to be same time next year? So when we meet again in February '27, are we going to see significant changes or not?

For example, have been surprised a bit by the fact that you still not hired a high-caliber executive from the competition from the luxury goods sector yet. So our people not willing to join the group? Or are you taking your time because you just want to hire the best from the competition. So if you could comment on management changes, future management changes, that would be great.

Okay. So I understand that you are asking me how is it going on in the market right now. We are -- we see the things happening. As I said before, I think we see a lot of positive signs, including at Gucci, okay, because the first , let's say, move with La Famiglia was actually pretty successful, almost everywhere, I would say, everywhere. Of course, it represents a relatively limited part of the offer. So I have to remind everybody that the first run away from [indiscernible] is actually happening on the 27th of February. So we haven't -- you haven't seen anything.

What I know is that Gucci team is working very, very hard. Obviously, also the creative team. I can clearly see that they understand very well what Gucci is all about or should be all about. That's what you -- when you look at the product, et cetera. And they also know that they have to develop a collection that covers all the important categories for the consumer. So I'm pretty positive. I'm actually very optimistic about how the things are going. It's -- the environment is what it is. It's not the most dynamic environment luxury sector since years. But as I said during the introduction, I think we went so down that the first races in ourselves.

So I think we lost market share in the last years, and now we have to get the thing back by doing properly the things. So we will see growth in 2026, we will see increase of margin. on all the brands. And that's basically the situation. For the management thing, I want to say that the quality of the people and the competence of the people in caring is very, very high. In fact, a lot of people in the last round were promoted from internal. That shows that we had people that they had potentially they know what they are -- let's say, what they are talking about.

Probably the opportunity that I see is to actually integrate people coming from different horizons to complement the vision of a group of people that have been growing in the luxury industry for decades. So I'm not looking at hiring executive from competition also because practically speaking, sometimes you have garden leaves or 1 year, et cetera. I don't have time to waste. I mean the people immediate. And in the next weeks, you will be seeing announcements of new people coming into this house to cover position that sometimes don't exist because we need to structure the organization in a different way.

I was mentioning to Luca before the need to focus on the upstream part of the business. That means the manufacturing, the purchasing, the logistics, the product development, et cetera. So this is a typical area where you need someone on top with a different experience that can bring a new perspective to the sector or at least to our organization. So be patient on the management is also true that I -- let's say, I'm taking my time to meet a lot of people because those decisions are important for you, but also for us as a company, it's important to create teams that are very cohesive normally work when everybody -- each other recognizes the value and the contribution of every single member of the team. So I have to bring top people so that they can integrate and it will happen. And most probably even before the CMD, you would see a few announcement that confirms what I'm hinting what I'm spoiling to you right now.

Reacting to your comment, it's true that as long as we have not -- the full impact of the Chinese New Year, it's difficult to assess clearly, what could be the landing point for Q1. Two, I think what has been said is super clear we are projecting and we're working on recovering in terms of growth for '26, but it will be gradual along the year, quarter after quarter. And there is something that you need to take into account is that there is a benefit to close, of course, some doors and some stores because it has a positive impact on the EBIT margin because we are working close the dilutive stores, but it is also partly a drag in terms of sales. So it's something that has to be factored also in the way you look at Q1.

We now have a question from Erwan Rambourg, HSBC.

So first on stores, in reconquering share, there's obviously a case that you can shrink before you grow. I think, Luca, you said you would probably eventually close 20% of units. I suspect this is at the group level, Gucci seems to be a bit over stored relative to others, and you're at 497 units today. If we think about the medium-term retail footprint for Gucci, is it fair to assume that it would be more than a 20% reduction eventually. And you are, in some markets tied into relatively long leases. Is there anything you can do to reduce these leases? So that's my first question.

And then second question coming back to management organization, I think you a very original hire, which I don't think exists for some of your peers, which is Chief Commercial Officer at the group level, [indiscernible]. So maybe going back to what you were mentioning about synergies. Can you maybe explain that role within the group? And how do you project that?

So I leave to the first answer to your -- first question to Jean-Marc, who is the absolute expert in the team real estate.

No. Erwan, I think first of all, the ambition that has been set is minus 20% in terms of store footprint from '25 to midterm, so let's say, around '28. We made already, as I mentioned, already some closures, massive closures, net closures in '25 and of which in the 75 closures. So based on what Armelle commented, it was already 40% of these closures made with the Gucci stores with a focus on outlet stores, but not only because we have a systematic review of the quality of the network we have at Gucci and the densities that we have in the stores and clearly, with the objective to close some doors, especially in Asia, I'm thinking about Korea, Japan and partly China, where your comment is totally relevant where probably we have a sort of saturation of the market with too many Gucci stores.

Going forward, is a minus 20% to come from '25 to '28 Gucci should represent something like 1/3 of this cohort of closures. But having in mind that there will be a concentration here again of the closures in the Asian market. I would say that if I consider particularly '26, I guess that 40% of the closures will happen in the Asian market.

An additional comment about the criteria regarding the closures and what is at stake. It's true that we have long-term lease. But it's part of a global negotiations that we have currently with the landlords. It's a -- to have a global discussion about not only the Gucci network, but the global network we have, in terms of resizing, in terms of relocations, but also in terms of rent renegotiations. .

And that's part of the explanation for the nonrecurring items that we had in '25 and that we would surely have in '26, it's about the cost of the exit of some locations. And here, we are very pragmatic. It's a financial calculation. We look at what would be the accumulated losses or the cost of keeping open a store and the cost to close it. Sometimes, we have an arbitration where we keep the store open and time of the lease. And sometimes, we are closing stores.

So that will be the rationale supporting this work of rationalization but we are very determined. And as said by Armelle 100 stores for net closures in '26 is the minimum we are targeting and we are working to deliver more. In terms of square meters, it's around a mid-single-digit decrease in terms of square meters with 100 net closures, and we are targeting, as I said before, even more. So probably we could reach ideally high single-digit deals of the square footage for '26.

Maybe building on what Jean-Marc was saying, I think that you have cases like the one I mentioned before, like McQueen, where you will go much deeper into the thing, probably more than 50% of the time without Mercy because we have to get down. The -- one of the things that we have been organized and thanks to the sort of Jean-Marc and his team is also form of coordination that was not necessarily working amongst the brand. So sometimes the locations that are closed are reallocated to other brands because they are interesting. So that kind of team play is one example of how the new carrying will actually work and bringing some opportunity of synergy and solution because we play as a team. .

I think it's also, in a sense, the reason for the creation of the position that we've given to Daniele Zito, who was a former President of Gucci Japan, [indiscernible], very talented knowledgeable about the retail. The whole idea there is to cut the horizontal to cut one of the main horizons that I will have to cut within an organization that was a siloed and structured by verticals on the plant. And this is the idea of, basically, you have all the channels somehow in the hands of someone. So retail, wholesale outlets e-commerce, et cetera, et cetera, because I think we really need to see the channels altogether.

We will understand much better what are the things, we'll have options to decide how to manage the kind of chain. And this was not the case because the responsibility was splitted the, let's say, was splitted with different people. And the work of Daniele will be, of course, in coordination with the brand or how to orchestrate the functioning of all the channels in parallel. So it's going to give us a better view. Of course, the work of the group is not to intrude in the commercial policy of the brands.

We are there to coordinate. We have to develop tools so that the brands can better decide. We are there to support them. the group is there to create the condition for efficiency and the brands will have the responsibility of nurturing and fostering growth. That's the concept. And yes, so Daniele will be one of the guys cutting horizontal, which we didn't have before.

We now have a question from Carole Madjo, Barclays.

Two questions on my side. The first one is about your outlook in 2026 in which you talked about redoing to growth and improving margins. Can you share a bit more detail on that? So are we here talking about all the brands, including Gucci, I think the market already has focus for the 2026 top line growth of around 5% and EBIT margin improving by [indiscernible] to 18% more or less to find these numbers achievable at this stage? That's the first question.

And question number two, I was about the Gucci brand itself. Can you share your view on the Gucci brand DNA going forward. I feel about [indiscernible] Gucci has been too fashion-driven, too exposed to newness. So how do you think about balancing creativity, innovation, fashion authority versus also they may be a bit more evergreen focus to carry over?

So on the outlook, we already said what we could say, and we wanted to say. So I can confirm you that '26 should be a year of growth and increase in margin, basically, in all the big brands, all the brands. What you have to understand, of course, I can't tell you exactly the details. But the way we build the budget with teams and with the brands we was pretty much now. You can confirm Armelle pretty bottom up. And this is not something that was imposed to the group. So we build it together. And all people in each one of the brand CEOs and the people here are convinced that we have planned for 2026 that is very reasonable, you can trust the numbers and pretty solid, okay?

So that's the way we enter into the year. We know that we have to kick start a new phase for -- and -- and we know that 2026 will be important also to build somehow confidence with you and with the markets, okay? So this is what I can say on the DNA of Gucci, I mean, I just want to remind everybody that Gucci is one of the top brands, luxury brands in the planet. Don't forget that. And in my career, I've learned something. Of course, it was a different vector that great brands actually are immortal. They never die. If you do the right things.

If you do the right things, they can rebound. And Gucci's history has proved many, many times and ability to rebound. And I have the feeling that this is what is starting right now with Francesca and with them. It's not very complicated to understand what Gucci stands for, right? What Gucci has to do. So as soon as we do and we use codes we execute excellently both product and customer experience, the market reacts. Look at what happened, for example, with the small collection of La Famiglia immediately the market was on us. I don't want to use information that we take, of course, as important, but a lot of signals are coming from different inquiries that Gucci is back on the radar. And this is only the beginning. And as I said before, just look at I had a question on before on management, look at the people that are running now Gucci.

So nobody noticed that we made a lot of change in the management, bringing a lot of experienced people. We have a very strong CEO, one of the most talent design on the planet. So trust that the thing will get better.

We now have a question from Antoine Belge, BNP.

Two questions. So first of all, I think you've been mentioning that Demna will present its collection at the 27th of February. Will there be a bit of a semi on amino happening? And so maybe in Q2 and then Q3, Q4. So how should we think about the share of the product offering influenced by them now? And my second question is in your return to profitability objectives, what will be the attitude to cost?

I think in 2025, we already saw quite a significant decline in OpEx. So what will be the -- what can more -- we should expect? And in terms of marketing, should we also expect some savings or better use of the same dollars, yes, what's the trajectory for marketing expenses in 2026. And actually, it's not a third question, but I think people are asking. So on the 16th of April, should we expect very precise numbers in terms of top line margin for a certain period? Or is it going to be more an ambition without a precise timing?

So look, I mean I'll leave for Gucci, Francesca, the pleasure of unveiling the strategy for the collection. I think that everybody is very aware at Gucci that we need the rhythm. We need a quick execution. And so we have to very, very quickly show some signs of rebound, including on the product side. So expect the collection to be very, very quick in the distribution, okay? But it's a question you should be up to Francesca and Gucci team. Regarding OpEx, I think you can expect this year -- we had a very important reduction in 2025. You should expect probably stability on the OpEx, but this is a mix of cuts that go on -- that will continue on things where it makes sense and reinvestment on thanks to improve the desirability of the brand.

So all in all, of course, we will try to reduce -- make the organization more and more efficient. So we'll look very, very detailed on the cost side. But my -- when I look at the numbers, it's basically a combination of further reduction on the things the dominant value and reinvestment, I think that potentially can bring back. And the same, I think, is for the marketing -- what I could see as a problem, but also therefore as an opportunity is that we have been kind of protecting below the line into the marketing investment.

And we have been cutting on above the line, which is the one that brings traffic to stores. So this year, we not only are planning to renegotiate some of the contracts with the media agency to gain efficiency. That is totally possible, I think, and we should do it. But also probably you'll see a little bit more accident investment on the above the line, which is the thing that speaks to consumers basically.

Maybe just to add on the OpEx side, if I may. I mentioned by Luca, there was a massive decrease of the OpEx in '25, but it started in '24. So over 2 years, we have more than EUR 1 billion of savings in terms of OpEx and not only variable cost, it's also that we worked hard on the fixed cost. If you look at the headcount, also, you see a double-digit decrease in 2 years, which is really an effort of recurring starting with Gucci, but also with the corporate organization. And that's exactly what Luca said. We will continue in '26 to streamline the organization and to make it more efficient.

So that will generate probably additional savings. But at the same time, hopefully, with the increase of the top line, we will have an increase of the variable costs. And we are reinvesting to sustain the growth typically in terms of tech and things like that where we will need to have some investments to support the reocurring plan.

We now have a question from Thomas Chauvet, Citi.

My first question on the portfolio after the sale of Beaute and your acquisition of the jewelry manufacturer resend of last year, how are you thinking about brand portfolio management, specifically, what are your key criteria to evaluate potential acquisitions or disposals. Secondly, on the financial leverage, net debt reduction to EUR 8 billion That's, I think, 2.2x EBITDA excess liability mainly due to the real estate transaction. That will be reduced by further EUR 4 billion with the sale of Beauty what leverage level are you targeting considering also that the Valentino acquisition is only 2 years away.

And how do you prioritize capital allocation during the turnaround. And if I can squeeze just a follow-up to an earlier question on Gucci's '26 EBIT margin outlook. Taking into account the cost reduction you've started 18 months ago and the investment required, as you said, look to enhance desirability. How sensitive is Gucci's EBIT margin to top line in other words, what is the growth level required this year to stabilize EBIT margin at the 60% level that you recorded in '25?

Look, maybe I'll leave to Armelle, the question on the capital allocation and lever and the EBIT margin. I'd like to answer to the philosophy in terms of allocation and management of the portfolio. You've seen let's say, those 2 big movements in 2025. One is the partnership with L'Oreal and the other one is the progressive acquisition of Brazil. It speaks a lot about how we see things. And I would say also the prognosis that we try to bring and the common sense that we'd like to bring as a team into our approach to the market.

I believe that people from the outside, they actually -- of course, the partnership with L'Oreal was seen very positively by, I would say, everybody. But I think that this is, in fact, has been seen as a kind of carrying not really kind of abandoning the cosmetic and the perfumes. In fact, the fact that we are with them reinforces our position. This is the way I see it. I think we will do much more business than what we grew alone. And the work that we will do together will, in fact, also have a huge benefit to our brand, particularly for the, let's say, investments and the string of L'Oreal when it comes to marketing practices, okay?

For me, the resi thing is I can clearly see that the jewelry business is growing. I see that caring is not doing so much. I think Boucheron is doing well, all the brands [indiscernible], et cetera, are doing well. But a very big hanging fruit is the business we could do with our fashion brands on that category from custom jewelry to high jewelry. Think, for example, but Gucci was 10 years ago, doing 3x the business that they are doing right now that category. So if you have an engine underneath that can help you develop the right product and the right collection, this is a no-brainer, right? This is an [indiscernible] that is there.

So what we do the jewelry thing because totally legitimate for our brands, not only the specs brand, but also because we understand that structurally, carrying is a little bit more dependent from the fashion cycle. And we want to create a form of balance and resilience embedded in the structure of group. So both the L'Oreal partnership and the reinforcement of our action on the jewelry category are also there exactly for this to actually make caring less dependent from the fashion cycle. It doesn't mean that we don't have to bring back Gucci [indiscernible]. We don't have to develop [indiscernible], Bottega Veneta and all the brands.

But you can expect in April that we will also talk about resilience and independence from the fashion cycle. That kind of work also has to happen within the brands in terms of the way you build the collection, of course. But our job as a group is also to design to make the architecture of the group in that kind of fashion, that kind of direction. I'll leave it to.

So regarding net debt, as you can imagine, with L'Oreal deal closing in H1 2026, and the cash flow generation of -- that we are going to generate this year, we, of course, expect net debt to decrease very substantially. And we see the leverage ratio. If I use the one pre-IFRS, which we ended the year at 3.4%. We see this ratio be ranging between 1 and 1.5. This is putting us back in a very good territory concerning also our leverage, and we are very comfortable in our strong investment-grade rating.

You've seen that our outlook was confirmed positive stable in October after the year result. Regarding margin, I wanted to remind something I said also last time in Q3 that with the work that we have done on our cost base, we could keep margins flat even without growth. Our ambition is to go. So -- and to grow, so it will yield to an improvement in margin at the group level, but also at Gucci.

We now have a question from Chiara Battistini, JPMorgan.

Yes, a couple of questions from me. The first one is on -- any initial thoughts on how you see the pricing architecture at the major brands evolving in 2026 between price and mix coming with the newness and the innovation that you're bringing to the market? And also how to think about the wholesale channel for the major brands considering especially for Gucci, the major caps that we've seen over the recent years. But any outlook on that would be great. .

And then second question, sorry, more short term. But in terms of the gross margin dynamics I think there was an engine gain that supported the gross margin. And therefore, I was wondering if you could give some color on the magnitude of that versus the underlying move of the gross margin? And what we should be thinking in terms of drivers for 2026 at gross margin level?

So we're going to do 1, 2, 3, okay? So look, on the pacing for sure, we -- I think that, that kind of bonanza inflationary power of the industry of the last few years probably should not be there. We know -- we all hear about luxury fatigue people telling and we take this thing into account very, very clearly. I think some of the product that just went of price. So we have been immediately looking at the structure of our collection.

And you have seen already some signs of new product coming into the shops where we have -- including, for example, the Famiglia collection from Gucci, where we had been trying to bring to the market let's say, the products at, I would say, a very competitive price. And it works. And this is the customer recognizing this, and so at least this is what the fed began getting from all the store manager that arise. So I think probably our efforts should be on trying to build an offer with the mix of things that are properly priced, but that structure are creating value for us, okay? So I think that you will see more mix effect than share pricing. And this also depends on the way we are building the collection.

I think for Gucci or for Kering in general because we have very important new creative director is the opportunity for them to create desirability with newness. And on newness, you know you can actually ask for more, let's say, interesting prices. And that's the way we build the thing. So expect something that in terms of value is there that the people will be happy to pay for but we will try to be competitive because we recognize that maybe in some category we went too far. And to the point that then volumes dropped dramatically in some categories and some products. As I said at the beginning I think we are very clear in our heads on the challenge, and we try to address them one after the other without hesitation.

Okay. So just a remark about wholesale, just to take a step back if we want to think about 2 that the evolution of wholesale in the past few years for the industry or for us was partly self-inflicted with some decisions to upgrade the distribution, which is still an objective that we have. and also something more structural with the sort of concentration of polarization of the wholesale distribution. It's important to remind this because, as you know, there is one player which gained some importance in this configuration, which is [indiscernible].

So when it comes to '26, part of the equation, we'll be also a little bit of what will be the evolution of the business of [indiscernible]-- we think that with the procedure, which is ongoing, there will be a stabilization or improvement of the situation at [indiscernible]. That being said, if we look at the performance already in Q4, you see that for many brands, there was a sort of not of stabilization, but, let's say, sort of normalization in terms of what are the trends. And if we project for next year, it's more or less that what we -- institution is more or less what we had anticipated is that the size of wholesale business for brands like Gucci, like [indiscernible], it's always in the range between EUR 200 million and EUR 300 million, considering the number of relevant accounts that we can afford to keep.

So that being said, it means that for many of our brands, it will be flat, flat mines, flat plus depending on the brands with the exception of Gucci where we should see some additional closures or improvement of the quality of the distribution. So I would say I would anticipate something around mid-single-digit decrease of the wholesale at Gucci for '26.

Regarding the gross margin, as you know, there are many moving parts in the gross margin. The gross margin in H2 was flat to H1. There were, of course, some hedging gains. We will still have some hedging gains into 2026 most due to H1, considering the evolution of the currencies. We suffered in '25 from the geographical mix as you've seen that APAC went on in the mix. And from the category mix, even if I must say that in Q4, because of the progress of the laser good category, we regain in the mix. In [indiscernible] channel, channel was a positive because of the rationalization of the wholesale and the higher share of retail in our mix and price of raw materials and notably on the gold, even if it's not very important when you look at group level, but more significant in our jewelry houses.

Looking into 2026, we expect channel to remain positive. Product mix will be positive because we are regaining in handbags. Geographical effect is very difficult to assess at the moment, and we expect the price of raw materials to probably still be a headwind in this year.

We now have a question from Zuzanna Pusz, UBS.

I have 2 questions. One will be more philosophical. The other one, more financial. So [indiscernible] start with the sort of philosphical one. Look, I'm just wondering, would you be able to tell us what sort of surprised you the most positively when you joined the group? Or maybe in other words, where do you see the biggest potential that hasn't been really properly exploited?

And then my second question is a bit more financial. I think that may be, of course, our mark that's going to be a follow-up to the comments on space. So you mentioned that space may be and please correct me if I'm wrong, mid-single digit to high single-digit EBIT this year. You just mentioned that wholesale could be down mid-single digits for Gucci. So all in all, if I combine it together with the comments that sales should be up, that would imply probably a double-digit like-for-like growth. Can you tell us if that's going to be mainly volume driven? Are you actually seeing that -- just so we can -- in terms of [indiscernible] so we can understand you really are seeing it, if that's meant to come later maybe in the year when the new collections come, just to understand that.

Look, I'll try to answer to the philosophical question with -- I'm not philosophical answer, but I have to say that maybe 2 things for me where I could -- I would be surprised. One is, in fact, the -- and I remember having a conversation in the first weeks with [indiscernible] on that, the group was built by fostering independence of each turn of the brands, which actually was great. So acting a little bit more as a holding and leaving to the entrepreneurial spirit of all each one of the brand's team to do what was best for them, okay? And in fact, for a while, this thing worked pretty well here. And if you look at the upside that the carrying has created for some of the brands.

I mean, I think from the beginning, I don't know, upsell is multiplied by 5, Balenciaga by 30. I mean, there are not many organizations who are able to create the kind of upside. Now when the brand become big and the company become being probably this is the time to actually build the platform for the group. That, as I mentioned before, will enable brands to get to be stronger will make the system more resilient will allow us to share and create synergy between Brent and give to the brands access to thanks to technology, to processes that they cannot do alone, okay? So the biggest potential I see is that kind of orchestration of a teamwork between the beautiful brands that we have because what this is also on the positive side is that the branders are really great. I mean we actually own some of the best brands in the whole industry.

And now that I'm getting into the thing, and I hear from feedback from media, from customer, et cetera, et cetera, there is absolutely no doubt that the portfolio of brands of carrying is pretty magic, okay? And by the way, we don't have too many but we don't have to last. So I think it's a relatively right number of brands that -- so it's big enough that we can orchestrate that kind of teamwork and there, I really see the potential. [indiscernible] was not designed like this. So the mission that [indiscernible] and the Board gave me was to create that kind of platform which, of course, as an ex automotive guy, the name platform resonates to me very, very well.

I know how to do it, okay? And probably the other thing is that was kind of not surprising, but where I really see potential, but yes, a bit surprising is the accent that we would put on the upstream part of the business. So I think there is a lot of things that also because of this approach, the new approach that we're bringing that -- where we can make big, big, let's say, step forward into the all industrial on the cost side, on the product development cycle on the organization on the upstream. So don't let me spoil to many things that I wanted to say on the 16th of April, but for sure, one of the things which I found weird for a guy coming from heavy industry sector was the level of emphasis on those topics, but now it's getting into the conversation, and we're spending a lot of time together to actually strengthen the upstream, you can call it verticalization. You can come at you want that is the way you actually engineer and control the back office.

So Zuzanna, let's forget final a few seconds, and let's move to figures. So send me your Excel file and I will help you. No, I'm kidding. So more seriously, I think first, in your reasoning, first, please consider that, as you know, [indiscernible] is not so huge in the contribution to the sale of Gucci. When it comes to space, just to help you to figure out, we are closing, of course, those which are not the most productive. So you should not apply the average sales density to the square meters that we are closing.

By the way, we are not closing the 1st of January. So of course, we are embarking the impact of the closing of '25. But when it comes to the closing of '26, it will be spread of the year. for sure. However, to come to your like-for-like growth without disclosing, of course, our ambition. It's not double-digit growth, but it's a significant growth, that's the reason why we are starting the year with a lot of humility and knowing that there is a lot of work to do. The objective is -- of course, not to redirect all the traffic from the stores we are closing to the other stores. It's an equation which is very difficult to solve. But it's, first of all, to increase the sales density of the stores we are keeping.

And that's really the objective we have, and it's very correlated, of course, to the desirability of the brand because the set density, as you know, as well as me, it's about traffic conversion, units per ticket, average selling price. So we can work already on the averaging price with the structure or the architecture of the collections. We can thanks to the energy and the commitment of our sales associates, as mentioned by Luca about the excitement we have around the brand. We can work on the conversion, but we will need traffic at the point. And it will be the work we will do in terms of desirability along the year.

That's the reason why we will invest some money in marketing. I'm not talking only about advertising in marketing in all the different directions to recreate the desirability and to drive the traffic and it will go along the years. That's the reason why, of course, at the beginning of the year and coming back to the first question about Q1, of course, you will have still the drug of the closures and not the full impact yet of the recovery in terms of desirability.

We'll take a very last question from Charles-Louis Scotti, Kepler Cheuvreux.

I have 2. The first one on the profitability. When I look at clearing mid-cycle average margin, it's been around 20% so the group became a luxury player and around 24% to 30% since Gucci reached a critical scale. And I guess you will have raised this topic in CMD. But do you believe you can bring the profitability back to those more normative historical levels? And if yes, is this achievable even without assuming a renewed super cycle at Gucci?

And the second question on Beaute. It seems flat. You think that the Gucci's new CEO [indiscernible] a bit more open on the earlier termination of the Gucci Beaute license. Would you have any interest in taking the license back ahead of the [indiscernible] June 2028 maturity? And do you think it will be a strategic plus to relaunch Gucci Fashion and Beaute at the same time under, let's say, fully coordinated approach?

Look, because we are a bit short in time. I will answer to your first question with simply yes, okay? On the second one, I mean this is -- there is some kind of, let's say, court cases around Coty so please allow me not to elaborate on the topic, we continue to do as a licensor of the thing that we continue to respect all our engagements and the contract. And this is a discussion we preferably like to have, I would say, directly with Coty in the good spirit and so we'll probably answer to your question in a few weeks.

Thank you, Luca. Thank you to all of you. Thank you for your questions, and we are very sorry as we were not able to go through all your questions. But of course, the full IR team is available today and in the coming days to answer all your questions. We'll be very happy to speaking with you again on April 14 for the Q1 revenue release, and then, obviously, on April 16 with our Capital Markets Day. Have a good day. Thank you to all of you.

Good evening to all of you. Welcome to Kering's 2025 Third Quarter Revenue Call. I will start with comments on the period and will be joined by Jean-Marc Duplaix, our CEO, for some concluding remarks before we take your questions.

Starting on Slide 4. The quarter ended with a series of bangs in the form of highly rated fashion shows and presentations with 3 debut collections at our 4 main brands. At Gucci, Demna's La Famiglia looks and his presentation through a short movie, Tiger, stand out as a bold creative statement. Reimagining Gucci's coats through a modern-day prism, the collection reflects the various facets of Gucci's personality incarnated by A-list performers.

At Bottega Veneta, restructured inaugural collection opened a new chapter, overlaying a confident vision to the house artisanal heritage. Our subtle interpretation of the interchapter motif and other house codes resonated strongly with audiences. Pierpaolo Piccioli gave the fashion world a refined version of Balenciaga, balancing couture craftsmanship with modern designs and accessories. Last but not least, Saint Laurent staged another powerful show set against the Eiffel Tower. The collection reaffirmed the brand's core identity and showcased a fresh dimension through spectacular silhouettes and innovative materials.

All 4 collections drew wide acclaim and attention, boding well for their rollout in H1 2026. Bottega Veneta, Saint Laurent and Balenciaga were among the most viewed runway shows with significantly higher live stream and replay views versus last year. Gucci, despite not presenting a runway show, received exceptional media visibility and generated record engagement and positive reaction across digital platforms.

On Slide 5, you will find the key figures for the third quarter. Revenue was down 10% reported and 5% comparable with a significant 5-point negative FX impact. The 5% comparable revenue drop comes after a 15% decline in Q2. Of this sequential 10 percentage point improvement, only about half of it is attributable to the easier comp base.

Looking at retail dynamics, all regions contributed to the sequential improvement. North America and Western Europe posted the best underlying momentum. In terms of KPIs, the drag from traffic moderated with some regions doing better than others. Continued increase in AUR driven by mix, as well as higher average ticket provided some buffer to the drop in volume. I would also like to mention that full-price stores performed best. Our brands continuing to gradually reduce their outlet footprint and assortment. Online revenue for their part started to stabilize.

On Slide 6, we have Q3 revenue by segment. All our segments improved sequentially compared to Q2. In terms of magnitude, Gucci and the Other Houses posted the best improvement, although starting from a lower point. Bottega Veneta confirmed its positive momentum on a high comp base. Saint Laurent's performance started to recover. The improvement in Eyewear and Corporate reflects an acceleration at Kering Eyewear.

Our Q3 revenue breakdown by region evolved from 2024. As a percentage of the mix, Asia Pacific dropped 2 points and Japan 1 point. Rest of the World was stable, while Western Europe and North America gained 1 and 2 points, respectively.

On Slide 7, let's move to the Q3 top line by channel. Retail, accounting for 74% of revenue, was down 6% comparable, a significant quarter-on-quarter improvement. Our footprint at 1,758 stores showed a net decrease of 55 units since year-end, of which 14 net in Q3. This excludes Creed integration of its China distribution back in Q2. Gucci was the largest contributor to our network optimization plan with a net decline of 8 units in the quarter and 26 over the first 9 months.

As you know, our strategy concentrates on fewer but higher quality locations. It also entails gradually downsizing our presence in outlets with 2 additional closures in Q3.

Wholesale and other revenue accounting for 20% of the total was down 2% comparable. Wholesale revenue at our luxury houses dropped 11% in Q3, primarily due to the strategic downsizing of this channel and softer order intake. While these factors continue to weigh on performance, their impact is progressively moderating. In absolute terms, wholesale dropped more than EUR 330 million year-to-date. We are in line with our planned trajectory for the year that implied a minor decrease in H2.

We are comfortable with our current wholesale setup and number of doors and do not expect any material impact from rationalization in 2026. This decline was partly offset by growth in wholesale at Kering Eyewear and Beauté, up 5% comparable and by a 1% increase in royalties and other revenue.

On Slide 8, a closer look at comparable retail performance by region. Overall, it continued to be affected by soft tourism spending, while domestic consumption demonstrated greater resilience. In Western Europe, Q3 improved sequentially, down 7%. Local demand accounting for 40% of the total was the key driver. Tourism spending also improved from Q2, but to a lesser extent.

North America turned positive, up 3% from a 10% decline in Q2. Sequential improvement occurred across the board with Saint Laurent and Balenciaga back to growth. Bottega confirming its strong momentum and Gucci's dropped now just 3%.

Looking at the American cluster, it was nearly flat in Q3, marking a notable improvement over Q2, although a bit less than the region. Japan, down 17% comparable in Q3, improved on the back of easier comps, but was still the region most impacted by weaker tourism spending, while local consumption proved a touch better than in Q2.

Asia Pacific declined 10% comparable in Q3, a 9-point sequential improvement. Better trends in the region were driven by Mainland China, Hong Kong, Macau, but also Korea. However, the overall improvement is in line with the easier comparison base.

The Chinese cluster was down high teens, substantially better than in Q2 and H1. In the quarter, more than 30% of spending by Chinese customers took place outside of their home market and close to 80% of their overseas spending remain in Asia, including Japan. Finally, Rest of the World swung back to growth, up 2% comparable in Q3.

Moving to our houses, starting with Gucci on Slide 9. Q3 revenue was close to EUR 1.35 billion, down 18% reported and 14% comparable. Retail was down 13%, 10 percentage points better than Q2, driven by North America and Western Europe. AUR was up across categories, mainly through mix, supported by newness introduction in handbags and average ticket also increased, partially offsetting a minor drop in traffic.

Leather Goods started their recovery. The injection of novelties initiated last year and accelerating since has begun to pay off, particularly in handbags, where we are seeing promising early sign of stabilization. This rejuvenation should gradually strengthen Gucci's carryover base. From the Emblem line to strategic revamps of Marmont and Ophidia, and the highly successful launch of Giglio in May, alongside Mini GG and recent introduction such as Beatrix and Siena, Gucci's product offering has been significantly strengthened and in terms of quality and rejuvenated across all price points.

With the La Famiglia presentation in late September, Gucci has started regaining its fashion authority, reaching broader audience, including younger customers and refreshing existing relationships, notably with top clients. As you know, the looks were available only in 10 stores for 2 weeks. So this will not change revenue profile in Q4, women's and men's ready-to-wear accounting for the bulk of the sales.

La Famiglia also supports traffic in stores and cross-selling opportunities for the fall/winter lineup. The full Famiglia collection will hit the whole network from January onwards. Wholesale was down 25% in the quarter.

Turning to Slide 10, Saint Laurent. Saint Laurent Q3 revenue was EUR 620 million, down 7% reported and 4% comparable. Retail was down 2% comparable, but was up excluding outlets. North America turned positive and Western Europe was only down 3%. The House confirmed its high desirability and new collections were very well received with both ready-to-wear and shoes up double digits. In Leather Goods, the revitalization of key lines such as [ Loulou ] and recent additions to [ Eka ] are yielding solid results. The acceleration in innovation and the fine-tuning of the product architecture are firmly on track. Group sale was down 16% in the quarter on phasing and further impact from rationalization.

On Slide 11, Bottega Veneta's revenue came close to EUR 400 million, down 1% reported, but up 3% comparable. Retail remains a key driver, up 5% comparable, supported by sustained double-digit growth in North America despite high comps, and positive trends in Western Europe and the Middle East. APAC was nearly unchanged and Japan was moderately down.

Growth was fueled by locals and high-end clients, as well as a continued AUR increase. Ready-to-wear and shoes were the fastest-growing categories and the launch of the Campana handbag delivered promising results. The value strategy, combined with strong cultural content and an efficient mix of global and local communication campaigns continue to reinforce the brand's positioning.

The acclaimed debut show of Bottega Veneta's new Creative Director paved the way for next stage of progress at the House. Wholesale declined 9% on a comparable basis, fully in line with the selective distribution strategy.

Our Other Houses here on Slide 12 had revenues of over EUR 650 million on a comparable basis. They were up 1%, with retail unchanged and wholesale up 5%. In soft luxury, our houses also delivered sequential improvements. Balenciaga sharply reduced the gap with last year, thanks notably to positive sales growth in North America, but all regions and product categories did better. Compared to Q2, McQueen reduced its year-on-year shortfall with sales of women's ready-to-wear up and a reinforced handbag lineup. Brioni sales were up, boosted by solid double-digit retail increases in key regions.

Jewelry was a particularly bright spot this quarter, up double digits. Boucheron's expansion in the U.S. continued to pay off, and the House posted positive retail and wholesale performances in other regions as well. Pomellato also had an excellent quarter, helped by retail, up in most regions with strong showings of killer lines and the new high jewelry collection. DoDo recorded another solid performance and Qeelin achieved impressive growth rates across Asian markets.

On Slide 13, a focus on Kering Eyewear and Corporate with segment revenues of nearly EUR 450 million. At Kering Eyewear, comparable sales were up 7%. All regions, apart from Japan, turned in positive results with particularly good performances from Maui Jim and Lindberg as well as Cartier. The expansion of the portfolio continued, thanks to the contract with Valentino, which will lead to a first collection of color and prescription frames for spring/summer next year.

At Kering Beauté, Creed's quarter primarily reflects differences in the calendar of product launches. The new Oud Zarian fragrance reached network in early September and is well received. The other highlight of the quarter was the introduction of the Balenciaga collection of 10 high-performing women's fragrances that recorded a hefty sell-out level.

This wraps up my comments on the quarter, and I will turn the phone over to Jean-Marc for a few words of conclusion.

Thank you, Armelle. Hello to everyone on the call. As you have seen, the third quarter has been quite an interesting period, during which we started seeing positive signs of inflection. Some were helped by easy comps, others clearly reflect early impacts of our actions.

Numbers are one thing. Another is the acceleration of our initiatives to regain our footing, and more broadly set our strategic priorities for the coming years. And on that front, we have not been sitting on our hands.

Luca's arrival has reenergized the organization. He has met with dozens of managers across the group and across regions. And we are all working together on developing our strategic plan for the next years. As you know, we should unveil it in the spring of 2026.

I don't think I will be spoiling the announcement of that plan when I tell you that our #1 priority is to reignite the top line. From that standpoint, the progress we made this quarter is encouraging, as is the response to the collections and launches that Armelle mentioned. Clearly, work on the product offer of all our houses ranks high among our strategic priorities.

On top of that, as we told you we would, last February or last July, we are accelerating and amplifying our cost and efficiency initiatives. We are further rightsizing the store network and focusing on durably improving sales density. We are enhancing the productivity of our marketing investments, and we are using every available lever to reduce our cost base. Solid progress has been made on all these fronts, and we are keeping the pace.

We also concentrate on cash generation, and we have launched a group-wide task force headed by Armelle to sustainably optimize inventory and working cap management.

Our task is to implement structural solutions to the group's challenges and reduce our sensitivity to cycles. In this endeavor, there are no sacred cows. We are assessing every aspect of our houses from brand positioning to client excellence, as well as the role the group should play in such areas as supply chain, sell-through optimization, or customer relationship management. Speed is of the essence, but we are also fully aware that some of these actions will take longer than others.

In the meantime, as you have also seen, we have been able to deliver on some key strategic initiatives. The announcements we made on Sunday to join forces with L’Oréal to boost the beauty potential of our houses represents a major step forward. This alliance with a global industry leader, a firm with which we share values and have a long-standing working relationship, secures the growth of our brands into beauty at an attractive valuation. As part of the alliance, Creed also gets to integrate into a bigger portfolio, demonstrating the unique attributes of this house and ensuring its next stages of growth.

Finally, our planned joint venture with L’Oréal in luxury longevity and wellness enables us to combine our strengths in an area that is sure to reach new milestones in coming years. The deal with L’Oréal will also have a highly positive impact on reducing our debt leverage and as a top priority.

Pushing back by 2 full years the exercise of the put option for the remaining 70% of Valentino enables us to focus on our existing activities at a time when they require our full attention. We are continuing to explore real estate transactions along the lines of what we have already done. As in any negotiation, it would be premature to put a date on them. But we are absolutely confident in reaching a favorable outcome sooner rather than later.

So a lot has already been done. We will not stop here. We are looking forward to the coming months and to sharing our progress with you.

Before we take your questions, I have an important announcement to make. This conference call, #48 is the last one under Claire Roblet guidance as she will soon be taking new responsibilities within the group. Claire's successor will be announced shortly and will be joining us in the coming weeks.

I wish to take this occasion to give Claire a warm thank you for the 12 years she has spent leading Kering's financial communications. She has done a spectacular job in good and in less good times. We intend to maintain the very high standards she has established and to continue earning the trust of the financial community. Claire, thank you from the bottom of my heart.

And on that note, we are ready to take your questions. Operator?

[Operator Instructions] First question is from Chiara Battistini, JPMorgan.

Thank you very much from my side to Claire for all the work together over the years. First question, maybe on North America, that was particularly strong really across the board, not just for one single brand. So can you give us more color? Can you talk a bit more about what you've seen with the American consumer throughout the quarter between traffic and conversion? And also whether you're seeing new consumers coming on Americans and maybe aspirational consumers coming back, or rather the high-net-worth individuals and returning customers across the different brands?

The second question on the beauty transaction. And I was wondering, are you now happy with the initiatives you put in place between beauty and real estate in terms of addressing liquidity constraints on the balance sheet? Or are you sort of revisiting all options, including potentially other brands in the portfolio? And with this beauty transaction and the cash inflow, should we be thinking about possibly also the urge of cost savings easing to stabilize profitability and availability of cash, or cost savings also remain a key focus at the moment?

Thank you, Chiara. On North America, we had a sequential improvement that occurred across the Board much beyond the comp base. Happy to see Saint Laurent and Balenciaga back to growth and Bottega confirming a very strong momentum in the region.

In terms of consumer, traffic is improving, but the growth is also helped by the fact that the AUR is going up through mix. And in terms of customers, I would say, still a good resilience of the high-end customer, but also maybe some good performance on the e-commerce that is generally a channel where we see more aspirational customers.

Regarding your question about the beauty transaction and its implications about what we're going to do with the portfolio and the leverage.

First of all, I think -- and I'm sure that there will be some other questions during the conference about the transaction. But the rationale behind the transaction was not driven by the deleveraging ambition that we had. I think it was, at the end of the day, a very win-win deal in the sense that it first fulfill completely our strategic objectives as well as the ones of L'Oréal. And of course, it does contribute massively to decrease the debt of the group.

That being said, we have started a process of optimizing the structure of our balance sheet that we will not give up in the sense that, as I said, we continue to work on the refinancing of the real estate, which was something already as an ambition when we bought the assets 2 years ago. So nothing has changed on that side.

When it comes to the portfolio, I want to be very clear. We'll review, of course, in a very open manner as we always did, the relevance of the assets we have in the portfolio. But I want to be clear that when it comes to Kering Eyewear, because I read some articles on that, Kering Eyewear is core in the strategy of Kering, is doing extremely well, is the leader on its segment. And you can see that the performance in Q3 was more than robust. So we are very pleased with the investments we have in Kering Eyewear, which is instrumental in the development of the group.

Beyond the portfolio, when it comes to the savings, we are working on with -- under the helm of Armelle, who is doing a brilliant job on that front, to be honest.

As I said, we keep the pace because the idea is not to cut the muscle or to touch the muscle, but it's really to be sure that what we are doing and where we are investing, it's always bringing results and return. And there is no reason to stop there. I think it's really a good window for us in this period for the industry and for the group to continue this work of streamlining the organization to chase for the maximum of efficiency.

Next question is from Ed Aubin, Morgan Stanley.

Armelle and Jean-Marc, so congratulations, obviously, for this very encouraging development. And just Jean-Marc, I just wanted to echo your comments on Claire. So just a huge thank you, Claire, for your time, your patience and your professionalism. So you will definitely be missed.

So on that, just Armelle, if you could please come back on the it looks like, but maybe I'm wrong that there was some gradual improvement during the quarter in terms of the trend. So if you could comment on that in terms of September and what you've seen so far in Q4 in the Golden Week? So that would be question number 1.

And so sorry, just to come back on the sale of the beauty unit to L'Oréal just to talk numbers to the extent you will be willing to share any. But I think some of the players have indicated that the cosmetic sales of Saint Laurent is about EUR 3 billion versus Gucci at about EUR 500 million. So it looks like there is a really huge opportunity there to grow the business.

When you look at that, should we be aware of any fundamental structural reason why Gucci in the medium- to long-term cosmetics business should not be more or less the same size? Obviously, Saint Laurent has a bit more heritage there in terms of perfume and cosmetics, but that would be one.

And then the last one is, which is quite important and maybe the most sensitive is for the investors to judge about the merit of the transaction, obviously, it would be helpful to understand what type of royalty fees are going to be paid by L'Oréal. So I think the industry norm is about high single digit to maybe sometimes 10% of sales.

Again, I don't know what you're going to be willing to share, but if you can just give us a little bit more color in terms of the structure of the deal. I understand that Saint Laurent, the fees are substantially lower than that today that you're getting from L'Oréal. So any comments would be much appreciated.

September performance was in line with the quarter. August was weaker, but it was the month with the toughest comp base. Yes, July, sorry. July was -- and then August was the best month, but September was in line with the average of the quarter.

In terms of current trading, it's very early in the quarter. I'd like also to remind you that the comp base in Q4 is much tougher than in Q3. That being said, retail trends in key regions are in line with Q3, but be mindful that October shows the easiest comparison base in the quarter.

So when it comes to the size, or the potential size of the beauty business for our brands, and this business should encompass at the end of the day, if you have -- you look long-term, fragrances, makeup, and to a certain point, the more mature brand is skin care. Of course, I cannot disclose any figure. I think that maybe you got some figures from L'Oréal management.

But it's true that we consider that if you look at the profile of luxury brand, I would say that we know that the beauty category, if we think in terms of retail price or penetration of the market should be higher than the one we have currently, or that we had historically for Bottega Veneta and Balenciaga. And that's the reason why we have decided to repatriate these brands and to internalize the business with the success.

We know because you may remember that we had very successful launches, and we are very pleased with what has been done so far by Kering Beauté. And we can imagine also that Gucci brand would deserve, let's say, a higher penetration on that segment, especially if you look at the ranking of the fragrances in different geographies.

I think we need to develop more of this business across the board for our brands, and that's the rationale behind the transaction with L'Oréal. So for sure, I think all the brands relatively to their respective size has the potential to grow quite massively with, of course, an incremental level of royalties for us. And it does make the transition with your last question on which, of course, you can imagine, I will disappoint you. But as we always did with Coty being very careful about not disclosing any contractual obligations, we will not disclose what is the content of the contract we signed with L’Oréal.

Next question is from Oliver Chen, TD Cowen.

Claire, it's been really wonderful to work with you as well. Congrats on the next steps. Thanks, Armelle and Jean-Marc. We appreciate it. I'd love, one, you mentioned early signs in handbags and also carryover. What are the early signs you're seeing? And can you accelerate the flow? You've done that in the past in terms of working very quickly there.

Second question is on traffic. Does traffic continue to be fairly volatile, given that Tiger was such a success, should we expect traffic to get better? It sounds like you're doing a great job with AUR and managing conversion very well.

And third, in your prepared remarks, you mentioned reduced sensitivity to cycles. Just would love for you to let us know what you mean there in terms of -- we've seen so many cycles between hard luxury and softer luxury, as well as thinking about aspirational, and also beauty is a great category, but it's a great deal you're conducting in terms of partnering with a world leader.

Regarding handbags, you know that we've done a lot of work since the end of 2024 by reintroducing many new lines in the offer at Gucci, but also at Saint Laurent. And the performance that we have on newness in handbag is very positive. We've been suffering from the underperformance of carryover that was offsetting the good -- very good performance of the newness. But we are on handbags coming to a point where it equals, and we are very happy to see the performance of the handbags at Gucci stabilizing this quarter.

Regarding -- so there will be, of course, a lot of new introductions in Q4. Some of them that you've seen during the Cruise show in France and of course, some other in 2026. So the trend is very positive. In terms of percentage in the mix, you have some seasonal effects. But at the moment, I would say, in handbags at the end of September, we were at more than 60% of the sales in handbags were coming from newness. And of course, the newness from last year is now feeding the carryover base.

Regarding traffic, traffic improved sequentially during the quarter. It's still largely impacted by Japan and APAC.

Yes. I think when we -- I mentioned in my speech, cyclicality, it's not only a question of the mix of activities we have in the group. And by the way, even if the beauty business is no more internalized, what we hope and what is the best is clearly to increase the level of royalties, which is a solid base -- a solid contribution in terms of EBIT, as you can imagine, and to explore the full potential of our brands in that segment. So in any case, we'll still benefit from this cycle of the beauty business.

The hard luxury does represent still a quite substantial part of the business, not yet at the full potential. But if you combine the sales of our jewelry brands, but also the Jewelry businesses of our fashion brands, we start to have a quite substantial business. And it's clear that also our jewelry brands are quite relevant in the different segments of jewelry, so meaning high jewelry, fine jewelry and more accessible jewelry. So with also this capacity to absorb some shocks in terms of demand, especially when aspirational demand is weaker.

And behind this also, there is the work that we have started at group level and in each brand and that probably and surely, by the way, Luca will present more in depth and more in details during next spring, is to -- and it's a journey that we have started, but clearly, there is the ambition to accelerate this journey, which is to rely more and more on science to be stronger in terms of predictions, in terms of merchandising, in terms of supply chain so that we can gain in efficiency and to be less, let's say, exposed to aspirational demand to be stronger in terms of carryover lines, replenishment strategy.

And that's the reason why we have always said that in our industry, it's a combination of art and science. And clearly, even if we have made some progresses in the past few years, we need to accelerate to be sure that also we have -- and that was the spirit of what I was saying about what the group could bring to our brands.

It's also some expertise that we will have at group level to push our brands to do better in that direction, which is to be more disciplined in terms of sell-through and things like this, which are reducing, obviously, the risk of cyclicality.

Yes. Okay. That's really helpful. One quick follow-up on Mainland China customer. How would you characterize what you're seeing now? Are you encouraged in terms of raise of light and stabilization? Just color on what you think is happening in that dynamic market?

So consumer spending in Mainland China is still not very supportive, but we are seeing some sequential improvement. We are working on the product offer, the retail network and things are progressing. Of course, we will continue going into Q4 and next year. Things are going in the right direction. We are seeing still some polarization in the customer, but we are progressing in the right direction.

Next question is from Antoine Belge, BNP Paribas Exane.

Three questions, if I may. First of all, I think you updated a bit the amount of stores that were closed, first of all, at the group level, but at Gucci. Could you maybe comment a bit like not anecdotes, but when you're closing notably maybe a store in China that's quite close to another? Like how much of the business are you recouping? Are you quite encouraged that you're really not losing too many consumers? What you're obviously improving the cost base?

And also, I understand that it's not a 1-year effort because I think you're probably waiting for some leases to expire. So net-net, compared to, let's say, the fleet at Gucci at the peak and maybe 2 years down the road, where -- how many stores could end up being closed?

My second question is on the sort of overall group EBIT for this year. In July, you had mentioned that gross margin in H2 could be quite supported notably by FX hedging elements. And also you had given a very precise target for OpEx. So given that Q3, and correct me if I'm wrong, was probably ahead of your own expectations. Are you deciding maybe to spend a bit more on OpEx? Or are you happy to see consensus, which I think was at EUR 1.7 billion of EBIT, maybe creeping up to EUR 1.8 billion on the fact that trends are -- seems to be quite good at the beginning of the quarter.

And finally, on beauty, EUR 4 billion is -- seems to be a good number for disposing beauty, but I guess it's a combination of 2 things. One, selling the current business and then probably valuing what could happen in the future.

So is it possible maybe to have an idea, especially of the -- I mean, are you going on -- purely on the Creed on existing beauty business? Are you going to have to post a loss on asset disposal? Is that -- what is attributed to that is less than EUR 3.5 billion you paid? Or actually, that's not the case and you managed to get even higher price than you had paid initially?

Thank you, Antoine. Regarding the store closure, as I mentioned, we are progressing and we have closed 14 stores in the quarter, 55 year-to-date. Half of it roughly is attributable to Gucci. What it means in terms of recouping the business? Of course, it varies from one store to another because it depends on the location. It depends on the store. But I could say that generally, we recoup between 30% and 80% of the business.

Of course, we pay a lot of attention. We generally move the sales assistant from the previous store to the next store. We make sure that we call the clients, we invite them to the new store. So I must say we are quite satisfied with the dynamics. Of course, it will have to be measured more in the long term, but we are seeing good dynamics in that front.

If I may, I will add that going forward, we will continue to work on the network rationalization. Here again, we will have an occasion to be more specific already during the full year results, but even more during the spring investor meeting. But this is an ambition to continue to look at the network to consider what are the stores, which are the less profitable or which delivering is the lowest returns. We want to concentrate on some key locations and not to distract our brand with too many locations to operate because also it has an implication sometimes, which is to increase the structure and the costs associated with the structure to manage all these stores.

So we knew, and I think among the weaknesses, that we have acknowledged in the past few years was probably that we went a little bit too far in terms of expansion of the network. So without providing any figures, you can assume that in the two coming years, we'll continue to rationalize quite drastically the network.

Regarding your second question, I can confirm that we are delivering our plan on cost efficiency. We are -- so I can confirm the indication that I gave in July, which is that we expect OpEx to be down at mid- to high single digit in the full year.

Regarding gross margin, here again, I can confirm that we expect gross margin full year -- or H2, to be at the same level of H1 at constant currencies. Of course, if currency rates stays where they are today, there will be a hedging effect that will be a tailwind in the gross margin. But all in all, you have to keep in mind that FX and hedging combined could have a negative impact up to EUR 50 million in the EBIT. And then more generally in the EBIT, I also can confirm that H2 EBIT margin will be declining year-on-year, but much less than in H1.

Regarding the price, you said that EUR 4 billion was a good number. That's your assessment. But I think that if we reach a deal with L'Oréal is that -- we were thinking on both sides that, that was a good number. And it's a comprehensive deal. So through which L'Oreal and Kering are becoming long-term partners in Beauty. This deal encompass the sale of Kering Beauté as a company with all the subsidiaries and all the activities. It means, in other words, that the sale of Creed has a house, the fact that we are granting the Bottega Veneta and Balenciaga license to L'Oreal. And in the price, there is an option, or the right to grant the Gucci license, of course, at the expiration of the license with the current terms and conditions we have with Coty.

So to make it simple, it's Creed plus two licenses plus an option to grant a license. We don't split the price so far. What I can tell you is that in terms of capital employed at group level in our balance sheet, the capital employed attached to the Beauty business is below EUR 4 billion. So you take it the way you want. But at the end of the story, it will be a net gain before tax for the group.

Then the recognition of this profit, it's something we need to continue to work on in terms of -- because from an accounting and tax standpoint, there will be probably a need to allocate the price. But what has been negotiated is a global price. And again, I think it's a good price for both parties considering the ambitions we have on both sides for our beauty brands, but also for the joint venture because don't forget that in the deal also, there is a joint venture, which is very promising.

Next question is from Zuzanna Pusz, UBS.

I also like to say thank you so much, Claire, for all of the years and all of your wonderful help. I agree and we all miss you. So well, three questions from me.

First of all, on the Chinese consumer, in case I missed it, I don't think you commented on the sequential performance of the Chinese consumer. And I was just wondering if you have seen any improvement? I think that was sort of the key surprise from one of your peers. So if you could tell us a little bit, maybe especially for Gucci, how that has -- the cluster has performed?

And then secondly, on the store network rationalization. Just to follow up because Jean-Marc, you mentioned that if I understood correctly, for the next 2 years, we should still expect some further rationalization. And I remember you mentioned in the past that the space would be flat despite some store closures because the existing stores will be made bigger. So I just wanted to confirm if that's still the case?

And then finally, just a follow-up on current trends. Just because -- well, I guess I wanted to understand, I mean, the comparable -- because we don't know the comparable basis across every month. So I just wanted to understand because you mentioned August was the best. September was in line with the quarter, which surprised me a bit because I would have thought it would be better given the -- sort of a little bit more excitement around Gucci.

So I'm just trying to understand, like is it reasonable given that in Q3, you had seen an improvement ahead of the comp? And you are seeing comp getting tougher. But is it still likely that Q4 is going to be better than Q3? Or that improvement ahead of the comp is sort of a bit slower now and we should actually expect sales to be weaker again? Just to get a rough idea around that.

Thank you, Zuzanna. So the Chinese cluster improved slightly sequentially for all brands. The improvement is driven both by the domestic market and by the tourist with slight improvement on the tourists, but still double-digit negative trend in all regions, especially in Japan due to the higher comp base and also the less attractive price.

Yes. When it comes -- as regard to store rationalization, I think we -- our position has evolved to be clear, in the sense that we -- it's not a secret to say that the sales density is not on par with our expectations, and I would not dare to say on par with the competitors. So here, there is a need first to recover in terms of sales density.

So it does mean, in other words that, of course, if you look brand by brand, maybe it's difficult to say that all the brands will see both a reduction of the store count and of the square meters. But globally speaking, at group level, we envisage to reduce the total store base, even if probably the reduction will not be exactly at the same level in terms of percentage than the total number of stores because still some brands in the group deserve to have a decent size.

If we take -- and it's always the same example for many years, Bottega Veneta, it's true that now considering the growing share of ready-to-wear collections and footwear and the success of these collections, we need, in some cases, to have larger stores. We have not enough flagship for this brand. Even for Balenciaga, we may have some situations where we will need to consolidate in a larger store. But overall, and directionally, over 2 years, there will be a reduction of the number of stores and of the square footage.

So August was the best month of the quarter on easier comp and September was in line with the performance of the quarter. It's true that we launched Balenciaga product in September, but it was only 10 stores. So it cannot change completely the picture on the September performance. Going forward, what we see for Q4 is that, of course, consumer confidence is still uneven. There is a lot of uncertainty. From what we see so far, I would say that we could expect that Q4 sales decline year-on-year could be in the same order of magnitude of Q3 despite a tougher comp base.

Okay. So just to clarify, so basically, despite the tougher comp base we can expect -- is it across the group or for Gucci, specifically Q4 to be in line with Q3?

It's for the group.

And for Gucci? Sorry, I'm being very demanding today.

I'm sorry, but I won't answer brand by brand.

For the last one of Claire, you could be -- show some indulgence.

Next question is from Thomas Chauvet, Citi.

Claire, a special thanks to you for over a decade of hard work, great partnership with the analysts. You'll be missed. Three questions, please, one on rightsizing and two on L'Oreal Kering transaction.

On rightsizing, if we look at your luxury houses, we exclude Eyewear, we exclude Beauty, your '25 revenue will be more or less 1/3 lower than at the peak of '22, so just 3 years ago. You said Jean-Marc, in your concluding remarks, reigniting the top line is a priority. But until then, is there further rightsizing of the cost base that's needed at the Kering holding level, at the individual brand level?

Anything concrete maybe you and Luca and Armelle have started working on beyond what you've already initiated at the end of last year and the distribution footprint rationalization you've just talked about?

Secondly, on L'Oreal. First on the rationale and the opportunity or maybe the missed opportunity. When you took over the Safilo license 10 years ago, ballpark, my understanding is you thought you would do in the long run, a better job than your license partner in terms of distribution, marketing, production with the right people as long as you learn about this metrics. I guess you delivered on those promises.

You said this is core, this has critical mass. Now when it comes to Beauty, what was the trigger in the last year or so that made you think you wouldn't be able to replicate the same success as you did in Eyewear, to give up maybe so quickly after creating this division? Especially you could integrate the Gucci license in just 3 years. So where do you think you lack competencies relative to L'Oréal? I'm curious about that.

And thirdly, on L'Oreal and numbers. Is EUR 4 billion the net amount you expect to cash in H1 next year? Are there any other deduction, or addition, to that amount we need to be aware of? Particularly who will pay for the potential early buyback of the Coty license? And will you redeem early some of your existing bonds with that cash?

I don't want to be too specific on your first question because I will not enter into the details of all the things and all the initiatives we have started with Armelle, but also with the HR teams and also under, of course, the leadership of Luca. What I can tell you is that in the last 2 years with Armelle, we had already started to tackle what could be tackled rapidly and to grab all the low-hanging fruits in terms of savings. And it was easy to do in a way.

What we have started encouraged clearly by Luca is to look more structurally at the way we operate. Not only in all the corporate organizations at Kering level, but also in the brand, but also when it comes to big platforms like IT or logistics, we know that we can chase some efficiency more. So I think what we have started now is something which is more structural, which is to look at the ways we are working.

And so it will continue during '26. We expect with some gains. And sometimes also with some reinvestment -- bouncing back to the first question we had at the beginning of the call from Chiara. Of course, there is some cost cutting, but there is some reinvestment. We need also to recruit some talent in the group. So I think we will make savings, but we will also try to -- also boost the efficiency of our organization. And sometimes it will imply to recruit some people to invest in new technologies.

But for sure, yes, we will continue to work on the rightsizing of the organization. And I already mentioned the discussion around retail, which is part of the process of being more efficient.

What's the rationale? To be honest, and I will start by saying that we are very proud of the job that has been done by the Kering Beauté teams. They did a terrific job. The integration of Creed has been very successful. The launches they made at Balenciaga and Bottega Veneta were absolutely at the top and outstanding with a very good reception. And in a way, we have been so successful that clearly, it has triggered a lot of, also, appetite from the market and from our competitors. And it's also our duty as a management to regularly review our strategic options.

So it's true that at a point, feeling that there was some appetite in the market for our activities, we just start an analysis and discussed with the Board because at the end of the day, it was a Board decision to see if we could pursue our journey on a stand-alone basis, but if we had also some other routes to go, especially in a market which is probably a little bit tougher currently for the Beauty business. And in terms of risk and reward analysis, whatever the success we had, and we were confident that we had a very good team at Kering Beauté we could have pursue on a stand-alone way quite successfully.

If we look at the math and we want to go faster to avoid also capital -- if we want to optimize capital allocation, considering that it's a quite capital-intensive business, probably more than the Eyewear business. We decided to look at the different options. It was a process that accelerated more recently, but it's a process that started before and that was clearly decided by Francois-Henri so that we can move in that direction without any taboo.

It was fully supported by the Board. And clearly, with the energy and the vision of Luca, we have been able to accelerate and to strike a deal so very recently. That was the rationale behind this move. And clearly, you know that when we made the move with Kering Eyewear, at that time, the Gucci license with Safilo was already one of the leading license in the Eyewear business, even the first one.

So we had quite rapidly a critical scale. And we knew that it would be completely different with the Beauty business. So it was really what we call in the business school a strategic dilemma. And then we made all the pros and cons of each solution. But it's not the reason for taking that way was not because we were disappointed by the job done by the team because I think they were above expectations in terms of delivery and Creed was on par with the initial business plan.

I will not comment further as regards the price that has been paid. And so far, the plan is to wait for the expiration of the license. And we will see if at the point, there will be an opportunity to discuss with Coty. But so far, this -- as I said, there is an option, and we will see at the end of the license what will happen.

Maybe just Armelle or Jean-Marc on that last part, EUR 4 billion is the cash inflow in H1 '26 as per the press release, there's no delta ultimately on the cash flow. It's EUR 4 billion. And...

Plus or minus minor adjustment that you have already in that deal because when you sell a company like Kering Beauté, naturally, you may have some adjustments depending on the working capital situation, blah,blah,blah or what you know in M&A deal.

And when you say there's an option for Gucci license, that's captured, that option is valued within the EUR 4 billion?

Yes, it's a comprehensive valuation, as I told you, and the option is in a way probably valued as an option.

Next question is from Anne-Laure Bismuth, HSBC.

Thank you Claire on my side from a great collaboration and hard work. I have three questions, please. The first one is on Gucci. The Demna presentation and film is very U.S.-centric. It seems did the Chinese react to it? And maybe if you can comment about the performance of Gucci during the Golden Week. My second question is about the wholesale performance. What could we expect by year-end for all the brands? And should we see a further decline in wholesale next year? Or have you done for the key brands, especially Gucci? And finally, concerning Balenciaga, the recent Balenciaga stores are big and Demna driven and as a consequence, not in line with the new direction of the brand, given the limited financial means, will you prioritize the CapEx allocation?

So regarding La Famiglia, it was presented in 10 stores all over the world in every region. It's true that we had a very good response in the U.S., but also in Europe and also to mention also in Japan, especially with local Japan customer. We had already a pretty good response in China, maybe not to the same extent that the very strong one we had in the U.S. Regarding the Golden Week, consumer spending is not very supportive in Mainland China. And overall, this year's Golden Week is not changing the picture, even if some brands are posting better results than last year.

For wholesale, so we are confirming our indication that wholesale should decrease by EUR 350 million, maybe slightly more over the full year. It decreased already EUR 330 million year-to-date. And for next year, we expect this number to -- we expect wholesale to stabilize as we have done most of the rationalization of the doors. Now of course, it always depends on the dynamic of the wholesalers themselves.

Maybe you wanted to jump on the question of Thomas.

As I had the answer, but we jumped -- no, just very quickly coming back on your question regarding potential bond buybacks. We will, of course -- and the management of the cash inflow. So of course, first, it strengthen our balance sheet. We will balance between cash investment and potential buyback of some bonds, trying to be smart, but also always very mindful of our liquidity profile.

And maybe a word on the store footprint of Balenciaga. True that in the recent years, we have enlarged in average the stores of Balenciaga. But I think, first of all, nothing is changing regarding the categories that we have at Balenciaga. It will remain, in any case, a brand with ready-to-wear leather goods, footwear with a good proportion of men and women in the collection. So when it comes to the size, I'm not particularly worried. When it comes to the Demna aesthetic, I mean, you see, first of all, that in the first show, there was -- [indiscernible] there was a bridge in a way with what was the aesthetic of Demna, it was a good combination. And also, we don't plan short-term a major reshuffle of the network.

And we think that, first of all, all the stores have not exactly the same magnitude in terms of aesthetic and we have already tested some mockup where, obviously, just the addition of a few things and also some painting -- additional painting, things like that can easily create an environment that would be very consistent with the new collection. So here again, we don't expect a jump in terms of CapEx on that side. As usual, with Armelle and under the helm of Luca, we will have a global arbitration at group level of the CapEx to be sure that we have to do -- we invest rightfully in the right places and especially at the right pace.

Next question is from Charles-Louis Scotti, Kepler Cheuvreux.

I have 3. And congratulations, obviously, to Claire and best of luck in your role. On the Demna first collection, which will be rolled out globally in January, could you remember also you mentioned in the past capsules for Christmas and Chinese New Year as well as the cruise collections before the presentation of Fall/Winter 2026 end of February. If I'm not mistaken, could you please update us on the coming pipeline at Gucci? Secondly, the deal with L'Oreal includes as well a joint venture on longevity, health, and wellness. L'Oreal already gave us some details yesterday about it. Could you tell us more about this joint venture? And is this part of a broader move towards more experiential luxury, which seems to be gaining a lot of momentum now?

And third question regarding your beauty licenses for Bottega Veneta and Balenciaga. You previously had a very selective approach in terms of distribution, which obviously mechanically limit the development potential. This is not, I guess, L'Oreal strategy even for the couture brands, except for the private collections. Are you now more open to adopting maybe less selective strategy that will allow the business to scale up more quickly?

Demna Collection will be distributed in stores as of January '26. But in Q4, there are many initiatives at Gucci. We just introduced new, the Gucci [indiscernible] -- there is also the crucial collection that is rising in store in November. And of course, there will be plenty of capsule and animation in December for the Chinese New Year and more generally for the holiday season. That will be amplified by some campaigns. There is already a campaign that you've seen probably on the new shift sinker on digital. There is also a campaign on the ski altitude. And there will be, of course, the Gucci shift campaign at the end of the year as it happened last year.

Charles, I don't know if I can add something relevant to what Mr. [indiscernible] said brilliantly yesterday. It's -- I think we are convinced on both sides that definitely there is an opportunity in that segment of wellness, longevity. And it is true that it has to do with how luxury experience can expand in different categories, in different areas. We see that today, the high net worth individuals and many top clients of our brands are reallocating wallet also to experience, resort, travel, restaurant, and also wellness and longevity, which has become clearly a topic for the billionaires and high net worth individuals.

So yes, definitely, we are at the early days of this joint venture. But we are convinced that, of course, the idea for us is not to work on product because it's really the expertise of L'Oreal. And I think there are a lot of R&D investors in that area. And for us, it's more about finding some synergies, bringing also our capacity to find locations in the city, outside of the city to bring -- to create an environment which does correspond to the expectations to these clients to work on our CRM and database with the top clients we have. So this is really what we are targeting to really provide to this clientele a unique experience, mixing wellness, medical care to a certain extent and also so that they can enjoy a pleasant environment with a luxury experience.

So that we believe is a market which is very fragmented on which there is an opportunity probably to consolidate and to be with this joint venture, a major player, considering that our two groups are global and the capacity to enter in the main cities in the world and also to provide unique experiences. When it comes to Balenciaga and Bottega Veneta, your question is a good one. But I think the plan, you know that historically, these two licenses of these two brands have been completely underexploited in the beauty category. So we had to rebuild credibility, and we started by launching this niche products, niche fragrances, very elevated in terms of quality, in terms of price. And it was a way to reestablish the credibility of this brand in the beauty segment.

Clearly, the plan of KERING BEAUTÉ, especially for Balenciaga and to a certain extent to Bottega Veneta, but the positioning of the brands are slightly different. But the idea was at a point once we had started to be credible again was to go down to the prestige segment with a broader distribution with the usual suspect in terms of distribution. So it was part of the game. And if I come back to the rationale of the joint venture of the deal with L'Oreal, clearly, the idea is that, of course, we can scale up that business more rapidly, and we are very pleased if we could accelerate the development of these two brands, starting with Balenciaga in the more prestige segment, considering that, of course, we will -- and that was some of the discussions we had with L'Oreal. Of course, we want to keep an offer, which is very elevated for the top clients and also to have some fragrances in our stores.

Next question is from Carole Madjo, Barclays.

A few questions from me as well. And also on my side, thank you very much, Claire, for all your time. It was really good to discuss with you over the past few years. To come back on the first question being on Gucci, can you help us understand a bit more what should be the position of Gucci going forward? I guess to come back on the points you mentioned before, you talked about trying to reduce cyclicality, about being a bit more exposed to the high-end consumer. Demna talked, I think, about being a bit more exposed towards minimalism at Gucci when he does his first fashion show in February. So can you just, I guess, help us envision what could be the new Gucci in terms of pricing point, brand aesthetic and positioning going forward? That's the first question.

And second question, just to come back also on the jewelry side in the other houses, which I think has been quite solid for the past few quarters now. Can you remind us how big jewelry for the Boucheron and Pomellato brand mostly account for now in this division? And what kind of potential do you see for this -- for those brands going forward?

Your question on Gucci is an interesting one. I think it will be part of probably a larger strategic update that Luca and the team will give during the CMD in the spring. What I can tell you at this stage, I think going back to La Famiglia presentation as an example, I think it was, I think, very positive to see that the looks that Demna presented were large in their style, in the categories. And I think it was showing how diverse and rich the Gucci brand can be and very true to the DNA of the brand. Regarding jewelry, just -- I can just mention that if I look at last year, the turnover of our jewelry brands altogether was around EUR 1 billion.

Next question is from Luca Solca, Bernstein.

Congratulations to Claire and her next step within the company. Two or three questions. I was sort of detailed questions now at this stage. I was wondering when you look at the retail dynamics going forward, so the retail network being trimmed and potentially space being reduced, would that go hand-in-hand with rental costs also being reduced? I doubt that because most likely, you would be closing tail stores and you would be beefing up flagship and prime locations. But I just wanted to be sure what you thought about this. Maybe a more general question on the EBIT consensus basically see, there's been many moving parts, the reacceleration over the summer and the cost efficiency program continuing. I wonder if you want to touch base on that guidance that you provided or if not?

And then maybe more of a blue sky question on Armani. You're obviously focusing on your own business and on improving it organically, but you haven't been shy, for example, with the Valentino acquisition to play a protagonist role in consolidating some of the most important Italian fashion brands. I wonder if this is on your radar screen at all. And if we could envisage down the road a role for you, especially in a scenario where L'Oreal could potentially try an Estée Lauder deal that is buying the brand for the beauty business and licensing out the fashion and leather goods business as in the case of Tom Ford was done by Estée Lauder with Zegna.

We don't streamline the network just for the sake of making some savings on the rental cost. The idea is just to be sure that we have the right setup brand by brand. I think that there was a wave of retailization in the past few years, which was made across the board for all the brands. I think all the brands are not in a situation because of the size, because of the product categories in a situation to be at 80% or 90% retailized. If I think about Brioni or McQueen, these are brands which probably need to rebalance a little bit between wholesale and retail. I would not say the same for the other brands where there is still the ambition to have predominantly a retail distribution.

The idea is just to be sure that we have the right setup and that we don't multiply the number of point of sales in the city that we keep the most efficient one and that we are able to increase the sales density. We have to be very lucid and we are very candid on this. The problem of the group is not so much about the rental cost. There will be opportunities to reduce the rental cost for sure, but it's more about the sales density. So the purpose for us is, of course, to have the right setup when there is an opportunity to renegotiate rental -- the rent, we will do it. And part of the game also in this reshuffling of the network is also to create the conditions to renegotiate some rent. But the ambition is, first of all, to maximize the efficiency of the network to reignite the top line, as we said before.

On the outlook for this year, I gave already a lot of moving parts regarding top line, gross margin and OpEx. Maybe what I can flag additionally is that if foreign exchanges remain at current level, the drag on Q4 reported sales will be higher than the one in Q3. For the rest, I think I gave you already a lot of information.

Now about your last question, you can imagine that it's premature to comment and also because we have just signed a deal which was very important for us. We have the Valentino brand in the radar going forward with even if that we have postponed the exercise of the option still, there will be a need at a point to integrate the brand. We have a lot of challenges in our brand. I think our plate is quite full so far. And the priority for us is to work on the action plan that Luca is giving to us and to the brands. And it's not a consideration we have so far about Armani, and we will see what will happen with the different players that have been listed in the testament of Mr. Armani.

As there are no more questions registered at this time, I will turn the conference back to Ms. Poulou for additional closing comments.

Thank you very much for your interest and for your questions. Before I let you go, I would like also to add my own sincere appreciation for Claire's great contribution over the years. Thank you, Claire, on behalf of all of us who have worked with you.

Finally, to everyone out there, our next appointment is in February for our full year results. I wish you all a good evening, and thank you again for being on the call.