Brunello Cucinelli S.p.A. (BC) Earnings Call Transcript & Summary

[Interpreted] Good evening, and welcome to the end-of-the-year update of the fashion house, Brunello Cucinelli. Speakers will be Brunello Cucinelli, Executive Chairman and Creative Director; Luca Lisandroni, CEO; Riccardo Stefanelli, CEO; Dario Pipitone, CFO; Moreno Ciarapica, Co-CFO [indiscernible]; and Pietro Arnaboldi, Investor Relations and Corporate Planning Director. [Operator Instructions] Now I would like to give the floor to Brunello Cucinelli. The floor is yours.

[Interpreted] So here we are. Good evening. Thank you, and welcome back, you investors, analysts, members of the press, whoever has joined this call. Thank you. So in 2020, we basically decided to hold this end-of-the-year call. Well, we made that decision because it was a very special time. And my take was that we had to update you on a regular basis, if not once in a month or at least quarterly. And we see -- you see this kind of call is very advantageous. We like it very much. We also like the Board of Directors meeting we hold in December. We met this morning for the Board meeting, and it's very interesting, perhaps the most interesting of the year, because that's exactly when you draft your strategies, when you speak about your possible plans for the coming 5 or 10 years, so very interesting. So for us, we deem it the most important Board of Directors meeting of the year. So I spent a couple of months traveling the world as a globetrotter a bit with Riccardo, a bit with Luca. So we visited Shanghai in October. Then we were presented with a very prestigious award in New York, then another very important event in Dubai with the most preeminent families there -- prominent families who also work in fashion. And then last week, we went to New York and Los Angeles. But you see, I was -- I'm very, very tired, and I always suffer when I'm jetlagged. But nevertheless, I came back in a very positive mood, and I'm certain of one thing. We know damn well what we must avoid. Knowing what you have to avoid is really important if you think about it. And then I also added -- you see, when we stop feeling the desire to travel, then we better stop, because you see the world is moving fast and you have to see it in your best when you -- as best as possible. So let me read out the press release. Then I would like to give you an end-of-the-year look for 2024, then a 3-minute wrap-up of my thoughts about 2025 and 2026. And you are already familiar with everything, most of all, a couple of words on the accolades. And then we would like to really broach this discussion about luxury, a discussion we had with the investors in Paris, London, New York, where we met 108 investors in total. And tomorrow night, 30 to 34 investors will be gathered in Milan. And these end-of-the-year dinners where we basically -- with 150 investors in attendance, you see, for us, it is a very high-quality meeting, of course, always provided that you have the courage to listen. So let me read. You see, but the font is becoming smaller and smaller. So let me put my glasses on. So 2024 is reaffirming itself as a particularly nice, splendid year for us. The exceptionally positive sales in recent months basically drive us to revise our previous estimates upwards, envisaging an increasing turnover, between 11% and 12%, with anticipated growth in the fourth quarter aligning with the excellent results of the third quarter of 2024. I'd like to add that the second quarter last year was -- had been particularly buoyant, 18% growth on average. Then, in November, the pre-collection for -- so in November, the pre-collection for Women's Fall/Winter 2025 was presented, garnering particularly positive feedback and orders, relevant orders, from multi-brand clients and, of course, also from our boutique store managers. But as you know, multi-brand clients, we really value their feedback. And this follows the important orders backlog for Spring/Summer 2025, and we will start deliveries in a few days. So we continue to perceive significant opportunities for our brands in the forthcoming period and anticipate balanced growth of approximately 10% a year in 2025 and 2026. But we also envisage quite an interesting decade ahead. Important events, which we describe as artisanal due to the manner in which we host our clients with friendship and conviviality, well, these events have taken place in recent months in prominent cities such as Shanghai, Dubai, Los Angeles. And then additionally, in November, we hosted a very prestigious event called La Paulee in Solomeo, which entails a gathering of the world's foremost wine and champagne producers and collectors to celebrate the end of the harvest. So it is a particularly fine event. Now, we are honored to have received, at the end of October, the prestigious John B. Fairchild Honor Award from WWD magazine. You see, this magazine has always been considered a sort of bible of global fashion, and this happened in New York at the end of October in recognition of our continued success, ongoing innovations and constant, unwavering attention to craftsmanship, creativity, artisanal quality, exclusivity and the dignity of the human being. These were the reasons why we were awarded the prize. Then, at the end of November, we were bestowed with a significant Good Business award by our esteemed friends at Bloomberg China, but I couldn't go there in person to be presented the prize because I was in New York, in honor of our values of humanistic capitalism and human sustainability that shape every facet of our enterprise from craftsmanship to the new frontiers of technological innovation and, as we like to term it, human artificial intelligence. So we wish to extend a heartfelt gratitude to our 3,300 workers, who through the -- by the way, they are 38 years of age in -- on average, who, through their dedication, humanity and respect for our land, have enabled us to achieve these work and life objectives. So this is basically my comment on all this. This 2024 is drawing to a close, a year we define as truly enchanting due to the remarkable results achieved by fashion house, both in terms of figures and in having strengthened the brand's image. Our final project drives us to envisage a year with growth between 11% and 12%. And given the high quality of sales, we anticipate a healthy and balanced profit. At the end of October, I had the honor of receiving, in New York, the prestigious WWD John B. Fairchild honor. I consider this recognition a tribute to the dignity of the work we strive to cultivate daily in Solomeo. It is particularly significant that the recognition was bestowed by the esteemed -- specifically by this esteemed WWD magazine, regarded as the bible of global fashion, which, over the years, has honored the creative endeavors of eminent figures in the fashion world, including Ralph Lauren, my very much valued Karl Lagerfeld, Giorgio Armani, and Lady Miuccia Prada, who is always great, a great source of inspiration, at least for our company, in the past 25 years, but not just for us, inspiration for the whole world. The significant seasonal sellout of the autumn -- Fall/Winter 2024 collection and the start of the order collection for Women's Fall/Winter 2025 are yielding excellent results. And all of this instills great hope for 2025 that aligns with our customary project of annual turnover growth, around 10% as well as a good profit. And about this, I would like to say that, in the past 24 years, growth has averaged 12.8%, and since our listing in 2012, was between 12.7% and 12.8%. So we'd like to once again restate this figure of 10%. I'll try to -- I'll try and keep it short, so I'll leave more room for questions. So final project 2024, so we are approaching the end of the year. There are 17 days left, and this fourth quarter is perfectly in line with the third. So as I said last year, we had enjoyed a very important half year, not just quarter. So we envisage closing the year with a turnover of between 11% and 12% and with EBIT margins slightly improving -- so EBIT margins slightly improving compared to the previous year. So let's now talk about the different regions, the different geographies. U.S.A., growth between 15% and 17%; Europe, growth between 5% and 7%; Asia, between 12% and 14%; including China, 10%, 12%; and then e-commerce, about 9%, 10%; then retail channel growth between 12% and 14%; wholesale between 8% and 10%. And for us, this is quite an important figure. Then our revenues: retail, 66%; wholesale, 34%. And then we have menswear and womenswear perfectly aligned, 50% each. In number of units, it's 51 -- 52 -- sorry, 35% is men's because, of course, the price is, of course, lower. So what can we say? So we can say that, lately, we have noted an improvement in Asia, including China, so double digits in retail, very interesting, 12%, and wholesale, very, very good there, 9%, 10%. So since we are the only ones holding this December call, what we are asking of you is that to take everything we say with a pinch of salt because we wouldn't like to influence your ideas in any ways, for the better, for the worse. But we have to say that we are very much energized. We saw something important we truly believe in when traveling the world. So main themes for 2025 and 2026, so growth around 10% in revenues, EBIT margin slightly improving, investments around 8% because we -- you see, all the showrooms and stores, they need to be refurbished pretty frequently because, if a new collection comes out and it's displayed in a showroom that is old, then it does not have the same effect. And you see, you always want your showroom to look fresh because the new collection is different, whether you view it on the -- sitting on the very same chair or maybe in a different chair. Then investments in image, 6%, 7%, and we would like that to stay more or less the same because 6% is precisely what we want in the years to come. Healthy inventory, healthy debt and dividends around 50% of profits, it has been the case for the past few years. So what about the event? It's been a few years that we have -- we started setting, organizing these artisanal -- so-called artisanal events. The reason why we call them this way is that we invite usually between 100 and 120 guests, not so many because, this way, you have the time to entertain each individual guest. You can take pictures with them, and it's really a high-quality event. For me, it is quite heavy because I always asked around, but it is heavier to travel than to actually spend time with the guests. I love this, to do this. We really like our formula. And then Brunello, these are also -- these events are multipliers of relations. For example, in our trip to Dubai, we had the opportunity to meet 3 very nice families with high values. Yes, because they welcomed us in a really nice way, we have struck up friendships there. [ Alabbar ] was really a fantastic event because they used the Italian flag on the building. Then in [ Al Tayer ], he wanted me to speak to the younger generation for 2 hours, second and third generation of this family, people between 26 and 37 years of age. They wanted me to broach the subject of the next 50 years, what it could be like, so a very interesting meeting. You see, in these events, it is very important to show the family. The last event was the one we held in Los Angeles the other -- last week with all these celebrities invited in -- to the event. And they basically turn up because they like meeting among themselves. They like to spend time with us.

[Interpreted] I -- Riccardo speaking, I was there in what has become some sort of a tradition of a pre-Christmas event in Hollywood, together with the great stars of Hollywood. They actually become friends during these events. People you can entertain yourself with and engage in discussions. And I'd like to tell you what Kevin Costner said. On the way out from the event, he stated, "I would have never imagined to have dinner with Brunello, but not just that, of being placed, being sat right in front of him, opposite him." And actually, he sent a picture of himself shopping in our Aspen store. It was a great evening with Oprah Winfrey and others. And we also talked values during our chat. And Oprah told me, "I never heard anyone speaking -- in Los Angeles speaking about the soul the way you do." It was a great evening. So this has become a sort of very important event. And across the world, we have actually noticed this sensitivity to values, and even the event we organized in Dubai in the desert with all the princes. And my daughter [ Carolina ] says, "Careful, do not touch the ladies." No, but I don't touch the ladies. I don't do it voluntary. It's my way of being warm or being affectionate and Italian. Basically, we were all sitting around the same table. There were princes, princesses. It was very convivial. And Sharon Stone said, "You see, I basically came to the dinner because I want to spend time with you." And we looked as if we were together, and my wife was jealous because we're always sitting and chatting together. But you see, she's a very nice lady. She really went through sorrow in her life. She lost a nephew, so it was really hard on -- life was hard on her. But anyway, as about the awards, I was awarded the John B. Fairchild Honor at the end of October. And to tell you the truth, the really important thing in the awards and prizes is like when we went to China in the last 2 weeks or so. We received 3 offers of beautiful locations, and we had waited for quite a long time before we got that. And then is it that -- the value of exclusivity. This is really something very important for us. We discussed it during the event. And besides the pleasure of a convivial dinner, I have to say that, after any event, we receive a much higher number of offers of interest in retail locations. And also Bloomberg giving us this award, well, we did have to travel there to receive it, of course, but it's awards that are accompanied by good business recognitions, major economic publications that actually praise us for our artisanal attitude, for our business performance. So this is certainly very beautiful and very interesting. And also, we're going to receive another very important award in December. We're not yet prepared to disclose what it is, but it's maybe the most important fashion award of all. Now, for the next 5 or 10 minutes, what should we share with you? At the end of this analysis and the 2, 3, 4 months traveling around the world, we had a Board meeting this morning. And the first thing we discussed with the Board was trust and desire for luxury. Now, we do believe there's always going to be a great, undisputed desire for real luxury, that kind of luxury that's never been described by any kind of adjective in the history of luxury. You know that, up until 20 years ago, luxury was just luxury. Then someone came up with the definition of affordable luxury and so on and so forth, but luxury is luxury. Another key thing for us is exclusivity. We do believe in this very much. And there, to tell you the truth, we were at a dinner in New York City with about 40 investors, and we were close to the bus stop. And the rolling billboards that you normally have at the bus stops, and in 3 minutes there, we saw images of brands that we would never imagine we would see at the bus stop. So to tell you the truth, we do believe in exclusivity. We do believe firmly in the importance of exclusivity. We have about 400,000 customers globally, maybe 50% of the citizens of Perugia in terms of sheer numbers, and we like it that way. So this is another theme we have discussed a lot. Another key thing is the major theme of pricing. This is brand-new. Multi-brand stores were the first to bring this up. You know that normally multi-brand stores talk about prices because they want a 3% discount or something like that. But this time, they told us it's their consumers, their end customers that start complaining about hefty prices. Well, regardless of their spending power, I mean, it's 2 separate things. On one side, we see that constructing a complete outfit has become so pricy that a large chunk of consumers will never be able to afford it. On the other side, though, even for those consumers that are not too price-sensitive, like a few days ago, we had the founder of the biggest opticians chain in the States who came to see us, and she's a great client of our beloved Luxottica. The CEO, Francesco Milleri, last night told me, "Well, whenever I talk to investors, I tell them, just talk to Brunello." But in these 3 dinners, we did a part of the roadshow for you as Luxottica as well. But this lady told us that, during a trip, she lost a bag. She went to buy it again. And when she went to pay for it, the price was higher than the psychological threshold she had set for herself. And so it was much, much more expensive than it was 3 or 4 years ago when she first bought it. So we're all familiar with this theme, and we are attaching a lot of importance to it. Now, something else which is very, very important for us is the atmosphere in the stores. It just happened to me to be in London with [ Camilla ] some weeks ago. And we wanted to just walk into a store, but there was a queue outside. And as we looked into the store, we realized that there was no reason why there would be a queue outside because, at the end, the store inside was pretty empty. So what I perceive, if I see a queue outside and an empty store, it's something which I feel is not feeding the sense of exclusivity that should be interpreted in a different way, in our opinion. Yes. I told you before, I went to the Milan store. The store assistant didn't recognize me, and she said, "Would you like anything?" And I said, "Well, this is not a bakery. Why would I just be asked, would you like anything?" I mean it's not the way we should be welcoming in a store. Also, we don't want to do that. This is not our attitude towards the atmosphere in the stores. And since many of these sales associates are actually paid on a commission basis, as soon as you walk in the store, you feel attacked and aggressed because they want your commission. So we circumvent that problem because we have 85% of the salary of our sales associates is fixed income and just the rest is an incentive commission. So we don't want people to be aggressed by sales associates as they walk into the stores. They shouldn't hassle our clients. They shouldn't compete with each other also because each individual store is kind of a small company in and by itself. And so good teamwork is essential. Something else we have realized when we first presented the collection now is that many people are starting to comment there are too many evergreens. It's true that evergreens are more profitable. There's less inventory, fewer unsold items at the end of the season, but they make everything look a bit older. So for instance, I'm wearing a blue jacket today, 75 centimeters, and it was 72.5 centimeters 3 years ago. So it's not that different, to tell you the truth.

[Interpreted] Yes, speaking of Evergreens, a multi-brand client of ours commented on this some days ago. So on one side, he repeated this concept. He said he wanted novelty in the collections in the next few months. But then he started thinking about himself and his company. And I thought it was a very interesting comment he made. So his comment was, "I relied on mathematics too much, and I forgot about taste for a while." So this continuous osmosis between the buyers and the planners that need to work together, well, they need to strike the right balance without overpowering each other. And so he completed his comment by saying, "Mathematics is very efficient, but it's hardly ever the source of novelty." Now, something else we're all familiar with is the pricing of our third-party suppliers. So we know everything about everyone. We have access to all sorts of information. So we know about the micro companies that work for us. It's 400 companies, 6,000 direct employees and another 4,000 people work 50% of the time for us and 50% for other very important fashion houses. I have to say we need to really consider their income, their salaries. This is a thing which has become particularly important in the last few months, but we've always believed in this. So we believe that, first of all, there's a lot of work in working directly with smaller producers. We are not a platform. This is very important. We don't use platforms because we don't want to use in-between brokers between ourselves and our third-party manufacturers. We want to compensate them in a fair way to actually help them and simulate doing beautiful and wonderful things and to persuade their children to continue doing their parents' work. So today, in 52% of our third-party manufacturers' companies, the sons and daughters of the founders have actually decided to continue their parents' work. And of course, they wouldn't want to do it if they were not compensated properly. And besides being compensated properly, we were able to build beautiful places for these people to work. All these facilities have air conditioning. They have natural light, windows looking outside. So this is very important for people's working conditions. We hold this very dear to us. Next week, we are going to have a Christmas Greetings meeting, which is always an opportunity to speak about the budgeting for the next [ 3 ] years, too. And we are going to discuss it with our third-party suppliers soon. Another very important topic is the factory workers' salaries. We discussed this recently, and we discussed it with the major suppliers of raw materials. A friend of mine came over, Loro Piana, Pier Luigi Loro Piana, we actually grew up together. And so when we discussed fair compensation for workers and for the suppliers of raw materials, well, there was a gentleman from Hong Kong who thought he was being witty about it. And we believe that, with 1% of our profit paid out to our factory workers, we can actually change their life. We see it day in, day out. And then this guy was being a bit -- well, he thought it was a bit witty, and he said, "Well, why should we give up 1% of our profits?" And I said, "Well, it doesn't make sense to think it should be otherwise. We can never make fun of people who work for a living, not just here, everywhere in the world." I always say that we, as Italians, we have a huge chance because people love our taste. But we need to be brave enough to build beautiful places for people to work in and to pay them fairly because this is the only way to attract talent. We have 300 young people who have just joined the company. They are very young. They're happy to do manual work, but they can actually get access to salaries that are interesting to begin with. And on top of that, they work in a beautiful glassed-in office where they can have natural light and good working conditions. So we speak of Italian -- made in Italy all the time, and this is what we need to do to make Italy attractive as an employer. And we keep repeating it to pretty much everyone. So these are the biggest topics we are discussing in this moment in time. And so I was discussing it with the Board today, this morning, and I told everybody we foresee a bright decade for our brand. To remain steadfast to our core principles, so we need to be creative. Creativity is one of our main principles, but we have to remunerate people in a suitable way and in a fair way. So our objective has always been that of having a 10% profit. But is it a big difference between 10% or 11%? So why shouldn't earmark the extra 1% for our people? So for people who live in Perugia, a 10% salary increase does make a difference. So they certainly feel they work for someone who actually acknowledges their importance. For instance, we have no absenteeism. I mean, people don't just stay home because they want to stay home. Of course, they stay home if they're not well. That's the only reason for them not to show up for work. So that means they're actually feeling good with what they do. Also, we never had any kind of remote working. We'll never do it as much as we can. And [Audio Gap] have not made money, but they may be more attentive, more careful. So I'm not naming names, but I mean, if people are wealthy and well off, of course, it's because, at some time, they understood that exclusivity has really become desirability more, so prices are -- at times, they're not really justified. You see what I mean. So this is quite possible [Audio Gap] because people may be willing to be different or may be willing to buy something beautiful and be exclusive. But I believe that this is pretty important. Today, it's not just the product, but it is the ability to receive a piece of advice when in stores. And I go back to how important it is to have a warm, embracing atmosphere in the -- in your stores. And something else I'd like to add, we have customers who really trust our company. This honors us and also places a great responsibility on our shoulders. And we firmly believe that still keeping on working with our collections, we do have great chance, a great opportunity, for the future. Well, the most frequent word that I heard around the world was trust. They want to feel trust. They have trust. And we -- as you are fully aware, our price level is pretty high. Our products are pretty pricey. But there is the aspect of being exclusive that really matters. And it is really strongly felt. And prices, yes, they might be high, but they are well balanced. Truth be told, I went to New York. I used to pay $1,200 a night in the hotel where I used to stay, the same hotel, $3,200. I was not aware of this when the booking happened, but I'm never going to set foot in their hotel again after this huge, soaring price increase. So EUR 3,200, the same room I had before for EUR 1,200. Riccardo, you have had the same experience. You see, exactly the same experience, exactly the same room.

[Interpreted] And I'd like to say, Andrea, that last week, Riccardo speaking, I spent a week in New York, Chicago and Los Angeles altogether. And I can tell you that I was met with very vibrant cities, very lively. We are in the luxury streets. That's true. But there was very, very great vibes around. But Andrea, this should not be mixed up with a brand running into difficulty because this is now -- for 45 years, what I have seen in my life is that brands, they go -- they swing. They go up and down. So how the brand is doing is one thing. The individual brands is one thing. The market is a completely different kettle of fish because the luxury market will still go -- perform well in the years as has always been the case. Personally speaking, I believe that we need to expect something verging towards normalcy because we have great businesses scattered around the world with billions in revenues, and the value of their brands really cannot be priced. But at the same time, we have to -- everything must fall back into place somehow. We have to find a new balance. We shouldn't underestimate that, between 2019 and 2023, Andrea, EBIT has grown by 37% on average, which means that, in order to have a 40% EBIT, you need to multiply the industrial cost by 25x. This is the industry in general, obviously, not our brand. I wouldn't like to, really, this to be -- I wouldn't like to hammer on this again because you all know this.

[Interpreted] But I think that we somehow -- the industry somehow has crossed the line because there was the pandemic in 2020. We all felt that we were on the verge of bankruptcy. Then in 2022, 2023, everything doubled, revenues. Then there was a 40% increase in profitability in the industry at large. But where is the limit then?

[Interpreted] Thank you very much. Thank you. So the only -- one thing is for sure. People always want to look better than the day before. That's for sure. So I wouldn't say there is a disaffection towards the luxury segment. What I feel is that people feel -- I don't know, help me find a word. They feel a bit -- they seem bothered. They feel bothered and a bit annoyed by the way they're treated. You see, you set foot in a store and you have to wait for 2 hours, although there's no one in the store, no one around. You see all this hustling. And then so at the end of the day, these people will decide never to set foot in the store again because, if they, the customers, get upset, that's it.

[Interpreted] Somebody called me 6 times to sell me a Range Rover, and I was fed up with that, and I decided not to make the purchase, full stop. So you see the mood, the vibe, has changed in stores. First thing first, the stores where there was the owner, for example, the multi-brand, the vibes there are different. So you step in and you're not treated like that anymore. And then I went to a restaurant where I footed a huge bill, and I said I'm never going to set foot there again. You see a bottle of wine, EUR 2,000, of [ Milaya ] Sassicaia, yes, but still.

[Interpreted] Thank you. So you all know what we're talking about. You see this exaggeration in pricing. Well, I think that we really need to fall back to some sort of normalcy again.

[Interpreted] Next question from the English call by Louise Singlehurst, Goldman Sachs.

It's wonderful to see such good momentum going into year-end. I wondered if you could share with us any surprises during the Q4 period to date and the extra optimism. And I wonder if it relates specifically more towards the U.S. There have been some comments that the U.S. has picked up a little bit post the election, but it'd be interesting to hear what you're seeing in the U.S. And then secondly, for China, is that an improvement you talk about for the Q4 relating to like-for-like? Or is there also space expansion, too?

[Interpreted] Well, I can talk about the U.S. We just came back from that region. I see that there is a lot of confidence around the American Stock Exchange is doing well. The business is performing well. I see a lot of enthusiasm there, but they want really special items, special pieces. That's for sure. You see, one thing is for sure, the growth we achieved last year, well, we were expecting something less this year, whereas the opposite seems to be happening. Luca speaking. And that's precisely why we adjusted the estimates and the performance of the retail channel. It was slightly higher than our expectations. We had not been cautious because we have projected a growth for the last quarter where we had grown by 22%. But I have to say that across all geographies in the last quarter, all geographies offered a more than positive contribution. About China, yes, there is an improving performance. I have to say that, there, the event, when we held the event, it was a very important moment, time, for us, but it is a like-for-like improvement, by the way. There has been no space expansion in China. As you know, for us, this was just an ordinary year for us with a reduced or a small number of openings. Well, no, we can't say reduced, Brunello comments. It's just normal, the ordinary way of opening stores. And we envisage the same also for 2025. We believe that we have a network of stores that are very fresh, young, that can still express a lot of potential.

[Interpreted] Brunello speaking. This idea, Louise, we spoke about this in London, too. This idea that customers usually spend 32 minutes now in stores as opposed to 18 minutes before, it is, of course, by and large, but it means that maybe you step in, you have your cappuccino in the Brunello Cucinelli store on Madison Avenue. You don't have to shop, necessarily. Maybe you just sit there, you spend 20 minutes there. Your wife maybe shops. You go and check out the menswear. But what is happening is that these customers like to be comfortable in these physical brick-and-mortar stores. Everybody that turns up at our stores, 70% of them, they already saw the item online. So it's very important how you display and exhibit your goods in -- online because that then is converted into the physical purchases.

[Interpreted] Yes, Louise, I really like the fact that you really were able to hit it on the head about our positivity, our confidence. And this reference that Brunello was making about the time customers spend in stores, this is a great achievement. We are particularly happy with -- particularly pleased with it because that's the kind of scarce resource that we have, that we have little time, everybody of us. Because for [ celebs ], they come to the event from 7 to 12, they take a picture, they take a look at the collection. We never have fashion shows that last 30 seconds. We have our models staying there for as long as you like. So you have the opportunity to see your best outfits worn by the models. It's very interesting. It is the pleasure of taking part and experiencing. That's for sure.

[Interpreted] The next question will be asked by Chris Huang of UBS.

It's Chris from UBS. I have 2, please. Firstly, on the kind of top line you expect for 2025, of course, you guided to 10% growth. Can you just remind us, within this 10% growth, how much do you expect to come from price mix? Or if we put it in other words, the average selling price of the new collections? That's my first question. And then secondly, I just wanted to understand a little bit more on the wholesale dynamics you're seeing currently in the market. Of course, what we see across the sector is that the wholesale channel seems to be a little bit more under pressure. Are you seeing any potential weakness from that channel? Because some investors seem to be kind of concerned about promotional levels, discounting issues. So if you can share any of your thoughts on your control over the distribution, that would be super helpful.

[Interpreted] Thank you, Chris. I can definitely answer your question about the wholesale. We use the wholesale channel. You see, we say -- when we want, we say we should be careful. When they don't buy, we say that it's us that we don't want to sell to them, but this is not the truth. They don't buy because they don't like the collection. If the wholesale likes your collection, they buy. They're healthy. We have 320 accounts and the image we have at their stores is fantastic. It's really appealing. There is a lot of cooperation between us. They invest, but they also tell us when we have to change or tweak something about the collection. So as you know, about the wholesale channel, we think the opposite of what rumors has it. Then as far as prices are concerned, we think that we might grow by 10%. It could be 6%, 7%, 3% or 4% price mix and the rest, the number, the volumes. And as far as the novelties are concerned, well, you need to have a beautiful collection. When we went public 12 years ago, you analysts quite rightly said, how can you possibly not have any evergreen item, because evergreen drives you to the cemetery? Dear Chris, I know it's really hard to have -- to express this, but that's my opinion. You say no for the carryover for the evergreen items. We have all the material in-house. No, that's not true. You need to have a new shape, a new color, a new shoulder on your blazer. The other day, we came out with the collection, and they say it is the best in our history. Well, I try not to believe this too much, but I think it is pretty fine. But you must have the courage to work on your collections. And if something is not in line with your identity, it should not come out because, for example, what I said in the latest call that we organized with all our sales assistants, I said, "Do not dare sell items to your customers that do not suit these customers." Because, Chris, in the evening, they go back home and they try this item on with their spouses, with their partners, and they feel ridiculous because they were sold an item like that. That's not something that should be done because, you see, ready-to-wear is very tricky. If I sell you a blazer that does not suit you, is not flattering, well, it is not good. Of course, we have very -- in 1.5 months of travel, we have gathered, garnered a lot of positivity for true luxury, absolute luxury, for our brand, for the brand recognition, and also for Italy as a nation. But we have to be brave enough to stay exclusive. And if a color, if it doesn't -- you don't like a color, you should not use it just because it's trendy. You should not use it. We have 60 people working -- creative people working on the collection. And as soon as the collection was released, we started expressing our opinion. But only multi-brand channels can tell you whether your brand is aging or not. There's no one else that is going to make that comment, Chris. Your store manager in Los Angeles, New York and Milan who have not been around viewing collections, they will never tell you that your brand is outdated or is going down the drain. They will tell you, you are the best, whereas let me -- mark my words, multi-brands, they see 300 different collections. They pay attention, and they can really tell you whether your collection is working or not. And they also do point out if there are too many carryovers. Of course, they do point this out. Evergreen is just good for the financial people, not for -- it would be too easy to sell -- always sell the same piece, a blue blazer. You see, for example, I am wearing this blazer dating back to 2015 because it's 75 centimeters long, no longer 72 like last year. So Chris, I'm sorry for being so energetic when speaking, but I'm a great fan and supporter of the multi-brand channel. And many brands, they say perhaps we should cut down -- cut back on the wholesale because we wanted to sell more in the retail. No, that's not the truth. The truth is that they did not want to buy a collection.

That's super helpful. And if I can just add a little bit of follow-up here, so are you seeing any risk coming from the merger between Saks and Neiman Marcus in the U.S., especially given how important U.S. is a market for you?

[Interpreted] Well, personally speaking, I believe that Neiman Marcus is the best multi-brand retailer of true luxury. And it's not by chance that, when they turn up in the showroom, they spend 2 or 3 days looking at the collection, which means they really are on the lookout for the novelty, for novel stuff. So we see no risk there, but provided that you keep creative, provided that you are always fresh, youthful with your products, your visual merchandising must be great, your lifestyle must be wonderous. And we can't say you see we have that style in the warehouse, been there for 3 years, perhaps we will use that one. Perhaps your CFO will be happy because you sold somebody you dragged out from the inventory for a full price. But first, at the end of the day, you will end up in the cemetery, down the drain with your brand.

Congratulations. [ id="-1" name="Operator" /> [Interpreted] [Operator Instructions] Right now, there are no further questions waiting.

[Interpreted] Okay. So thank you a lot for attending this call. All the best for Christmas. And as I always say, well, Christmas, end of the year, is a time for reckoning. It's a time for not just economic accounting, but also you take some time to think about your personal relationships with your family. So let's take this time to think of improving ourselves. We need more gentleness, more politeness, more -- well, this is true for our stores, for the man on the street, for pretty much everyone. So this morning, we decided to present a 5-year Plan of the Soul. Don't worry, it's free of charge, no money invested there, but it's a call for all of us. I mean, we make -- we need to make sure that, at the workplace, if you see someone who needs help and so on, just extend your hand to them. So thank you. Thank you very much, and thank you for appreciating our positivity. All the best. [ id="-1" name="Operator" /> [Interpreted] This is the Chorus Call operator. The conference is now completed. You can disconnect your phones. Thank you. [Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]