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

Good evening, and welcome to the presentation of the 9 months results 2026 of the fashion house, Brunello Cucinelli. Speakers will be Brunello Cucinelli, who is the Executive Chairman and Creative Director; Luca Lisandroni, CEO; Riccardo Stefanelli, CEO; Dario Pipitone, CFO; Moreno Ciarapica, Co-CFO, Senior; and Pietro Arnaboldi, Investor Relations and Corporate Planning Director. [Operator Instructions] Now I'd like to give the floor to Brunello Cucinelli.

[Interpreted] Good evening, and it is really a pleasure to see you. We have installed new microphones. And hopefully, that is working -- it is working properly. So thank you very much, analysts, investors, journalists. There's always all 10 of us here around by table to provide you with the results of the first 9 months of the year. But being mid-October already, we -- basically, this call basically provides you with the results of the end of the year. So this is how the call will run. I will read out the headline figures, then Luca and Riccardo will give you a worldwide overview of the market. Also with updates on Callimacus that we received the green light from the government, and that we have started this great project together with Marc Benioff. Then I will take the flow back with expectations for 2026. Then we will also provide you with quite good visibility on 2027. And then I will tell you about the conclusions we drew after the 2 days we spent together in early October, when we basically gathered and tried to understand who we are, in which market we are present and how we operate and what the great fundamentals of our fashion house are. Now let me read. The first 9 months of the year closed with very, very positive results, which allow us to raise up again our estimates for 2026, moving from an expected plus [ 10%-11% ] to a forecast revenue growth of plus 12% at constant exchange rates. So revenues of EUR 1.123 billion, up by 13.3% at constant exchange rates and 10.2% at current exchange rates. Third quarter revenues, very important, EUR 374.2 million, up by 13.5% at constant exchange rates. The retail channel revenues of EUR 741 million report an increase of plus 19% at constant exchange rates in the first 9 months of the year. Then significant growth was reported in every quarter of the year, 17% at constant exchange rates in the third quarter, with double-digit increases across all geographies. The wholesale channel with sales of EUR 382.6 million confirms a consistently very sound result, plus 4% at constant exchange rates as of 30 September 2026, plus 7% at constant exchange rates in the third quarter. Very positive performance across all geographies, sales at constant exchange rates of plus 20% in the Americas, plus 7% in Europe and plus 14% in Asia, with a significant contribution coming from China. Sales of the fall/winter 2020 Men's and Women's collections currently in stores are very positive. Then spring/summer 2027 collections. [ Comes in ] Women's order-taking campaigns are complete, both with very extremely positive results. We gathered particularly favorable comments from our sales teams from our multi-brand clients as well as from the international press at [ PT Wamo ], the trade fair, last June, as well as the recent Milan Fashion Week for women last September. Our positioning in the absolute luxury segment and the pleasant atmosphere that we continue to feel around our brands allow us to look with confidence to 2027 as well, a year in which we expect healthy balanced revenue growth of around 10%. Next week, in Tokyo, Shanghai and Hong Kong, the important premieres of the documentary film Brunello, The Gracious Visionary will take place following the great appreciation it received in Rome first, and then New York and Paris. During the Shanghai event, we will also open our Casa Cucinelli there in a captivating historic residence from the late 19th century in the city. It is really a splendid city. So next week, we will be traveling across eastern -- the eastern part of the world. At the beginning of November, in Solomeo, we'll host the second addition of La Paulee, a prestigious biannual gathering that brings together some of the most important wine and champagne producers and collectors in the world. It is a relevant event for us and also for Solomeo, which will give us the opportunity to welcome guests of international standing and to share with them the atmosphere and values that animates our village. If you have 2 spare days, please do join us. Now let me read out what I wrote. The first 9 months of 2026 ended with revenues growth of 13.3% at constant exchange rates, and we consider this result to be very pleasing. We believe that the brand's image around the world reflects what we have always aspired: a belief in absolute luxury. With no logo absolute luxury, we think of a brand that stands for authenticity, style, familiarity and simplicity, where the product is the fruit of exceptional craftsmanship, quality, creativity with a contemporary sensibility and a strong sense of exclusivity, the latter being of paramount importance to us. We also feel that ours is not a mass market notoriety or renown. The family's stewardship of the brand allows us to take a longer-term view, with the enduring hope of maintaining a sound and well-earned reputation and ensuring that the [ run ] continues to thrive for decades to come. In light of these considerations, and as the year draws to a close, we expect healthy revenue growth of around 12% in 2026 with -- at constant exchange rates, together with a sound level of profitability. Following the excellent performance of our spring/summer '27 menswear and womenswear collection and the highly favorable reviews from the press during the Milan Fashion Week last September, we visage healthy growth of around 10% for 2027 as well. And now it will be up to Luca and Riccardo to give us a worldwide overview.

[Interpreted] Well, very well. Ric, let me start. I have to say that we have closed the first 9 months of the year very well indeed, as we have these first 15 days of October. You see the results achieved and the information and feelings that we have regard the last quarter of the year have led us to a second review of our revision of our estimate, always guided by the desire to share our expectation with you promptly and punctually. The growth has been distinctly regular, steady and continuous as the figures themselves demonstrate. In Q3 too, we are actually growing by 13.5% at constant exchange rates, perfectly in line with the results of the first 6 months. And even when we actually look at absolute values and no longer percentage ones, we can actually realize that the contribution to growth of each quarter at constant exchange rates has been entirely comparable. Therefore, we attach very great relevance to this growth. We attach a still greater value to two of its features that make this growth even sounder and more robust. On the one hand, we have its linearity over time. And then on the other hand, we have its spread across geographies and sales channels. This increase, the raising of the estimate about 2 points compared with the start of the year, rests on two reasons. On the one hand, the actual advantage achieved in the first 9 months of the year, and then the great confidence with which we look to the last quarter. As to the 9 months, we have delivered 3 quarters [ or ] slightly above our expectations, thanks to [ 4 tagonists ], we may say. Retail, our online boutique, then geographically speaking, North America and China, and then, obviously, the strength of our collections. The advantage gained is ascribable to the retail channel in a balanced way between the organic component and the contribution of the new stores and new spaces. In the stores, both the number of customers and the average spend of existing ones are growing, thus reinforcing our conviction that we have a network that is still very young, which has ahead of it, both ample room for healthy organic growth and also further scope for expansion. So very good results for the physical stores and excellent results for digital boutique. As you know, our online boutique accounts for [ EMA ] about 6% of our sales. But you see the image of brand of the collections becomes really fundamental there. And we see this thanks to the increasing number of customers who step into the store showing pictures they have seen online. And we have to say that Callimacus was truly, truly instrumental here. And I would like to update you on this project. First of all, as Luca was saying, results, we delivering, we are pretty satisfied, not just for the economic results, but also for the quality of the traffic. So the traffic is steadily increasing, and the traffic -- visitors tend to stay there twice as long as before. And this actually proves that our customers are looking for something very specific, elegance, quality, contemporary style. And a lot of tips and lots of advice is asked for during the whole stay and on the website. And then on the other hand, the great [ investments ], but it is somehow another kind of business for us. We are happy to announce that on September 28, Salesforce, you all know this company, and with whom we enjoy not just a business or professional, but also personal relation with Marc Benioff, [indiscernible] they have taken upon themselves the development and the growth of this invention of this project. So we have entrusted them with it, and we are very pleased that a great company such as Salesforce decided to invest in this project, not just for the novelty and the innovation brought about by the platform, but also because of this balance between manual skills and visual together and technology. And besides, we are very happy to note that Microsoft, a few days ago, taking inspiration from us, decided to call it the human super intelligence, which for us is a confirmation of what we have always maintained. So the government not only authorized, but also sent a letter where they actually congratulated us on this deal. Let's go back to physical for a second. All geographies have given a positive contribution to the 9 months growth, including the Middle East. In the last 9 months, it's been slightly positive, thanks to a great start in the first month of the year. And here, we have to get accustomed to the idea that every year, something may happen which is out of our control and may actually set us apart from our expectations. At the beginning, we thought the Middle East would give us a good contribution. It's still a [ youngish ] area and geography for us, and it has -- it holds great expectations for us. But we also have to say that the American market was even more favorable than we originally expected it to be. And actually, a good part of the extra performance comes for us from the U.S., where in the first 9 months of the year, we grew by as much as 20%. And in the third quarter, we kept growing at 19% at constant exchange rates again. So the performance here is really, really good. And then this beautiful expression is absolute luxury is growing in America, not only in terms of width, but also in terms of depth. And so we believe that our authentic luxury is becoming more and more rooted in the lifestyle of many American customers. As to department stores, they're still really important in the American market. And everything continues to do well for us with the [ Ecsiempo Luxury Group ]. There's [ 4 ] mutual satisfaction about the results. And we're growing in each of their 3 banners, Neiman Marcus, [ Saxenburg ], Berg Goodman. And within each banner, both Men's and Women's are growing. And positive results have been positive for all 3 quarters. And we had no problems on payments that were perfectly punctual at all times. We can also confirm that for winter 2027, we will extend the Men's and Women's location at Bergdorf, which we believe remains 1 of the most prestigious and most beautiful luxury stores in the world. Now from the West, let's move to the East. We are just as happy with the results of Asia and China, in particular, which maintained a fine growth trend over the previous quarters. And about 14% of our global sales were posted from Asia from this region with a quiet and gradual and constant growth in market share. The Golden Week was very successful in all territories in our geographies. And we we're discussing this with Pietro. One year ago, we said our brand seems to be experiencing a wonderful spring time in China. One year later, with revenue base, which is more significant. We seem to perceive the same fractions and to see the same excellent opportunities. Now we should remember at all times that we're specialized in ready-to-wear and clothing. At a time when the appeal and interest in this category is very high and growing, we have protected and favored by our size, starting with that of our notoriety. Brunello in his [ code ] says that we don't seem to have massive notoriety, not in China. And hopefully, it will continue like this. But we can certainly benefit from the fact that many new customers have kind of discovered their brand. There's a lot of attention towards us. A lot of magazine covers were dedicated to our brand because of positioning image, but also because of the values we speak of. And when you dedicated magazine cover that meets the product is top trend. There's a beautiful expression in Chinese tradition that says flowers in the spring, fruits in autumn. So we do trust really that the perseverance and the spirit of protection we've used in working in this region will truly bring us very good fruits for the future. And even today, we're very happy to celebrate the opening of Casa Cucinelli in Shanghai and the extension of the Plaza 66 store, which is going to be completed before the end of the year. Finally, Europe, we believe it is solid and strong. Once again, the domestic customers are fundamental for the European market. And we are closing this -- the best quarter as a percentage and in absolute terms for the whole year. We just completed the extension of the Geneva store. And I'd like to point this out because we actually carefully look at balancing investments carefully to obtain a well-balanced retail network across different continents. And finally, as far as the products are concerned, the first part of the year was marked by a very successful summer collection, and we can say the same about the winter collection, which is now in stores. We received very good feedback when we presented the collection to journalists, and we received very good feedback from our in-house buyers and the multi-brand clients. And now we see the appreciation from end customers, too. We see it in our own DOSs, and we see it in the wholesale channel too, which have already received numerous reorders. It is good. It's important for us to underline that in these first 9 months, growth is entirely comparable and fully balanced between Men's and Women's. As to the good health of sell-out, as Luca said, we need to thank all of our collaborators who the season to enabled us to deliver the winter collection, which is currently in the stores with very, very interesting punctuality and a degree of craftsmanship that gives tribute to the capability of our creative teams to come up with these products and to the artisans who will make them. Yes. We now stand at about 70% manual work in our construction, and this is really important. Yes. Once again, I'd like to point out that this capability is the outcome of the direct relationship we have with each and every one of them. We work with 400 artisan workshops that represent 9,000 individuals, 9,000 artisans. We had the first [ general meeting ] in -- on September 18, we met them, we shared work plans for next year with them. Because actually, our brands will be their work in order to. And we shared with them, the main challenges that concern us all, such as their fair pay, workplaces and the transmission of artisan know-how, which is fundamentally important for us. So here, once again, we still believe that the schools of style and how custom chip Solomeo are extremely important to us. Both are the main sources from which we draw to secure those manual skills and capabilities, which also pressures to our [ case model to our ] fashion house. Back to products and to Luca's comments. We'll know that in every question, it's really important to have a fair balance of colors, shapes, and most importantly, weight and temperatures to follow the needs and requests of customers that are really located all over the world. Now this is precisely one of those issues which we discussed and we bring up with multi-brand customers. And the contribution is very valuable because they understand individual places and customers and service. It allows us to design our collections better and to decide what we do in our own data store assume. Let's now talk about exchange rates. In the third quarter, the currency effect was still negative by a couple of points. But despite that, we successfully grew by 11.7% at current exchange rates in this quarter and 10% over the 9 months. For the fourth quarter, we still expect a slightly negative currency effect, which should mean that the exchange rate headwinds should be about 2.5 points by the end of the year. Let's now look at the last quarter. Many of the pieces of evidence that we have presented so far support our confidence for the last part of the year. Last year in that quarter, we grew a value of about [ 15% ] in retail and achieved the best results of the 12 months. And despite this, we feel confident that we can achieve beautiful and organic growth, fully in continuity with the previous month. The lesser specific weight of the new openings in the second half of 2026 has already been reflected in our guidelines. And so we believe that today, we are in best possible conditions to complete this year as we imagine it with beautiful growth of 12%. And we can plan concretely for a healthy growth of [ 10% ] for 2027 as well. Now let me say a couple of quick things about what Brunello said earlier, the movie. We're very happy with how the film has been received. The latest premier in Paris generated a really moving atmosphere. So next week, Brunello will be traveling into Asia. Unfortunately, [indiscernible]. And so the premier cycle is going to be completed in December with another premier to Hollywood in L.A. Yes. Actually, we would have wanted to go to the Middle East and Russia, and we are planning to go there as soon as it's feasible. Just to give you a dissemination on the Italian market. The movie has been made available by the [ Sky ] platform in Italy last weekend. It's now available on the main British platforms, too. We are receiving very beautiful comments not just from our clients, but also from people who are less familiar with the story of Brunello. And so we believe that since [ Tornatore ] is the director of the film, this is the best way to tell the world about ourselves and our business that we're not familiar with our company, but also it's a really powerful tool for our [ fuel fall ] to really source motivation from what they see in the film of our way of doing business. And it should serve as a [ mail station ] for their work and their daily behaviors, too. To say something as about the movie, it was translated in 8 languages and some titles in 9 other languages. So that's quite a good achievement. I mean, watching a movie in your own language will actually make a difference. It's -- we also prepared the translation of the movie in Arabic and Russian, and hopefully, we'll be able to use it as soon as possible. Now let me say a couple of things about the forecasted for next year. After hearing from Luca and Riccardo, as we said, we think we will grow by 12% by the end of the year over 2026. The EBIT margin is expected to be around 17%, up from 16.8% last year. Investments should be around 6% by year-end. But please remember, do not think this is a low figure because when we speak of investments, we -- well, for the next 3 years, we always be around 6% because for the next 3 years, we're not going to have to make any further industrial investment because that's what we did in the last 3 years. However, these investments on production, I'd like to give us a healthy and safety network for the next 10 years at least. Production is very good in present. The financial section is expected from -- to shift from 14% of revenues last year to about 10.5%. So from EUR 188 million to around EUR 160 million. So that was 2026. As to 2027, these are forecasts, but reasonably concrete ones, given the excellent sellout year-to-date and having completely sales campaigns with good feedback on them. So because of all those factors, we may imagine that for the first half of next year, multi-brand stores and directly operated stores will be equipped with the products that have been very, very well received by the market. So this gives us a good peace of mind. And so we can actually tell you that we are looking at the final forecast for the next year, where we are thinking of revenues growing by around 10%, investment, 6%. Please remember, this is not a lot of bigger net financial position improving further. And we have no plans to change the dividend policy. As usual, we expect to maintain our 50% proportion, and that's been going on for about 10 years now. Okay. Let's take a few minutes for some other important information, and that we not draw questions. So we did meet at the beginning of October. We spent a couple of days together. So we have finished pretty much our old tools. We have completed collections, orders and so on. And so we get together to listen to people and to discuss and trade insights. So we met with clients, journalists, investors, analysts, bankers, and we gathered to picture together and to discuss who we are, who we are today, what we can expect for our future and to state once again our fundamentals for us right now when there are different visions on the future functions. And we've discussed the greater things, the value of style and identity, the value of absolute luxury, the value of Made in Italy, the value of exclusivity, the value of uniqueness, the value of healthy growth, as you call it, value of healthy profit because that's the way we call it, the value of family, the value of generational turnarounds and handover brand, hopefully, of the brand's long life. So as to our great values, the one in which we have always believed, we want to restate them because this is a high time for us to really restate them because we need to survive for the coming decades. We feel we enjoy a kind of excellent, healthy reputation. Of course, these are all this is a feedback that we all gave ourselves. Nine of us were present in attendance of family controlled over the company allows us to plan further ahead. This being a strong wish for the life of the company here in Solomeo. And as to the responsibility, well, of the -- it was the community as a whole, you are fully familiar with the Solomeo, and we always have to stand for the place where everything has a very place of the utmost importance to us. And then even in times as favorable as the past few years have been for us, [ price ] allows us to work with greater serenity, and with it, greater creativity. Well, perhaps you can't really hear it, but there are the bells tooling and ringing with the Holy Mary chant tolling, and it's really all beautiful. Then another thing, supporting and believing in healthy growth and healthy profit gives us strength and determination because you have -- we want to envisage that the enterprise will live for a long time. But this idea, this concept generates in every day, positivity everyday life, positivity, creativity and humanity. Because you see, creativity is stronger if it is surrounded by positivity and humanity in the working environment. And then of course, what matters is also what we call humanistic capitalism. We need to believe and act so that the brand may live, hopefully, for more than a century. The really instrumental theme here, recruiting coworkers or others. We need to recruit people of integrity and empathy as coworkers. And wherever the atmosphere is pleasant, everything feels more human, harmonious, and people are far more creative. And I have to say that this is specifically felt now as much as we sell back in 2022, the pandemic. You see, passing on craft -- and as I was saying, 70% of our designs are manual. Well, we fully believe that it is essential to raise wages and to make workplaces slightly more pleasant because after all, who would advise their own children to become manual workers? You see, this is the greatest wager for the future of products made with exceptional manual skill like ours is. And then we need to continue to seek out talent and to recognize its value to us to build the company that is contemporary and human. You see, talent is important. But you see, talent means that someone is better at working with colors, the other thing. So we really need to be able to recognize talent. And finally, the product, which we call our king. And we want to tell you how we build, we put together our product. You see human beings need to feel trendy every day by wearing fashionable products and wearing fashionable brands as history teaches us. And this need is really as old as humanity. And it does not just apply to clothing. Therefore, everything depends on how contemporary the product and the brand are. We do not believe for a moment, absolute luxury is waning today. Quite the opposite. It is growing all the time. Actually, it is becoming even more important because everybody takes selfies then posts them. So we want to look better tomorrow than today. How do we build our collections? Well, there about 100 work in the design department, of whom 19 are first level people have dedicated to menswear and womenswear, 50-50. They -- we are all in constant dialogue with 1 another. Well, we hold large meetings with everyone to discuss the Men's and Women's styles. And the market, everything is always organized collectively like we did yesterday. We have never believed in collections made up largely of evergreens. For me, even the word evergreen, it really means that you make your collection age quickly. So it's not that you don't have to have them at all, but you see the their presence should be slightly less than what it is usually in the other collections. You see, visual merchandising plays a very important role here. We actually started off drawing inspiration from Ralph Lauren, and we want to keep it feeling grateful to him. Visual merchandising and styling. These are in-house teams. The fact that we have our own in-house styling team means that we are able to daily, combine all the different items. And this really makes the difference because you then learn how to combine jackets, whether to where a tie with a denim or without a denim changes the whole picture. So even the schools that Riccardo was mentioning, these fully fledged schools, where usually the these schools, they welcome around 250 young men and women every year. They encompass every single kind of subject matter, visual, styling. And we believe that as a result, what comes out of it is a strong identity, style identity. And this is the reason why in '23, '24, '25, this were -- we were presented with major awards. And they were all based on the identity of our brands, and we are very pleased with this. So we have our own identity. We continue to believe, as always, in no logo absolute luxury. I have always been mistrustful about logos because some of you might know that I was modeling for [ Alesso ], the #1 sportswear in the world back then. And that's what happened when they use the logo, and the brand went downhill. You see, products should stand for authenticity, simplicity, familiarity, style and also manual skills, quality, creativity and exclusivity. And exclusivity in particular, has -- is very much in the moment. It's always been a powerful theme in luxury, but especially now. So products must have an identity of style and lifestyle. And the style and lifestyle identity of our fashion house must always be embodied by a team, a team of people and never by a single individual. Because in our company, no one is allowed to make any decision alone. This is not part of our culture. And this applies not only to the collection, we always discuss every single subject. So as far as product is concerned, well, it is [indiscernible] by myself with my 2 daughters, Camilla, Carlina and Riccardo. And this is my job. And I devote 80% of my time to it, product and communication. But you see, product is my background. And if someone actually submits to me any financial deal, I'm not interested. Whereas if you submit to me a wonderful top-notch quality cashmere, then I'm interested. You see, we are working on cashmere denims, cashmere jeans. And I try them on today, and we are so happy with them. And this is what interests me the most, more than any financial deal that might be offered to me. So final remarks. We have always claimed that products and brands go out of fashion quickly and perhaps far faster than we imagined. Therefore, this is what matters the most. And [ Sean de la Prue ] reminds us of it when he was writing in the age of the [ tanking Liatos ] in 1688. You see he was a writer, someone who was savvy about fashion. And he wrote a statement that I agree with fully. One fashion has just barely replaced another when it is itself replaced by a new one, which in turn yields to the one that follows. And that would not be the last, and such is our fickleness. So if we look up -- if you look at the word fashion in the dictionary, it says in fashion, out of fashion, it means that it is a passing trend. And this applies to everything, in restaurants, night clubs, bars, music. When I listen to some music, you see, and my daughters turn up and they say, what kind of music, outdated music are you listening to? So if this is so, we must work even more intensely to try and remain contemporary and modern. And how? Well, we need to listen to the market without ever compromising on our taste and style identity. Then 1 minute on generation and changeover. At 58, I set up a [ year vocal ]. English is by trust, and I started talking about this with Moreno when I was 50. And this was to be for the benefit of my 2 daughters, currently our Vice President. So during -- according to -- pursuant to this [indiscernible]. During my lifetime, I may act freely the day after my passing as far as our fashion house is concerned, everything is already settled. So no worries there. At 63, I took on the role of Executive Chairman and Creative Director and decided to appoint 2 Chief Executive Officers, Riccardo and Luca, Riccardo from the family and Luca from outside, whom we nonetheless consider family. And on average, they are, lucky them, only 47 years old. So I really strongly wanted to create some sort of alliance in terms of values and generations. So I strongly wanted to build this alliance. So some of you, quite likely, 1 day, we might write what happens after Brunello. Well, after Brunello, as today, the company will remain in the hands of many capable people where all -- everybody is useful, but none is indispensable. And you see this is what we have always cherished because we are not the owners of the company, mind you, but we are its major shareholders and those chiefly responsible for it, but the company itself belongs to the world. Let us conclude by saying that, undoubtedly, we are experiencing a wonderful momentum for our fashion house across the world. And we can also add that things are going even better than we expected. We work serenely, always very focused and always aware that -- for both the products and the brand, we must be truly exclusive, contemporary, unique modern, and why not, cool. If we're not cool, it doesn't work that way. So thank you so much. And now we have all the time in the world for your Q&As. You see, this was this was supposed to be wanting to restate who we are today and who we aspire to be in about 10, 15 years. And we have walked you through this discussion. Let's open up for questions.

[Operator Instructions] The first question will be asked by Chiara Battistini of JPMorgan, please.

[Interpreted] Good afternoon, Brunello and everyone. I have two questions, please. So the first question is about the North America is still performing really well. Can you please [ press ] some more details about the product mix you sell in there? Or better, the mix between existing consumers and new consumers and how loyal existing customers behave in terms of their spending patterns? And what about the price mix in North America? We are seeing some changes there? My second question is about your strategy for force. I think that new openings are focusing mainly on larger stores. So can you please remind us of the average size of your stores? And where do you think we are adding in terms of the optimal size for new stores? And finally, I need a clarification. I think -- you said that October is off to a good start. So we didn't get it right, is Q4 going as well as the rest of the year?

[Interpreted] Yes, Chiara, you've got that right. Q4, beginning of Q4 is as good as the rest of the year. Now for North America, people tend to buy beautiful [indiscernible], and they tend to buy entire outfits. So much depends on what the test and how you mix it, especially managed that really makes it a good. If you -- you can buy it to suit and then just used a jacket with denim, causes. It's important to suggest it. And so this is why styling is so important and how we present it. As to the size of the stores, pretty much unchanged. 500 to 600 square meters for large cities, 400 square meters monthly for a second-tier city. And then for smaller tourist locations that we -- they may be like 70 square meters as much as [ 600,000 ] -- 600 square meters in Pacific. But nothing much has changed. We do believe it's really important for customers to see how we put things together and with 5 of them. Callimacus helps a lot there because people ask Callimacus, I'm going to enlight, what should I were. And Callimacus provides suggestions and examples. So we have seen to be very, very in it is true. We do 7% on e-commerce. But people normally walk into the stores with some predone research from the website before. So people are looking for unique, beautiful, well done, well construct things, were styled. And so well put together. So this is what Ralph Lauren has been teaching us for like 50 years now. So put things together, style them well, and that they should be very, very charming. Thank you.

Next question will come from the English conference, and it will be asked by Adrien Duverger of Goldman Sachs, please.

The first one would be on the different geographies. Have you seen any differences in terms of the consumer spending patterns between the U.S., Europe and Asia? My second question would be around margins. So with the recent investments in the production capacity in retail and in client engagement, which should support long-term growth, when could we expect these investments to begin generating stronger operating leverage? And what could drive margins above the current gradual progression?

[Interpreted] Thank you, Adrien. As to customer habit and behavior, one of our states is what Brunello was saying before. So the ability to sell more than an individual product, but rather, making our customers fall in love with a complete. And this is visible in U.S., Asia and Europe alike. The way our customers behave in different geographies is really similar.

[Interpreted] Yes. This is Brunello speaking. We set from the events we organized, normally organized events with 100 to 150 guests. And our customers are very similar throughout the world. As to your question on margins, Adrien, we need to say that we are already very happy with the fact that over time, year after year, we are improving successfully. So that means the investments we are making are going hand-in-hand with the return of those same investments. Now this is true for retail, for the growth of our stores network where, of course, retail expansion goes together with higher personnel cost and rental cost. But we've always appraised the size of our investments carefully in order not to have a bad impact on P&L, but whether we have some operating leverage at the end of the year, which is what we expect for this year. And let me add that the investments we've done over the last few years have been focused on developing production capacity, first and foremost I would like to say something else too. I mean, should we decide to raise prices by 15% tomorrow morning, we may still sell successfully. But this strategy of having a healthy profit is a business-related strategy. We're not -- see what I mean? I mean, we're not looking for anything unusual. If I were a young buyer, I would really look at what companies do. I mean, if margins are reasonable, I would be very captive. They are too high, that would kind of other me. Someone certain to that car and is it no because they are even too profitable. So questions that customers put to the forefront are very diverse. I mean, if we get the 20 basis points more, we'll be happy, but we want to change our strategy. That's the key thing.

Next question will be asked by Charles-Louis Scotti of Kepler Cheuvreux.

I have three, the first one on the store network. Could you give us an idea of the contribution of the new store openings to organic growth over the first 9 months? It seems that this contribution has been more significant than in previous year. And if you could give us also some granularity by region? This will be also helpful. My second question is on Europe, where the growth doubled in Q3 compared to the first half. What were the main drivers behind this acceleration? And when it's related to a recovery in tourist spending? And if so, which nationalities contributed the most? And lastly, I know that you are relatively underpenetrated in China. So you may not be fully representative of the broader market there. However, given the recent tax reforms that is targeting affluent Chinese consumers, have you seen any impact on demand? And have you also experienced the same trading patterns as some of your peers with a more challenging over in China and some kind of improvement in September and October?

[Interpreted] So I will answer on China because we have seen the cover of major trends in China. We don't have high revenues, but the brand exclusivity plays a high role. We were awarded very important prices. So it is a healthy brand. When a few days ago, some Chinese investors came to visit, 1 Chinese vessel of them said, "Well, your brand in China is all the rage. We could have 3 great years ahead of us." And I replied, yes, but this does not mean that we want to open 20 stores a year, enjoy great profits and so that he can make money, and then our brand is down the drain. So we want to be slightly and stay slightly exclusive and unique and exclusive. And this is a topic we mentioned during our meeting in October. And it is very important. And contribution of new space is organic growth, as I was saying before, Luca is speaking now is always very well balanced. Where as far as Europe is concerned, we enjoyed a good summer. Partly, it was expected because Europe is the main tourist destination in the summer. And also, local customers also played an important role. Yes, very, very important frameless, local customers are very important. In the first 3 quarters, we had double-digit growth in retail across Europe. In all 3 quarters, actually, we had excellent restocking and reorders of multi-brand European multi-brand clients. And this has resulted in this Q3 growth in revenues. But our feedback judgment on Europe does not change. It's the thing that we said before. We believe that we have a distribution network that is quite good in Europe, and I think we believe we have very key customers there.

[Interpreted] Brunello now. As I was saying before, I don't think that the interest for luxury is waning or shrinking. Customers are in the lookout for more exclusive, more unique products, truth be told. And also the fact that we do not have a considerable size in China, that's also what matters. And we want to still pursue exclusivity there because I attach apartment importance to. When I was -- I was saying before, eyewear and fragrances are going really well there, but their positioning is extremely high. You see average price, retail price is EUR 800 for our eyewear. As Luxottica said, this is the high end EUR 280, for fragrances. So everything we do, we would like to have it positioned in 1 single segment, which is the absolute luxury one.

Next question from Alberto Cecchetto, Citi.

[Interpreted] Yes, Alberto Cecchetto speaking. Congratulations on your results. My first question concerns wholesale. I would like to know whether the 7% acceleration in Q3 also includes the timing of shipments? And what about wholesale performance in Q4? Second question, I would like more color on the progress of mix in like-for-like. And to what extent the product mix how actually product mix tends to change from the start to the end of the customer life from the first purchase to the adoption of the total look, for example?

[Interpreted] Riccardo. I can answer on the product mix. We see a homogeneous progress. On the 1 hand, collections have increasingly high weight of manual work. And you saw, Alberto, as far as collection are concerned, [ it ] is pretty strong in our collection. And we have a very refined, sophisticated, hand-made, pretty costly and expensive collection. But 1 year, it could be knitwear is all the rage, then it's the T-shirts and trousers. There are no significant changes there. Riccardo is back on the line.

[Interpreted] Yes. What we were saying both thanks to our salespeople and Callimacus, the -- we achieved great results. I put it together the outfit. You see -- by the way, we forgot to talk about sales associates. This really is paramount because when you step into the store, generally speaking, other brands have this idea of wanting to hassle you to sell you at all costs. Whereas if you want to try and push something and force something upon me, I will definitely abandon your store. And we were talking to all sales associates the other day. We were saying to them, do not push. I said -- that was the first thing I mentioned. Of course, they are sales associates, they receive 85% of our revenues -- sorry, their wages are fixed. So -- but if you behave like that with me, if you have some, I will stop coming into your store. I actually stepped into a store the other day, the 2 sales associates were just browsing to their phone. And I just left. I've never seen it before, some precedented. They were sitting down, and they were basically checking their phones. And they asked me, "Yes, what would you like?" We're not even standing up to welcome me. And this really, really matters, you know, so much so that it is definitely not easy to find the right people for your stores because they need to work on Saturdays, Sundays. And yes, this is definitely another important topic as Brunello -- as Luca is saying, because we want people to be amiable. Because at the end of the day, if you are a customer in a restaurant or in a store, as soon as you're step in, you immediately are met by the kind of atmosphere in the store itself. So also we are really able to put together the team, individual people, but the general atmosphere is very pleasant. Yes, Brunello repeats. We do not want to be hassled. And it's not -- then I will stop coming to your store to your brand and shopping from your brand altogether. That's why we want to keep guaranteeing 85% of fixed salaries. So that there is no rivalry that is peaked, that is stored among the different associates. You see -- there was someone who was really was insisting on me buying a car. And in the end, I bought it from someone else. So Alberto, we can say -- what we don't want to be done to us, we don't want done to others, vice versa. Then about your whole question on wholesale, so very punctual shipment and grade restocking, as Riccardo was saying. You see, Brunello says this production structure that we put together is very flexible. And if you are able to restock and reassort in just a few days, you see it's not the same as doing the reorder in just in a month or so. So things are going well, also thanks to the taste, the style of the collection, also the value of the brand that we can say the [indiscernible] right now. And this makes the difference. So I don't know whether we answered your question. Hopefully, we did.

The next question is going to be asked by Maria Meita of Bernstein, please.

I have a follow-up, and then a second question. So first, it's actually on wholesale. And my question is given the significant acceleration that you have seen this quarter. And sort of looking maybe beyond the fourth quarter, what are your growth expectations for the channel in the next year? And then second, you have obviously acquired a lot of customers, both in the U.S. and China over the past quarters. And I was wondering if these show the same loyalty and sort of return purchases as previous cohorts given the acceleration in growth in this region?

[Interpreted] Well, I can answer myself, this is Brunello. Well, this acceleration between 4% and 7% is not just due to new clients, but also to quicker reorders. Also because in terms of absolute values versus last year, we are talking about a growth of EUR 8 million to EUR 9 million. So I mean, collection, which is slightly more or less attractive already makes a difference. As to purchasing behavior, we see no big difference. I mean, we have a lock multibrand in Tokyo or in Hamburg or Harrods in London, then they hold just as well. We have 440 multibrand customers globally, but it said something beautiful. I like it very much. We look for a beautiful young multi-brand stores that are likely to become the leading multi-brand stores in the next 10 to 20 years. The 440 multibrand stores we have today, as an average, have anywhere between 120 and 125 years of age. It was that our multi-brand store in [ Bari ] recently and [ 8 ] old stores. And it's joyful. I mean, customers walk in, they chat away, and then they say they like to see a brand or another. And it's a very interesting selection in terms of their taste. And so when customers walk by, less time in a brand, you realize their reaction is different immediately. It's really, really interesting to spend time at multi-brand stores, also because they have a very open judgment about what they see. So if I say the ag collection is showing, so well, that's the comment you never receive from your in-house store team. They'll always tell you, you are fantastic, but they've seen nothing from outside, whereas multibrand customers have seen like 300 collections every season.

So the next question will be asked by Andrea Randone of Intermonte, please.

[Interpreted] Thank you. Thank you very much. Good afternoon, everyone, and congratulations on your results. I have a curiosity. You answered many questions already. It's about the movie. What impact did it have on usage of the website? Did you see any interaction there? And in particular, did you have any new information about the traffic on the website? I was also interested to understand how you're seeing your customers because your brand suggest cultural values too. And so the success you're experience in China today is maybe something that could not have been done 10 years ago. The cultural backdrop brand like yours was not there 10 years ago. So what's the impact of the website, what's the impact of the movie? And what are the possible new areas where you might actually grow the brand in the next 5 years, but maybe areas where it's less known?

[Interpreted] Well, Andrea, I'll try and answer you first. So the movie is actually raising a lot of interest and growing interest. And it's about what Brunello was saying in this call. And as you pointed out, our communication is based on principles and values and fundamentals. And the movie is about this, also failures, Andrea. Now when kids are 15, they should be able to be successful on do something in their life. When I was 15, I didn't have that kind of pressure. So this happens with very young people, they feel a lot of pressure. Yes, this morning at the Board of Directors meeting, we were talking about a U.S. boy, a very young one in his 20s, a son of an acquaintance of ours, who wrote a beautiful message and says I saw myself mirroring in the story of young Brunello because I feel these values as my own. And even in failures, even in starting from scratch. So Andrea, these are important values in. It's also truly in the first part of the movie, there is this whole part and life in the countryside, which is just no longer existing without electric light or whatever, it looks a bit poetic. But the movie is really very satisfactory for us. You were asking whether it has an impact? Well, hopefully, yes. And for 2 years, I spent 60 hours in interviews. It was quite fun. But at the same time, it was quite demanding, but care is the name of the brand around.

Next question will be asked by Oriana Cardani of Intesa Sanpaolo.

[Interpreted] Good evening, Brunello. Good evening, everyone. I have a question on France. I was wondering, have you noticed lately, local French credit customers are slightly weaker, so to speak, than customers in other European nationalities? What is the weight of France overall and whether the weight of tourism in France is slightly higher than the average of the group or whether it is in line?

[Interpreted] Well, we do not see any marked difference coming from French customers. France for us still accounts for an important European market as well as for visibility because France is always -- will always be France. Paris will always be Paris. There are 2 different, so to speak, realities. You see fashion, there's the home of fashion, Paris, it's Milan, London. My neighbor back in the years on Saturdays, he would fly to Paris to shop there because his wife wanted to come home sporting her carrier bags with the brand, Chanel Paris. So perhaps you are thinking of this slightly -- slight demonstrations and stuff. You see, I myself was brought up in the end of the '60s, and I grew up with all the demonstrations in November in 1968. So I know all about it. But I think that we really are in dire need, kind of a young cultural evolution is called for. So I think that we need to change something to bring about change, truth be told. Besides the business, young people -- well, I am positively impressed by the fact that the demonstrators are 17, 18 years of age, right, Moreno?

[Interpreted] Yes, we lived through it. So allow me, but there is a need for raising the awareness of these young people. They need to be aware that something needs to change. Luca?