Kering SA (KER) Earnings Call Transcript & Summary

Good evening. This is the conference operator. Welcome, and thank you for joining the Kering Third Quarter 2022 Revenue Conference Call and Webcast. [Operator Instructions] At this time, I would like to turn the conference over to Mr. Jean-Marc Duplaix, Chief Financial Officer. Please go ahead, sir.

Good evening to all of you, and welcome to Kering's third quarter 2022 revenue call. Starting on Slide 4. The group once again achieved a very solid performance. Revenue was EUR 5.1 billion up 23% reported and 14% comparable year-on-year. Scope was not material. The consolidation of Lindberg offsetting the disposal of watches. FX was a 9 percentage point tailwind. We carry out a range of actions to nurture the desirability and exclusivity of our Houses, capitalizing on their heritage and immense creativity. All the fashion shows [ they ] run for the upcoming season were widely acclaimed and extended the reach and influence of our brands. Gucci Parade of 68 sets of identical twins, Balenciaga thought-provoking [indiscernible] installation, Saint Laurent sophisticated Spring/Summer 2023 runway. And the perfectly [ balanced ] Bottega Veneta show, I'll come back to you in a moment, all ranked among the most striking displays on the recent fashion show circuit. We also closed on the acquisition of Maui Jim a few weeks ago, reinforcing the positioning and growth potential of our Eyewear activities, EUR 1 billion business we have built from scratch over just a few years. Turning to Slide 5. You will find our revenue breakdown by business and region. All segments contributed to growth in the quarter, demonstrating the strength and complementarity of our ensemble of Houses. Western Europe and North America together accounted for 55% of revenue at 29% and 26%, respectively. Asia Pacific represented 1/3 of the total. The relative contributions of Japan and Rest of the World were pretty stable. I'll come back on trends by geography in a moment. On Slide 6, we provide more insight both year-on-year and against 2019. In Q3, a 14% comparable growth represents a slight acceleration compared to Q2. This puts us 28% above the pre-pandemic level, a very consistent performance versus Q2 and the first half. Looking into our retail performance alone, Q3 accelerated sequentially. Compared to 2019, Q3 retail is up 35%, above the pace of the first 2 quarters. On Slide 7, let's review our Q3 revenue by channel. Retail accounting for 77% of the total was up 19% in Q3. Our global store network was almost fully open during the period, although operating conditions in Mainland China had not completely returned to normal, as you know. Online sales remained dynamic, up 17% in the quarter with a penetration of 13% of retail. Wholesale and other revenue were down 1%, reflecting an 8% decrease from our Luxury Houses, a 23% rise at Kering Eyewear and 18% growth in royalties and other. Shifting to Slide 8, an analysis of quarterly retail trends by geography. Up 74%, western Europe was the most powerful growth engine. The region enjoyed strong demand both from local clients and from a sharp rebound in sales to tourists, which nearly tripled year-on-year. On top of intra-European Middle Easterners and some Asian travelers, Americans came back massively this summer. Western Europe is now 18% above pre-COVID level, although sales to tourists are still nearly 10% below Q3 2019. Japan pursued its recovery trend, up 31% in the quarter. Revenue in the country is now ahead of pre-pandemic performance, though until very recently, it was generated exclusively by locals. Growth in North America moderated. Revenue was up 1% in Q3, but this represents an impressive 85% increase on a 3-year stack. As mentioned, Americans traveled and purchased abroad, especially in Europe. So overall, the cluster is very much on par with its Q2 trend. Asia Pacific went back to positive territory, up 7% compared to a 15% decline in June. Mainland China improved substantially but was still impacted by rolling lockdowns and mobility restrictions, impairing traffic in some locations. In the Rest of Asia, our Houses delivered very strong performances across both established and more recent markets. And finally, Rest of the World also sustained a good momentum. Let's now look at each of Houses, starting with Gucci on Slide 9. Q3 revenue was up 18% reported and 9% comparable. Retail grew 9% as well. In Western Europe, the trend was sustained both by local clients and by the return of tourists, notably in Paris, Rome and London. Gucci posted strong performances in Japan, where its timeless focus resonates particularly well. Against tough comps, North America also faced the increased spend overseas this quarter. In Asia Pacific, the overall situation improved. Gucci was still disproportionately impacted in Mainland China, while Rest of Asia kept performing strongly. Wholesale, whose rationalization is broadly over, grew 2%. In line with its strategy of elevating client experience and overall brand positioning, Gucci implemented the host of initiatives this quarter. From a product perspective, new collections were very well received. And together with carryovers, contributed to a material increase in AURs. The revitalization of Gucci's luggage offering is a success, particularly well timed as travel resumes in many parts of the world. Gucci is working hard on introducing newness in leather goods to round out its offer on strengthening its men's category as well as on fully implementing its strategy in Mainland China in the coming quarters. This initiative, together with a strong reception given its latest fashion show, are bolstering our confidence in the outlook at Gucci. On Slide 10, Saint Laurent had another stellar quarter. Comparable sales rose 30% year-on-year. The Houses conquest of local clienteles in all markets yielded sustained growth across the board. Retail was up 38% with strong or even very strong double-digit growth in Western Europe, Asia Pacific and Japan. Progress was also solid in North America, considering the dynamics I mentioned earlier. Saint Laurent posted strong double-digit increases across all product categories. Ready-to-wear led the race, thanks to the success of the summer and fall collections. In leather goods, beyond the success of its key carryover lines, Saint Laurent kept up with strong demand for the [indiscernible] bag launched in Q2, confirming its ability to address higher price points. The 13% increase in our wholesale entirely reflects strong demand for the upcoming seasons. [ Saint Laurent ] [indiscernible] showing this quarter, notably with locals, confirms the Houses' very positive trajectory. On Slide 11, Bottega Veneta posted healthy growth in the quarter, driven by retail. Total revenue was up 14% comparable with an increase of 20% in retail alone, all through the store network that has been stable for several quarters now. Following a much-admired winter collection, [indiscernible] gave a huge standing ovation to the ultra-refined fashion show that Matthieu Blazy and his team put up last month. This marks yet another step in the Houses' effective iconization strategy. The House intensified its communication efforts, reaching new and existing clients now that its ultra-high-end positioning is well established and being deployed across all product categories. Bottega Veneta's focus on timelessness is paying off in higher AURs and initiatives underway should further support this strategy. Rationalization of wholesale is ongoing and resulted in a 5% drop in revenue through this channel. In short, Bottega Veneta is diligently implementing its road map, and we are confident that the house will amplify its successes across all markets. On Slide 12, we have summarized the performance of our Other Houses. Revenue was up 13% comparable. Retail, up 43% drove this increase, and both soft and hard luxury contributed consistently to this trend. At Balenciaga, growth was well balanced across categories. Leather goods continued to gain momentum fueled by novelties as well as the iconic Hour Glass family. Ready-to-wear was strong, especially driven by [indiscernible]. Alexander McQueen also delivered a robust quarter in the retail with good progress in its leather goods offer both newness and [indiscernible] lines and sound growth in ready-to-wear with a renewed appeal of evening wear. Brioni confirmed its rebound in retail, all main regions being nicely positive. In jewelry, Boucheron posted another high-growth quarter showed by the appreciation of its lines in high jewelry and jewelry across Western Europe, Japan, Korea and Mainland China. Pomellato also experienced strong momentum driven by Japan and Western Europe. Finally, despite its heavy exposure to China, Kering proved resilient in the quarter. Wholesale of the Other Houses segment was down 25%, reflecting a combination of phasing of deliveries and enhanced selectivity in third-party distribution. Let's turn to Kering Eyewear & Corporate on Slide 13. The revenue was EUR 253 million, of which EUR 246 million from Eyewear, up 23% comparable over last year. Sales were higher in all regions and channels. Once again, Gucci and Cartier were the largest revenue contributors, but together, all the other brands posted sharp increases. The top line also benefited from the successful integration and development of Lindberg. And we are, of course, looking forward to the contribution of Maui Jim with high potential is undeniable. Let me now conclude with Slide 14. We are pleased with the group's performance this quarter. Solid year-on-year increases, consistent growth quarter after quarter since the beginning of the year under somewhat unsettled macro conditions are a testimony to our strength. Our brands continue to leverage their attractiveness and exclusivity and to benefit from the pursuit of customer excellence and tighter focus on retail distribution, where it has been fully implemented this strategy has paid off according to plan, and we are reinforcing it brand by brand across all markets around the globe. At the same time, we are keeping a very close eye on our environment. Our sector might be less correlated than others to overall economic conditions, but that doesn't mean it is completely weatherproof. So our long-term investment plans in our Houses and growth platforms are unchanged, but we are also ready to rapidly make the right decisions to maintain the group on costs in the near term should the need ever arise. Also, we remain confident in carrying fundamentals in our capacity to meet challenges and in our prospects for the coming quarters. And now, with Claire, we are ready to take your questions. Operator?

[Operator Instructions] The first question is from Antoine Belge with BNP Exane Paribas.

Yes. It's Antoine at BNP Exane. Three questions, if I may. First of all, regarding Gucci in China, is it possible to have the trend for Asia to be slightly negative at 2%? Is it fair to say that China was down double digits? And it seems so that September was probably worse. And some comments about the initial results from [ Laurent Cathala ]. Question #2 is about the fourth quarter at Gucci, if we would [indiscernible] maintain the 3-year stack you'd achieved in Q3, I think it would imply a sort of decline of around 10% year-on-year. Is that the right way of looking at it or 3-year stacks are not that relevant? Or are there any initiatives or factors that could prevent [ sales ] to be down 10% at Gucci? And question #3, regarding the EBIT margin, I think consensus is slightly below 38% or 37.6% according to [ Eagle Alpha ]. Do you think it's the right number? Or I think you had -- as you did in the past, that if need be, you would not refrain to invest in the brand?

Thank you, Antoine, for your 3 questions because you have the right to ask 3 questions tonight. And in fact, you have 4 questions if I include your comment about the start of [ Laurent Cathala ] in China. So indeed, China, in fact, if we look across the board in the industry or at least in our group, we have a sequential improvement compared to Q2 in APAC, which is of around 20 points or something like this around that 20 to 25, depending on the brand. And clearly, driven by an improvement in China because as we try to explain -- as I tried to explain during the speech, in the other countries in Asia, the demand was very strong, and we posted very good figures across the board and also for Gucci in the other countries of the region. So clearly, there was an improvement in China, but it means that Gucci is among the brands, which is still negative in China. I would not elaborate further in terms of figures, but I think your guess is something which is close to what are the figures, while some other brands in the group are back to positive territory. So as you can imagine, Laurent started last July. The first -- his first mission was to travel in China to meet all the teams to assess what has to be done very short term. So he's working very hard to improve the situation. We know and we have been very candid about the situation we have for Gucci in China. So there is a short-term action plan, which is right now implemented with a boost in terms of energy in the teams and some work done in terms of display, in terms of merchandising in the stores, plus some initiatives going along with the launch of new products with [ pop-in ] activities and [ pop-up ] activities, some -- also more investments in terms of advertising. And of course, you can imagine that also Laurent is presenting in the coming weeks an action plan for the long term with, of course, some more -- or some directions as regards investments, both in OpEx and CapEx, but still in the envelope globally that we have in mind for Gucci and its trajectory. So now coming to the Q4. Obviously, I'm sure that a lot of your questions tonight will be about what we see for Q4 in certain regions and globally. We know globally that our brands have built a strong offer and have a solid pipeline of introductions and initiatives, and that's also true for Gucci, as you can imagine. They are implementing consistently their strategies nurturing their desirability, engaging with a broad base of consumers, focusing also on local clients. But what we know also is clearly that the comparison base is very demanding and in a macro environment, which is clearly unsettled with quite low visibility. So we see that there is still a strong demand for luxury goods so far. So it's very difficult to predict. Clearly, we have a pipeline of a lot of actions and initiatives to support the business in Q4 for Gucci. But of course, I will not take the risk to comment further about the trends we could see for the last quarter. Finally, regarding the EBIT margin. So you are talking about a magic number. So I don't know what's the magic number for the EBIT margin of Gucci for this year. What I know is that, as we mentioned already, we are working as a group, and we are working to improve to sustain the trajectory of the group in terms of profitability. It means, in other words, like we do with CapEx that we have some priorities every year, and we know that today -- this year, this is really a year of investment for Gucci. So we will continue to support Gucci in this effort to recover, to accelerate. And as such, EBIT margin is important, of course, but we will continue to invest in the brand. And what I can tell you is that for sure, I'm not sure that we will deliver an EBIT margin for H2 that would be exactly on par with what we have delivered last year. It would be probably below considering the level of investments we are injecting in the brand.

The next question is from Edouard Aubin with Morgan Stanley.

Sorry, Jean-Marc, I know it's a bit [indiscernible], but as you know, the market cares about the brand. So if you -- on Gucci, during your CMD late June -- sorry, early June or late May, I forgot. You talked about the new structure you were implementing with 2 creative directors, 1 new marketing director is coming from [ Roger Vivier ]. And the objective was obviously to allow you to kind of work on 2 legs, so to speak, keep the fashion forward characteristic of Gucci, but also develop your timeless, your icons -- timelessness and your icons. So where are you in that long-term journey? If you could give us an update, that would be much appreciated. And then on the U.S., so I think in the second quarter call, you talked about, Jean-Marc, about some entry price point being under pressure for Gucci in the U.S., which obviously was offset by higher price points, accelerating. Is that kind of still the case in the third quarter? And to what extent the U.S. cohort globally is accelerating or decelerating on an underlying basis? And obviously, any comment on the [ exit rate ] would be more than welcome. And last one, sorry, on energy costs. There was an article in the Wall Street Journal this week. I don't know if you saw it but talking about some of your suppliers in Italy being under pressure, the profitability being significantly impacted by higher energy costs. How big of an issue is that for you and your suppliers? That would be helpful.

Thank you, Edouard. Your last question was -- the sound was a little bit blurred, but we heard the question. So it's okay. And I regret that you don't remember this memorable Capital Market Day, it was in June. But so what we said during the Capital Market Day, maybe I will elaborate a little bit about the new organization just to clarify. So you're right that there is now Maria Cristina Lomanto in charge of merchandising. She started her new role in April 22. And her attention was really focused on a few key areas. I would mention 3 of them to begin with. First, and it's very important, the Gucci's full return to the fashion calendar as soon as 2023 with 6 collections. It does imply to work very closely with the design teams, the marketing teams and the supply chain to ensure a unified and very coherent go-to-market capability. The second area is about the further expansion of Gucci's in the high-end offer across all categories, which is one of the access or one of the key pillars of the strategy that has been presented by Marco last June. And of course, some opportunities and sweet spots that we have mentioned like the men's category and the travel categories, where we believe that we have not yet reached the full potential. The second part of the organization -- reorganization was about the design office, which is to be very clear, still and fully under [indiscernible] direction. But considering the size, the scale of the brand, the expansion of the brand's collection, the expansion in some categories and the full return to the fashion [indiscernible], there was a need to have someone also in charge of part of the main collection. So a longtime-trusted collaborator from the team has been appointed as a studio director with a reinforced structure to support the scaling of that business. So that's the 2 pillars we had mentioned. And of course, one of the aspects of the strategy is also about timeless, but I will not elaborate too much on that because you will jump on it just to ask for some KPIs. It's not about KPIs, it's a merchandising approach, and you know that the launch of the [indiscernible] is clearly part of that strategy. To be honest, so far, I think that when it comes to timeless and the more high-end offer, we start to see very good results in that direction. We had the launch of all the last pieces of the [indiscernible] with -- and we have also now the travel -- the luggage business with the launch of the Gucci Savoy travel line with a campaign, an advertising campaign featuring with Ryan Gosling. So I think, definitely, the reception is very good, and it's part of the question you had about the U.S. It's true that in the very important customer cluster among the high spenders, we have delivered a very solid growth at Gucci. So very good results so far, but this reorganization has been announced only a few months ago. And as clearly mentioned by Marco Bizzarri during the Capital Market Day, it's a long-term strategy that will continue to bear fruits in the coming months, in 2023 and even going forward. Regarding the U.S., I think if we look now just starting with the U.S. [indiscernible] because I think it's very important to start with that, the growth for Gucci with that cluster in Q3 has been very consistent with the one of Q2. But of course, with the transfer of part of the purchases from America to Europe, principally. We have a growth -- triple-digit growth of the sales to the American clients in Europe. By the way, we have more or less a triple-digit growth with all the different clusters of tourists in Europe, including some Asian tourists. So what we see in the U.S. is that also I heard a lot of things about the decline of the business in the U.S., globally speaking. But what we see is that, first, the traffic is still up for our brands in the U.S., including for Gucci. What is clear also, and I had already mentioned it during the H1 call, that among for certain categories of products, which are maybe more appealing to the -- to a more aspirational clientele, there is some more pressure, more -- less conversion. So the traffic is up, but with an impact on the conversion rate. But globally speaking, the U.S. [indiscernible] is up. And as I was mentioning before, very good results with the high spenders and the top clients. Finally, regarding energy cost. So since I don't read English, I didn't read the news -- the article you are mentioning. But more seriously, I think that, yes, clearly, what is happening is that during several months, not only our suppliers, but we have also been protected by long-term contracts with fixed cost. Now we start to see with some new contracts the impact of the energy increase, not only the gas, but also the electricity. The contracts we are signing now, we have a massive increase of the cost per unit in a way. As such, of course, it does create some more tension for our suppliers. You know, by the way, that in the past few years, we have integrated more the production and the design process, all the process before the production. But clearly, as usual, we will support our network of suppliers. We did it several times, including during the COVID-19 crisis. So of course, we will absorb part of that inflation in the production cost. But you know that we have some more inflationary pressure now for several months, both in terms of transportation costs, [indiscernible] in terms of salary. You know also our capacity to absorb price increases through some more efficiency in the production process. We have some room to find some savings. And of course, we can still also increase the prices [indiscernible]. Of course, there are some other considerations when it comes to price increases. So definitely, yes, there is some increase of the cost of goods sold, but so far, in a proportion that we can manage.

One very small clarification. When you say that traffic is still up in the U.S., you're referring to Q3, not Q4, right, so far?

Yes, I'm talking about Q3, yes. I will not comment on Q4.

The next question is from Louise Singlehurst from Goldman Sachs.

If I could just have 2, please. Firstly, just a follow-up on China. Is there any risk of any excess seasonal stock or any clearance activity that will need to take place given where we are towards the end of the year after Autumn/Winter? And then my second question, you must be very pleased with the strong result from Europe, particularly for Saint Laurent. But when we look at Gucci, so the question I have is the performance between or any details you can give us between the domestic- and the tourists-driven demand. Is it fair to assume there's been a slowdown in the domestic consumer? Obviously, it's difficult to read from the numbers, they're big numbers, but obviously just trying to look between the 2 different cohorts.

Yes. Thank you, Louise. As regard the level of inventories or the risk of overstock, obviously, you know that in the past few years, we have made a lot of investments to improve the efficiency of the supply chain and the logistics. So we have strongly -- obviously, strongly improved our processes from manufacturing to sales planning, replenishment and logistics. So we are in a position where we can adapt more to the current situation. On top of that, you should remember that at the end of 2021, we had a quite -- at group level, a quite clean situation in terms of inventories. We had a quite sound start of the year. So in fact, we are very -- let's say, we are comfortable with the fact that we may rebuild inventories in some regions, especially considering the ongoing elevation of our brands, starting with Gucci and the share of carryovers we have in our collection. So of course, China, among the regions where -- will be the region where maybe the situation of inventories will be where we have the highest days of inventory. But considering what I said before about the share of carryover, I think it's a situation that we can manage. Of course, I expect, let's say, compared to the very sound situation we had at the end of 2021, probably an increase of the days of inventory globally speaking at the end of 2022. But so far, it's under control. Claire, do you want to take the question about domestic demand and...?

Yes, I can take this one. Louise, I'm not sure I will comment specifically on Gucci. But where you're right is that when we look at the European clusters on Q3 year-on-year versus Q2 year-on-year, there is a slight deterioration, and that's true, I would say, for most of the brand, if not all the brands. So still very strong trends, but a little bit of moderation once again sequentially year-on-year. When we look on the 3-year stack, it's pretty consistent, I have to say. So Q3 stack, 3-year stack on European versus Q2 once again at group level is pretty consistent.

And I would just add that domestic demand remained very sustained. And clearly, there was a boost also due to the tourism during the summer. But looking at Gucci and the other brands in the group, the trends with locals were very good along the summer.

The next question is from Zuzanna Pusz with UBS.

I have 3 questions, please, if possible. So the first one on YSL. Can you maybe tell us a little bit more about the drivers of the very nice strong momentum and acceleration sequentially? Is it, let's say, higher exposure to Europe? So any incremental color on that would be very helpful. And secondly, maybe on pricing. Can you share with us any pricing plans you may have short term or perhaps next year? I know it's not necessarily always easy to comment on that because FX is moving a lot. But clearly, given that the U.S. dollar strength, Europe is way cheaper than the U.S. dollar sort of linked region. So I'm just wondering if you're planning to address it by perhaps raising prices in Europe by quite a bit short term or perhaps next year. And finally, sorry to press on that, but to come back on the Gucci margin. Now I understand that you're obviously managing the margin as a group. But also just in June, you provided your long-term plans for the brand, and you said that the margin should return to 41%. And that from current levels, we should be seeing a gradual improvement year-on-year. So maybe if you don't want to comment specifically on H2 margin, at least if you still expect the margin to be improving every year from last year or if this may have a different sort of shape?

Thank you, Zuzanna, for your 3 questions. As I mentioned, you have the right to ask 3 questions. And there is no good or bad question, so you can push all the button you want. Starting with Saint Laurent, I think that it's a very sound development of the brand. It's very balanced across geographies and very balanced across categories. I think we see an acceleration at Saint Laurent because also, Saint Laurent has been very strong to reconfigure to restructure its ready-to-wear offer. You may remember it happened a few years ago already with some work -- hard work done in terms of structure, architecture of the collections, both in terms of product, but also in terms of prices. The same with the Shoes. So at the end of the day, definitely, this work starts to pay off now for a few quarters, and now this growth is very well balanced across all the categories. I would mention also this capacity of Saint Laurent to have very strong iconic lines of that, but also to introduce strong newness. I mentioned in my speech, the [indiscernible] bag, which is definitely a success, a very nice bag, helping also Saint Laurent in its target to have a balanced structure also in terms of prices. So also, it's true that it's a brand with very good penetration with locals in some key markets like Japan and Europe and the U.S. and the brand is still benefiting from a lot of traction in this market. It's also a well-balanced growth if we split between volumes, price increase, product mix and with a favorable impact on the average selling price, plus a small contribution of store openings. But you may remember that we have started to moderate the growth in terms of store footprint, so it's not the key driver of the growth. It's just an element among other and quite a small one. Yes, you're right. When it comes to pricing, it's not easy to answer because we -- as we mentioned before, the environment is quite unsettled. You have a risk of high volatility in terms of currencies. I think that we had explained during H1 call what we did as regards the prices for Gucci and for the other brands. We have not increased the prices during Q3, and I will not comment about what would happen in Q4 and in 2023. You may -- you know perfectly that each time we are introducing a new collection and newness, this is an occasion to work on the average selling price and to play with the mix. We are very pleased with the development of the average selling price at Gucci during Q3. That does demonstrate that we are going in the right direction. We had a very substantial contribution of the average selling price. So I will not comment further on the pricing. You're right to say that we have a situation in terms of pricing and price gaps between the region, which is not necessarily sustainable in the very long term. But short term, we don't feel the need to make something, and we will see going forward what will be the decisions of our brand. EBIT margin. I think that I partly -- I think I've been quite clear about what we could expect for H2 saying that we will not be at the level of EBIT margin of the second semester of last year, considering the investment we are making in the brand. When it comes to the potential of the brand, of course, I will not change a word to the slide that has been presented by Marco Bizzarri during the Capital Market Day. To say that the brand can reach 41% margin at EUR 15 billion of sales is something which does look, I think, quite reasonable and sensible and quite logical if you make your math, and considering also the expansion of the retail contribution, you may have noticed that we have now 91% of our business at Gucci in retail, completely exclusive. And in fact -- and I'm sorry to insist, it may be weird, but I'm sorry, we are managing a group. And sometimes, I would like to look at the performance at group level. And still, I think the trajectory we have in mind for our group is to continue to improve the profitability, whatever the level of investment we have to make in our brands. So we would be very comfortable if Gucci will plateau a little bit in terms of EBIT margin going forward considering the investments we have to make. And then to see an acceleration later in the trajectory, considering not the lending point, but at least the milestone of 41% at EUR 15 million of sales is something we believe we will reach in any case.

The next question is from Chiara Battistini with JPMorgan.

I actually have just a follow-up. One is on your wholesale strategy. If you could give us an update by Amazon on how to think about wholesale, especially into next year. And notably for Saint Laurent, that keeps on growing while we were expecting at the beginning of the year a decline there? And then maybe just to touch on the other division. If you could give us any color by brand, and notably within the brands, by category. And within jewelry, if you could comment on sort of what kind of performance you are seeing by price point, are you seeing an outperformance in the higher price points within jewelry? Or is it broad based across all the different price points?

Yes, Chiara, this is Claire. I mean going into next year for wholesale, it's a bit maybe a bit too early, so we'll probably be happy to update a bit later. Now I can maybe comment on the shorter-term views for the end of the year. Yes, you're right. We were expecting Saint Laurent to turn negative under the impact of rationalization probably a bit earlier. The brand is effectively implementing the strategy, but with strong demand, I would say, with the accounts that we keep. So that turns out to be still a positive in Q3 at some point, and maybe Q4 will be the starting point. The wholesale at Saint Laurent should really moderate and turn slightly negative. BV, I think it's pretty clear. I mean you have seen the moderation coming gradually. And I mean nothing to change on the message now for bottega. For Gucci, as you've seen, wholesale rationalization is completed. So it's a channel that should grow very modestly, I would say, at least in Q4. And then for other houses, and then that will make the link with the question that Jean-Marc will take on other houses, I mean this minus 25% in Q3 is a combination of pretty different impacts. So you had a bit of phasing impact, so difficult to extrapolate that on the Q4. You had clearly some rationalization and conversion to retail, which is going to continue, for sure. And then you had other, I would say, smaller impact from Hainan, et cetera, Russia for Brioni. So that's a mix of smaller impacts. So I would say, going forward, as the strategy is also for over luxury houses to get more and more control over distribution, that's probably also where you should expect wholesale to moderate or to, I mean, still be negative at least Q4.

Bouncing back on the enter of Claire, clearly, this was a quarter of rationalization among some of the brands, I think about Balenciaga and Alexander McQueen. As mentioned by clear, it's not only about rationalization, but we have been very clear about the group strategy aiming at focusing on exclusivity in terms of distribution. And conversely, retail did extremely well during the quarter. Some of our brands are benefiting compared to the 3 big ones of some space expansion, both from opening in '21 and '22 with the full year impact for the ones of '21. But it's true also that we are very pleased to see that starting with Balenciaga, the brand is growing very nicely in all categories. It's a great success of the leather goods collections and products, and we are very pleased to start to reach this balance across categories both in terms of growth, in terms of sales in absolute terms and also the rebalancing to also more formal pieces in all categories, shoes and ready-to-wear. So very good traction still at Balenciaga definitely. McQueen also is doing very well in its network with also a very encouraging improvement in the leather goods category, which was so far quite small category in terms of contribution at McQueen. And still a very good performance in ready-to-wear, which is really a strength of McQueen. So of course, Brioni was impacted by wholesale, especially by the lack of the Russian business. But in retail, very positive trends across all geographies following also a simplification and rationalization of the offer turning back to basics and fundamentals, Wardrobe at Brioni. So when it comes to jewelry, it's very difficult to say because our brands are especially Boucheron, which is a brand with the most comprehensive offer, meaning from jewelry pieces to high jewelry pieces, they are penetrating very successfully many markets. And in fact, when they are entering some markets like we did recently in China or in some other Asian markets, the success is across all categories. So it's very difficult to -- I know that there are some debates about what's the health of each category or each price point in the jewelry segment. But I think that considering the investments we have made in our brands, especially launching also the high jewelry collection at Pomellato, all the different price clusters are achieving great results in our brands, which is due to the expansion of our brands. By the way, also, Boucheron very strong in Europe historically. And thanks to the return of many tourists in Europe, we have been able to sell quite expensive pieces, especially in our boutique plaza dome that I invite you, by the way, to visit if you have the occasion. And so very difficult to say. And of course, there was something specific situation for Kering in China. But as we mentioned, Kering proved to be very resilient despite the situation in China, but the offer of Kering is more concentrated on certain price clusters.