LVMH Moët Hennessy - Louis Vuitton, Société Européenne (MC) Earnings Call Transcript & Summary

Well, good evening. I'm delighted to be with you again. I think it's 2 years now, Mr. Guiony that we were not present. Perhaps on Zoom, perhaps that meant that I didn't have to work. That was all well and good, but at least I'm very pleased to be with you this evening to announce. I won't say once again at the risk of tiring you, record results for the group LVMH. You saw the chart that was published. We achieved just over EUR 79 billion in revenue over -- just over EUR 21 billion for profit from recurring operations, an increase 23% net income above EUR 14 billion free cash flow, just over EUR 10 billion. So financial performance that's quite remarkable, really the consequence of the great work put in by our teams in the various Maisons in terms of the quality, the desirability of our products and our presence throughout the world that is both dynamic and outstanding and has allowed us during these difficult years marked by the economic crisis in part and above all by the health crisis to increase our market share, as I say on several occasions, in difficult times in terms of the macro economy or political difficulties. LVMH is gaining market share and making progress, and this has been the case since 2019. Organic growth is very significant. The reported growth of most of our brands is also in each of our divisions, we have creativity and innovation that allows us to be in the situation where we are with these earnings. And I'd like, first of all, to discuss the most important activity of the group fashion and leather goods, notably, we don't win in the release when we go through a major milestone, we never got the figures of Loewe. It's a major milestone. So we give it. It's the case this time for the first time. We said this when we crossed the EUR 10 billion mark. Louis Vuitton has exceeded EUR 20 billion in terms of revenue. And in this regard, I'd like to salute the outstanding performance of Chief Executive, who will now take other functions Michael Berg and for 10 years, has been heading up Louis Vuitton, carrying it to this level, exceptional level, what's preserving its desirability with innovations and wonderful boutiques and stores and creations that surprised worldwide, the most recent. I'm sure you've seen it because we can see it in Paris on [indiscernible], the Kusama, the range of products that we produce with Kusama, and she, in fact, visited the Tokyo store, one of the greatest current artists came to visit the works and to face robot -- robotized image that you can find in the displays of our store in [indiscernible]. So it's a creativity that enhances the brand's desirability, and that's what guides our teams above all. It's the desirability, be it for our fashion and leather goods activities or for all the other activities of the group. Let's also mention in Fashion and Leather Goods, a great milestone. And I think at the last meeting where we've physically present. We mentioned this because Hedi Slimane had just joined the Celine. And we set as a goal midterm to top the EUR 2 billion revenue mark, and it's an important milestone. I can confirm that we have crossed that milestone, which is very interesting and bodes well for the future for this iconic brand whose desirability attraction to young people, to young women, in particular, is now spreading to perfumes and fashion goods with tremendous success. Before going into greater detail of all this, and Jean-Jacques Guiony will go into the details of the figures. I would like to stress what I view as most important, extremely important for the group that is now a leading group in Europe and various markets, that its economic and social footprint. Because I very often note with a surprise. But [indiscernible] with the economy, and we can be criticized and we are criticized by people who don't really know the subject that they're discussing. I would like to demonstrate here that this significant group that has spectacular results is also a group that has a great economic and social footprint for France. In 2022, we recruited worldwide close to 40,000 young people in France. In France alone, we recruited over 15,000 people, makes the group the leading recruiter in France in 2022 [indiscernible] invested over EUR 200 million for the training of its employees. In France, a job created by LVMH, generates 4 in our -- with our partners or suppliers. So we carry some 160,000 people in France who work directly or indirectly for LVMH. The group has worked on its building new workshops and it stores over 5 million in -- over 500 stores and 100 craftsmanship manufacturing sites are in France. LVMH opens every year, many manufacturing facilities notably for Louis Vuitton in France, and we need -- the group, of course, we generate profits. We play a lot of tax. We paid EUR 5 billion in corporate tax in -- throughout the world, half in France, whereas 80%, close to 90% of our products are sold abroad. Over EUR 1 billion invested in France every year on average over the past years, the total tax footprint. Well, when we -- the total corporation tax, taxes and social benefits of LVMH is of over EUR 4.5 billion a year. Let me add that because our Head of Human Resources informed me that was an important point, and I would agree with that, that the salaries of the group's employees amongst the most competitive and the various sectors of activity. Most of our employees furthermore, benefit from profit sharing with a total -- for the group of EUR 400 million a year. A word on the -- our commitment as regards the environment, LVMH has been recognized for its leadership in terms of transparency and performance regarding the protection of the climate, forest and water by the Carbon Disclosure Project, the CDP, which is a not for profit, global organization, LVMH, one of the 2 companies who could be ranked triple "A". 15,000 companies and I believe we're the only one to have achieved that in our business sector. I wanted say that because this is even equally important, perhaps even more important than the figures that we're discussing today. Moving now across the various business groups, it's an excellent performance for wines and spirits. Champagne delivered an excellent year with a considerable increase in its sales, in fact, facing a supply problem. It's very difficult in certain countries, notably in the U.S. to find Dom Perignon for this year. We fully integrated [indiscernible] that we own together with Jay-Z, the famous U.S. star, and it works very well. We're doubled forecast when we made the investment, the acquisition of the Joseph Phelps Vineyards in the Napa Valley that augurs well for the future. Cognac, Hennessy is up with a strategy aimed at increasing its price, very dynamic strategy, the U.S. where somewhat impact earlier in the year through the logistic constraints, but the partnership of Hennessy has been strengthened with the NBA and strong progress of our whiskeys. Glenmorangie and Ardbeg, Ardbeg is viewed today as possibly the finest whiskey in the world, and we sold a cask of Ardbeg, that's actually the equivalent of 144 and this cask was sold at a world record of EUR 19 million and the quality was vintage dating back to 1975. Moving to Perfumes & Cosmetics. Great success of Perfume, the Dior perfume, in particular, with Sauvage is a leader in perfume sales. Sauvage great perfume, the world's leading men's or women's fragrance, we launched less than 10 years ago, achieving remarkable success, driven buoyed by the image of Johnny Depp. You've probably seen the ads that's working very well. The Dior perfume, we now have a [indiscernible] that joined us recently because when we recovered the house Francis, we asked Francis to also become the perfume creator, and he accepted that. And with great talent. We have many plans for the future. Of course, the other the Roger prestige cream and [indiscernible] is growing very well, did hope for the other brands. What can I -- yes, we acquired a small brand that is really quite interesting that I urge you to take a look at because we have several stores in Paris, one of the [indiscernible] is a very small brand, not a lot of revenue, but set for a great future. It's already growing quite remarkably, notably in Japan. Fashion and leather goods. I've discussed that. Everything is growing very dynamically. We have a team of excellent creators be it Dior, Louis Vuitton with Nicolas [indiscernible], [indiscernible] with Maria Teri, Celine, I've mentioned, Loewe, Jonathan Anderson, our overriding objective is to make these brands increasingly desirable and the desirability of the brands when we compare it to that of our peers is improving steadily. And therein lies the results that will be presented in the moment, and I'm sure you have questions. As a consequence of all that. It's not a [indiscernible] objective. That's not where I spend most of my time because the desirability, it's improvement leads, of course, with the quality of the products, the creativity in stores leads to a certain consequence, which is increased sales and better profitability, but it's a consequence. On selective retailing now, which is -- we have the watches too. On the watches and jewelry also a very good year. Tiffany, for the first time, will exceed the EUR 1 billion in profit, profit from recurring [indiscernible] we were barely at half that when we acquired the business, everyone said to me, why are you buying this business at that price, it's far too much? Well, if today, the business were to be listed. Well, you never know, but I mean it wasn't perhaps managed in the most dynamic way. I won't dwell on that at the time. But if it were listed today, we would be probably worth twice as much. I don't know what Alexander thinks about that. But the group, the shareholders, I hope there are shareholders here not -- not just commentators. It's a very good investment, continues to work very successfully. I'm not going to plug for [indiscernible] that everyone's clamoring for I get requests every week to agree to sell [indiscernible] watches. The problem is that they sold. I mean the market price was about $40,000. When it was sold, one model was sold at an auction. It generated almost 10x as much. So very strong demand, a whole string of products arrive products that are currently being launched and we also have high jewelry collections that are doing very well. But with the leaders in high jewelry worldwide. We've just bought a collection of a pink diamonds in an Australian mine that is shutting down fantastic calculation, worth a certain price, but I think it's almost presold, et cetera. And of course, the high point of this year for Bvlgari will be the opening of the flagship on Fifth Avenue on the corner of 57th, but as we're already doing over EUR 200 million in the provisional store. I think we're going to double even more the annual sales in this new store, which will be wonderful. I've seen. I don't know if it's going to be open on time. You never know the United States a less precise than the Japanese when it comes to construction. So Bvlgari is going very well. It's companies that a brand that we own for longer that's expanding very well, Tagore watch brand also developing well all these brands are profitable -- very profitable, some [indiscernible] just had a great boots with the Soccer World Cup every time a new player came on the pitch. [indiscernible] was up on screen, [indiscernible] great success, Fred, for the first time, a wonderful exhibition in Paris. And I hope that we'll be able to continue it and travel throughout the world and Zenith developing fine new products. I don't think I've forgotten anything. Selective retailing. Well, Sephora is really firing on all cylinders, record profits and sales. We're a very well-managed company, very present in the United States. The year '23 is off to a great start in the U.S., fantastic scores. I think they now ahead of the market. It's far and away, the lead is distribution brand of Perfumes & Cosmetics. And while DFS, slightly more challenging airport sales, airports have been deserted up till now. So of course, it's difficult to remain out in front with an uptick in sales, but there are green shoots in China, it's [indiscernible] has started again. I mean, we're not invested in casinos. Let me reassure you, but in our stores in Macau, business is back, the Chinese [indiscernible] small, but good sales -- good level of sales, very well managed, very creative, [indiscernible], but well done Brover the latest create with pans. I mean it's amazing. It's absolutely wonderful. So a word about the outlook, the goal for 2023, which is to continue the risk of tiring you continue to improve the group's leadership. And we plan to increase our lead across market segments and to continue with the same strategy with teams that are changing. You see that we made a few changes in the group teams. So as to advance things I mentioned earlier, the Head of Louis Vuitton, after a wonderful success will work with me directly on other issues, Pietro Beccari, who's moving from to [indiscernible] to Vuitton where it was previously after great success with [indiscernible] moved to Louis Vuitton [indiscernible] was due for 10 years. And then 10 years Vuitton is now back at her with a great creative team, an extraordinary creative director. So for 2023, I'm quite confident. I think that 2023 -- if the early part of the year is confirmed, if the opening up of China is confirmed, it's a bit short, but January, but a very start. We'll see. We can't guarantee it's going to continue like that. We can't guarantee that something might not happen. We hadn't expected the Ukraine problem 2 years ago if it continues as it is, it will be an excellent year, and we'll be able to continue to develop our investments gain market share because even when the situation is somewhat more challenging as can happen for 1 month next, we continue to invest, whereas some of our peers may have tighter financial constraints. They stop investing or they invest less. And so things are more difficult after as we continue to invest in for the ,it's been quite successful for us during the difficult times when we -- whether the health crisis, that's all I wish to say at this stage. And we'll come back later to take your questions. I haven't forgotten anything. Very good. Thank you. Mr. Gironi, over to you.

Thank you. Good evening, everyone. It is pleasure to introduce the figures for the year 2022. As Mr. Arnault just said, revenue was close to EUR 80 billion, profit recurring operations, EUR 21 billion; cash flow, EUR 10 million; and net income, about EUR 14 billion, market value about up 14%. Well, that's not the purpose of tonight, but these are all record high numbers, and this was an outstanding year. Let's get into the details, starting with revenue. Revenue in euro was up 23%, 17% in organic growth. I'll give you the details by territory. No scope effect this year, unlike last year, and the currency effect was positive essentially because of the U.S. dollar and the Chinese RMB, we're up to about EUR 80 billion in revenue. EUR 80 billion, if you look at the geographical areas, there's been something of an upset. The main country remains the United States with 27% all total revenue. Asia is a runner up. Asia last year was 35%, but now it's down to 30%. You might ask why I'll tell you, Europe is doing well, about 24%. So you have a balance between the U.S., Europe and Europe. Japan remains stable at 17%. Let's look at the various regions. Starting with the U.S., the United States was up 15%. And year-on-year, we've been double-digit growth for the past 10 years, 2022 there was no exception. Looking at the numbers, we get the feeling that growth was slowed down over the year because the growth rates were down. However, there are 2 aspects, 1 overall general aspect is the basis of comparison for 2022 in H1 was an easy one because there were so many closed in Europe and the U.S. So growth rates were easy to achieve in easier in H2 than in H1. But the second aspect is that in the U.S., you also found that U.S. dollar had been high in the second half of that generated tourism towards Europe because they were -- well, the tourist took advantage of the high dollar to make purchases in Europe. So while there was less growth in the U.S., you will find this the right-hand side in Europe. In Europe, of course, you have this basis of comparison in H2, which was exacerbated, but you may remember that everything was closed down until April 2021. And the growth rates remained sustained in the last 2 quarters, including in Q4. Regarding Japan, Japan was -- had a slow recovery from COVID, but it's work up and now dramatic growth, constant growth to the tune of about 30% in Q1. And then Asia as a whole is a complicated region. It both volatile and a contrasted picture, Q2 and Q4 reflected the situations of lockdown in China locked down in Q2 and the specific situation in December and Q4 and as Mr. Anu referred to. And then Q1 and Q3 were more regular quarters, but there was pressure because of the knockdown overall. So Asia was stable but the overall growth being 20%, that's why Asia's share came down from 35% to 30%. If you look at the various business lines, pretty easy to tell. All business lines are enjoying double-digit growth. That's not that -- it doesn't happen that often. The special mention for fashion and leather goods, not -- well, still the digit. And it's mostly [indiscernible] Vuitton, but all the other brands did well. I'm not going to go through the whole list. And then a special mention for selective retailing up 17% organically, which after a number of challenging years is now generating high growth and in absolute numbers, also very high numbers. Looking at the business lines on a quarterly basis. So this is a bit more complicated. But let's look at the bottom line. You can see overall growth on a quarterly basis for the group as a whole. It looks like growth over the years has slowed down. Well, still, so Q4 at 9%, it's still 14% in euro terms, so it's not bad at all. This is an apparent slowdown and without looking in -- well, going back to ancient times. But if you look at the numbers compared with 2019, and that's the last year that didn't have too many upsets because of COVID. We find that on all quarters, consistently, we're looking at 33% growth in Q1, 2, 3, 4, maybe 1 is the 2% of 33%, but still growing about 3% compared to 2019 in spite of the huge drop in 2021. And for some businesses like Fashion & Letica, we're talking 70% growth, driven mostly by and the other brands. But the striking thing is that quarter-on-quarter, there's stable and sustained growth. So if you look -- if you think it's a slowdown closer look with view that reveal that it's a bit more subtle than that. Looking at the income statement and the income statement. I won't go through the first line, sales revenue up 23%. We already mentioned this. Gross margin -- similar growth at 68.4%. That's pretty good. charges overall were up 18%, 24% including the currency effects. And of course, our profit from recurring operations were up 23%. So the profit margin is stable at 26.6%. So last year, during the -- well, when we saw this margin 26.6%, up 5% compared 2019 last year prior to COVID, we were asked whether we could keep these levels for the year 2022. Well, now you have it. We were able to keep these levels in 2022. Now I know you're going to ask this, so I will is already this profit margin, 26.6%. There was some increase in H1 and a slight decline in H2 compared to last year. But all in all, we're still stable at 26.6%. We did not commit to keeping the same profit levels in all quarters all over the world. But overall, yes, we were able to do this because the decision was made in H2 to keep our marketing budget up 30% to the previous year, even though we knew we would not enjoy the same growth in revenue because of this comparison basis, I mentioned earlier on, but also we did not fully expect that sharp decline in China in December. But in spite of this strategic decision, I mean, of course, we're not going to do this every quarter. But in spite of that decision to keep ambitious marketing Overall, we were able to keep these margin levels. Other operating income and expenses, EUR 54 million, it's not very significant. The financial line, I will give you more details later. Net profit is stable. We stand at about 26% corporate income tax about the same as last year, we are talking about 50 -- EUR 5.4 billion in taxes, even though they say that big companies don't pay taxes. And all in all, the group share of net profit is EUR 14.1 billion, up 17%, a record level. So about the profit from recurring operations, there was a significant growth in wine and spirits ever since we've commented these results. I don't think this is an outstanding year in wines and spirits. Fashion and Leather Goods, another good year, up 22%. In Perfumes and Cosmetics, it's a more challenging situation because we deliberately decided to contain or indeed, delete all parallel channels and travel retail around the world. So to preserve our brand capital. This is a costly decision. This is offset by local dynamic local markets in Europe and the U.S., but overall this drove down profitability, even though it comes at a cost, it was the right decision. Over time, that will keep our brands attractive. Another mention -- special mention for selective retailing. You can see that profit is up almost 50%. This is not just because of DFS because DFS in spite of its efforts met major challenges last year. So this is mostly due to Sephora. And Sephora here was truly outstanding, and that was well noted. So we're looking up 23% in profit from recurring operations. And last slide about that. Variation highlights the currency effect. The scope didn't make much difference Currency effect brought in almost EUR 1 billion, which is significant, but nonetheless, most of the growth is attributable to organic growth, which accurate almost 25%. So let's look at the costs. Well, if you look at the cost of net financial debt, interest mostly. Until '21, while we had financial income and now we have financial expenses when we have that. We're paying EUR 17 million compared to the overall debt. We're looking at a reasonable rate of 0.2%. Interest on lease liabilities, as you know, this is the way the debt was converted in IFRS 16, meaning that part of the rents there are lumped in a line which has nothing to do. Fortunately, it's stable from 1 year to the next. The cost of hedging has increased well because individual hedge strategies have increased, but also the budgets that need to be hedged are higher, of course, when the group enjoys growth, well, then the budgets also that need to be hedged grow as well. And then if you look at our investment of financial portfolio of financial investment, we had in 2021, a EUR 500 million increase in value. And now we had decline of EUR 200 million. So it looks like a lot of money. But in economic terms, it is not that significant. And overall, the portfolio has enjoyed capital gains even though the capital gains are down EUR 200 million compared to the previous year. If you look at the balance sheet, there's no major changes because there were no acquisitions. We have a bit more inventory and the variation of debt is also contained. But a few words about cash flow. Cash flow is always a complicated topic. You may remember that back in 2021, we had high cash flow levels, but that was to do with nonrecurring effects, especially as we emerge from the crisis, we paid relatively little tax because in the cash flow statements, you have the tax installments, which were based the previous year where the previous year, the numbers were rather low. And this year, we have more in tax installments. You have variation in inventory last year, we were running out of inventory. So we -- the stocks came down. But this year, it was the other way around. We had large inventory, but December was challenging in China. And so we had a surplus of inventory. So last year's level, last year, we had a favorable effect. This year, it's unfavorable. Regarding the operating profits. You have to remember that we sold some property in the U.S. and that we had this exceptional increase in cash. And this year, we have acquired more property, including this building. And so we have a nonrecurring about EUR 1 billion in nonrecurring capital expenditures. So you can't really compare 2022 and 2021. Nonetheless, we have more than EUR 10 billion in cash flow and free cash flow. Debt itself remains stable. We have about EUR 10 billion in cash flow, EUR 6.7 billion in dividends. It's not just dividends. It's also taxes plus dividends paid out to minority interests, in particular, [indiscernible], EUR 1 billion in property acquisition. Joseph [indiscernible] being the main one that also we bought back EUR 1.6 billion worth of shares, and that's a way of regulating the debt level in view of the high level of interest rates, we don't propose to have -- well, we don't -- we want to keep the debt under control. And right now, it remains at an acceptable level. Dividends up 20%, and net income was up 17%. So we decided to keep it simple. We rounded it up to EUR 12. We've already had an interim dividend of a EUR 5 interim dividend and the balance will be paid and decided at the next AGA.

[Operator Instructions]

Antoine Belge from BNP Paribas. And three questions. First of all, could you say a word about the outlook, the prospects reopening of China? Do you think that the prevailing enthusiasm is indeed justified you see challenges -- I mean, in our stores in 2022. The revenue levels are higher than without Chinese tourists. How are you going to maintain the customer experience Europeans with a lot more traffic. My second question is the [indiscernible] brand. You were so kind as to give us its revenue, perhaps even more '21, '22 over 3 years. It represented an increase of some EUR 8 billion to EUR 9 billion. So a question perhaps on the law of great numbers to grow EUR 5 billion, that's EUR 1 billion. That's more than a lot of brands in the sector, how to maintain the exclusivity of the brand. I'm sure the same question was put to 15 years ago when you talked the EUR 5 billion mark. Third question, last year, you set up a company that the management company with a family that was at risk, could you perhaps tell us a bit more about this management partnership company?

Well, China, it's actually difficult to predict what's going to happen. What we can say about China is China needs economic growth. It's no secret. I think everyone would agree that China for its people for the success of the country needs economic growth is the growth has slowed I'm quite confident that the Chinese leadership being very astute. They will no doubt and almost certainly use the to reboot Chinese growth. If that's the case, in fact, it started in January. We have every reason to confident indeed optimistic on the Chinese market. In Macau, where the Chinese can now travel to the change is quite spectacular stores are full, it's really come back very strong pace. So are they going to travel? I mean you're afraid of that coming to when will they travel? I mean estimates would be as of the summer, if they resume their travels and they'll head for the countries that attract them and probably come to France. We have for that the possibility of receiving them. We have various stores, different size stores and increasingly, we have stores that are reserved for the customers who require greater individuality of quality and we've managed, although the brand does indeed track hugely. We've managed to improve the desirability that key criteria, the brand desirability every quarter, and that desirability in no way suffers from the size of saying, society is will it become exclusive? Is it not too big? I mean, I've heard since I was appointed CEO of LVMH. It was back in 1989, 13th of January. And one of my close friends. It was a leading Belgian finance asset. But are you really sure that you want to start this business to buy it because I was offered Vito products. And they're so spread so widely that I didn't want it. Are you sure and Vito in euros less generate less than 50 in revenue. So don't be overly impressed by size. What counts above all is quality today, products selling incredibly well while it's been difficult to find if today, if you want a yellow cruise summer bag in the -- on the [indiscernible]. Well, it's quite simply out of stock, and I'm not at all worried about that. And what was the other? And the limited partnership, well, that's for the lawyers lawyer, they recommended that I set up this limited partner. It's strong. It's very much in fashion. Hermes did that this limited partnership? Why don't you do one? It doesn't really -- it's really nothing at all. I wanted to about the organization because we changed the organization of the group quite a bit earlier, I didn't mention selective retailing with Christal Puente, who's that masterly fashion with the success of Sephora, which is really quite extraordinary. They get -- we bought that at how much, Tony. I think we acquired it for GBP 100 million, right? I don't know how much it would be worth. Today generates significant -- very significant profits. I won't give you the number, but let's say, very highly significant. So it's a great company. We've just reorganized. I mentioned Tiffany earlier. We've just reorganized the watches and jewelry. [indiscernible], David with Stefan Bianchi, who is with us this evening, runs all these businesses. They're all profitable today. All our watch business is business who's already profitable. And [indiscernible] who constantly producing new watches. I've got a tag higher watch and worrying one. It's quite wonderful. It's a diversity and at the same time, we learn a lot on the -- about the technology of the product at Tommy, they produce extraordinary watches that are quite spectacular and that enhance the desirability of the brand.

My name is Edouard Aubin from Morgan Stanley. You mentioned recent changes. One significant one is change of management in [indiscernible] your flagship brands. Can you tell us what we can expect to come out of these changes in selective retailing, et cetera, had a very, very good year. Can you expect a digital pure player emerging in the western world like Tim [indiscernible] selling prestige brand franchises, and that contain the growth of Sephora in China. Is that something that could be a challenge for Sephora. And a question for Mr. Bernard about the profit margin in H2, you gave us clear explanations on fashion and leather goods and the impact on selective retailing margin was down in H2 compared to H2 of last year, whereas according to your explanation, well, your explanations don't apply to selective retailing. So can you is more about the decline in profit margin from 1 year to the next where growth was rather sustained in selective retailing.

Well, in a large company, as in any human organization 1 needs to evolve. It's not a good thing to keep a form of organization that leads to routine mindset. And in the group, apart from I, who've been here for quite a long time, but we follow the business from afar. But I think we need to push innovation that the executives up a certain while Mr. Give them time to prove their quality to succeed, but they must use their management skills by changing mustn't get used things. But of course, we need duration. I mean, it's not like in a government change every 2 years or even more here, it's the opposite. It's really just that they're just flitting from one job to another. But to wait that a number of new ideas injected brought to the table that they're supported by individual experience. You'll have noted that the heads that we've appointed to the 2 major businesses are very experienced and to wait strategic continuity with a possibly a different managerial approach, a focus place on quality, creativity of products, emphasis placed more on communication store design, et cetera, but fundamentally the same strategy. Sephora U.S., well, I was already -- someone said to me 5 years ago, be careful, be very prudent, Sephora in the U.S. is on the threat from Amazon. That's what we were told, okay? But it's never worked so well. I think that there's a return to physical stores and the experience in a physical store will always be extraordinary as to compared to an online purchase. So to sell products, be it luxury products or cosmetics, solely on Internet. I don't really believe in the potential for direct head-to-hand competition of that sort of thing. What's interesting in selling by Internet, I mean lipsticks, perfumes, creams, et cetera, is a service when you tried the cream when you come to Sephora to test the product after you want to renew it, you go on the separate site and you buy it, but discover the product on Amazon in the midst of a whole other utilitarian products. I mean, it doesn't really make you fantasize I'm not saying it doesn't work, but most of the selected brands are not represented. So I'm not really worried.

Regarding the last question, profit margins was slightly down in Selective Retailing 0.9% in H2. The explanation is DFS. Because DFS had 2 very different half years. The first H1 was not outstanding all right, but H2 was a challenging half year because, of course, the local circumstances and the fact that Macau was knocked down starting in July, no Chinese visitors and so no sales in Macau from July to December. And as Mr. Bernard pointed out, now things back in business, Macau is one of the few places where the COVID test is not compulsory for Chinese nationals, but H2 was challenging compared to 2021 where Macau was open. Hong Kong, no big difference with Macau. Of course, when it's closed down, suddenly when that of course, things difficult.

Luca Solca from [indiscernible]. I have -- there are a number of significant factors in a certain recovery in Chinese demand, but American demand seem to be slowing down. I mean are there signs in the U.S. that there's a slowdown there? I mean, there's talk about that recession and whatnot. But looking at a 7% growth in Q4, it seems pretty good. So is there a slowdown or not? Question number two, about steps that you might consider to address the return of Chinese tourists in Europe, we've thought about this. But could a price increase in Europe be a way to maintain the high-quality experience in the stores for local customers. In other words, not to have too many Chinese visitors. And the last point I saw representatives of the Bernard family sitting in the front row. Mr. Bernard already thinking of your succession? And then what would be the criteria considered to who would following your first steps.