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

Hello. I'm Chris Hollis, Director of Financial Communications at LVMH. And with me is Jean-Jacques Guiony, our Chief Financial Officer. Thank you for joining us for this webcast. We have some remarks to make about LVMH's revenue for the first quarter of 2023. And after these remarks, Jean-Jacques and I will be happy to take your questions. As a reminder, certain information to be discussed on today's call is forward-looking and is subject to important risks and uncertainties that could cause actual results to differ materially. For these, I refer you to the safe harbor statement included in our press release and on Slide 2 of our presentation. Turning now to our announcement. Hopefully, you've all had the chance to read our release, which was issued a short while ago in both French and English. As always, the release is available on LVMH's website, www.lvmh.com, as are the slides that we are using to guide us today. On Slide 3, you'll see the group is off to an excellent start to the year, with organic growth up 17% with -- yes, sorry, apologies for that, with -- in line with last year and against the backdrop of the challenging economic climate. All business groups recorded double-digit organic growth revenue growth with the exception of Wines and Spirits, which still delivered growth, most notably in the Champagne and Wines businesses, I'll discuss in a few moments. On a geographic basis, the group delivered strong revenue growth in Europe and Japan. In the U.S., revenue was good, but softer, while in Asia, revenue growth is improving rapidly as pandemic restrictions have eased. Looking at the business groups, we once again saw strong progress in Fashion and Leather Goods, driven by Louis Vuitton and Christian Dior as well as Celine, Loewe, Loro Piana, Rimowa and Berluti reflecting the deep heritage and each of these as a Maisons and the innovation our teams have brought to them. The watches and jewelry business also continues to perform well with particular strength at both Tiffany and Bulgari, reflecting a great deal of excitement and energy at both Maisons. There is off to a good start in the Perfumes and Cosmetics group, driven by both iconic products and well-received launches in the perfume and makeup businesses. And lastly, Sephora saw strong growth, while DFS is seeing gradual recovery with a growing return of international travel. On Slide 4, you'll see the revenue rose to EUR 21 billion compared to EUR 18 billion in the year ago first quarter, representing a 17% increase on both an organic and reported basis. Revenue continues to be well balanced on a geographic basis and in line with the breakdown in the year ago period. In the first quarter, 36% of revenue was generated in Asia, excluding Japan, which itself was a source of 7% of revenue. 23% of revenue came from the U.S., while Europe contributed 14%, excluding France, which contributed to 7% and 13% of sales come from other markets. Looking at the progression of organic revenue by region, which is now Slide 6. Europe and Japan remained strong with 24% and 34% increases, respectively, year-over-year. The U.S. business had a more uneven performance due to the softer trend I mentioned, but still delivered an 8% year-over-year gain. And finally, again, as I mentioned earlier, we are seeing a rapid improvement in revenue in Asia with a 14% increase in Q1 of this year compared to the year ago period, fueled by Mainland China, Hong Kong and Macau. Drilling down now on revenue by business group. We'll begin, as always, with the Wines and Spirits and on Slide 9. In the fourth quarter of 2023, revenue in the Wines and Spirits business group reached EUR 1.69 billion, a 3% increase on both an organic and reported basis from the EUR 1.63 billion in the first quarter of 2022. Breaking this down, organic revenue from the Champagne and Wines business increased by 14% after taking into account a 2% negative currency impact and a 1% positive structural impact relating essentially to the first consolidation of Joseph Phelps, reported revenue rose 13% to EUR 796 million for the Champagnes and Wines. Organic revenue from Cognac and Spirits was down 5%. And after taking into account the positive 1% currency impact was EUR 899 million compared to the EUR 932 million in the year ago quarter. To provide the context of these figures, revenue gains in the Champagne and Wines business was driven were driven by both positive price effects and continued growth in all regions. It was a busy period across the business with efforts designed to continue to continue this strong momentum, including the launch of a new -- the new Lady Gaga campaign for Dom Perignon, the start of construction of the new Nicolas Ruinart Pavilion in its home of France where this iconic Champagne business was started nearly 300 years ago. It will include a visitor center, a showroom and a boutique. The continued international development of Chateau d'Esclans, the recent strategic partnership with famed Chateau Minuty, including the acquisition of a major stake and Chandon of the new Garden Spritz, an exceptional mix of sparkling wine and a unique bitters recipe being very well received, contributing to Chandon's good performance. Finally, Q1 includes the first quarter of revenue from Joseph Phelps Vineyards, which has been consolidated in the group's results since December of last year. Moving on to Cognac and Spirits, the softer economic environment in the U.S. and high inventory levels led to a decrease in volumes. We're seeing a gradual recovery in China as the effects of COVID subside within the business, it was a good deal of excipient around the collaboration between Hennessy X.O and the Dior Men's and Fendi, Artistic Director, Kim Jones, featuring a collectible sneaker a couture decanter and as you'll see on the right-hand side, the right photograph on the slide here, a cognac bottle. In addition, a new Hennessy X.O and Paradis space was inaugurated at La Samaritaine in Paris and I courage you to visit. Finally, in this group, there was an ongoing solid revenue growth at both Belvedere vodka and Glenmorangie whiskeys. Now we'll take a look at the very strong first quarter for fashion and leather goods. On Slide 12, you see the revenue in this business group rose 18% on an organic basis, including a small 1% negative currency impact, reported revenue reached EUR 10.7 billion compared to the EUR 9.1 billion in the year ago first quarter is due to rounding, reported revenue also reflected an 18% increase. Growth in the fashion and leather goods business was broad-based with strong performance across Maisons. I'll begin, as always, with the ever iconic Louis Vuitton, where its ongoing growth is fueled by the exceptional creativity of Nicolas Ghesquiere who's shows continues to be extremely well received. The Maison also made the very exciting announcement that Pharrell Williams has joined as the new men's Creative Director and will show his first collection in June during Paris Men's Fashion Week. Now the highlights I expect you've also noticed the immensely successful collaboration between Louis Vuitton and incomparable Japanese artist Yayoi Kusama and on the topic of art, if you're here in Paris its all coming soon, I encourage you to visit Pantas LVDream exhibition focused on the Maisons artistic collaborations over its 160-year history. Last year with respect to Louis Vuitton and the Mason continues to expand its product offering across all categories. And now moving on to Christian Dior couture. The year is off to a very successful start on this Maison as well with the ongoing strong growth of the register wear collections from the exceptional designers, Maria Grazia Chiuri and Kim Jones, the Maison as a spectacular show in Mumbai for its full 2023 collection as a tribute to Indian textile traditions and the art of embroidery. And the mason introduced a new Lady 95.22 in honor of the initial introduction of this iconic bag in 1995 and the year of its reinterpretation. Now I'll go through some highlights at the other Maisons growth at Celine continues to be driven by the enduring strong appeal of Hedi Slimane creations as well as the Maisons tight control of both its image and distribution. At Loewe, JW Anderson shows continue to generate excitement as has Mason's collaboration with Studio Ghibli, and Loewe's new Paseo bag is quite sought after. And Fendi at Maisons continues to selectively expand its store network with its first flagship boutique opening in South Korea and its largest ever store in Japan in Tokyo at Omotesando. Loro Piana has seen strong performance in its ready-to-wear and shoe collections and its new Bale Bag has been well received. Marc Jacobs is performing well with strong momentum in the U.S. Rimowa entered into a new partnership with German Football Association, DFB while Berluti successfully launched its golf capsule and introduced its new sought after Lorenzo Drive loafer. We'll now turn to performance in the Perfumes and Cosmetics business group. On Slide 15, you'll see revenue in this division reached EUR 2.1 billion in the first quarter of 2023 and reflecting 10% organic growth and a 1% positive currency effect, that's growing 11% compared to the first quarter of last year. Overall, the Perfume & Cosmetics division saw strong growth, reflecting the ongoing success of the selective distribution policy across the Maisons. At Parfums Christian Dior, the Maison continued its momentum in key markets, particularly in the U.S. and Europe. Sauvage maintained its position as the leader in fragrances globally while iconic perfumes J'Adore and Miss Dior also enjoyed continued success. La Collection Privee, the beloved refined scents from Christian Dior welcome new additions from Francis Kurkdjian on the makeup side, the new refillable lipstick, Dior Addict saw great success among customers. And the skin care line, Prestige and Capture Totale remain favorites in the premium skin care segment. Guerlain saw strong momentum from its sought after Perfumes Aqua Allegoria and L'Art & La Matiere and rolled out its new Terracotta Le Teint liquid foundation in Europe. Other successful product launches this quarter included the new Givenchy Gentlemen's Society perfume as well as Benefit's new Pore Care collection, which is now available worldwide. Fresh continued the rollout of its serum Tea Elixir, which focuses on protecting the skin from stresses and at Maison Kurkdjian, the year started off quite well with solid performance in the U.S. and the success of its new perfume 724. Acqua di Parma released a new Colonia limited edition designed by Samuel Ross and saw continued strength in its home collection. Officine Universelle Buly benefited from last year's expansion of its store footprint, in particular, across Japan. And Fenty Beauty progressed nicely along following Rihanna's performance at the Super Bowl, which she touched up where she touched up on makeup, Media bringing even greater visibility to the successful brand. Now on to Watches and Jewelry. Slide 18, Revenue in Watches and Jewelry rose EUR 2.6 billion in the first quarter of 2023 from EUR 2.3 billion in the first quarter of last year. This translates to an 11% increase on both an organic and reported basis year-over-year. Jewelry made strong progress at the start of the year and watch has introduced exciting innovation for which our Maisons are known. To provide some highlights this year began well at Tiffany, with the international rollout of the Lock collection and the great success of the iconic T line, while high jewelry enjoyed record performance. In brick-and-mortar, the brand opened up a series of new concept stores and very excitingly announced the reopening of its famed Fifth Avenue landmark location in New York City, which is planned for late April. Bulgari also showed good -- so strong momentum in Q1. The Maisons beloved Serpenti line celebrated its 75th anniversary with an exhibition at the Museum of Contemporary Art Shanghai, and the high jewelry collection Eden: The Garden of Wonders was highly successful. Now over to watches. TAG Heuer celebrated the 60th anniversary of its Carrera Chronograph, while Hublot continued its partnership with Takashi Murakami, releasing a fourth collaboration with the artist. This included the creation of 12 unique pieces exclusively available to owners of an all Black or Sapphire Rainbow NFT. Chaumet launched the Echo Culture Awards program, which aims to support women who are committed to passing down culture that creates social links and diversifies audiences. And Fred created a new line of reversible Pretty Woman bracelets, featuring its signature heart within a heart in Carnelian stone, while Zenith released its predesigned Pilot collection at the Watches and Wonders event in Geneva. We'll close out the business group review, as we always do with selective retailing. Organic revenue in selective retailing grew by 28% compared to the year ago period -- first quarter, I mean, after taking into account a 2% positive currency impact reported revenue grew 30% to nearly -- to reach nearly EUR 4 billion. Slide 22, you'll see some details. Sephora's performance was very -- was strong this quarter, while DFS benefited from a recovery in travel, especially in Asian markets. Sephora continued its excellent momentum with revenue and market share growth across North America, Europe and the Middle East. The stores saw a recovery in traffic and good performances across all categories, especially makeup. Finally, the first Sephora store in the U.K., which opened in Q1 in Westfield London, enjoyed an excellent start. As we said, revenue at DFS rebounded after reopening of the China borders, although it still remains below 2019 levels. There was a progressive return of tourists to Hong Kong and Macau and the first concession opened in China in Chongqing Jiangbei Airport. Lastly, Le Bon Marche continues its creative animations with the exhibit Sangam by Subodh Gupta, the sketch Aquarium and the immersive theater of Au Bonheur des Dames. These are the latest in the stores tradition of featuring major contemporary artist to delight visitors. So in summary, this first quarter set a strong foundation for the group to take advantage of a gradual return of travel while continuing to stay vigilant in the face of macroeconomic and geopolitical uncertainties. Our business groups all contributed to revenue growth in Q1 and marking a strong start to the year and positioning us well to continue gaining market share. Our online and omnichannel developments continued their strong momentum, focused on delivering exceptional experiences. And taken together, these strengths reflect our Maison's ongoing focus on offering innovative and high-quality products to our customers, a continued selective approach to investments, in particular, in expanding store networks as well as overall cost management and agility. Our first quarter revenue reflects our continued leadership in the luxury goods sector, and we're excited for the rest of the year ahead. And with that, thank you. We will have take any questions you might have. Now Rudolf will announce the name of the participant and invited to ask a question.

[Operator Instructions] And the first question comes from Louise Singlehurst from Goldman Sachs. We can't hear you your Phones still switched off.

I've been unmuted. I wonder -- I know there's going to be lots of questions by region, but I wondered if I could ask broader question, Jean-Jacques, in terms of really the store densities across LV, it's incredible in terms of the growth that we've seen, certainly over the past 2 or 3 years. But I wondered if you could help us understand what's happening with the store densities and also where you see probably the most constraints but also the most opportunities. I presume there's lots to go, obviously, with the reopening of China. And then secondly, I wondered, following on from that, if we look at the components of growth, is it fair to assume a little bit more is coming from price mix in the equation if we think about pricing and volume going forward? And is that sustainable? Is that becoming a little bit more of the overall growth driver going forward?

Thank you, Louise. So your question on store density, you're absolutely right. I mean we've been increasing the business, particularly at Vuitton fairly large way over the past 3 years without really increasing the number of square meters of store density. I mean, sales density has improved quite significantly. The largest improvement was in China, where we had the largest store and the lowest sales density prior to the pandemic so in some way, I mean, it happened in the right place as we were able to absorb a much higher level of sales without having to invest heavily into stores. We are talking now about the mainlanders traveling again. Certainly, they will start as we see with Macau, Hong Kong and the neighboring countries such as Korea and probably Japan in the near future. We have no particular worries as to our ability to absorb this additional business in those countries, particularly with regards to Hong Kong and Macau which have been under severe pressure over the past few years. Korea will be maybe a bit more complicated, but we'll manage. So we are not particularly worried any influx of mainlanders into Europe is probably a little bit Far-fetched as we speak. We see some additional clients from Mainland China today in Europe, but most of them are not group based. They are mostly individual travelers and they are pretty easy to absorb in our existing network. So this is not something we worry too much about for the next quarters. Maybe in 2, 3 years' time, we'll have to take decisions which obviously we will anticipate. But short term, we are not particularly worried. With regards to the composition of growth, I assume that your question, Louise, was about Vuitton. Well, we don't get into many details as our competitors don't. So it's reasonably sensitive in terms of information. What I would say is that the price component is not much, much bigger than what it used to be in 2022 and 2021. There is some price component. Obviously, as we passed on some price increases last year progressively but the bulk of the growth, the majority of the growth still comes from mix, as we've been doing over the last 15 years, let's put it that way. And a little bit of volume growth as well that helped deliver some numbers that we don't disclose, but as I always say, never very far from the division's average.

The next question comes from Antoine Belge from BNP.

Yes. Hello, can you hear me?

Yes.

Good evening to all of you. So 3 questions. First of all, since we were on the topic of China, specifically for Fashion and Leather. Is it possible to maybe quantify the growth maybe around 20%. Also how has been the phasing months after months, not so much just on the trends, but maybe more the behavior of the Chinese consumer within the quarter. Point number 2 is about the U.S. in the press release on so Chris prepared remarks, it seems that you are talking about the normalization in U.S., but if the -- my numbers are correct, 8% seems to be actually a bit better than in Q4, at least at the group level. So specifically on Fashion and Leather, have you seen any normalization as they call it. And point number 3 is actually more on Cognac. I think -- is it possible to have a sense of what's happening in the U.S. market? I understand maybe the consumer buying at $37 cognac is a bit more -- less resilient. But also, we've heard about maybe a shift into Tequila. Is it something that you've noticed too? And with regards to the Chinese situation, maybe is it more of just a destocking by one quarter since, I guess, the end demand must have picked up there.

Thank you, Antoine, for your 3 questions. The first question on China, you know that we don't disclose specific numbers for Mainland China. The growth for Fashion and Leather was double digit. In the first half -- in the first quarter, sorry, of the year. I will not really answer into details on the sequence January, February, March, not that easy to read as always, with Chinese New Year, not always being at the same time in the year. But all in all, I mean, we registered some pretty nice pickup in China, which bodes well for the rest of the year. We definitely see a normalization of this market with people returning to our stores with the Internet business picking up so we are really back to where we were prior to the complicated period of 2022 so we are extremely hopeful and should benefit from a strong push from Mainland China in 2023. Certainly in Fashion and Leather, but probably as well in jewelry, so other categories will take a little bit of time to recover. Cosmetic remains a little bit under pressure in Mainland China. I'll discuss later on cognac as you have a question -- specific question on that. But overall, we are extremely optimistic, and we think that the numbers that we have seen in Q1 bodes well for the rest of the year. With regards to the U.S., you're absolutely right. I mean, we have 8% growth, which is more or less in line with what we had in Q4. Q4 was 7%. So it's roughly the same numbers. A significant part of this growth comes from the selective distribution business and namely Sephora, which is doing extremely well. For the rest, we have the business is slowing down a little bit. It's slowing down due to a bigger and bigger share of the business taking place outside the U.S. but also due to the fact that the local business seems to be slowing down. So nothing to write home about. But nevertheless, what we've seen both in jewelry and in Fashion and Leather is a little bit of a slowdown throughout the quarter. It's difficult to grow any perspective for the rest of the year. We don't really know what will happen. For the time being, it's perfectly manageable, and we still keep a good level of business. The cosmetic business is doing well. The champagne business is doing all right, but the cognac business is under a little bit of pressure that leads me to your third question, Antoine. So I try to summarize a little bit the situation with Cognac. In the U.S., we definitely have severe slowdown in demand. It's been going on for quite a while. We have inventories with our distributors at their maximum level, so we cannot offset a slowdown in end demand with picking up the level of stocks. So obviously, we are suffering a little bit there. We know that the Cognac market is cyclical in the U.S. It's not the first time we see that. Obviously, when the business goes down, everybody asks about substitution products is the mood for brown spirit over and people turning to 2 other things. It happened before. We've heard about Vodka now it's Tequila. I've seen that many times. I'm not worried at all. I mean Hennessy remains, if not the first probably amongst the most preeminent brands in the United States, and we are absolutely confident that they will recover when demand picks up again. So we are not worried at all. The situation in China is, at the same time, worse in terms of numbers. But probably will not last very long. We have excess inventories due to the situation of the market at the time of Chinese New Year. We had loaded a little bit our clients ahead of Chinese New Year, which basically didn't happen, and it's a large part of the business altogether in China, and there was a little bit of sell-in and not sell out at all during Chinese New Year. So obviously, we have excess inventories that we have to absorb. It will take 3, 4 months, I think. And after that, we'll benefit from demand already picking up but we don't see that. I mean the sell-out is picking up, but we won't see that into sell-in before, as I said, 3 or 4 months.

The next question comes from Edouard Aubin from Morgan Stanley.

Yes. Jean-Jacques, Chris. So just sorry to follow up on China, Jean-Jacques. Based on consumer reports and press report, it looks like the consumer spending in China seems to have been a little bit weaker than expected. The rebound seems to have been a little bit weaker than anticipated by the market. It doesn't seem to be the case, clearly with luxury looking at the numbers you've just reported. Do you have a view as to why there is a divergence which seems to be continuing between the outperformance of luxury just flagged cosmetics, maybe not rebounding as well. So would be curious to have your view on that. The second thing is if you look at the Fashion and Leather Goods division, in the past, you've told us that Vuitton was a bit below was a bit above the division's average. So if you could comment because you talked about an excellent performance at Vuitton in Q1. So just wanted to have a bit of clarification on that. And then lastly, during the last call, you indicated that you had maybe a bit of very invested in the Fashion and Leather goods in terms of A&P and you anticipated a moderation of spend. So did you achieve these good figures in Q1 with A&P spend moderating on that?

Well, as far as the consumer spending in China is concerned, I find it hard to discuss outside luxury. What we see in luxury sounds as a pretty solid rebound. And if we look over 2 years, the growth for Fashion and Leather in Q1 is above 20%. So that's really a good sign of what's going on. And as I said, I mean, we are extremely optimistic for the rest of the year. We are not talking about frantic or excess optimism and growth in China, we are talking about normalization at a fairly high level. Why is it better than other consumer sectors, frankly, I'm not in a position to comment. I can just testify what we do. And frankly, is doing well without access. So we are pretty confident, as I said. Your question about the growth of the various components of our Fashion and Leather division. Well, it's exactly as usual, Vuitton a little bit below, but really a notch below, Dior a bit above. And the others a little bit in different places, but not so far from the average. So we have a sort of [indiscernible] around the 18% organic growth number that we released. With regards to A&P, I mean, our policy not to answer questions on P&L when we discuss revenues. So you'll see that when we discuss full first half performance at the end of July.

Next question comes from Zuzanna Pusz from UBS.

Can you hear me?

Yes, Zuzanna.

I have 3. So the first one will be maybe a little bit boring, but would you be able to maybe discuss the performance for Fashion and Leather goods or Vuitton, whatever is easier by nationality? And specifically, I think last quarter, you mentioned that the American cluster was still growing double digit globally. So it would be interesting to hear specifically how the American cluster has performed in Q1. Secondly, on Watches and Jewelry. Would you be able to maybe comment specifically how Jewelry has grown versus Watches? I think you mentioned in your remarks that you were very positive on Jewelry. And you didn't mention what you just curious if you're seeing maybe the Watch market pulling down? Or is it specific to China because of the business being more wholesale-driven. So any comments on that would be interesting. And finally, I think you're reopening now in Q2, the flagship landmark boutique for Tiffany. Would you be able to remind us what percentage of sales it contributed to the brand globally. I think if I remember correctly, it was quite meaningful. So it would be just interesting to know how much help we could get from that in the coming quarters?

Thank you, Zuzanna. So Fashion and Leather by nationalities. Obviously, China leads the charge with a very high number for most brands, in most cases, exceeding [20%]. With a comparison base, which is muted pretty tough in the first part of the quarter, much easier after the 15th of March. But for what it's worth, we have pretty high numbers there, which are exceeding the growth we have in China due to the fact that the offshore business, the touristic business is growing faster. The domestic one, but both of them are growing very significantly. As far as American is concerned, this is why I mentioned a slowdown. We have altogether the American cluster is flattish. Unlike what it was in Q4, even taking into account so the business we do in Europe, which is quite significant now. With Europeans we have mixed numbers, but most of the nationalities in Europe are growing double digit mostly the French, the British and Italian. So we cannot complain about the business we do in Europe, as you can see from the very strong numbers that we have posted for Europe as a whole. Your second question is about Watches and Jewelry and commenting a bit the situation in Watches. In the numbers we reported, Jewelry is doing a bit better than watches. Reading the watch market is not as easy as reading the Jewelry market, Jewelry is retail. So we know almost live what's going on, Jewelries or Watches is obviously more complicated to read. As far as we are concerned, you know that China is not a big market for us. So what we observed in China is not necessarily relevant or necessarily a good proxy for the rest of the industry. But all in all, I mean it's a bit contrasted, but we have high single-digit numbers in our -- in most of our Jewelry brands. So we are pretty satisfied with the business in Q1. Finally, Tiffany and the flagship. I think it's a number that the previous management used to give. If I remember correctly, if it was around EUR 400 million or something like that, so close to 10% of sales. Don't get carried away. I mean I don't think we will increase the business by 10% just by clicking our fingers and reopening the store on Fifth Avenue. But this being said, it should have a positive impact, not only in terms of numbers, it should add up because this store will be absolutely stunning and will add up to the business as it should and will have a much larger contribution than the temporary store that we've been operating for the last 3 years. But it's also very important in terms of marketing and branding because it's a testimony of what we are doing with the brand. It's probably the most emblematic luxury store in the world. I don't have to remind you all the story around this store. So obviously, we did things according to the status of the store, and we expect to see you at some point there and hopefully, you will be stand as well as we are.

The next question comes from Erwan Rambourg from HSBC.

Can't wait to see that store. Three maybe follow-ups. First of all, on Chinese consumption. You're basically mentioning, I believe that offshore spending outside of Mainland China is outperforming onshore spending. Do you think that will go on this year? And to your previous comment about the capacity that your stores have to welcome more people, will you not reach a point of tension, I'm thinking Hong Kong, Macau, particularly Thailand? Are there areas in the world where you're a bit underdeveloped in terms of store units. Secondly, if we look at price arbitrage, I don't know if you can give us an idea of where you believe you stand on average in terms of pricing in Shanghai relative to Continental Europe. But I think you rightly said, Jean-Jacques a while ago that what FX can do, it can undo and it's undone quite a bit. We've gone from Euro to Dollar at $0.95 to $1.10 today. But despite that, I suspect the gap is still pretty wide do you need to address it? Are you comfortable with the gap? And how can you address it potentially without alienating the local European consumer? Thirdly and lastly, I'm just wondering if you could share priorities for beauty, for fragrance and cosmetics. You made a very high profile hire from L'Oreal about a year ago, who is running hospitality. Now he's also running beauty given the high profile of the individual, I'm wondering if you will just use them to shake up the existing portfolio. If you have views on optimization or M&A or dreams of maybe a bigger contribution from that part of the business.

Thank you, Erwan. Maybe I was not too clear on the first point, which is onshore, offshore with mainlanders. What is offshore is growing faster than onshore but in terms of contribution, I mean, it's 1 to 4 or 1 to 5. I mean, roughly speaking, the offshore business last year was about 15% of the global Mainlanders cluster, and it's now 20%. So it grows at a fast rate. This being said, in terms of contribution, it has nothing to do with the type of growth we get into -- with the Mainlanders inside Mainland China. So your question is about areas where we could feel under develop or we would need to add up some existing capacity. Well, first of all, that's a good problem to have, and it's a problem we've been dealing with for the last 25 years. So we know how to do that. You mentioned Thailand, probably not. I mean we have had [indiscernible] and pretty significant presence in Thailand and particularly in Bangkok, over the last years. Vuitton, for instance, is, I think, 4 stores in -- 3 or 4 stores in Bangkok, most of them being pretty large, so they can accommodate larger amount of touristic flows. So we are not too worried. It's not something that we expect to be too disruptive whether in Thailand or elsewhere and we are pretty relaxed with this issue. Obviously, if there are pockets of areas where we feel constrained, we'll mention that in the future, but I don't think it will happen too much. With regards to currency gaps and whether there is need for action. As you said, I mean, currency is going to do what happened. And we've seen particularly with regards to China. The price premium of Mainland China products compared to Europe has been reduced in a significant way over the last few quarters, I would say and it's now at a point where it's not a big issue. Obviously, we have a little bit of a question mark with Hong Kong. Hong Kong is gaining an importance as the mainlanders lenders start to travel again. The Hong Kong dollar being paid with the U.S. dollar and the U.S. dollar being stronger against the RMB. This makes the price gap between the 2 areas, a little bit less interesting than it used to be. So we'll see what happens there. We'll have the same question with regards to Japan as well. But for the time being, I mean, we don't intend to take particular action around that. I mean, the flows even in Asia today are still starting and we want to wait and see before we decide what to do about it. Your third question about beauty is the nomination of [Stephane] announcing a big shake-up in the division. Maybe, maybe not. In any way, it's hard to comment that type of thing. In earnings and revenue call. With regards to the portfolio, we are pretty satisfied with the portfolio we have. Our strategy is usually to make the best of our brands and not get rid of them and by some others. We have a great portfolio. Some brands are doing well. Some brands have been suffering a bit in the pandemic and they need to recover. We are working on that, and that's priority #1, 2 and 3 for [Stephane] in the next few quarters.

The next question comes from Ashley Wallace from Bank of America.

Chris. I have 3 questions, please. My first one is just around one of the hot topics on social media at the moment, which is around the idea of quiet luxury. I was wondering how you think this trend will potentially impact your Fashion and Leather brand? My second question is on.

Yes, I missed your first question. What is the hot topic?

Quiet luxury. Basically this under. Yes. So basically, like this idea of like understated not go is something that really has become quite popular over the last couple of weeks in social media, so potentially playing out in terms of brand momentum. The second question I have is on the Perfumes and Cosmetics division. I was just wondering how much of the 10% growth in Q1 was driven by the strong rebound in Asia travel retail and Hainan specifically. I guess my understanding was that there was still somewhat high level of inventory in the channel in beauty and at the timing of the restocking would be more Q2. So my question really is like did you benefit in Q1 already from this? Or is it something that's still to come? And then the third question is on Selective Retailing, given the very strong top line momentum, which is benefiting from the return of Asia travel retail. How should we think about the margin of this division in 2023, especially in light of DFS, which you have not mistaken was loss-making last year?

Thank you, Ashley. Quiet luxury. So you name for something that we have heard already a few times in the past, 15 years ago, the logo or even the signature of handbags was dead. People were just looking for bags that were unsigned and unlogo. You know what happened afterwards. So needless to say that this is not the trend that we've seen in the following 15 years. So it comes and go. I mean, that's kind of the kind of thing we get from time to time. Well, if people want quiet luxury product, there are some brands within the group or even some items that we sell that are much more discrete in terms of signatures than others. So we try to accommodate the taste of all our customers. And frankly, we think that's fine. I mean if customers want unsigned product, they should get them want sign products and frankly, it's a vast majority, that's fine as well. So we don't know whether this will be a trend or not in the coming quarters. But in any event, we are ready to offer them to offer clients product that will suit their needs. As far as Perfume and Cosmetic is concerned and your question about Asia Travel Retail, and the bulk of the growth, more than the bulk of the growth, actually more than 100% of the growth we get comes from mostly Europe and the U.S. In Asia, including Travel Retail, we have not rebounded yet. As you know, we commented that many times. We have a fairly restrictive attitude vis-a-vis Asian travel retail. There is nothing wrong with Asian Travel Retail as long as the clients are real clients and not Daigou and the bulk of the Asian travel retail even today and particularly in Hainan that you alluded to remains Daigou. So we are extremely cautious. We think this parallel business could destroy any brand in the long run, and we are extremely conscious to avoid this type of business. So no such thing as a rebound in Asia and Travel Retail so far. Selective Distribution margins well, the main impact in 2023 should be that DFS is returning to breakeven. We had a really difficult year last year with Hong Kong being on the stand still in Macau being closed almost from June onwards. So half of the year. So it was a terrible year for DFS as a tribute to the quality of the management, they took this as an opportunity to reduce the cost base. So they were loss-making last year but they limited the loss as much as they could in a very efficient way. Obviously, they will benefit from that this year, and we expect them to recover to breakeven, maybe a bit more, but I mean breakeven would already be a fantastic achievement for the management team.

The next question comes from Thomas Chauvet from Citi.

The first one on pricing, Jean-Jacques, back in January around the full year results. I recall you said in a media interview that the industry perhaps needed to mark a pause in terms of pricing. Can you perhaps comment on -- what does that mean for Vuitton, Dior and your key brand this year, particularly as you passed on some prices in the first quarter. Any idea of how much you think the industry can pass on pricing for the rest of the year, if any? Secondly, coming back to the U.S. growth at plus 8 and the components of that growth if I understood correctly, the American cluster for the Fashion and Leather was flat. You experienced a severe slowdown in Cognac. So what drove the plus 8%, is that the other 3 divisions by difference? So I guess, Perfumes Watches, Jewelry and Sephora. And finally, Japan had an extraordinary growth in Q1. We know it's -- it's still a very important market for this industry. It's been historically steady but also volatile. Do you feel this is a shift in consumer behavior in Japan in the economic outlook? Or are you seeing just a massive influx of Korean tourists. Can you explain about what you see in Japan at the moment.

Thomas. So on pricing, what I meant when we discussed that already in -- at the end of last year is that after a general price increase in 2022. I mean it was difficult to conceive that we would do it again with the same magnitude in 2023, which is probably not going to happen. It doesn't mean that from time to time, there could be some tactical price increases. We discussed a little bit price gaps due to currencies. It is something that could happen. But global and significant price increases, I don't think so. So I don't comment future price increases. I just give you the global philosophy but it doesn't change. I mean we think that we have done what we had to do last year to reflect inflationary pressure in most of our product lines. This year, we'll be more cautious when it comes to price increases, and it will be done mostly on a tactical basis rather than on a global basis to reflect inflation pressure. Your second question about the U.S., to be frank, you made the answer yourself. I mean it doesn't come relief from cognac from Fashion and Leather. So it comes mostly from the other divisions. Sephora did well and Perfume Cosmetic did well too. So we are pretty happy with that, and this enables us to show a number which is pretty close to what it was in Q4. In Japan, Well, that's an interesting question. The answer is less easy, to be frank. What we see in Japan is 2 things. A little bit of growth coming from tourists, which is quite new. I mean we've seen that a little bit at the end of last year, but compared to Q1 last year, it's quite new. So it has a little bit of contribution, but we are talking about a growth of 34% in Q1. So it's not the only explanation. And the other explanation is a domestic customer which is who is still doing shopping a lot and generating a significant growth. Explanations are always difficult to provide. We have -- it seems to be that the Japanese customer -- consumer is very confident about the economy, about the global situation, about inflation as inflation strikes, way less in Japan than it does elsewhere and is, therefore, pretty confident and buying and is active in terms of shopping. I'm conscious that this is not a very deep and thorough explanation, but that's all we can give you at this point in time. And as I sometimes say, I'd rather have good numbers that I cannot really explain then the other way around. So we really enjoy these exceptional numbers which are a great tribute to the quality of the business that we -- that our people are doing in Japan.

The next question comes from Oliver Chen from Cowen.

Great results. On China specifically, what do you see happening with Hainan as well as your thoughts more generally with the rebound on inventory positioning and how you're positioning by region in this volatile atmosphere? Second question on the Louis Vuitton brand. Pharrell Williams was an exciting announcement. Just would love your thoughts more generally on key priorities and what you see happening, perhaps with mix or the cultural movements in the brand. You've been very innovative. And then third on Tiffany. So bridal industry-wide has been facing a tough comparison, it's negative. I was wondering on Tiffany, how are you balancing margin expansion relative to revenue growth? And also the Lock has gotten a lot of attention. Just what does that mean in terms of how you're thinking about the brand and the Generation Z appeal. I'm wearing the Tiffany Nike stuff too. So love what you're doing there. And lastly, you touched on this a lot, but the U.S. trends and your expression of softer, are you extrapolating that? Do you expect it to turn negative and/or continue to be fairly volatile. We are seeing a pretty promotional luxury environment with an aspirational customer that's under pressure.

Oliver. So your first question is about Hainan and how we feel about it and what could happen there. Well, we can only listen to what is being announced. We understand that there will be 2 phases in Hainan. The first one is the one we are in with only duty-free concessions, 6 of them, if I'm not mistaken, that currently mostly concentrate on Perfumes and Cosmetic, Spirits, and Tobacco. This business is mostly dominated by China Duty Free Goods Corporation and other operators. It's an important business for some cosmetic brands. We are extremely cautious with regards to this business due to the Dior phenomenon that I discussed a little bit before that's all we have to say about this phase. The second phase, which is supposed to come in a few years will be a tax-free country. It's not a country, it's a region, but a tax-free region, comparable maybe to Hong Kong, where there would be no such thing as taxes, which obviously will never level the playing field. There are a lot of shopping mall projects and a lot of things are currently being under construction. We understand that the travel flow into Hainan is about EUR 40 million, EUR 50 million a year. So it's significant and that the market could become very significant. So we definitely look at the market for the second phase, not for the -- what the market is today because we are not so much interested in being into this dig frenzy. But the second phase of the market, we should see this market becoming a normalized normal market, I would say. Particularly exciting because there will be price difference with China, and we will be there, but we will be there in a normal way. I mean we'll have our stores. We have our people will decide upon our assortment and prices. So at the same time, a little bit farfetched because it doesn't happen tomorrow, but it's something that could be extremely interesting in the medium term. Pharrell Williams yes. What are the key priorities for LV. Well, I think the nomination of Pharrell is actually telling you something about the blurring of boundaries between distribution, marketing and product strategies. Each strategy we designed at Vuitton and elsewhere. I mean, this is true for most of our brands. There is no such thing now as a pure product, pure distribution or pure marketing strategy. The 3 of them mix and obviously, Pharrell has been nominated to spare ahead this effort of being global, and there will be some marketing component in the creation there will be some distribution component in the product strategies, and we try to mix all that. So the marketing effort and the branding effort that we are developing at Vuitton and elsewhere is much more global and encompass the various areas of the marketing mix. So this is the priority to promote the brand to enhance the branding of Vuitton and the other brands through appropriate marketing, distribution and product rates, the 3 being quite entrenched. Your question about Tiffany and I think it was about bridal, right? And the competition about Bridal. Am I right?

Expansion competitor.

Oh yes, margin expansion and well, the question about margin expansion and revenue, in my view, is -- sorry, Oliver is not the right way to really set it. Basically, what we -- what happens in Luxury is that we design strategies that will boost revenues for a while, the margin don't move. And when revenues start to develop, we get a boost in margins. We've seen that at Bulgari, we've seen that Vuitton and Dior. Look at Dior, I mean, for decades, the margins of Dior were pretty lackluster and with the development of the brand in the last 6, 7 years, we've seen an explosion of the margins. So hopefully, the same will happen at Tiffany. We'll develop the revenue through product innovation, through store expansion and renovation. And at some point, the strategy will kick in, in terms of margins, and we'll see a margin improvement. It's exactly what happened at Bulgari, and we try to replicate exactly the same thing at Tiffany. Well, with regards to the U.S. trend for the future, I mean, as you know, our visibility in our business is as good as yesterday's sales. So it's always very difficult to assess what's going on. So what we try to do is to be as transparent as possible on what happened so far. What will happen next I mean everybody, as you fully remember, in September, everybody was expecting 2023 to be a horrendous year for Luxury in the U.S. It doesn't happen. I mean, it's not as good as it used to be, but how could it stayed at 20% growth per annum. So it's normalizing, but it's not bad either. So it's very difficult to make any prediction. Interest rates are rising in the U.S. maybe taking its store on consumer spending, Difficult to say. Interest rates rise will probably come to an end if I read the market correctly, sometimes in the rest of the year may have a positive impact. Nobody knows. So frankly, I find it extremely difficult to answer your question.

And the next question comes from Rogerio Fujimori from Stifel.

Jean-Jacques, Chris and Rod. I have 2 questions. I have one follow-up on jewelry. One about Korea and one about Perfumes and Cosmetics. So on Jewelry, I think in the presentation, you flagged the high-end jewelry as a bright spot, an exceptional quarter for both Tiffany and Bulgari. So anything to call out in terms of performance for Bulgari with Tiffany in the U.S. and the core collections for Bulgari and Tiffany across the main clusters, the U.S., Chinese and European. My second question about Korean cluster that it has become obviously relatively large for the industry in the last 3 years. So any thoughts on what's going on in Korea and Koreans buying abroad. And then the third on Perfumes and Cosmetics is just a follow-up on category trends. I think on your comments about Sephora, you mentioned that makeup is standing out. So any change in terms of fragrance versus makeup versus skin care.

So your first question on high Jewelry I must say that Q1 is not the biggest quarter for high jewelry. It's a fairly seasonal business. So high Jewelry is doing all right in the first quarter of the year, but it's not a big contributor. So it's -- I find it hard to comment further. Q2 is a much more relevant quarter with a lot of events. Taking place around the world. But as far as we can see so far this year, the positive trend that we have experienced both at Bulgari and Tiffany doesn't seem to be getting any worse. So it should remain a view, a key contributor to the growth of the business going forward. Korea, well, you said it. I mean, it's becoming an important market it's, at the same time, a hub for some Chinese tourists. It's a big market in itself. And we have Korean shopping abroad. So it's 1 of the most complex market in the world in this respect as we have to accommodate the 3 dimensions of this market. It's been going well through the pandemic, less volatile than the Chinese market, for instance. We'll have to control Daigou because we know that there is a tenancy for Daigou's to shop in Korea, which is closer to home than some other markets. This can be done with pricing, as we discussed a little bit before we'll see how the market develops in coming quarters. But for the time being, we are pretty satisfied with the Korean market, with the business we do with the locals, the business we do with the Korean tourists and we managed to control the Daigou business in a fairly correct way. Perfume, Cosmetics and the category, yes, makeup is doing well, but fragrance is doing even better. And the skin care business is flattish. So the bulk of the growth come from fragrance and makeup. This has been going on for a while. I mean probably due to the fact that we have less growth in Asia particularly China and Asian travel retail than we have elsewhere and the bulk of the growth coming from Europe and the U.S. This creates some bias towards in favor of fragrances and makeup.

We have a question from Luca Solca from Bernstein.

Maybe a slightly different question on eyewear. You've been in housing eyewear for a few years. I understand that there was an element of experimentation in this decision. I wonder, looking back, what do you think about this is gone? And how important do you believe that this category could become for the group if it's going to be material or not. A second question on capacity and inventory availability, especially looking at leather goods. I understand you're being overseeing a very important growth in the most recent 30 years or so. But I seem to remember that one of your smaller competitors in Paris provides a number about capacity growth each year. I wonder if you could give us that figure for leather goods and your increasing capacity as you face very strong growth from consumer demand as the numbers in the first quarter testify. Thirdly, we understand that demand in the U.S. is showing no clear trend with lower-end products that Hennessy having an issue and at the same time, Sephora doing very well indeed. I wonder if you look at Hennessy and the most recent [indiscernible] we've seen there, for example, the inventory availability issue or the price increase decision last year, how much of the current performance, which is slightly disappointing as being self-inflicted and how much of it depends on the market. And are you confident that any issues in decision-making and in the company are now streamlined and on the good track.

Thank you, Luca. So your first question on eyewear, we internalized eyewear progressively for some brands, mostly Fendi and Dior to start with. And I must say that with regards to these 2 brands, the results are quite interesting and very positive in many ways. First of all, this -- in terms of quality, we have improved the average quality of our products, which is always something very important to do. So we are very pleased with that. In terms of distribution, we control much more and much better who do we sell our product most of eyewear is sold through third-party distributors. And we don't want to end up with 20,000 doors and finding Dior eyewear everywhere in the world. This has to be controlled. And obviously, we do it in a much better way through our own organization. And thirdly they are important incorporated marketing budget into the eyewear P&L that positively contribute to the global marketing effort of the brand and the fact that we control this budget ourselves, enable us obviously, to direct them and to control them in a much better way. And this happens to be a profitable business. Obviously, the start in 2019 and 2020 was a little bit loss-making as it is normal for any startup to when integrating a business, but now we are turning very nice profitability. So we'll move on and we'll continue to integrate one after the other, all our brands. So probably remove the remaining licenses and develop from there. We have a strong base. The only constraint that we have is to find land to be out factories and to find people to work in there. otherwise, I mean, from a pure product and management viewpoint, we have a great team, and they have really given us the proof that they can develop the business much further, and we'll try to do so. On capacity, well, the capacity question is something that is being raised from time to time. The last time was probably 2015 when 2016 when we had a little bit of shortages in terms of capacity. It's not the case now. I mean we can accommodate the current growth which, as I said, is mostly mix based, which is less of an issue from a capacity viewpoint than volume-based growth, as I explained many times. So we can accommodate the current growth without having to make very significant and urgent investment. And if we have to make it, and certainly, at some point, we'll have to make it, we'll plan them in advance, and we'll do them as we've always done. I mean there is always the ability to enlarge existing Atelier to double the size of an existing Atelier. When we buy a land to build an Atelier, we always think about making a second one at the same place. So there are large number of solutions that we can develop to accommodate the good problem of excess demand that we cannot -- that we maybe couldn't meet without further investments. So we'll do it. I think it's a good problem to have, and we have handled that many times in the past, and I'm not worried about that. Your third question about Hennessy and price elasticity is a very valid one. We had a lot of, as I said before, a lot of inflationary pressure at Hennessy, in particular due to the price of glass, energy, et cetera. And we had to pass on very serious price increases last year. which were probably a bit difficult to absorb by some clients, hence a little bit of negative reaction on volumes. That's -- you're right. I mean that probably happened and it takes a little bit of time to be swallowed. And that's why we are extremely cautious when it comes to further price increase. VS in the U.S. will not be subject to any price increase this year, and it's certainly the right thing to do. At the same time, we also have to invest behind the brand in terms of marketing. There is always a tendency when you have high demand and shortage in availability of product as it happened in the -- in the second half of 2020 and 2021 to reduce marketing budget, not only our marketing budget, but our distributors marketing budgets. They are not going to invest behind the brand when they know that they will be selling the bottles anyway. So after a while, this has a tendency of putting the brands behind some others that are more active in terms of marketing. So we are very conscious of that, and we shall be investing behind the brand much more because it needs to be done. So again, I mean, I'm not worried at all with the U.S. situation for Hennessy, which is the largest spirit brand by value in the world, and we are very confident that the brand will continue to be extremely performing well and be profitable. There are a few issues to be fixed in the U.S. and time will enable us to absorb the price increase. And at the same time, we'll be reinvesting into marketing and everything should get better within some quarters. We'll not have a great year in 2023. Don't take me wrong. I mean it takes a little bit of time to do that, but I'm fully confident that the Hennessy team will be able to manage that.

We're indicating late. We have 3 remaining questions. I suppose all the important ones have been asked at this stage. But maybe we can take these last 3 questions, if you limit yourself with one question, please. And the next question will come from Carole Madjo from Barclays.

This is Carole Madjo. Yes, 1 -- 2 questions for me, if I can. I guess, just this one, just to come back on the Chinese market. I think you mentioned earlier on the call that there was some pressure in cosmetics in China. Just to clarify, is it just linked to this no gray market Daigou business, which is, of course, having the pressure or could we think that the middle class consumer in China is still performing a bit less strongly than the higher-end consumers who maybe tend to buy a bit more fashion as the goods product categories? That's the first question. And the very quick second question I had was on Louis Vuitton. Of course, you mentioned that you have hired Pharrell Williams in the menswear segments over the past few months. Can you maybe remind us about the structure of the womenswear designing team? Of course, Jean-Jacques been here for, I think, around 10 years now. How should we think about -- is there any element of disruption you want to add to the way he operates. Are there any communication between menswear and women's wear are you fully happy with the structure should we expect any more collaboration as you, of course, have been doing lately on the let go categories. Just a kind of update on how we can think about the womenswear segments could be interesting.

So on the Chinese perfume cosmetic market, we've been saying the same thing for quite a long period of time. The market is being heavily disrupted by the parallel business, the gray market, whichever way you call it the Daigou gray market parallel that is creating an enormous pressure -- discount pressure on the market. And when you try to preserve the value of the brand not to discount, obviously, you're at a disadvantage vis-a-vis the competition. So I don't think the Chinese, the Mainland Chinese customer by itself is in any way showing some signs of weakness and not particularly today with the recovery that we see there, but the market is heavily disrupted by the discounts and particularly on the best sellers that have been introduced during the pandemic period through the duty-free segment. So it's something that we don't see clearly where the market is going. It will take a while to normalize. But as far as we are concerned, I mean we'll never play the game of discounts because we know it would be destroying the brand. when you have a brand like Dior, I mean, obviously, it would be a very bad idea to discount Dior perfume and cosmetic brand, given the size and the importance of the Dior perfume business altogether in Mainland China. So we'll be very strict. We have been and will be very strict on that. With regards to the organization, of the ready-to-wear business and the creation within Vuitton, we are extremely happy with the way it works. There are a lot of contracts and collaboration between men and women. I cannot really elaborate because it's a question of how the business is being organized, but don't expect major changes in the way the business is being managed in the future.

The next question comes from Natasha Brilliant Credit Suisse.

Just wanted to ask one on capital allocation. I mean, the usual question, there's not a lot of things available and of size to buy despite some press articles associating you with certain competitors. But in the absence of any large-scale M&A, could you see in the medium-term scope to increase the buyback and shareholder returns?

Listen, if you look at the global numbers, I mean the big chunk of the excess capital, I mean, whichever you call it, free cash flow or goes to the dividend. We have been increasing the dividend very steadily and very significantly over the last year. I think on average, over the last 30 years, we've been increasing the dividend by 11% per annum so that absorbed a big chunk of the cash flow. Even if we don't do sizable acquisitions because for lack of compelling opportunities or available opportunities as we speak, we do some acquisitions, bolt-on. I mean, we've been doing a few things, as you've noticed in Wine and Spirit. We always do some acquisitions. They also do consume more absorb a little bit of the excess cash flow and the debt has the potential to go down. So we have a share buyback program, which has been set at EUR 1.5 billion for this year, it was the same amount last year. We think we are fine with that level for the time being. If the cash flow increases and we have to revisit that question and as a good problem to have, we'll think about it. But for the time being, we don't think it is necessary.

And the last question comes [indiscernible] from CICC.

I have one question with 2 small parts, if you don't mind. The first part is if we look at the spending by Chinese cluster in the first quarter of '23, when compared to first quarter of 2019 will be the growth for Chinese? And how has that performed compared to other nationalities. So that's the first part. If you could please share some comments on that. And the second part is, if we take a time machine back to 4 months ago, I assume most of us will be more optimistic about Chinese rebound and growth rates. So compared to the reality, apparently, there is some gap in there. So apart from the acceleration of offshore spending by Chinese? What are the other main reasons that led to this gap between expectation and reality.

Well, maybe expectations were too optimistic, so I cannot comment on that end of the comparison. And as far as we are concerned, I mean, 4 months ago, we really thought that with the release of all the zero COVID measures, we were off for something like 6 months chaos in China for the normalization of the sanitary and the pandemic situation. It happened to be much, much shorter than that, and it was a pleasing surprise. So it's a little bit counterintuitive now to really be disappointed by China. If we compare the situation today where we were 5 months ago, it's much, much, much better. So as far as we are concerned, I mean, the situation in Mainland China is an excellent surprise compared to what we thought it could be only 4, 5 months ago. With regards to the Chinese cluster versus 2019 I don't have very precise numbers in mind, but I think we are all together in between 30% or even 40% -- no, it's even it's between 40% and 50%, I guess, higher than what we were in 2019 obviously, where the business takes place is entirely different from what it was in 2019. But we've been growing the business very steadily ever since. Is that it?

Yes, that's it.

Thank you so much for attending the call. And as I mentioned, I look forward to guessing with you all the P&L numbers at the end of July, as we always do. Thank you, and have a great evening.