Full Year 2023 Ermenegildo Zegna NV Earnings Call

<unk> actual results scope my name is and I'll be your operator today, if you'd like to ask a question during the Q&A portion of today's call. You may do so by pressing star followed by one on your telephone keypad I will now hand, the call it around <unk> to begin to Paolo. Please go ahead and you're already.

Thank you thank you and good.

Good morning, good afternoon to everyone.

And thank you again for joining many of these opinions.

Color on that.

And then in 'twenty three.

All the materials.

Discussing the presentation and the press release that was sent to previously you can find it on our group website.

Dot com.

I'm very happy to say it to say that today with US we have the leadership team, including our CEO Mr. Xu.

Yeah.

Oh I see it for Luka tell you boy and we have also a.

Got up here with us.

Your thumb Brown and Tom I'm sorry.

[laughter].

Right.

And that and the Mr. Rodrigo My son.

As connected that I believe are from Los Angeles.

And these are also here with us before beginning I need to point out.

These are a few things that are going to be boring, but we need to do it that way.

During the call.

We will make certain forward looking statements.

Our actual results may be materially different from those expressed or implied by these forward looking statements.

Oh, so I remind you that space went outside to a number of risk and necessary guarantees, including those described in our SEC filings. Please refer to the forward looking statements cautionary.

Included at Sage are two of our presentation.

Okay. After this very happy too and the way too.

<unk>, our CEO and he said he does Danielle good morning, and good afternoon.

Thank you Paolo and things to join US on today's conference call on Zillow group is trying to deal with it when it goes up.

Today as usual I would like to give you a brief update on ourselves for rush here discuss the main accomplishments in project, we undertook and finally briefly comment on what we are looking forward to this year.

I do believe that 23 was a milestone year for them and as you look at who.

We completed the acquisition of a thoughtful question, which is are reached our group with a third brand that is perfectly complementary to our portfolio.

On top of this Great addition, the group also achieved outstanding results.

Revenue in 'twenty three as we shared back in January reached $1 9 billion up 28%.

Yes.

Good morning, or good afternoon, and welcome to <unk>.

None: Second degree FY 'twenty two 'twenty three financial result scope my name is out there and I'll be your represented state if you'd like to ask a question during the Q&A portion of today's call. You may do so by pressing star followed by one on your telephone keypad now how much with the pilots I don't have to begin to Pablo. Please go ahead when you're ready.

And up 19% on an organic basis, our adjusted EBITDA reached 120 million euros with an adjusted EBIT margin of 11, 6% up 10 basis points from 'twenty to 'twenty two.

And most importantly, our net profit more than doubled compared to 2022.

Pablo: Thank you thank you and good.

None: Good morning, good afternoon to everyone.

I think theres been a great achievement.

Uh huh.

None: Thank you again for joining the <unk> conference call.

I'm also very proud of the progress we've made on our sustainability commitments.

Pablo: 23 fully out of that.

Information and the communities around us is around the value of the group and I am pleased to say that we delivered on their sustainability commitments, we said look going into 'twenty three.

Pablo: Oh No my theory, I've said, we are discussing the presentation and the press release that was sent that previously you can find it on our group website.

Pablo: Your group Dot com.

Last year, we formalized the adoption of our global diversity equity and inclusion policy and 87% of our employees on topics I've seen on B E.

Pablo: I'm very happy to say I have to say that today, we announced that we had with the leadership team of the group, including our CEO and he said I mean as usual.

We are on track to reach by 26, 50% of key raw material is certified as Thrace and lower incur.

Our C O N CFO Gianluca Italia Board and we have also.

Pablo: And I got asked are here with us are CEO, Tom Brown and Tom Claude.

We continued our investment in renewable energy, 97% of <unk>.

Energy use in our European Operation now comes from or renewables go into 'twenty. Three we have installed photovoltaic panels on the roof top or additional production facility.

Tom Claude: That's right.

Tom Claude: And that and the new set of Brio Mcdonald's that I cannot state that I believe are from Los Angeles.

Tom Claude: And he is also here with us before.

It's only the beginning as I always say fish is the beginning of the journey and we are still lots of work to do Nevertheless, I'm proud of how far we have come in for work because <unk> taken to get there.

Tom Claude: Before beginning I need to point out and these are a few things that got a little bit boring, but we need to do it that where it makes sense.

Tom Claude: In the call we will make certain forward looking statements. Our actual results may be materially different from those expressed or implied by these forward looking statements.

Now I want to take a moment to talk about the heart of our business the three brands and our key here.

Xena brand Twenty-twenty see we continued to build on our successful junior one brand strategy globally as you know the Americas and EMEA I ahead on this journey, but we are also starting through the summary of whats in other market.

Tom Claude: Oh, so I remind you that space rents are subject to a number you can necessarily.

Tom Claude: Including those described in our SEC filings. Please refer to the forward looking statements cautionary.

So you go to China, and what are the market, where the journey started later is exactly greater China. We do recognize the 24th we still be challenging there due to geopolitical and macro environment and as we further evolve and develop our customer base, but we see important positive sign.

Tom Claude: <unk> included a page.

Tom Claude: Our two of our presentation.

None: Okay. After this that I'm very happy to own and go over to our CEO and he said he doesn't yeah. Good morning, and good afternoon. Thank you Paul and thanks to join US on today's conference call.

Especially the fact that demand for our highest end product install an employee.

None: Fiscal year 2022 is.

CEO: Today as usual I would like to give you a brief update on our SASSA last year discuss their main accomplishments in project, we undertook and finally briefly comment on what we are looking forward to this year.

Let me focus on and committed to this region to further reinforce our brand awareness Dania is the leader in luxury menswear.

Talking now about product <unk> brands in February we launched the second skin collection globally, a selected number of skus, including labor outdoor and the second drop of seats, our icon that may define this leather.

None: I do believe that 23 was a milestone year for the minutes.

None: We completed the acquisition of a thoughtful fashion, which is our reach our group with a third brand that is perfectly complementary to our portfolio.

None: On top of this Great addition, the group also achieved outstanding results.

<unk> scheme, the drop has performed very well in all regions.

Including China looking at distribution, we are even more committed in reinforcing our D to C channel. We will continue to streamline our wholesale distribution also converting some mono brand store organization finally on very exciting event coming up for the Zale brand.

None: Revenue in 'twenty three as we shared back in January reached $1 9 billion up 28%.

None: And up 19% on an organic basis, our adjusted EBITDA reached $120 million with an adjusted EBIT margin of 11, 6% up 10 basis points from 22 I did too.

<unk>.

Midlantic cooler April we're sorry, we cover.

None: And most importantly, our net profit more than doubled compared to 2022.

Cohort <unk> in April we dividend during this early that mobile will be lowest in Aussie xenial.

I think it has been a great achievement.

Global.

And present, the born in order to book, which got a unique vision of our father, we're doing that at the moment when all eyes will be on power grid from city land within say for other reasons.

None: I'm also very proud of the progress we've made on our sustainability commitments.

None: Caring for our nature and the communities around us is around the value of the group and I am pleased to say that we delivered on this sustainability commitment, we said look going into 'twenty three.

Next is Tom Brown in the year 2023, and we saw brand celebrated <unk> anniversary, Tom Brown revenue reached 380 million or euros.

None: Last year, we formalized the adoption of our group diversity equity and inclusion policy and 687% of our employees on topics I've seen one b E.

So being a strong 26% compounded average growth rate since the brand became part of the group very nice trend I would say, but the journey just started and we see that amount of time to do the brand has huge potential across markets and product to go beyond the 500 million orders that was my initial target.

None: We are on track to reach 26, 50% of payroll makita certified astray.

None: Lower input.

We continued our investment in renewable energy, 97% of energy use in our European operation now comps.

Financial import pressure the new adjoining our group crowd. We do believe that there is a huge potential for fashion. These confirmed through every conversation I have with Lilly about their brand covering the award worthy with landlords with clients with luxury experts around the globe. They all agree that the brand is developing particularly women.

Renewables from 'twenty to 'twenty, three we have installed photovoltaic panels on the roof top or additional production facility, but this is only the beginning as I always say this is the beginning of the journey and we are still lots of work to do Nevertheless, I am proud of how far we've come in for.

Any leather goods segment the brands created under TC direction is strong you've seen net into the sexual pizza.

None: It has taken to get there now.

To date.

<unk> are here today with us is forming a ski team starting with head with new heads for Asia and for that matter. Because we're also making sure that the brand can leverage our global infrastructure, including our supply chain Knowhow for both men's and women's tailored for CRM and customer engagement.

None: Now I want to take a moment to talk about the heart of our business the three brands and our people.

None: First Zynga brand 2000, Twenty's C. We continue to build on our successful Zenia, one brand strategy globally as you know the Americas and EMEA I ahead on this journey, but we are also starting to reap some rewards and other market, but these are exciting and what are the market, whereas the journey started later.

And develop the storm caused fashion store footprint with secured.

Some eight to 10 stores this year and we start with renovating few of them.

None: Is exactly greater China, we do recognize the 24 suite still be challenging there due to geopolitical and macro environment.

Before I hand over to Gianluca mentioned, we reported project I'm, particularly proud of <unk>.

None: And as we further evolve and develop our customer base, but we see important positive side, especially the fact that demand for our highest end product is strong and employee we're extremely focused on and committed to these regions to further reinforce our brand awareness Dania is the leader in luxury goods.

You said, new terminology and Italian sites with others like in English. However is our fully owned and fully integrated supply chain made or the finest high and Italian excellent platform integrated with <unk>.

Actually manufacturing capacity really unique a unique project in luxury.

None: Yes.

None: Talking now about product Zane your brands in February we launched the second skin collection globally.

During quarter three here, we have recently approved any important new project in pharma I would call it a breakthrough.

None: The number of Skus, including later outerwear and the second skin sharper seats, our icon that may define this leather Alco second screen. The drop has performed very well in all regions, including China looking at distribution, we are even more committed in reinforcing our D.

Projects cutting edge center for excellence, which will primarily produce men's shoes in leather goods.

Designer designed by the famous architect.

And then she stereo design, our current headquarter in the land the facility will sit on a 10 extra a plot of land and function also as an important research and development training center, including our other big windfall in running the center will have grown more than 300 people and we.

To see channel.

None: We'll continue to streamline our wholesale distribution also converting some mono brand store and concession finally, one very exciting events coming up for the Zale brand.

None: Midlantic cooler.

None: We're sorry, we will take over in April.

Produce a significant portion of our group shows primarily <unk>.

None: During the sorrow that mobile app will be lowest in Aussie Zane, but so do all of them.

Also served the other brands.

Let me now conclude by saying that although 24 will be a volatile year. We remain extremely confident that our path has been traced uncertainties can create amazing opportunities. If you have a clear vision.

None: And present, the born in order to book, which got a unique vision of our father.

Doing that at the moment when all eyes will be on power grids. When the city put is probably it is <unk>.

None: Next is Tom Brown in the year 2023, and recent brand celebrated its <unk> anniversary, Tom Brown revenue reached 380 million or euros <unk>.

They are able to that immediately and firmly being ready to take off.

Discussion by executing perfect around award I would like to take the opportunity to be shared with some of the actions that we have been working on with our management team number one we are enforcing our team of talent with some key additions in the market. We will continue to invest on our brand focusing on key <unk>.

None: So 26% compounded average growth rate since the brand became part of the group is very nice round I would say, but the journey just added and we see that amount of time to do the brand has huge potential across markets and product to go beyond the 500 million orders that was my initial target financed.

I already spoke in term of marketing in store opening in our modeling.

None: I will forward fashion, the new adjoining our group Crown. We do believe that there is a huge potential windfall for fashion. These confirmed through every conversation I had with them about their brand covering the award worthy with landlords with clients with luxury experts around the globe. They all agree that the brand has room to developing particularly women aware of any leather.

DC in CRM, two very important part of our evolution our month that I think will be even more in the forthcoming months foreseeing for Tom Brown for Gulfport.

No better and be closer to our customer loyalty customer mortar lining shines in times and in the meantime, we have to see Q2, our people in stores. Our first ambassador will continue to streamline our wholesale doors, if anything even more.

None: I would segment the brands created under TC direction is strong you've seen that in the sexual pizza collections to date.

None: <unk> are here today with us is forming a skilled team starting with head, but with new heads for Asia and for that matter. Because we're also making sure that the brand can leverage our global infrastructure, including our supply chain Knowhow for both men and women tailoring for CRM and customer engagement.

Sibley than initially planned last but not least we are working on continuing to improve store productivity isn't too where we have gained.

Very important.

Stan.

Let me conclude by reaffirming that our robots in a custodian.

None: And develop this towards fashion store footprint, we have secured.

Then.

<unk> disappears.

One is to protect them since we've been around 114 years.

None: Eight to 10 stores.

None: This year and we start with renovating two of them.

<unk> alongside those committed to you at the recent capital market day, we still affirm today and this is also a thing to the best in region. We have 300 ascending brands unique Italian luxury focused accountable and responsible management team of United family 100 employer.

Before I hand over to John O'callaghan, you mentioned, an important project I'm, particularly proud of.

None: <unk> is a new terminology and Italian sites with that facility in English. However, it's our fully owned and fully integrated supply chain made or the finest high and Italian excellent platform integrated with.

The municipal credits and last but not least a clear vision that guides our actions.

With that in mind, let me turn it over to Luca.

John O'callaghan: Luxury manufacturing capacity really unique a unique project in luxury.

Go into the financials in detail.

Yes.

Ladies and gentlemen, my said, we'll take your questions. Thank you very much.

243 here, we have recently approved an important new project in pharma I would call it a breakthrough.

Thank you David Good morning, Good afternoon, everybody. So let me move to page 13 of the presentation, where you find the group revenues evolution over the past three years.

John O'callaghan: Projects are cutting edge center for excellence, which will primarily produce men's shoes in leather goods.

John O'callaghan: Designer designed by the famous architect.

Preliminary revenues for full year 'twenty three we're already disclosed at the end of January. So there is no news and therefore I will not spend much time and age just let me underline that full year 2003 revenues.

John O'callaghan: And then she stereo design, our current headquarter in the land the facility will sit on a 10 extra a plot of land and function also is an important research and development training center, including our other mean when full and running the center will employ more than 300 people and we.

Lynn.

In a very good year for our group with almost 28% reported growth.

Thanks to a double digit contribution from thing and Tom Brown and from the newly added tone towards fashion segment, which contributed $235 million revenues I remind you also that some port fashion has been consolidated for around eight months last year lets move to page four.

John O'callaghan: Produce a significant portion of our group shows.

John O'callaghan: Emily Pennsylvania.

John O'callaghan: Also served the other brands.

None: Let me now conclude by saying that although it's 24 will be a volatile year. We remain extremely confident that our path has been traced uncertainties create amazing opportunities. If you have a clear vision.

Before commencing the numbers I would like to remind you that since 2023, we have changed the way of reporting our P&L adopting the bifunctional presentation versus the previous by nature. We believe that this way too it was a numbers not only reflect better the way we look at our the business, but also can help us understand more out.

None: So that immediately and firmly being ready to take off.

None: Assertion by executing perfectly around award I would like to take the opportunity to be shared with you. Some of the actions that we have been working on with our management team number one we are enforcing our teams' talent with some key additions in the broader market. We will continue to invest on our brand focusing on key.

Company.

For this reason in the next pages I will comment yet from numbers underlying their drivers by each P&L line, let's start from gross profit in 2023 consolidated gross profit rose by 32% to a $1 2 billion Euro Mark with a margin of $64.

None: Priority spoke in term of marketing in store opening in our modeling.

None: <unk> and CRM, two very important part of our evolution our months or is it will be even more in the forthcoming months foreseeing for Tom Brown and Franco for we have to know better and be closer to our customer loyalty customer more lighting shines in times and then.

This 210 basis points improvement from last year has been largely driven by a better channel mix as you know DTC gross margin is higher than the wholesale one but also by better price price mix and by the scale effect in particular in the supply chain side, which helped.

None: Meantime, we have to stay tuned to our people in stores. Our first ambassador will continue to streamline our wholesale doors, if anything even more aggressively than initially planned last but not least we are working on continuing to improve store productivity isn't true where we have gained.

Better absorbing the industrial fixed cost channel mix is estimated to justify about all of this gross profit margin step up.

And important to underline we lead down towards fashion consolidations, you remember that on April 28 of last year, we acquired four roughly an enterprise value of $150 million cash free debt free and on the basis of normalized working capital 85% of <unk>.

None: Very important.

None: Step.

None: Let me conclude by reaffirming that our group is in a custodio.

None: Then disappears.

None: Priority is to protect it seems to have been around 114 years.

None: Ruben reasons alongside those committed to you and the recent capital market day, we still affirm today.

National and the holding company that manages the Tom Ford fashion business under a 20, plus then license agreement, we'd get the law there comfort the purchase price allocation. So called afterwards PPA of this transaction has been allocated to the assets acquired including inventories.

None: It also has turned to the best in the region. We have 300 attending brands a unique Italian luxury theater and focused accountable and responsible management team.

None: As a family.

114 years of heritage and last but not least a clear vision that guides our actions.

Customer orders and the license agreement itself generating some PPE related charges booked at cost of sale and at the SG&A level.

None: With that in mind, let me turn it over to Luca that go into the financials in detail after that Rodrigo radio in general where they said you need to take your questions. Thank you very much.

Cause of this PPA in 2023 gross profit we accounted for $15 6 million euro higher cost of sales related to the step up of inventory values and the amortization of the value allocated toward this backlog. The majority of this 15 six part of <unk>.

Luca: Thank you David Good morning, Good afternoon, everybody. So let me move to page 13 of the presentation, where you find the group revenues evolution over the past three years.

Luca: Literally revenues for full year 'twenty three we're already disclosed at the end of January. So there is no news and therefore I will not spend much time on this stage just let me underline that full year 2003 revenues.

<unk> $15 6 million charge is actually related to the inventory. These amount will be largely accounted in 2023 financial with a smaller <unk> 24 in <unk>.

Lynn.

Luca: In a very good year for our group with almost 20% reported growth. Thanks to a double digit contribution from Zynga and Tom Brown and from the newly added Tom Ford traction.

This year 24, we will account the remaining in last $3 million to $4 million of this kind of charges in the cost of sales after that.

Waller effects in 'twenty, four we will not incur additional cost related to PPA on the cost of sales.

Luca: <unk>, which contributed $235 million revenues I remind you also that some sport fashion has been consolidated for around eight months last year lets move to page 14.

Moving to SG&A.

They reached in frankly going to four 901 million euros with a 47% incidents on our revenues about 200 million higher compared to year 2000.

Luca: Before commencing the numbers I would like to remind you that since 2023, we have changed the way of reporting our P&L adopting the bifunctional presentation versus the previous by nature. We believe that this way to represent numbers not only reflects better the way we look at our the business, but also can help you understand more.

Deep down on this increase of G&A and I would like to underline a couple of important factors.

Tom fourth consolidation contributed to more than <unk>.

Some 174 million Europe to this absolute increase is amount includes all.

Luca: Our company for this reason in the next pages I will comment yet from numbers underlying their drivers by each P&L line, let's start from gross profit in 2023 consolidated gross profit rose by 32% to a $1 2 billion you remark with them.

Also the royalty fees that Tom Ford Phase II Este Lauder. In addition, it includes the second part of the PPA that I mentioned before exercise and this part is related to the amortization of the right of use of license agreement, which gets amortize over 30 years in 2023.

Luca: <unk> of 64 to <unk>.

Luca: 110 basis points improvement from last year has been largely driven by a better channel mix as you know DTC gross margin is higher than the wholesale one but also by better price price mix and by the scale effect in particular in the.

For the eight months consolidation the license amortization was equal to $2 2 million Europe and in 'twenty four the amount will be in the tune of $3 million.

On a 12 months okay.

Luca: The supply chain side, which help better absorbing the industrial fixed cost channel mix is estimated to justify about half of this gross profit margin step up.

The second relative to item. It is important to underline is the impact on SG&A rising from the acquisition of the Tom Brown, South Korean business I'll remind you that since July 23, <unk> started to manage though I'd estimate that 70 stores.

Luca: And important to underline relates to Tom Ford fashion consolidations.

Luca: You remember that on April 28 of last year.

In that market and as you know retail generates higher gross profit, but also the other side higher selling expenses compared to the wholesale business.

Luca: Wired for roughly an enterprise value of $150 million cash free debt free and on the basis of normalized working capital 85% of.

On the other side its important to remark amended Zynga segment helped offsetting some of the above mentioned negative effect by contributing itself with a positive leverage on SG&A.

Luca: International at the holding company that manages the Tom Ford fashion business under a 20, plus then license agreement with the Este Lauder company.

The final comment for those that might have not known the group for along given that this is the first time that we report 21 SG&A expense <unk>.

Luca: The purchase price allocation. So called afterwards PPA of this transaction has been allocated to the assets acquired including inventories customer orders and the license agreement itself generating some PPA related charges, both at cost of sales and.

In 2021, SG&A expenses included some 100 million euro arising from the business combination with the fact that led to the lifting of Dania group at the end of 2021. So that is the reason of this.

Luca: The SG&A level.

Luca: Because of this PPA in 2023 gross profit we accounted for $15 6 million euro higher cost of sales related to the step up of inventory value and the amortization of the value allocated toward this backlog. The majority of this 15 six part of $16 50.

This curve, which presented a high number.

Well.

Let's move to.

Marketing expense.

Expenses page 16 increased to a 6% incidence on revenues in line with the management plan to further invest on its brand equity value. We remember that this 6% incidence is also effected by Abitibi components within our business, which requires very little or no support at all.

Luca: 6 million charge is actually related to the inventory. These amount will be largely accounted in 2023 financial with a smaller teu in 2024. In fact this year 24, we will account the remaining in last $3 million to $4 million of this.

By marketing and this is the case of textile and third party brands that together represent roughly 10% of group revenues. So when we look at 6% incidence we have to bear in mind that this 10% comes with very limited marketing dollars.

Luca: Kind of charges in the cost of sales after that the smaller effect in 'twenty four we will not incur additional cost related to PPA on the cost of sales.

Page 17 years.

Reports of our consolidated statement of P&L I believe we have already thoroughly commented line by line the ones above Youre breaking profit, let me make a couple of comments at this point below operating profit on financial income and expenses and taxes, starting from the financial items in full year.

Luca: Moving to SG&A.

Luca: They reached in 'twenty to 'twenty, four 901 million euros with a 47% incidents on our revenues about 200 million euro higher compared to.

Luca: 2008.

Luca: Let's deep down on this increase of G&A and I would like to underline a couple of important factors.

<unk> thousand three net financial expenses, including foreign exchange losses in 2000, they were negative for a combined amount of 36 million Euro versus 49 million Europe negative in 'twenty two so.

Luca: <unk> consolidation contributed to more than <unk>.

124 million euros to this absolute increase this amount includes.

$13 million positive swing from 'twenty, two 'twenty three arises mainly from three factors.

Luca: Also the royalty fees that <unk> phase II Este Lauder. In addition, it includes the second part of the PPA that I mentioned before exercise and this part is related to the amortization of the right of use of license agreement, which gets amortized over 30 years in 2023.

First lower liabilities from the phone brown with option related to better Forex. This adoption is expressed in dollars and related to higher interest rates, which reduced the net present value of the put itself.

Luca: <unk> for the eight months consolidation the license amortization was equal to $2 2 million Europe and in 'twenty four the amount will be in the tune of $3 million Europe on a 12 months.

And this two components more than offset the higher increase in fair value of the foot.

From a year expected result of Tom Ford looking forward in the years to come.

Luca: The second relevant item. This is important to underline is the impact on SG&A rising from the acquisition of the Tom Brown, South Korean business I'll remind you that since July 23.

Second component that generates the positive swing in positive reduction of financial components is the lower <unk> cost that we incurred this year and the third higher returns from financial assets versus 2022, this effect more than offset.

Luca: <unk> started to manage the I've estimated 17 stores that.

Luca: In that market and as you know retail generates higher gross profit, but also on the other side higher selling expenses compared to the wholesale business on the other side its important to remark that Zynga segment helped offsetting some of the above mention negative effect by contributing itself with a positive leverage.

The financial cost.

That emerged with a warrant redemption that occurred.

Beginning in 2023, which I recall generated 22 million charge in our P&L.

And as the information the financial expenses, which might help also they're kind of at the analyst model there.

Luca: On SG&A.

Just a final comment for those that might have not known the group for it along given that this is the first time, we reported 21 SG&A expenses in 2021 SG&A expenses included some 200 million euro arising from the business combination with the fact that led to the lifting of Dania.

Projections of financial expenses related to bank loans and lease liabilities under <unk> 16, who were this year in duration.

$30 million.

I'd call out to the last.

Points of attention the 3 million euro negative related to results from investments accounted for as equity barrel that they refer mainly to Tom for that resolved in the four months before our acquisition and they are related to the deal related costs incurred by the target company before closing therefore.

Luca: At the end of 2021, so that is the reason of this.

Luca: This curve, which presented a high number.

Luca: Let's move to <unk>.

Luca: Marketing expense.

Luca: Page 16 increased to a 6% incidence on revenues in line with the management plan to further invest on its brand equity value. We remember that this 6% incidence was also affected by the <unk> components within our business, which requires very little or no support at all by.

This line is expected to return positive from 2024.

Finally, let's talk about taxes.

Last year in 2003, we had the favorable effective tax rate in the region of 20%, which has been influenced by.

Luca: Marketing and this is the case of textile and third party brands that together represent roughly 10% of group revenues. So when we look at 6% incidents we have to bear in mind that this 10% comes with very limited marketing dollars.

A positive tax ruling and by the recognition of DTA connected to some tax losses previously generated.

Can anticipate that looking forward for the group.

And in mind, the normalized tax rate today is closer to 30% rather than 70%.

Page 17.

Luca: Reports of our consolidated statement of P&L I believe we have already thoroughly commented line by line the ones above the operating profit let me make here a couple of comments at this point below operating profit on financial income and expenses and taxes, starting from the financial items in full year two.

Moving to page 18, the adjusted EBITDA metric, which is our key metric in terms of analyzing the performance of deals already commented the full year 2003, our adjusted EBITDA reached 220 million Europe with almost plus 40% increase versus last year and this was high.

Luca: <unk> three net financial expenses, including foreign exchange losses in 2000, they were negative for a combined amount of 36 million Euro versus 49 million Europe negative in 'twenty, two so the $13 million positive swing from <unk>.

And of our own expectations adjusted EBIT margin rose to 11, 6% notwithstanding the deletion of ethylene.

Colombia, so important consolidation.

For full year 2003, you can roughly estimate likely higher than one and half percentage point about of which of which about half are coming from the previously mentioned PPA effect on cost of sales.

Luca: Two to 'twenty three arises mainly from three factors.

Luca: First lower liabilities from the film Brown put option related to better fabrics. This adoption is expressed in dollars and related to higher interest rates, which reduced the net present value of the code itself.

The difference between the adjusted EBIT 100 clients and Youre breaking profit on that.

And eight that is $12 million.

Yes.

Referring to adjustments that in the reported P&L are almost entirely accounted for at PNM.

Luca: And this two components more than offset the increase in fair value of the put the IV from <unk> expected result of Tom Ford looking forward in the years to come the second component that generates the positive swing in positive reduction of financial.

Please I remember again that this $12 million adjustment do not include the charges related to the PPA because it is not allowed to have the PPA charges accounted for as an adjustment. So they are part of our adjusted EBIT. So the adjusted EBIT discounts.

<unk> is the lower <unk> cost.

Luca: We incurred this year.

Luca: Third higher returns from financial assets versus 2020, this effect more than offset the financial costs.

The PPA effect goods or best.

On our P&L.

Let's look at the results by segment moving to page.

Luca: The merged with the warrant redemption that occurred at the beginning of 2023, which I recall generated 22 million charge in our P&L.

'twenty one same zynga segment.

As you know this segment includes both the Zynga brand products and expand division for the category.

Luca: And as the information the financial expenses, which might help also with the analysts to model there.

Right at $1 3 million billion.

Revenues before intergroup revenue elimination that amounts to $33 million and those are sales of either crop finished product or textile to gulfport and Cobra.

Luca: Projections of financial expenses related to bank loans and lease liabilities under <unk> 16, who were this year in the region of total $30 million.

Luca: I'd call out to the last.

And.

We came out with an adjusted EBITDA margin of 14, 6%, thanks to a higher gross profit margin.

Luca: Points of attention the 3 million euro negative related to results from investment accounted that's equity available.

A lower incidence positive leverage on the SG&A.

I refer mainly to Tom for that resolved in the four months before our acquisition and they are related to the deal related costs incurred by the target company before closing. Therefore this line is expected to return positive from 2024.

Is that back were supported by the strong 25% organic growth and being a brand DTC, which has helped to boost our store productivity as we said in New York by almost 50% up into years 2023 basis point to one and was also supported by a.

Luca: Finally, let's talk about taxes. This year last year in 2003, we had a favorable effective tax rate in the region of 20%, which has been influenced by a positive tax ruling and by the recognition of DTA connected to some tax losses.

Positive absorption of fixed cost and supply chain and fixed line operation by the increased volume of business. This important increase in adjusted EBITDA margin arises notwithstanding the decision between us the marketing expenses for the <unk> brand, which will disclose.

<unk> generated I can anticipate that looking forward for the group we have in mind, the normalized tax rate that is closer to 30% rather than 20%.

Our prior conversations.

Page 23 on Brown segment the segment of each of these.

380 million Euro before elimination with a 15, 5% adjusted EBIT margin. This good result, with links to the positive performance in both channels with DTC channel plus plenty organic.

Luca: Moving to page 18, the adjusted EBITDA metric, which is our key metric in terms of analyzing the performance of deals already commented the full year 2003, our adjusted EBITDA reached 220 million Euro.

Full year circuitry, and all sale on a plus 16% organic in full year 'twenty three.

Luca: Almost a plus 40% increase versus last year and this was high end of our own expectations adjusted EBIT margin rose to 11, 6% notwithstanding the releasing.

After a strong year and in wholesale with Q4 wholesale delivery.

Net reported a plus four feet organic versus Q4.

Luca: From this point forward consolidation, which for full year 2003, you can roughly estimate slightly higher than one five percentage point about of which of which about half are coming from the previously mentioned PPA effect on cost of sales.

<unk> II.

Two worse finally on the encore passion.

<unk> results were in line with your expectations impacted adjusted EBIT level by the already mentioned PPA and buy there or if you see it is important to us that line in particular for 2024 is our priority remains to invest in the business and to set the basis for a successful organization led by this deal.

Luca: The difference between the adjusted EBIT was 120 and Youre breaking profit.

Luca: And eight that is $12 million.

And then you'll give up.

Sure.

On the next pages, we summarized some key results of our consolidated statement of financial position and balance sheet.

Luca: Referring to adjustments that in the reported P&L are almost entirely accounted for in the G&A line.

So let's look at page 27, I just call out.

Please I remember again that all this $12 million adjustment do not include the charges related to the PPA because it is not allowed to have the PPA charges accounted for as an adjusting item. So they are part of our adjusted EBIT. So the adjusted EBIT discounts.

Couple of elements on the line related to non current asset because it is the one that is seeing most of growth. So in that line. The growth comes from the following factors. There is a 96 million right of use asset.

Affect good or best.

Coming from the Tom Ford license agreements so in the PPA we are located.

On our P&L, let's.

Luca: Let's look at the results by segment moving to page.

Luca: 'twenty one same zynga segment.

At time of the closing $99 million of right of use asset, which get amortize over third year at the end of the year. It came down to 96.

Luca: As you know this segment includes both the Dania brand products and the textile Division third party Bryan It's Jeff.

Then there is a goodwill of $24 million related to the Tom Brown, South Korea business. They can over mid year and then there is the increase of right of use asset related to leases.

Luca: Right at $1 3 million billion revenues before intergroup revenue elimination that amounts to $33 million and those are sales of either crop finished product or textile to gulfport and Tom Brown.

16.

Whose growth is mostly driven by the addition of Tom Ford.

Luca: We came out with an adjusted EBITDA margin of 14, 6%, thanks to a higher gross profit margin.

Fashion retail network related leases within our consolidated.

Let's go to page 28, where we comment trade working capital working.

Luca: A lower incidents positive leverage on SG&A.

Luca: These effects were supported by the strong 25% organic growth in Dania, Brian DTC, which has helped to boost our store productivity as we said in New York by almost 50%.

Working capital increased 23 two.

Level for.

449 million Europe, 23, 6% of revenues driven by the normal increase in business, but also by our decision as we have already seen in the semi annual number of 23 pre investing Zheng essential plastics, which are continuously collections across the season.

Luca: In two years 2023 versus <unk> 21, and was also supported by a.

Luca: Positive absorption of fixed cost and supply chain and fixed line operation by the increased volume of business. This important increase in adjusted EBITDA margin arises notwithstanding the decision to announce the marketing expenses for the <unk> brand, which we'll disclose that in our prior conversations.

These invest investment impacted inventories in particular in the first months of 2003 and in fact, if you compare year end <unk> III and at June <unk> 2003. They are basically in line. So it means that we have plateaued and now we start <unk>.

Luca: <unk> 23, non brown segment.

Luca: Segment to reach it.

Luca: Reaches 380 million Euro before elimination with a 15, 5% adjusted EBIT margin. This good result is linked to the positive performance in both channels with DTC channel at plus 20 organic.

Normalized we are seeing already start to normalize.

<unk> coming from this one one time investments on continued collection.

In addition, you should consider that the incidents of revenues on vis vis the trade working capital.

Luca: Full year, 'twenty, three and all sale on a plus 16% organic in full year 'twenty three.

<unk>.

As we finalize biomathematics effector human that the addition of working capital is coming from Tom Ford 52 million in Europe.

They're a strong year and in wholesale with Q4 wholesale delivery that reported a plus four feet organic versus Q4 <unk>.

This compares to only eight months of revenues of comfort.

For the future our goal is to move gradually towards a 20.

Luca: Finally on the Tom Ford fashion.

20% incidents.

Luca: Page 25 results were in line with your expectations and pass it.

<unk> capital.

<unk>.

Page 29, you'll see the new metrics.

Luca: Just the deep level by the already mentioned PPA and by the royalty fees. It is important to us that line in particular for 2024 is our priority remains to invest in the business and to set the basis for a successful organization led by the CEO at <unk>, you'll get up on the next pages will summarize some key results of our.

One on the SaaS model.

We introduced also listened to you.

Action is that free cash flow metric and let me comment this nice $72 million free cash flow generation, which we recorded last year largely driven by our improved operating profit results last year, Capex was equal to $78 million around 4% of revenues.

Luca: Consolidated statement of financial position balance sheet.

Luca: So let's look at page 27, I just call out a couple of.

I would like to reiterate what we already commented in New York Capital market day, and the fact that for 24 <unk> 25, our Capex Capex should decrease as a percentage of revenues slightly above the 5%.

Luca: Element on the line related to non current asset because it is the one that is C. Most of growth. So in deadline. The growth comes from the following factors. There is a 96 million right of use asset coming from that.

Threshold given that we are investing in new store openings and remodeling.

And also in the breakthrough project mentioned by Gilles.

Luca: Tom Ford license agreements, so in the PPA and reallocated.

New factory he.

Actually.

And at time of the closing $99 million of right of use asset, which get amortised over third year at the end of the year. It came down to 96.

This is actually more than a factor it could be a center of excellence.

At TVT, where we will somehow celebrate our scaled our seasons that everyday produce luxury shoe support Danielle for the group and an amazing environment, which will be announced the workforce welfare.

Luca: Then there is a goodwill of $24 million related to the Tom Brown, South Korea business taken over mid year and then there is the increase of right of use asset related to leases.

Finally page 30.

This is the bridge of that.

Luca: 16.

Net financial indebtedness, which starting from a cash surplus at the end of last year <unk> basically a neutral.

Whose growth is mostly driven by the addition of Tom Ford.

Luca: Fashion retail network and related leases within our consolidated.

That's the net cash position with a slight <unk>.

Luca: Let's go to page 28, where we comment trade working capital.

Net financial investments of $11 million after at incur the investment.

Luca: Working capital increased in 'twenty three.

England subsidiary and where the bulk of them are different.

Luca: Level of four.

Amounts come from some point fashion with this in mind, let me leave the floor could yield before.

Luca: 449 million Europe 23, 6%.

Luca: Everything is driven by the normal increase in business, but also by our decision as you have already seen in the semi annual number of 23 to investing Zheng essential and turnaround classics, which are continuously collections across the season does invest investment impacted inventories in person.

Our remarks on outlook and currently.

Thank you John over over a clearer presentation.

Let me deal with the first part of this call, which solar marks.

On the quarter one trends.

Here and there.

Dissipate the equation that I'm sure you will ask us as you know.

Luca: In the first month of 2003 and in fact, if you compare year end event III and that June inventory of 23. They are basically in line. So it means that we have plateaued and now we start <unk>.

We are going to publish both of our revenue or neighborhood dessert. So deep in inflows and questions on Qunar. Most should be discussed in that location I look now, but let me give you some highlights to help you better understand <unk>.

Normalized we have seen already start to normalize.

Luca: <unk> coming from this one one time investments on continued collection.

<unk>, which we believe it might not have been completely understood.

Otherwise when before revenue result reflects three main trends number one.

Luca: In addition, you should consider that the incidents of revenues on vis vis the trade working capital.

First of all a decision taken awhile ago, rather enforce to date to further streamline the horse a distributional in particular its own brown.

Luca: <unk> is being finalized by mathematic effector human that the addition of working capital coming from Tom Ford 52 million in Europe.

We went into the current environment. It was the right decision for the tissue based some action that we have initially planned over a longer period of time. Secondly, we are seeing some higher than expected volatility in Asia, mainly in greater China, and mainly for Tom Brown for Daniel to trend in the range of <unk>.

Luca: This compares to only eight months of revenues of comfort for the future. Our goal is to move gradually towards.

Luca: 20% incidence of <unk>.

Luca: <unk> capital.

Luca: Sure.

Luca: Page 29, you'll see the new <unk> III.

Luca: One hour for smartphones.

Largely reflects the one brand strategy and we see signs go currently that we are moving into the right direction.

Luca: We introduced also listening to.

Luca: Question is that free cash flow metric and let me comment this nice 72 million free cash flow generation, which we recorded last year largely driven by our improved operating profit results last year's Capex was equal to 78 million around 4% of revenues.

If this strategy is yet to be fully completed for Tom Brown the trend in greater China has been influenced by the challenging environment, but also by the need to reinforce the retail organization.

On the other side I have to say that.

I'm very pleased to see all the other markets towards Asia in particular are there other states.

Luca: I would like to reiterate what we already commented in New York's capital market day, and the fact that for 24, <unk> 25, our Capex Capex should increase as a percentage of revenues slightly above the 5%.

And some of the key markets like Japan for Tom Brown growing solid double digit DTC growth confirming the strength of our brands.

Luca: So given that we are investing in new store openings and remodeling and also in the breakthrough project mentioned by June of the New factory.

And as a result, Q1 revenues are expected to grow in the region of 10% constant Forex wide organic performance you expected mid single digit negative due to wholesale revenue Tom Brown expects it to be down high double digits of very cheap.

Luca: Actually.

Luca: This is actually more than a factor it will be a center of excellence in PVC, where we will somehow celebrate our scaled rfps that everyday produced luxury shoes, Florida, Dania and for the group in an amazing environment, which will enhance the workforce welfare.

Zing comparison base, however, looking at full year, 2024, and considering revenue consensus numbers.

Confident they are achievable.

Luca: Finally page 30.

Luca: This is the bridge of that.

And I'm sure that we have taken the right that show good over there.

Luca: Net financial indebtedness, which starting from a cash surplus at the end of last year <unk> basically a neutral net that's the net cash position with a slight net financial investments of $11 million after at incurred investments in subsidiaries and where the bulk of them are different.

Regarding our mid term guidance as already said I confirm this.

This guidance is unchanged and coker. Thank you.

Okay.

Thank you. Thank you do you do and that is now the operator to open the Q&A session. Thank.

Thank you operator.

None: This amount come from Tom Ford fashion with this in mind, let me leave the floor could yield before.

Thank you as a reminder, if you would like to ask a question today. Please press star followed by one on the telephone keypad now turn to the queue.

None: Final remarks.

I want to ask a question. Please ensure you had touched.

None: Outlook and currently.

Luckily star followed by Bob.

None: Thank you General Rover clearer presentation.

And our first question today comes from Chris Ryan from UBS, Chris. Your line is open. Please go ahead.

None: Let me deal with the first part of this call, which solar marks on the quarter. One trend of this year anticipate the equation that I'm sure you will ask us.

Hello, Hi, Thank you for taking my questions, it's Chris harmful to ask three questions. Please.

My first question is on the Chinese consumers.

None: As you know we are going to publish quarter wired revenue or neighborhood is so deep in inflows and questions on Q numbers should be discussed in that location I look now, but let me give you some highlights to help you better understand trends and actions, which we believe might not have been complete.

I know this is a true pan.

They'll call, but are you able to provide any color on how the cluster has so far performed in 2024.

The reason why I'm asking about this is that we have been seeing I'm hearing from some of them appear that tens of March have slow down.

After a very solid Chinese new year. So if you can and any possibility comment on month by month trends that would be super Super helpful for us.

None: Understood.

Otherwise when before M&A.

None: Just three main trends number one.

On the guidance you provided for Q1 with organic sales growth will be down mid single digits.

None: First of all our decisions taken a while ago, but they're enforced today to further streamline the horse a distributional in particular its own brown.

Just to understand a little bit more that you provided wholesale for Tom Brown to be down high double digits.

None: We went into the current environment. It was the right decision for our PC based some action that we have initially planned over a longer period of time. Secondly, we are seeing some higher than expected volatility in Asia, mainly in greater China, and mainly for Tom Brown for any other trend in the range of a loss.

What kind of level or are we expecting here just so we can understand better.

What is the impact from a challenging environment in greater China, and how much is from wholesale because if I just did the math.

We're assuming mid single digit upwards, saying, yes to.

Get to mid single digit down for the group organically. It means Tom Brown is down.

None: <unk> reflects the one brand strategy and we see signs go currently that we are moving into the right direction. Even if the strategy is yet to be fully completed for Tom Brown the trend in greater China has been influenced by the challenging environment, but also by the need to reinforce the retail organization.

30% to 35% organically.

That's my second question.

Lastly on EBIT margin.

Remember back in December 2023, you provided some new midterm targets by 2028, which if we kind of look at the CAGR implies EBIT margin to reach the level of high teens at a.

None: On the other side I have to say that.

Tom sorry, if we compare that level to the 12% you printed in 2023.

None: I'm very pleased to see all the other markets towards Asia in particular, the other states.

Just share some thoughts on what should we expect in terms of the cadence of margin expansion in the coming years.

None: And some key markets like Japan for Tom Brown.

None: Growing solid double digit DTC growth confirming the strength of our brands.

Are these types of its likely to be front end or backend loaded. Thank you sabra.

Yeah.

Okay. Thank you Peter.

None: And as a result, Q1 revenues are expected to grow in the region of 10% constant Forex wide organic performance expected mid single digit negative due to wholesale revenue Tom Brown expects it to be down high double digits off of very cheap.

Regarding your first and second question, we will now that will ask management to address some color about that actually such a detailed questions.

And then the postponed to April 'twenty one.

Therefore, Taiwan number but for sure I will ask a G, though and to also our.

Zing comparison base, however, looking at full year, 2024, and considering revenue consensus numbers.

Ron it's on par to yield to give that a little bit of flavor on the Chinese market, which was your first question.

None: Confident they are achievable.

And then going.

Going into the second one on Spain.

None: And I'm sure we have taken the right action to deliver there.

None: Regarding our mid term guidance as already said I told her that this guidance is unchanged and confirmed thank you.

Well I'll ask Luke to do a couple of comments about I think also on this one that I don't think you can comment a little bit more and then even Santa Luca for the AEP.

None: Thank you. Thank you.

Thank God.

So on the car side the agenda.

None: And now.

None: To open for the Q&A session. Thank you.

But I think that the.

None: Operator.

Colorado is Tom Brown.

None: As a reminder, if you would like to ask a question today. Please press star followed by one on your telephone keypad now turn into the queue.

Fourth hurdle.

First of all we have been traveling quite a bit.

And are there you go.

Operator: When comparing to ask a question. Please ensure your headsets pretty plugged in and on mute locally.

In the past few months so.

I think we have a good grasp of the Chinese market.

None: Hello, Bob.

None: And our first question today comes from Chris Ryan from UBS, Chris. Your line is open. Please go ahead.

Overall, I must say that.

It's challenging.

Unknown Attendee: Hello, Hi, Thank you for taking my questions, it's Chris harmful.

That.

It's positive.

Unknown Attendee: Three questions. Please.

Surely we see less traffic.

Unknown Attendee: My first question is on the Chinese consumers.

We used to see so I think that the U S toward gomorrah.

Unknown Attendee: I know this is a true P&L call, but are you able to provide any color on how the Chinese cluster has so far performed in 2024.

Less of it is actually a more relationship driven with the customer.

The reason why Im asking about this is that we have been seeing I'm hearing from some of it appears that tens of March half slow down after.

I think that our outreach.

Our platform is very important.

To reach our customer wherever it is she is and I think that we are having similar outreach percentages that we have in other countries led to another space, which has been really a problem and I must say that our branding strategy is coming up.

After a very solid Chinese new year. So if you can and any possibility comment on month by month trends that will be super Super helpful for us.

Unknown Attendee: On the guidance you provided for Q1 with organic sales growth will be down mid single digit.

Unknown Attendee: Just to understand a little bit more that you provided wholesale for Tom Brown to be down high double digits.

More and more of a read every every three months we have been.

Unknown Attendee: What kind of level are we expecting here just how we can understand better.

Successful, we did drop strategy on senior by weeks, the second season by which we have four to five drops of merchandise also know that the most of the support that by market. There is a broader base as well as supported by the ramping of the store and we see that every time, we do that too.

Unknown Attendee: What is the impact from a challenging environment in greater China, and how much is from wholesale because if I just did the math.

Unknown Attendee: We're assuming a mid single digit upward thing yeah.

Unknown Attendee: Get to mid single digit down for the group organically. It means Tom Brown is down.

We have action of our clients, who the store we've created personalized event for.

Unknown Attendee: 30% to 35% organically that's my second question.

Unknown Attendee: Lastly on EBIT margin.

For high end merchandise.

Unknown Attendee: I remember back in December 2023, you've provided some new midterm targets by 2028.

Some of the top cities by setting headquarter people and we had very very good result, so.

If we kind of look at the CAGR implies EBIT margin to reach the level of high teens at.

I would say that.

From the day Amc's Dania.

We had that.

Unknown Attendee: The mid time, so how do we compare that level to the 12% of your printed in 2023.

In exploration our customer.

Is that partially lost that you'll be getting new customer.

Unknown Attendee: Can you just share some thoughts on what should we expect in terms of the cadence of margin expansion in the coming years.

And we are gaining traction more and more with high end products.

Last but not least.

Unknown Attendee: At this time it is likely to be front end or backend loaded. Thank you so very much.

To measure I think that the one incredible weapons that we have.

None: Okay. Thank you Peter and I got to your first and second question. We will now I will ask management to add some color, but actually such a detail of the questions that has to be then postponed to April 21, we had it is therefore, Taiwan number.

Used around the World and then also in China is made to measure by which we often.

And unique.

A product that is very helpful in reaching out.

A special customer that wants to feel exclusively in what they were and they are very picky on.

But for sure I will ask David and.

The charges so.

We do remain.

None: And also our components of our Tioga to give that a little bit of flavor on the Chinese market, which was your first question.

Positive on China, but as I said.

Is it slower and slower.

Better to countries like America in picking up there.

None: And then.

None: Going into the second one on those sales.

And that we.

We'll get there pretty soon.

None: Rodrigo I'll ask Gerry Luther to do a couple of comments, but I think also on this one.

<unk> you want to add some color on and so forth, yes of course.

Yeah.

Gerry Luther: Comment a little bit more and then Santa Luca for the EBITDA.

Carboline.

Mark.

China as you know China for us going forward.

Gerry Luther: The third one.

On the metallurgical market because they are mainly come alive.

Gerry Luther: So on the cost side.

And then I would say that Russia, China, and then making sure the market is a great opportunity for us.

Gerry Luther: But I think that.

Gerry Luther: We can add color Tom Brown.

This model with great opportunities.

Gerry Luther: What we have been traveling quite a bit.

Gerry Luther: And the other eagle in the past few months.

In the last few months.

Comps for making a bespoke cheaply.

Gerry Luther: I think we have a good grasp of it.

The brand in the market and as confirmation of the tangible with the opening of our new flagship store is going to happen at the end of June and one of the most important shopping mall.

Gerry Luther: The Chinese market.

Gerry Luther: Overall, I must say that.

Gerry Luther: It's challenging.

Gerry Luther: That is it.

Gerry Luther: It's positive.

Gerry Luther: Surely we see less traffic.

And on Hollywood dislocation, but as well.

Gerry Luther: We used to see.

Uh huh.

Gerry Luther: I think the idea is to work more.

Opportunity to get in China mainland.

Gerry Luther: Less of it is actually a more relationship driven with the customer.

But in direct to consumer boutique.

And I would add that with confirmation of some location as well.

Gerry Luther: I think that our outreach.

Gerry Luther: Our platform is very important.

Gerry Luther: To reach our customer wherever it is she is and I think that we are having similar outreach percentages that we have in other country like when other states, which has been really a prolonged.

Lisa.

The question Mark from the previous year.

By the lender on top of that that we have an addition of a new precedent one of the top group of luxury to join.

So the math on that.

Gerry Luther: I must say that our re branding strategy is coming up more and more of a read every every month.

How nice and charter has efficacy and we have a massive marketing EBIT.

As we start to deploy.

Successful, we did drop strategy on <unk>.

And the next.

A few months where were really connect the brand with the Chinese consumer.

Gerry Luther: We've set the second season by which we have four to five drops of merchandise Autonoma immersive is supported by market. There is a border by Venezuela is supported by the ramping of the store and we see that every time, we do that.

<unk> to glide that these get nationality as one of the most important nationality forget that within those countries.

Okay.

Can I ask are they go through.

Gerry Luther: We have a reaction of our clients in the store.

To comment on China for some around them.

Gerry Luther: Have created personalized event.

Gerry Luther: For high end merchandise.

Right.

Sure sure.

Gerry Luther: In some of the top cities by sending headquarter people and we had very very good result, so.

Good morning, Chris.

Coming from Los Angeles, a return from Hong Kong, Shanghai, Tokyo So.

None: I would say that.

Clearly, it's a different.

None: From the day of CS Dania.

Environment in China, you still walk the streets in the CBD.

None: We had debt.

None: And expiration of a customer that.

Betty BV and clearly the market is.

Is that part of the loss that you have been gaining new customer they've got a hand and.

Divided by aspirational clients seem pretty committed clients, we're seeing fantastic trend when it gets too very committed class.

None: And we are gaining traction more and more.

None: High end product.

None: Last but not least made to measure I think that one incredible weapons that we have.

Yourself and the MTM and events that we did last year, which we're going to be repeating later on this year I come from meeting planners are visiting our teams. The aspirational client is much more challenging in general for everybody and we brought in place a new GM at the beginning with the year, we are focusing 100% on the Cline connection.

None: Used around the world and also in China is a made to measure by which we often.

And unique.

None: <unk> a product that is very helpful in reaching out.

None: A special customer that wants to feel exclusively in what they were and they are very picky on the choices. So.

No.

Confidence, we think all of our team.

The plan to still pay a result that we have certain stores are doing really well and some other some of our more challenging.

None: We do remain.

Positive on China, but as I said.

Steve Heidi.

Exciting market, but when we need to connect even farther with clients and have even more confidence from an external point of view land those deals really.

None: Yes.

None: Lower is slower.

None: Better to countries like America in picking up.

None: <unk>.

I'm committed to continue to grow with us.

None: We'll get there pretty soon.

None: <unk> you want to add some color on and so forth, yes of course.

And waiting for us to have even one or two weeks in the country.

None: I am.

Thank you. Thank you on maybe on those sales.

None: Traveling.

None: Mark.

None: China as you know China fulfilled for the metallurgical market because they are mainly for horizon in America, and and I would say that for US China is in the making sure the market is a great opportunity for us.

I'll ask John Luca to comment a little bit and that means we're ready to go.

Sure.

Ill provide some more color.

Okay.

So.

Paolo was mentioning cannot be specific on the numbers.

None: We responded with great opportunities in the line in the last few months.

The numbers and figures I think.

Pretty good trend relating number so.

None: Confirmation of that.

You make the math anyway, I confirm that on brown.

None: We believe.

None: And the brand in the market and as confirmation of the tangible with the opening of our new flagship store at least when it happened at the end of June and one of the most important shopping mall.

Wholesale revenues are declining.

High double digit and this is the result of two.

Main planned factors the first one.

None: And on Hollywood dislocation, but as well.

Related to a different timing in deliveries as we anticipated during the full year revenues conference call in January we said that Dan Brown wholesale deliveries were strong in Q4 compared to a year before.

None: The opportunity to get in China mainland.

None: <unk> direct to consumer.

None: And I would add that with confirmation of some location as well.

If you remind that was plus 40%.

None: Mr <unk>.

<unk> in the previous year.

Growth in Q4 vis vis Q4 'twenty two.

None: By the lender on top of that that we have an addition of a new precedent one of the top group of luxury that John.

In addition, Q1 'twenty three base of comparison I go by Arthur was close to 70 million Euro over a full year wholesale 195 was also particularly challenge. So we have a Q1 that is facing a strong comparison in Q1.

None: The old enough for that.

In terms of efficacy and we have a massive marketing activities as we start to deploy.

None: And the next.

None: Few months, where we really connect the brand with the Chinese consumer.

Last year and is facing the effects of a strong Q4 last year.

None: To drive these got nationality as one of the most important nationality forget that within those countries.

So this is a timing effect and there is a section that is not binding but it is structural.

None: Can I ask are they go through.

Channel strategy decision about wholesale doors select.

None: To comment on China for some brown I'm sorry.

Well the Eagle mentioning the decision.

None: Alright sure.

Streamlining the selection.

None: Good morning, Chris.

Wholesale distribution, especially even more now with some situational.

None: Coming.

None: Coming from Los Angeles, a return from Hong Kong Shanghai stock.

None: So.

None: Clearly, it's a different.

Client facing some credit risks.

None: Environment in China, you still walk the streets and its a busy.

I think I ask Rodrigo to comment further about this decision that was taken.

None: A very busy and clearly the market is.

None: It's divided by aspirational clients seem pretty committed clients, we've seen fantastic trend when it gets too very committed clients such as yourself and the MTM and events that we did last year, which we're gonna be repeating later on this year I come from meeting planners and visiting our teams the aspirational client, it's much more challenging than ever for everybody and.

We probably have decided to go.

Quicker and accelerate on a journey that was already in the books. So that was that is no different than what we had in mind, but we just push that off to the metal on this.

None: We brought in place a new GM at the beginning with the year, we are focusing 100% on the client connection right now when teleconference. We thank all our team.

The Opex and <unk>.

<unk> got to give some flavor around it.

Okay. Thank you Luca.

Yeah to give more background. If you wanted to include the E business elements, which we all have seen the big shifts and onerous shifts and changes we have close out certain businesses.

None: That's done to superior results that we have certain stores that are doing really well and some other some of our more challenging.

None: Steve.

None: Exciting market, but when we need to connect even farther with clients and have even more confidence from an external point of view land those are still really.

Leadership, we have talked for the past two years. We have also we see a significant reduction also in stock being offered on the business is harder to that we made a strategic choice to reduce even harder any spoke available to those channels.

None: I'm committed to continue to grow with us.

None: Waiting for us to have even one or two weeks in the country.

And a similar convention.

None: Thank you. Thank you on maybe on a sale.

As we've been growing our DTC channel for the past eight years from four directly but the social 90 operated stores. We shall do was even more important to be confident on reducing any stock that could compete with our own DTC. So if it's a choice.

Sure.

None: I'll ask John Luca to comment a little bit on that any further I want to provide some more color.

So Paolo was mentioning cannot be specific on the.

Obviously challenging wholesale market around the globe.

Gianluca Ambrogio Tagliabue: Numbers and figures I think Tracey you are pretty good in trend relating number so.

But at the same time wholesale remains a great.

Channel MCM Sachs would have <unk> set up with a fantastic event for Bac some celebrities with.

Gianluca Ambrogio Tagliabue: To make the math anyway, I confirm that Tom Brown.

With an exclusive collection in in Los Angeles.

Wholesale revenues are declining.

Accessories, and clothing and wholesale we continue to believe is important but we need to make a choice on the volumes that we put in wholesale so as Luka Luka mentioned, we made a strategic choice to further accelerate any reduction that we felt it was necessary to further strengthen our business.

Gianluca Ambrogio Tagliabue: High double digit and this is the result of two.

Gianluca Ambrogio Tagliabue: Main planned factors the first one.

Gianluca Ambrogio Tagliabue: Related to a different timing in deliveries as we anticipated during the full year revenues conference call in January we said that Tom Brown wholesale deliveries were strong in Q4 compared to a year before.

Which is a short term pain, but a long term game.

Thank you. Thank you and maybe if there was a third question on the EBITDA.

Gianluca Ambrogio Tagliabue: If you remind that it was plus 40% organic growth in Q4 vis vis Q4 'twenty two.

Trajectory from Oaktree.

We call Sunday that we mention that they make it more explicit.

Gianluca Ambrogio Tagliabue: In addition, Q1 'twenty three base of comparison I go buy ours, it was close to $70 million euro over.

For cohort this year is a foundational year. So we are building.

Gianluca Ambrogio Tagliabue: Full year wholesale of 195 was also particularly China. So we have a Q1 that is facing a strong comparison in Q1 last year and is facing the effects of a strong Q4 last year. So this is the first timing.

Touch.

People opening stores and as is normal.

For the year of a score.

The second year in terms of performance. So we are not seeing in linear pattern of growth of EBIT.

<unk> to add.

Accelerating.

We have said that we have a couple of years of over investment in Capex.

Gianluca Ambrogio Tagliabue: Yes.

Gianluca Ambrogio Tagliabue: And there is a segment that is not binding but is.

Depreciation we have the fact that going forward will be consolidated 12 months.

Gianluca Ambrogio Tagliabue: It's structural.

Sandal strategy decision about wholesale doors select.

Multiple core and we don't get the PPA this year, but still we see.

Gianluca Ambrogio Tagliabue: So Greg you mentioned the <unk>.

Gianluca Ambrogio Tagliabue: Streamlining the select the wholesale distribution, especially even more now with some situational.

The growth in our EBIT more.

Thanks.

Gianluca Ambrogio Tagliabue: Client facing some credit risks, so I think I ask Rodrigo to comment further about this decision that was taken we probably have decided to go.

In years after that.

And then.

Thanks.

Okay.

Okay.

Okay. So we can move to the next.

Rodrigo: Quicker and accelerates on a journey that was already in the books. So that was that is no different than what we had in mind, but we just push that.

The question operator.

And it can be.

So let me follow up with you.

An explanation comes from Anthony <unk> from BNP Paribas Anthony Your line is open.

Rodrigo: To the metal on this.

Yes. Thank you good morning, it's Alex.

Rodrigo: Given the context and.

None: <unk> got to give some flavor around it.

Finish up here from BNP.

None: Yeah.

Okay I have two question I mean, thanks for further would.

Luca: Okay. Thank you Luca.

Luca: Yeah to give more background. If you wanted to include the E business elements, which we all have seen the big shifts and onerous shifts and changes we have close out certain businesses. The relationship we have cut for the past two years, we have also.

Further description.

Before it just went on on current trading and the remaining would be on that.

On the margin. So just if you can.

Give us a bit.

Thank you.

Both of them.

On the U S market.

Luca: Significant reduction also in stock being offered on <unk> business is harder to that we made a strategic choice to reduce even farther any spoke available to those channels and as Luca mentioned is as we've been growing our DTC channels for the past eight years from four directly but it's also 90 operated stores we should.

In 2000, sorry Anthony.

I don't know if it's our problem, but we don't hear you.

Yeah.

And you're saying, okay, if I can.

Okay, you're going to try again.

Yes can you hear me better.

Much better.

Much better okay sorry.

Yeah. So first question would be on the under U S trend.

Luca: There was even more important to be confident on reducing any stock that could compete with our own DTC. So it's a choice obviously, a challenging wholesale market around the globe.

I guess about 2024.

At the time, where.

Where does slow down was.

Luca: But at the same time wholesale remains a great channel I'm seeing Saks would have posted it up with a fantastic event for Bac some celebrities.

It was already present in 2023 for most of the luxury sector. I mean for you. It seems that you are quite quite resilient.

Luca: With an exclusive collection in Los Angeles.

In the region and that you seem more optimistic than you were commenting on China. So maybe if you can.

Accessories, and clothing and wholesale we continue to believe it's an important tenant, but we need to make a choice on the volumes that we put in wholesale so as Luka Luka mentioned, we made a strategic choice to further accelerate any reduction that we felt it was necessary to further strengthen our business.

Share your thoughts on the on the U S market currently.

My second question would be.

On the marketing.

I understand that that Tom Brown.

There have been no step up in marketing and in 'twenty.

Luca: Which is a short term pain, but a long term gain.

23.

None: Thank you.

I would say that.

None: Thank you and maybe if there was a third question on the.

Starting from a low base should we expect at some point.

None: EBITDA.

None: Trajectory from a case.

Yes, our marketing step up also.

Tom Brown.

None: I recall, something that we mentioned, but they make it more explicit.

To drive a bit there.

The U S.

None: For some this year is a foundational year. So we are building.

The new edition women's wear and.

And with that.

Sure people opening stores and as its normal the first year of a store.

The last question would be on.

On the gross margin I mean.

A very nice improvement.

None: The second year in terms of performance. So we are not seeing linear pattern of growth of EBIT.

In 2023 I understand your point is driven by you.

Specifically by Tom Brown.

None: Specced at an.

Can you tell us if there is more upside than and maybe a.

None: <unk>.

None: We have said that we have a couple of years ago over investment in Capex.

Thanks Danielle.

Knowing that there is to be a business that is maybe 30 or 35% margin. So if you do achieve.

None: Depreciation we have the fact that the going forward will be consolidated 12 months.

None: Months of course, then we don't get the PPA this year, but still we see that.

Do you see for films on growth.

In 2024 and beyond or should we expect something.

None: Growth at our Egypt more.

Thank you.

None: Ethane.

Okay perfect. Thank you. So I think we have a first question on U S trend and then ask Jay.

None: In years after this.

None: And then.

None: Thanks, Paul.

To comment, saying you have to get it.

None: Okay.

Dania then.

None: Yes.

Okay. So we can move to the next.

Hey.

We need to some more clarity marketing I'll leave it to Tom Brown and <unk>.

The question operator.

Question Operator: Hi, Nicholas.

Nicholas: Let me follow up but we have yet.

Okay.

Yeah.

Nicholas: The next question comes from Anthony <unk> from BNP Paribas Anthony Your line is open.

We remain positive for this year as we were last year.

So the main positive the Domenico revisit Europe as of the last summer.

Anthony: Yes. Thank you good morning, it's Alan.

Anthony: Finish off here from BNP Hi.

And I think that.

Anthony: Okay I have two question I mean, thanks for further growth.

Many of you being able to penetrate in the perception of the upper scale Amerigon in an integrated way.

Anthony: Further description.

Before it just one on on current trading and the remaining will be on that.

Just hitting on the iconic pieces.

Anthony: On the margin. So just if you can give us a bit.

Our economy is really.

Anthony: Your thoughts.

Anthony: On the U S market.

In the shoes of the law.

None: In 2000, sorry Anthony.

Actually crowd.

This organization is another very important.

Anthony: I don't know if it's our program, but we don't hear you so well.

But I think that theres been a cultural change of our company and of our people. Many addition of.

None: And you're right.

None: We try.

None: Try again.

Yes can you hear me better.

Top 10, and our merchandising and marketing people in the organization that is led details formation promise wholesale cuts or into a REIT and culture.

None: Much better.

None: Much better okay sorry.

None: Yes. So first question would be on the under U S trend.

None: I guess that 2024.

These are Brian going from a policy of the <unk> company to a luxury leisure and necessity company.

None: At the time, where.

None: We're just throw down was.

None: It was already present in 2023 for most of the luxury sector. I mean for you. It seems that you are quite quite resilient.

Worked out extremely well.

Around the states.

I think that there is no prices as soon as we are offering an incredible service in every store.

None: In the region and that you seem more optimistic than your comment on China. So maybe if you can.

Increasing the productivity is quite a sensational.

None: Share your thoughts on that.

None: The U S market currently.

None: My second question would be.

So I think that.

We have been appreciated.

None: On the marketing.

Thanks to our thermal brands, but so the changes we broke in we are gaining not only more confidence from the loyal customers.

None: I understand that that Tom Brown.

None: There have been no step up in marketing and in 'twenty.

None: 23.

Customer to where very business oriented also two new customer.

None: I would say that.

None: Starting from a low base should we expect at some point.

And younger ones, so I think that the.

None: Our marketing step up also.

The major changes as being.

Brody.

None: Tom Brown.

The perception of the brand by offering new products.

None: To drive a bit.

None: The U S.

And superior service another another important factor.

The new edition women's wear.

None: And with that.

It's a little change of.

None: The last question would be on.

From an Osage.

None: On the gross margin I mean.

Sir you said, we'd signed many boys those sales from wholesale to retail and the productivity of spiked up unbelievable that'll make the example, Nordstrom did we change our scheme and we change our numbers immensely.

None: Very nice improvement.

None: In 2023 I understand your question driven by you.

Tom Brown: Specifically by Tom Brown.

Tom Brown: Can you tell us if there is more upside than and maybe a follow.

You mentioned.

So I think we are proceeding our judge our journey with this determination and I think that.

Tom Brown: Xinyuan.

Knowing that that is b to b business that is maybe 30 or 35% margin. So if you do achieve I mean do you see fulfills our growth.

It will go on so I remain as I said the positive view on the outcome.

These are big luxury loved it.

Tom Brown:

Yeah.

Tom Brown: In 2024 and beyond.

Do you want to comment on some fall.

Tom Brown: Should we expect some singer who they are.

None: Thank you.

These are mainly North America market, where we see that we see.

None: Okay perfect. Thank you. So I think we have a first question on U S trend and not ask Jeeves.

Yeah.

Collection of Pizza.

And some I think.

None: Two commentary category for Dania then.

Okay.

The category is.

<unk> form.

None: Hey.

On the market.

None: We need to some more clarity marketing I'll leave it to Tom Brown and <unk> stock.

And then with the recent peak in the first of all with just much Luke.

Sure.

None: Okay.

There are a lot of opportunity to do some of the newer some of our metrics.

None: Yes.

None: We remain positive for this year as we were last year.

Hopefully see more slowly and upsize it as well.

None: We remain positive that the America, we visit Europe as of the last summer.

Good good feedback on our <unk>.

None: And I think that <unk> been able to penetrate in the perception of the upper scale America.

Production levels.

All possibility.

Good good.

Yeah.

None: Great way.

Okay I'll leave it now to sort of come down to marketing, but that if you want to start with the data I guess with that you're adding on with vendors right now.

None: Just hitting on the iconic pieces of it.

None: Chris.

None: Icon is really big.

That is a big event with taxes.

None: The shoes of the luxury crowd person organization is another very important traction.

Couple of comments on the U S market.

None: Traction, but I think that it has been a cultural change of our company and of our people. Many addition of.

Sure sure.

The most important points that we continue to invest in marketing and communications for their brand that's a very important point.

None: Top retailers in our merchandise and marketing people in the organization that has led to us formation from wholesale cuts or into our recent culture and.

Something that we are with that.

Known for our questions show, which is the beginning of everything when people ask me what do we do with cell phone from Vishal multiple with selling our stores kind of classify shelves over the past 20 years and continues to be the case, we have made a conscious effort since last year since the couture show to make any brand.

None: These are brandi going from a proceed of the closing of the tendering company into a luxury leisure and necessity company has really worked out extremely well.

I'm, putting a brand events like the 20th anniversary declined moment and client events, we've seen million minimum plus million barrel plus a multimillion dollar performance with clients on the back of these events. We are extremely focused right now on percent industrial connections not only in New York for clients, who want to one appointment to BSC.

None: At this stage.

None: I think that there is no price resistance.

None: Offering an incredible service in every store.

None: Increasing the productivity is quite the sensational.

None: And so I think that.

None: We have been appreciated.

Significant clients, but also imperatives, we have had fantastic fantastic feedback and actual bookings from that.

Thanks to our strong brand, but so the changes we broke in we are gaining not only the more confidence from the lawyers zenia customer to where very business oriented also two new customer.

We continue to do the same thing in the second half of the year, particularly in Asia last year, we patched.

Q, Shanghai and sold it would be the couple of capital in Asia in the second part of the year with Tom.

<unk>, so I think that the.

None: The major changes has been there.

None: Growth.

None: The perception of the brand by offering new products.

We've seen a great reaction.

Gets to America, where we've seen a huge brand awareness growth in the last couple of years, particularly because of the women's business right now as you pointed out I'm here in Texas hosting us with a great event and a fantastic communication in but when they feel it's incredible store in kind of a client focused store yesterday would have it.

None: And superior service another another important factor.

None: Let us change of.

None: From a wholesale to retail cancer, you said, we'd spend many point of sales from wholesale to retail and the productivity of spiked up unbelievable, you'll make the example of Nordstrom did we change our scheme and we change our numbers immensely.

Great events hosted by Saks with Tom and clients are asking for celebrities and beef tons into today.

None: You mentioned and so I think we are proceeding our judge our journey with this determination and I think that.

Amounts of appointments.

That we have with <unk>.

In order to buy the connection to the level of Colfax figure, which is largely unclaimed tweet.

None: It will go on so I remain as I said the positive on the outcome.

None: These are big luxury market.

The made to order box, which we're launching globally here or anywhere breakfast and lunch moved to order here.

Yes.

None: Do you want to comment on some far better than nothing.

And the opportunity to write made to order for me to make the order we must make the measurement. That's what we are seeing fantastic performance as well so you.

None: These are mainly in America marketable seed that we sell.

None: The installation of <unk>.

You would say is the business, but it's tough from a marketing point of view, how can communicate if not click marketing story on marketing on the collections.

None: Thank.

Historical precedence basically separately.

It's positive.

From the market.

<unk> Com score and this is happening on a global scale with all three.

None: The collection and then with the recent peak in before with them just last week.

Continents with the work we are seeing these great reaction to put something on connections into business that follows that and linked with this with the award of a spiritual clients older Whortleberry committed clients shows huge.

None: We saw that.

None: There are a lot of opportunity to do some of the newer some of our key metric for Nomura.

Wholesale grew more slowly than outside of it.

None: Why do you have a clue.

Positive performance of our businesses. So we are penetrating key community. When you can happen even going into fiscal of last couple of years. When we are presented with the collection scheme front of significant clients. Their performance is outstanding really committed and suffer closely and trigger firms right now for Christmas in footwear.

None: Good feedback on our spending.

None: Sure what we can see.

None: Possibility.

None: Good good.

None: Yeah.

None: Okay I'll leave it now to breakout sort of come around the marketing, but if you want to start with the data I guess with that.

None: You are exactly right now.

Fantastic. Thank you so much and I'll leave now.

This big event with taxes. So just a couple of comments on the U S market.

Okay.

Gross profit so firstly qualify for 2023 hour rule.

None: Sure sure.

None: The most important points that they will continue to invest in marketing and communications for the Brown, that's a very important point.

Increase of margin.

Mobile from junior So Dania is the biggest driver of increase of gross margin.

Something that we are well.

None: Known for our fashion show, which is the beginning of every unique when people ask me what do we do with cell phone from industrial most of all we're sending all those cost pass base shifts over the past 20 years and continues to be the case, we have made a conscious effort since last year since the couture show to make any brand moment on pony brand events like the 20th anniversary.

Alright.

Second question was how do we look forward the gross margin.

I think we still have opportunity to grow the gross margin and that is our plan for this year. The drivers are several one is exactly that.

None: The decline in moment and client events, we've seen millions and millions plus million barrel plus a multimillion dollar performance with clients on their back office events. We are extremely focused right now on percent industrial collections not only in New York for clients, who want to one appointments to BSC and significant clients, but also in Paris.

<unk> actually something that is these appearance of the PPA on cost of sales. This is something that we had.

This year were $15 million and we Couldnt, we couldnt be doing before we still have a very minor three to 4 million tale of the PPA purchase price allocation on it.

Fantastic fantastic feedback and actual bookings from that.

Cost of sales.

Second.

Apart from this we have apart from this slide we still.

None: We continue to do the same thing in the second half of the year, particularly in Asia last year, we patched.

Upside on the gross margin driven by the fact that we are still.

None: So Q Shanghai and sold it would repeat a couple of capital in Asia in the second part of the year with Tom.

Yeah.

Meaningful way Matt.

None: We're seeing a great reaction when it gets to America, where we've seen a huge brand awareness growth in the last couple of years, particularly because the women's business right now as you pointed out some here in Texas hosting us with a great event and a fantastic location in Beverly Hills.

Managing the price lever.

As Jim was mentioning we are going the last mile we sell more and more.

North America is the biggest area, we have on Dania, if full 12 months of Korea.

The mix channel mix will be a driver, but the price will also be a driver. So we.

None: Well store in kind of a client focused store yesterday, we had a great event.

We expect gross margins to be still.

None: Saks with Tom and clients in DSV, so celebrities and beef tons into today.

The area of expansion in terms of margins for 2024.

Thank you.

None: We've got amounts of appointments that.

I hope we answered Anthony we have.

None: We have with <unk> in order to buy the collection I consider there will of course next year, which is largely conklin tweet and made to order box, which we're launching globally here.

We can look to the next question.

If I ask the next the first solar to keeping maybe two one because we would like to leave that.

Thanks for taking lunch make to order here.

All the questions we have.

The protector right made to order made to or make the order we must make the measurements. That's why we're seeing a fantastic performance as well. So you would say is the business, but it's tough from a marketing point of view how to communicate if not take market three on marketing on the collections and what the brand stands for and this is happening.

As of Tonight. So.

<unk>.

The next question comes from Oliver Chen from TD Cowen Oliver Your line is open. Please go ahead.

And Jim Luca.

Hello, Hello, Good morning here from New York City alone regarding.

Regarding your comments on AR.

None: On a global scale.

None: All three continents.

An aspirational.

None: Continents with the work we are seeing this great reaction to put something on connections into business that follows that and linked in this with the award of a spiritual clients all the world very committed clients.

The only thing pockets of pressure and continued over inventory trends with aspirational across <unk>.

Some brands.

Youre very service oriented brands with distinctive.

None: Shows you.

None: <unk>.

None: The positive performance of our businesses.

Characteristics on quiet luxury as well, but what's happening with aspirational. That's my question, what do you see happening for what's in your control and what's out of your control as we think about that customer coming back later, thanks a lot.

None: Penetrating key communities when usually happen even going into fiscal last couple of years. When we are presented with a collection scheme.

Significant clients their performance is outstanding really committed and stuff workload and triggers right now for Christmas as quickly.

Thank you.

None: Fantastic. Thank you so much and I'll leave now and it will start with Luca.

Thank you Oliver I'll ask David to comment on that they are an aspirational customer, but then I'll leave that.

Luca: Luca gross profit so firstly qualify for 2023 hour growth increase of margin.

To Rodrigo.

Maybe two or thought that a couple of more comments.

Since you decided to work with our brand.

Yeah.

Luca: Mobile from Virginia, So dania.

Luca: Driver of increase of gross margin.

<unk> has become a less important.

Alright.

To us it's as simple as that and I think he's using it was at least for Daniel brand name was concerned it was the driver now.

Luca: Second question was how do we look forward the gross margin.

Luca: I think we still have opportunity to grow the gross margin and that is our plan for this year.

We will replace the <unk>.

Yes.

Luca: Divers are several one is exactly that.

We do a lot of courage and Laredo apprise, the top <unk> customer that is driving our business and we will be keep trying our business because the product.

Luca: One technical thing that is these appearance of the PPA on cost of sales.

Really unique.

Luca: Yet this year or $15 million.

Not expensive or the signal being expensive us so very high quality I mean, we.

Cone and <unk>.

Luca: 24, we still have but very minor three to 4 million of the PPA purchase price allocation.

Thanks ill pass all the delays that we create the best.

The Bravo with investments area very exclusive I mean, all of these are ideal for stability from linear into awards, which will be a final ruling to Kashmir I mean is unique and they really embraced this sustainability.

Luca: Cost of sales.

Luca: Apart from this.

Luca: Apart from this fact that we still.

Luca: Upside on the gross margin.

Sustainability.

And high level of service.

Luca: Given by the fact that we are still.

And so we are able to.

Luca: Yeah.

Luca: <unk>.

Luca: Meaningful way managing the price lever.

Driving new customer at the same time.

The increase the level of our offer.

Luca: As <unk> mentioned, we are going the last mile.

Luca: More and more in North America is the biggest area we have on zama.

And so yes, we have become.

We're more selective.

Customer I think the example below.

Luca: Months of Korea.

With a very other few brands to set a luxury and we do believe that this trend.

The mix channel mix will be a driver, but the price will also be a driver. So we.

Not that comfortable than we are right in the mid low to Germany, and we have to expedite the journey in particularly in China as I've said several times.

Luca: We expect gross margin to be still.

Luca: The area of expansion in terms of margins for 2024.

None: Thank you.

We are ahead of the pack in United States by any means we're ahead on a bank in Europe and in the Middle East.

None: I hope we answered Anthony we have.

We can.

None: The question and.

None: If I ask the next the first solar.

Doing a good job in Japan.

Keith maybe to one.

So what to do in the.

Some other part of Asia, China, Southeast Asia, and Korea, but we're working on river together. This is a policy. This is the world that we want to get relived together.

Because we would like to leave.

None: The floor for the questions we have.

As of Tonight, So nexon.

Thank you.

None: The next question comes from Oliver Chen from TD Cowen Oliver Your line is open. Please go ahead.

Sure.

Some are evidence of this journey, especially in China.

Oliver Chen: So I think Youll, Don and Jim Luca.

We have.

Oliver Chen: Hello Hello.

Sign that this evolution from.

Oliver Chen: Morning here from New York City, and all of the.

Oliver Chen: Regarding your comments on AR.

Leaving behind the aspirational clients in.

Oliver Chen: An aspirational.

China is getting signs and we see legitimacy from the top end clients.

Oliver Chen: We're definitely seeing pockets of pressure and continued over inventory trends with aspirational across.

We are seeing for instance, the second skin triple stage, which is priced higher than 100 in Europe.

Oliver Chen: Some brands.

Very service oriented brands with distinctive.

1200, Europe Western Europe.

Oliver Chen: Characteristics on quiet luxury as well, but what's happening with aspirational. That's my question, what do you see happening Ford and what's in your control and what's out of your control as we think about that customer coming back later, thanks a lot.

It's.

Performing very well in China, we are seeing the Uber luxury products sold very well, we just finished the xi'an.

Successful.

Tom Shaw Uber luxury products, where clients came in and recognize the collection the high quality collections of GPA mesh.

None: Thank you.

None: Thank you Oliver.

Escondida to comment on that they are an aspirational customer but.

None: And that leads.

None: To Rodrigo.

In China, the highest number of so called linear friends that are the ones above the 50000 spending per year. So of course, it's the area and that is where we have always described we are reshuffling our client based in China and start that later, but we are confident that the formula agreed.

Rodrigo: Maybe to add a couple of more comments.

Rodrigo: Since we decided to roll up with our brand.

Rodrigo: Aspirational has become less important.

Rodrigo: To us it's as simple as that and I think as user or at least towards in branding was considering what was the driver now is already in place.

Is the recipe is working also there we have science that.

The progress is with nice I and clients are seeing thing as the go to brand also on the board. So I think it goes.

Rodrigo: Yes.

Rodrigo: With a lot of courage and Laredo apprise, the top AD customer that is driving our business and we will be keep turning all of our business because the product.

Yes.

Glad that mix and then a couple of comments from your side and then the following question.

Rodrigo: Really unique.

Rodrigo: Not expensive or the single being expensive.

Rodrigo: High quality I mean, we.

Thanks to all of possible delays that we create the best.

Sure to put into perspective from a coverage point of view I think that the.

Rodrigo: <unk> is a product with the best material various clues here I mean, all of these are ideal for its ability from linear into war superfine cashmere is unique and they really embraced this sustainability.

Fantastic opportunity, but we don't target a specific client with target.

And female clients, so we'd have a wide variety.

Target, we have a young and older clients, who loved them all and we have an aspiration that we have a very committed clients. So that's the whole range Theres no question, Mark that when youre going to markets and the real estate as it is impacted by a.

Rodrigo: Sustainability.

Rodrigo: And high level of service.

Rodrigo: And so we are able to.

Rodrigo: We drive new customer on the same time.

Quarter to 30% and there's no great news from them in the other financial markets the integration of that kind of would be buying less.

Rodrigo: The increase the level of our offer.

Rodrigo: Offer.

Rodrigo: And so yes, we have become.

Rodrigo: More selective custom.

What we've seen is that we have a very developed client value management.

Rodrigo: Customer I think the example belongs.

Rodrigo: With a very few brands to set a luxury and we do believe that this trend.

And when I walk the streets of the capital side I mentioned, you see the brand.

Or by clients in combination then with the key luxury brands most of them are French and U.

Rodrigo: Not a capital event and we are right in the middle of the journey and we were able to expedite the journey in particular in China as I've said several times.

Can we get that client to regular body. That's absolutely absolutely. Yes. That's why marketing is very important that's why you're explaining that he could easily what we do with the Brent in the range of products is very important that's why we mentioned that the Congress on the wider selection of brother and cutting of connection or a really good understanding of client. So can you beat the market and when it gets to aspiration and knowing that.

Rodrigo: We are ahead of the pack in United States by any means we got ahead of the pack in Europe and in the Middle East we are.

Rodrigo: Doing a good job in Japan.

Rodrigo: So what to do in.

Rodrigo: Some other part of Asia, China, Southeast Asia, and Korea, but we're working on river together, but these are the policy. This is the world that we want to get and we will do it.

Yes, and that's what the hard work that we're doing today to build a couple of years ago. So we remain always very positive from the expansion of clients I think what's happening in their markets, particularly in key markets with less growth in general aspiration of clients, who kind of for the first time into a brand.

Rodrigo: Sure.

None: Thank you.

None: Some heavy.

None: Especially in China.

None: We have.

None: Sign that this evolution from.

Thanks, Anthony after okay.

None: Leaving behind the aspirational clients.

Yes.

None: China is getting signs and we see legitimacy from the top end clients.

And all of that I think we answer your question. It kind of thing you can come back to me.

None: We are seeing for instance, the second skin triple stage, which is priced higher than <unk>.

And we have the last one before closing Nicola.

The final question comes from Louise single House from Goldman Sachs. Please go ahead. Your line is open.

None: <unk> in Europe.

None: 1200, Europe Southern Europe.

None: It's.

Hi, Good afternoon, everyone. Thank you for taking my question I will keep to one but Tom just to clarify a couple of things on the wholesale channel and as we think about that rationalization, which absolutely makes sense for the long term, but for Tom Brown is that expected to go into obviously the multi year.

None: Performing very well in China, we are seeing the Uber luxury products sold very well, we just finished the xi'an.

None: Successful.

None: Dan Shaw EBIT luxury products, where clients came in and recognize the collection the high quality collections the depot mesh.

Now as we look beyond 2024, and similarly with Tom for what should we be expecting some rationalization of wholesale over time in that.

None: In China, the highest number of so called linear friends that are the ones above the 50000 spending per year. So of course the area and that is where we have always described we are re sharpening our client base in China started later.

And then a sneaky, but its related question, presumably we should start to see an improvement on the gross margin really helpful getting any gross margin color today.

Annual 2023, but presumably we should start to see the channel mix effect benefiting that.

None: We are confident that the formula agreed the recipe is working also there we have science that.

Going into the next couple of years. Thank you.

Thank you Luisa.

John Luca to comment.

None: The processes with a nice high end clients are seeing as we go to Brian also on the board. So I think it was.

I need to meet the nano mobile landing.

And you're on some thoughtful Washington.

Yes.

So we go back to what we said in New York, we have disclosed that growth.

None: Yes.

None: Provided the mix and the deal a couple of comments from your side and then the related to the following question.

Sure.

The mid term CAGR of 10% and there was a question say outcome, we do a 10% growth when you.

Brian: Sure to put into perspective from a top line point of view I think that.

You Chase.

Kris.

Productivity, we disclosed an increase of store footprint.

Brian: The fantastic opportunity, but we don't target a specific client with target.

Through <unk> through conversion and through brand new openings.

Brian: And female clients, so we'd have a wide variety.

Yes. It was we see our wholesale business flattish going forward. So our mindset is that the growth does not come from wholesale.

Brian: Target with a young and older clients, who loved them all and we have an aspiration that we have a very committed clients. So that's the whole range Theres no question, Mark that when youre going to markets and the real estate as it is impacted by the quarter to 30% and does not bring us from any other financial markets.

So this is to insert it in perspective, we want to keep both sales.

Basically where it is now.

We are going through and especially for some ground in a cleanup and especially his selection.

Brian: The expiration of that kind of will be buying less.

Brian: What we've seen is that we have a very developed client value management.

Pounds.

Definitely this would translate into a channel mix positive effect on gross margin. It carries also SG&A together because when you do convert to bring some cost attached possibly some conversions are paying back our or with our rule of thumb.

Brian: I walk the streets of the capital side I mentioned, you see the brand.

Brian: Or by clients in combination then with the key luxury brands most of them are French.

Brian: And.

Can we get that client to regular body. That's absolutely yes, absolutely. That's why marketing is very important. That's why you explained very clearly what we do is the Brent in the range of products is very important that's why we mentioned that had the confidence on the wider selection of product.

At least in a couple of years.

Store up and running so you might have the first 12 months.

Nikhil.

Brian: <unk> a really good understanding of client. So can you beat the market and when it gets to aspiration and knowing that when you look yes, and thats what the hard work that we're doing today to build a couple of years ago.

Then.

It is a spike afterwards.

Also the reason of my answer to place at the beginning if we see our EBIT growth linear or not no. We are not seeing this because we are going through some conversions some openings themselves, but definitely the logic is.

Brian: So we remain.

Brian: With very positive from the expansion of clients I think what's happening in that market, particularly in key markets with less growth in general aspiration that clients with clients that are first time into a brand.

Go direct to the consumers then is also already 85% there we want to bring together two brands to 17.

Brian: Yeah.

None: Thank you very clear okay.

None: And I think we answer your question if anything you think come back to me.

It's just not the case today.

None: And we have the last one before closing the call.

Two selection and conversion.

Louise Susan Singlehurst: The final question comes from Louise single House from Goldman Sachs. Please go ahead. Your line is open.

<unk>.

We've laid yield and Rodrigo.

Expressed the logic of the we had exactly yesterday anything in wholesale.

Speaker Change: Hi, Good afternoon, everyone. Thank you for taking my question I will keep to one but Tom just to clarify a couple of things on the wholesale channel and as we think about that rationalization, which absolutely makes sense for the long term, but for Tom Brown is that expected to go into obviously the multi year.

Fresh.

Newmont com.

Fourth quarter is concerned as we mentioned in the capital market.

Our key driver of growth will be retained because we've done where we connect with our customers.

Speaker Change: And as we look beyond 2024, and similarly with Tom for what should we be expecting some rationalization of wholesale over time in that.

Of course 2020 for MBS position, so it's not going to be a year, where we're going to make a lot of things happening more cells Boston to confirm the saka deal I can tell you that the rate in 2015.

Speaker Change: And then a sneaky, but its related question, presumably we should start to see an improvement on the gross margin really helpful getting any gross margin color today.

That's true.

Speaker Change: Annual for 2023, but presumably we should start to see the channel mix effect benefiting that.

On cross sell of the Osmose here today.

Moving construction, we have additional three new openings.

Speaker Change: Through into the next couple of years. Thank you.

None: Thank you Luisa.

Typically.

Gianluca Ambrogio Tagliabue: John Luca to comment.

User also modeling the path will not be open concession directory.

None: A little bit and then maybe also.

And of course.

None: Yes.

None: Yes.

<unk>.

O'brien better control of manager some of the points of sale.

None: Hi.

None: So.

I'd go back to what we said in New York, we have disclosed that growth.

Data or retailer.

None: Sure.

So having a good financial situation right now and we need to better control.

None: The mid term CAGR of 10% and there was a question say outcome, we do at 10% growth. When you Chase increase of store productivity, we disclosed an increase of store footprint through <unk> through conversion and through brand new openings and the answer was we see our whole.

With that I know you've got to be part of course, I reiterated the fact that retail will be the driver.

And the next year, we're going to add much.

Much more.

Our pension and our sponsors because it doesn't throw off.

Customer receivables.

None: <unk> business flattish going forward. So our mindset is that the growth does not come from wholesale.

Great.

Perfect.

Great.

Okay.

From say.

None: So this is consistent in perspective, we want to keep hold sales.

So from our point of view.

So if we take that we have a beautiful brand and a beautiful product and we want to connect obviously the class are the three elements wholesale is an important component important component because they have a global connection with very important clients and you definitely have to be walking through the door. So for department stores is supposed to be can be or should be mostly does very well known in DLC kind.

Basically where it is now.

None: We are going through and especially for Tom Brown in a cleanup and especially a selection of our plan.

None: <unk>.

None: Definitely this would translate into a channel mix positive effect in gross margin.

None: There is also SG&A together, because when you do convert to bring some cost attached.

Like we're living today right now we saw yesterday when coming in the event that the store with the product in front of the best clients. They have a very developed.

Possibly some conversions are paying back our or with our rule of thumb.

<unk> faced.

None: At least in a couple of years the store up and running so you might have the first 12 months.

Sweet.

Market and program I just saw the same thing in Hong Kong with choices and copper, it's fantastic and just will make a choice the biggest impact ICD fear on lifestyle. It last year is from an EBIT point of view, we saw the change of ownership very quickly a couple of big players are not just just to clarify John Lucas we had shut down.

None: We use it.

None: Then.

None: Yes.

None: Spike afterwards.

None: Also the reason of my answer to Chris at the beginning if we see our EBIT growth linear or not we are not seeing this because we are.

Additionally, much of before this happened so that's one of the few choices, but from a cultural point of view, where we remain positive is that we want to be connected with the best book to attract clients in the world with the plant expansion opportunity clearly that one closely.

None: Going through some conversions some openings themselves, but definitely the logic is.

None: <unk> direct to the consumers.

None: He is also already 85% there we want to bring together two brands to 17.

Kimberly specific ROE how are we going to see a significant change in volume. None. This is Tommy is gianluca mentioned, but do we have an opportunity to continue to expand on footwear and accessories. What we tend to have very good results, particularly from Japan, Japan is leading for us there.

None: Which is not the case today.

None: Two selection and conversion.

A lead lag yield and Rodrigo.

JP on accessories, as well as food with a total commitment and exposure on the shelf for US would have its first two aerospace on the ground floor with the settlement <unk> performed really really well so what can coastal contribute they can connect this week incredible clients. They can put us in front of it.

Suppressed the logic of the we had exactly yesterday meeting them wholesale.

None: Yes.

Yes.

None: Fourth quarter is concerned as we mentioned in the capital market day in December our key driver of growth.

Right next to the most.

Because we don't know where we connect with our customers.

Important brands when it gets like this is a full dose. So we can continue to work intelligently hosted in cherry pick where to grow which categories to grow with how to expand it with it and how to do business directly and complement that with other business that brings with clients that we would have in the short term. There is no market make up for the room that we saw yesterday.

None: Of course, 2020, full MBS position and yet there is not going to be a year, where we're going to make a lot of things happening we will sell bus to confirm the strategy I think that we needed to raise in 2024.

None: Two.

That we had with.

None: A bunch of cells hot today.

With sex here. So that's that's our view on hosted the volumes as Gianluca mentioned, we are going to be somewhere on the liver. So we expect in 2024.

None: Today that move in construction, we have additional three new opening.

None: Typically.

Joyce and the breakdown in terms of women's and men's and women's is a new business. He didn't exist almost nine years ago is a very important part of our of our business and when it gets to growth and opportunity legally key wholesale accounts can bring us to a very interesting client.

None: The wholesale model in the past it will not be open in concession directory.

None: And of course.

None: Albright.

None: O'brien better control of manager some of the points of sales.

None: Dana or retail.

Azuela MTO them until we have had fantastic success, when we target that's very innovative very committed client from wholesale it comes from a made to measure my daughter were talking about $9000.

None: No hedging good financial situation right now and we need to better control of OIBDA.

None: I know you got the sweet spot of course, I reiterated the fact that these data will be the driver.

Certain fabrics within the collection, the full suite and with opioids, even custom or does it come from.

None: Next year, we're going to add.

None: <unk> more.

None: Sanction and our sponsors because it doesn't matter.

Significant clients of some of the best Department system, the warm that bite.

None: Customer receivables.

$100000 of looks from brown, when it relates to customer Morris of shows.

None: Yes.

None: Thanks, Dan.

None: Great.

None: So.

Thank you. Thank you Rodrigo and now with this.

None: From.

None: So from our point of view.

Question and answer.

None: Wholesale so if we take that we have a beautiful brand and a beautiful product and we want to connect obviously the class are the three elements Costar is an important component important component because we have a global connection with very important clients and it definitely has to be walking through the door. So for department stores is supposed to be can be or should be mostly does very well known in DSV.

I would like to.

The caller I D.

Thanks, everybody to have joined <unk> as we said there on the 20 that we will have our Q1 revenue results call.

We see each other.

In <unk>.

In a couple of weeks.

Each other in a couple of weeks that in the meantime, if you have any question on what has been discussed with you in the call on fiscal year 'twenty quantitative I'm always available.

None: Like we're living today, if right now we saw yesterday when you're cutting in the event that the store with Saks the product in front of the best clients to having very developed.

Thank you. Thank you so much everybody.

None: Fox faith.

Bye.

None: Suites.

None: Market and program I just saw the same thing in Hong Kong with choice and then copper is fantastic and just will make a choice the biggest impact icd's year on last probably last year is from an E business point of view, we saw the change of ownership very quickly a couple of big players on monstrous just to clarify John Lucas we had shut down.

This concludes today's call. Thank you very much for your attendance you may now disconnect your lines.

None: Distribution, we might just before this happened. So that's one of the few choices, but from a cultural point of view, where we remain positively start we want to be connected with the best book to attract clients in the world with the plant expansion opportunity clearly that one closely Kimberly specific ROE how are we going to see a significant change in volume not necessarily is gianluca mentioned.

But do we have an opportunity to continue to expand on footwear and accessories. What we seem to have very good results, particularly from Japan, Japan, leading for us.

None: The opportunity on accessories as well as footwear.

None: Total commitment and exposure on the shelf for us because of its first two aerospace on the ground floor with the settlement <unk> performed really really well so what can coastal contribute they can connect us with incredible clients. They can put us in front of it.

None: Right next to the most.

None: The important brands when it gets stuck with us. So we can continue to work intelligently hosted in Cherry pick work to grow which categories to grow with how to expand it with it and how to do certain business directly and complement that with other business that brings with clients that we would have in the short term does no market make up for the room that we saw yesterday.

None: That we had with.

None: With sex here. So that's that's our view on hosted the volumes as Gianluca mentioned, we are going to be somewhere on the liver. So we expect in 2024 somewhat as a choice and the breakdown in terms of women's and men's and women's is a new business. It didnt exist almost nine years ago is a very important part of our of our business and when it gets to growth on our part.

None: Clearly key wholesale accounts can bring us very interesting client.

None: As well as MTM until we have had fantastic success. When we target that's very elevated very committed client from wholesale it comes from a made to measure mature we're talking about $9000.

None: Certain fabrics within the collection full suits and with opioids, even custom orders that comes from very significant clients of some of the best Department system in the world that buy.

None: $100000 of looks off Tom Brown, when it relates to customers of shows.

None: Thank you. Thank you Rodrigo and now with this.

None: A question and answer.

I would like to close the call.

None: Alright, thanks, everybody for joining.

None: As we said on the 20th that we will have our Q1 revenue as that call. So.

None: We see each other.

None: In.

None: In a couple of weeks.

None: According to each other in a couple of weeks in the meantime, if you have any question on what has been discussed during the call on fiscal year 'twenty 'twenty data available.

None: Yeah.

None: Thank you. Thank you so much everybody can't get anybody.

None: This concludes today's call. Thank you very much for your attendance you may now disconnect your lines.