Q2 2026 LVMH Moet Hennessy Louis Vuitton SE Earnings Call

Speaker #1: Welcome to today's conference call. I'm Rodolfo Zahn, Director of Financial Communications, and with me is Cécile Cabanis, our Chief Financial Officer. Cécile will start with key highlights of the first half of 2026.

Speaker #1: I will then share details on performance by business groups, after which Cécile will comment on the financials and conclude. And then we'll be happy to take your questions.

Speaker #1: Turning now to our announcement: our release was issued a short while ago in French, and English, and is available on LDMH's website ldmh.com, as are the slides for today's call.

Speaker #1: The habitual safe harbor statement is included in our press release, and on slide 2 of our presentation, let's now move on to today's topic, our first half figures, and passing over to Cécile.

Speaker #2: Thank you, Rodolfe. Hello everyone, thank you for attending the call, and I will dive right into the results, starting on slide 3. LVMH delivered a very solid set of results in the first half, and a second short acceleration on organic growth in the second quarter.

Speaker #2: Group revenue rose 2% organic in H1 at 38.6 billion EUR, with Q2 up 3% organic. Operating margin reached a very high level of 22.5%, very good outcome, as we remain focused and disciplined.

Speaker #1: Good afternoon, everyone, and welcome to today's conference call. I'm Rodolphe Ozun, Director of Financial Communications, and with me is Cecile Cabanis, our Chief Financial Officer.

Speaker #2: Profit from recurring operations closed at 8.7 billion, reflecting a significant negative currency impact. Net income was in line with last year. Finally, another semester of strong free cash flow delivery reaching more than 4 billion EUR.

Speaker #1: Cecile will start with key highlights of the first half of 2026. I will then share details on performance by business groups, after which Cecile will comment on the financials and conclude.

Speaker #2: Let's turn to slide 4, with a few qualitative comments on the semester. Overall, the first half of 2026 confirms the strengths and resilience of our model.

Speaker #1: And then we'll be happy to take your questions. Turning now to our announcement, our release was posted a short while ago in French and English, and is available on the LVMH website, lvmh.com, as are the slides for today's call.

Speaker #2: Middle is conflict impacts H1 top-line growth by a negative 1 suffered from this point. So if we exclude that, organic growth is rather 4% in the Q2.

Speaker #1: The habitual safe harbor statement is included in our press release and on slide two of our presentation. Let's now move on to today's topic—our first-half figures—and I'll pass it over to Cecile.

Speaker #2: Thank you, Rodolphe. Hello, everyone. Thank you for attending the call, and I will dive right into the results, starting on slide three. LVMH delivered a very solid set of results in the first half.

Speaker #2: Revenue momentum accelerated sequentially in our three largest divisions: fashion and leather goods, selective distribution, with watch and jewelry at double-digit growth in Q2. Our key geographies posted sequential acceleration.

Speaker #2: And a second, strong acceleration on organic growth in the second quarter. Group revenue rose 2% organically in H1 to €38.6 billion, with Q2 up 3% organically.

Speaker #2: US, Japan, and Asia all posted mid-single-digit growth for the first half. These results were supported by, amongst others, product innovation and creativity, which delivered tangible results in the first half.

Speaker #2: Operating margin reached a very high level of 22.5%—a very good outcome—as we remain focused and disciplined. Profit from recurring operations closed at €8.7 billion, reflecting a significant negative currency impact.

Speaker #2: The strengths of our icons and outstanding experiences in retail. The first half also demonstrates our continued attention to operational efficiency. Rodolfe will now comment on the numbers and key highlights by business group, and I will then comment further on the group financials.

Speaker #2: Net income was in line with last year. Finally, another semester of strong free cash flow delivery, reaching more than €4 billion. Let's turn to slide four with a few qualitative comments on the semester.

Speaker #1: Thank you, Cécile. And we'll start with wines and spirits on slide 7. The wines and spirits business group recorded 2.6 billion EUR in revenue in the first half, up 5% on an organic basis, and flat on a reported basis after a negative 4% currency impact.

Speaker #2: Overall, the first half of 2026 confirms the strength and resilience of our model. Middle East conflicts impacted H1 top-line growth by a negative one point; both Q1 and Q2 suffered from this point.

Speaker #1: Broken down, champagne and wines generated 1.4 billion EUR, up 7% organic and up 2% reported after a negative 5% currency impact, and cognac and spirits delivered 1.2 billion EUR, up 3% organic and down 1% reported, after taking into account a negative 4% currency impact.

Speaker #2: So, if we exclude that, organic growth is rather 4% in Q2. Revenue momentum accelerated sequentially in our three largest divisions: Fashion and Leather Goods, Selective Distribution, with Watches and Jewelry at double-digit growth in Q2.

Speaker #1: Profit from recurring operations for the division rose 11% year-on-year to 582 million EUR, and operating margin rose 210 bps to 22.4. Moving to slide 8, wines and spirits improved markedly in the first half of the year, the 5% organic growth achieved in H1 was predominantly driven by volume growth, reflecting improving demand for our products.

Speaker #2: Our key geographies posted sequential acceleration. The US, Japan, and Asia all posted mid-single-digit growth for the first half. These results were supported by, among other factors, product innovation and creativity, which delivered tangible results in the first half.

Speaker #2: The strength of our icons and outstanding experiences in retail. The first half also demonstrates our continued attention to operational efficiency. Rodolphe will now comment on the numbers and key highlights by business group, and I will then comment further on the group financials.

Speaker #1: In champagne, volume price and mix all contributed to growth, and Old Maison accelerated in the first half of the year, with strong momentum in Europe and Japan.

Speaker #1: Mix improvement was driven by the outperformance of prestige cuvée. For rosé wines, volume growth came from Château d'Escarent in the US and Minuti in Europe, and for Chandon, growth came from the US and Asia.

Speaker #1: Thank you, Cecile. We'll start with Wines & Spirits on slide 7. The Wines & Spirits business group recorded €2.6 billion in revenue in the first half, up 5% on an organic basis and flat on a reported basis after a negative 4% currency impact.

Speaker #1: In cognac and sea volumes also returned to growth in H1. US demand remained soft, and depletions are still negative, but this was more than offset by improving demand elsewhere notably via SOP in China.

Speaker #1: Broken down, champagne and wines generated €1.4 billion, up 7% organic and up 2% reported after a negative 5% currency impact. Cognac and spirits delivered €1.2 billion, up 3% organic and down 1% reported, after taking into account a negative 4% currency impact.

Speaker #1: The launch of a new ready-to-serve format in the US and sea very special cocktails had limited impact on volumes at this early stage but highlights our commitment to innovation.

Speaker #1: Finally, spirits also performed well, driven by Belvedere and Glenmorangie. Going forward, we expect the division to grow at constant currencies in 2026, albeit not as much as in H1, and we expect full-year EBIT margin to be closer to 2025 levels, due to cost phasing and to the delayed adverse impact of currencies in this division due to profit in stocks notably.

Speaker #1: Profit from recurring operations for the division rose 11% year on year, to €582 million, and operating margin rose 210 basis points to 22.4%. Moving to slide eight, Wines and Spirits improved markedly in the first half of the year. The 5% organic growth achieved in H1 was predominantly driven by volume growth, reflecting improving demand for our products.

Speaker #1: Turning now to fashion and leather goods, on slide 10, revenue reached 18.1 billion EUR for the first half, down 1% organic and down 5% reported, after taking into account a negative 4% currency impact.

Speaker #1: In Champagne, volume, price, and mix all contributed to growth, and Old Maison accelerated in the first half of the year, with strong momentum in Europe and Japan.

Speaker #1: Mix improvement was driven by the outperformance of prestige cuvée. For rosé wines, volume growth came from Château d'Esclans in the US and Minuty in Europe, and for Chandon, growth came from the US and Asia.

Speaker #1: Q2 growth amounted to plus 1 organic. Profit from recurring operations came to 6.2 billion EUR, down 7% year-on-year, and operating margin contracted 60 bps to 34.1, although in both cases the decline is more than entirely attributable to currencies.

Speaker #1: In Cognac and spirits, volumes also returned to growth in H1. US demand remained soft, and depletions are still negative, but this was more than offset by improving demand elsewhere, notably VSOP in China.

Speaker #1: Turning to slide 11, two broad comments on the division. Firstly, virtually all brands accelerated sequentially in Q2. Including Louis Vuitton and Christian Dior. Secondly, local demand outperformed in both Q1 and Q2, but offshore demand, which was negative in Q1, turned flattish in the second quarter.

Speaker #1: The launch of a new ready-to-serve format in the US and Cîroc Very Special Cocktails had limited impact on volumes at this early stage but highlights our commitment to innovation.

Speaker #1: Finally, spirits also performed well, driven by Belvedere and Glenmorangie. Going forward, we expect the division to grow at constant currencies in 2026, albeit not as much as in H1, and we expect full-year EBIT margin to be closer to 2025 levels, due to cost phasing and to the delayed adverse impact of currencies in this division due to profit in stocks, notably.

Speaker #1: A few words on the largest brands: Louis Vuitton celebrated the 130th anniversary of the monogram canvas with success, consistent with its ambition to communicate on some of its most distinctive attributes, know-how, history, and travel.

Speaker #1: And Christian Dior accelerated sequentially, driven by continued excitement around the unveiling of Jonathan Anderson's new creative vision, with good response to bags and to ready-to-wear.

Speaker #1: Turning now to Fashion and Leather Goods. On slide ten, revenue reached €18.1 billion for the first half, down 1% organic and down 5% reported, after taking into account a negative 4% currency impact.

Speaker #1: L'Europeanine Rimowa continued to enjoy above-average growth, while Celine and Fendi improved sequentially, compared to the second half of 2025 and to Q1 2026. Moving on to perfumes and cosmetics, on slide 13, revenue reached 3.9 billion EUR, flat on an organic basis and down 4% on a reported basis after a negative 4% currency impact.

Speaker #1: Q2 growth amounted to plus 1% organic. Profit from recurring operations came to €6.2 billion, down 7% year on year, and operating margin contracted 60 bps to 34.1%. Although in both cases, the decline is more than entirely attributable to currencies.

Speaker #1: Profit from recurring operations declined 2% year-on-year to 417 million EUR, whilst operating margin improved 20 bps to 10.6%. Now to slide 14, which details product innovation across our maisons, the perfumes and cosmetics business group continued to see good performance from its historic maisons, in particular Parfums Christian Dior and Garland.

Speaker #1: Turning to slide 11, two broad comments on the division. Firstly, virtually all brands accelerated sequentially in Q2, including Louis Vuitton and Christian Dior. Secondly, local demand outperformed in both Q1 and Q2, but offshore demand—which was negative in Q1—turned flattish in the second quarter.

Speaker #1: A few words on the largest brands. Louis Vuitton celebrated the 130th anniversary of the monogram canvas with success, consistent with its ambition to communicate on some of its most distinctive attributes—know-how, history, and travel.

Speaker #1: By category, fragrances outperformed, although again Dior and Garland enjoyed good momentum in both makeup and skincare. And looking at key markets, whilst travel retail remained a headwind, Asia and Japan enjoyed good momentum, finally our maisons remained focused on maintaining their selective distribution strategy, with tangible and measurable benefits on brand desirability.

Speaker #1: And Christian Dior accelerated sequentially, driven by continued excitement around the unveiling of Jonathan Anderson's new creative vision, with good response to bags and to ready-to-wear.

Speaker #1: Next, turning to watches and jewelry, on slide 16, where revenue for the first half of 2026 rose to 5.2 billion EUR, up 9% organic and up 3% reported, after taking into account a negative 6% currency impact.

Speaker #1: The European line, Rimowa, continued to enjoy above-average growth, while Celine and Fendi improved sequentially compared to the second half of 2025 and to Q1 2026.

Speaker #1: Moving on to Perfumes and Cosmetics. On slide 13, revenue reached €3.9 billion, flat on an organic basis and down 4% on a reported basis after a negative 4% currency impact.

Speaker #1: Profit from recurring operations rose to 831 million EUR, in the first half of 2026, up 9% year-on-year, and the operating margin rose to 15.9%, up 90 bps year-on-year.

Speaker #1: Profit from recurring operations declined 2% year on year, to €417 million, while operating margin improved 20 basis points to 10.6%. Now to slide 14, which details product innovation across our maisons.

Speaker #1: I'm now on slide 17, jewelry recorded an excellent performance in the first half of the year, including double-digit growth in the second quarter, and positive growth across all key regions, driven by the US, Asia, and Japan.

Speaker #1: The Perfumes and Cosmetics business group continued to see good performance from its historic Maisons, in particular Parfums Christian Dior and Guerlain. By category, fragrances outperformed, although again, Dior and Guerlain enjoyed good momentum in both makeup and skincare.

Speaker #1: Tiffany continues to progress in its elevation strategy, with iconic lines, new store, and high jewelry all outperforming materially. Focus remains on developing our iconic lines and hardware and not, in particular, enjoy exceptional growth despite very tough comps.

Speaker #1: And looking at key markets, whilst travel retail remained a headwind, Asia and Japan enjoyed good momentum. Finally, our Maisons remained focused on maintaining their selective distribution strategy, with tangible and measurable benefits on brand desirability.

Speaker #1: And meanwhile, Tiffany is also progressing with the ongoing renovation of its retail network, with approximately 40% of the network now renovated. Bulgari also continued to enjoy strong momentum, notably in retail, with strong growth across jewelry, high jewelry, and watches.

Speaker #1: Next, turning to Watches and Jewelry. On slide 16, revenue for the first half of '26 rose to €5.2 billion, up 9% organic and up 3% reported, after taking into account a negative 6% currency impact.

Speaker #1: And again, growth was broad-based across all key regions and driven by the continued success of Bulgari's icons Serpenti, Diva, and B01, our watch maison also unveiled several exciting innovations in the first six months of the year.

Speaker #1: Profit from recurring operations rose to €831 million in the first half of '26, up 9% year on year, and the operating margin rose to 15.9%, up 90 bps year on year.

Speaker #1: Now, moving on to our last business group, selective retailing, on slide 19. You can see revenue came to 8.4 billion EUR in H1, up 5% organic and down 2% reported, after taking into account a negative 5% currency impact.

Speaker #1: And now on slide 17, Jewelry recorded an excellent performance in the first half of the year, including double-digit growth in the second quarter, and positive growth across all key regions, driven by the US, Asia, and Japan.

Speaker #1: And a negative 3% perimeter impact, due to the disposals at DFS, profit from recurring operations came to 893 million EUR, up 2% year-on-year, resulting in a slightly improved operating margin of 10.6%.

Speaker #1: Tiffany continues to progress in its elevation strategy, with iconic lines, new stores, and high jewelry all outperforming materially. Focus remains on developing our iconic lines and hardware, which, in particular, enjoyed exceptional growth despite very tough comps.

Speaker #1: And turning to slide 20, a few words on Sephora, which enjoyed good performance across key markets. Including the US, Europe, Middle East, and China.

Speaker #1: Meanwhile, Tiffany is also progressing with the ongoing renovation of its retail network, with approximately 40% of the network now renovated. Bulgari also continued to enjoy strong momentum, notably in retail, with strong growth across jewelry, high jewelry, and watches.

Speaker #1: And all categories recorded positive growth, with makeup and hair care outperforming. Sephora also continued to invest in its retail network and to expand into new markets, with Belgium and Croatia open in the first half of the year, amongst others.

Speaker #1: Le Bon Marché continued to see good growth in the first half, and finally we have continued to progress with the sale of DFS assets, which led to a negative 1 percentage point perimeter impact at group level, in Q2.

Speaker #1: And again, growth was broad-based across all key regions, and driven by the continued success of Bulgari's icons: Serpenti, Diva, and B01. Our watch maison also unveiled several exciting innovations in the first six months of the year.

Speaker #1: This concludes the business group presentation, and I'll now pass back to Cécile for financial results.

Speaker #1: Now, moving on to our last business group, Selective Retailing. On slide 19, you can see revenue came to €8.4 billion in H1, up 5% organic, and down 2% reported, after taking into account a negative 5% currency impact.

Speaker #2: Thank you, Rodolphe. You can breathe now. I guess. And now, let's discuss H1 2026 financials in more detail. Starting with slide 22, with the revenue bridge.

Speaker #2: First half revenue reached 38.6 billion EUR, up 2% on an organic basis, down 3% on a reported basis, given first a strong negative 5% currency impact, mainly US dollar, Japanese yen, and Korean won, and a negative 1% perimeter impact, due to the disposal of DFS activities in Greater China.

Speaker #1: And a negative 3% perimeter impact, due to the disposals at DFS. Profit from recurring operations came to €893 million, up 2% year on year, resulting in a slightly improved operating margin of 10.6%.

Speaker #1: And turning to slide 20, a few words on Sephora, which enjoyed good performance across key markets, including the US, Europe, Middle East, and China.

Speaker #2: Organic growth accelerated 2 points in Q2 to 3%. Slide 23 details the geographic breakdown of revenues in EUR, our regional mix remained well balanced, with Europe 25%, US 25%, Japan 8%, Asia gained 1.229%, and other markets which include the Middle East fell 1.213%.

Speaker #1: All categories recorded positive growth, with makeup and haircare outperforming. Sephora also continued to invest in its retail network and to expand into new markets, with Belgium and Croatia opened in the first half of the year, among others.

Speaker #1: Le Bon Marché continued to see good growth in the first half. And finally, we have continued to progress with the sale of DFS assets, which led to a negative 1 percentage point perimeter impact, at group level, in Q2.

Speaker #2: Slide 24 highlights regional trends, with growth across all key markets, in Q2. In the first half, growth came from Asia, the best-performing region, up 6%, followed by Japan, up 5%, and then the US, up 4%.

Speaker #1: This concludes the business group presentation, and I'll now pass back to Cécile for the financial results.

Speaker #2: Thank you, Rodolphe. You can breathe now, I guess. And now, let's discuss H1 2026 financials in more detail, starting with slide 22 and the revenue bridge.

Speaker #2: Europe declined modestly, 1%, penalized by lackluster touristic demand. Tourism improved, however, in the second quarter, driven by Asian clientele, which explained the sequential slowdown in Asia and the improvement in both Europe and Japan.

Speaker #2: First half revenue reached €38.6 billion, up 2% on an organic basis, but down 3% on a reported basis, given firstly a strong negative 5% currency impact—mainly from the US dollar, Japanese yen, and Korean won—and a negative 1% perimeter impact, due to the disposal of DFS activities in Greater China.

Speaker #2: The sharp acceleration in US offshore demand in Q2 came on top of a tangible improvement in local demand, leading to the sequential acceleration in the US market, up 6% in Q2.

Speaker #2: Turning to slide 25, which illustrates the tangible acceleration of organic growth in our largest divisions. Fashion and leather goods returned to growth in Q2, driven by the acceleration of US and Japan.

Speaker #2: Organic growth accelerated 2 points in Q2, to 3%. Slide 23 details the geographic breakdown of revenues in euros. Our regional mix remained well-balanced, with Europe at 25%, the US at 25%, Japan at 8%, Asia gained 1.2%, and other markets, which includes the Middle East, fell 1.2%.

Speaker #2: Watches and jewelry enjoy the strongest growth in H1, with 9% organic, including double-digit growth in Q2, driven by very strong performance at both Tiffany and Bulgari.

Speaker #2: Selective distribution also grew 5% in H1, supported by a continued strong momentum at Sephora, as Rodolphe presented, while the sale of DFS assets negatively impacts the division's reported growth.

Speaker #2: Slide 24 highlights regional trends, with growth across all key markets in Q2. In the first half, growth came from Asia, the best-performing region, up 6%, followed by Japan, up 5%, and then the US, up 4%.

Speaker #2: On wines and spirits, revenues grew 5% organic in H1, a very good outcome, supported by improving consumer trends. And finally, perfume and cosmetics were revenue momentum stable, with a good performance by our historic maison.

Speaker #2: Europe declined modestly, 1%, penalized by lackluster touristic demand. Tourism improved, however, in the second quarter, driven by Asian clientele, which explained the sequential slowdown in Asia and the improvement in both Europe and Japan.

Speaker #2: Let's now switch to operating income. On slide 26, with the bridge of operating income versus last year. As you can see, we enjoy nice EBIT growth of around 4% in organic terms, and a negligible perimeter impact, but this was more than offset by a significant negative currency impact, totaling nearly 700 million EUR.

Speaker #2: The sharp acceleration in U.S. offshore demand in Q2 came on top of a tangible improvement in local demand, leading to the sequential acceleration in the U.S. market, up 6% in Q2.

Speaker #2: Turning to slide 25, which illustrates the tangible acceleration of organic growth in our largest divisions. Fashion and Leather Goods returned to growth in Q2, driven by the acceleration of the US and Japan.

Speaker #2: Slide 27 details operating income by division. Wines and spirits delivered a very strong performance, with double-digit EBIT growth, driven predominantly by champagne and wine, but also a nice improvement in cognac and spirits.

Speaker #2: Watches and jewelry enjoyed the strongest growth in H1, with 9% organic growth, including double-digit growth in Q2, driven by very strong performance at both Tiffany and Bulgari.

Speaker #2: Watches and jewelry also delivered a significant increase in operating profit. Driven by strong growth in jewelry and OPEX discipline, with continued investments in Tiffany's transformation.

Speaker #2: Selective distribution also grew 5% in H1, supported by continued strong momentum at Sephora, as Rodolphe presented, while the sale of DFS assets negatively impacts the division’s reported growth.

Speaker #2: Fashion and leather goods operating income decline is entirely driven by currencies. At constant currencies, EBIT margin improved modestly, and operating income was flat. Operating margin remains very high, as 34%.

Speaker #2: On Wines and Spirits, revenues grew 5% organically in H1—a very good outcome, supported by improving consumer trends. And finally, Perfume and Cosmetics, where revenue momentum is stable, showed a good performance by our historic maisons.

Speaker #2: Finally, perfume and cosmetics and selective distribution operating profit evolution is close to flattish, with selective distribution improving slightly. Now, on slide 28, a few comments on our income statements.

Speaker #2: Let's now switch to operating income. On slide 26, you'll see the bridge of operating income versus last year. As you can see, we enjoyed solid EBIT growth of around 4% in organic terms, and a negligible perimeter impact, but this was more than offset by a significant negative currency impact, totaling nearly €700 million.

Speaker #2: All in all, the net profit group share closed at 5.7 billion EUR, in line with last year. If we go line by line, so revenues I already commented.

Speaker #2: Gross margin evolution is in line with revenue evolution, which is a good outcome, with a rate of gross margin actually improving by 30 bps versus last year, at 67.1%.

Speaker #2: Slide 27 details operating income by division. Wines and Spirits delivered a very strong performance, with double-digit EBIT growth, driven predominantly by Champagne and Wine, but also a nice improvement in Cognac and Spirits.

Speaker #2: The negative currency impact is fully offset by organic margin expansion, across divisions, on the back of improved pipeline. And in addition, there is a modest positive perimeter impact from DFS assets sale.

Speaker #2: Watches and Jewelry also delivered a significant increase in operating profit, driven by strong growth in Jewelry and OPEX discipline, with continued investments in Tiffany's transformation.

Speaker #2: Operating expenses were actively managed, with a 2% decline in marketing and selling expenses, GNA was kept flat, reflecting continued discipline on cost. Other income and expenses are slightly positive on the semester, nothing major to report there.

Speaker #2: Fashion and laser goods operating income decline is entirely driven by currencies. At constant currencies, EBIT margin improved modestly, and operating income was flat. Operating margin remains very high, at 34%.

Speaker #2: And this leads to an operating profit for the group of 8.7 billion EUR, already commented earlier. Financial results for the first semester improved strongly versus last year, and I will provide more details in the next slide.

Speaker #2: Finally, Perfume & Cosmetics and Selective Distribution operating profit evolution is close to flattish, with Selective Distribution improving slightly. Now, on slide 28, a few comments on our income statement.

Speaker #2: And finally, tax rates remain at a very high level of 30%, reflecting this year again the impact of the French CERTax. Moving on slide 29, positive trends, as I was saying, in net financial results of 300 million, which includes on one side cost of debt and interest on lease liabilities which both saw a small improvement.

Speaker #2: All in all, the net profit group share closed at €5.7 billion, in line with last year. If we go line by line—so, revenues I already commented.

Speaker #2: Gross margin evolution is in line with revenue evolution, which is a good outcome, with the rate of gross margin actually improving by 30 basis points versus last year, at 67.1%.

Speaker #2: The cost of FX derivatives decreased by over 100 million. It's not so much the cost of the edge, but rather it's the impact from the amplitude of currency move that was more contained this year versus H1 last year, where the amplitude was huge.

Speaker #2: The negative currency impact is fully offset by organic margin expansion across divisions, on the back of improved pipeline. In addition, there is a modest positive perimeter impact from the DFS asset sale.

Speaker #2: Lastly, and again, we have a strong positive impact from the revaluation method in mark-to-market of our financial investment portfolio. That led to an increase in value, larger than the one of last year.

Speaker #2: Operating expenses were actively managed, with a 2% decline in marketing and selling expenses. G&A was kept flat, reflecting continued discipline on cost. Other income and expenses are slightly positive on the semester.

Speaker #2: However, a reminder that this impact is purely theoretical and does not reflect any profits in reality. Turning to slide 30, regarding the structure of the balance sheet, currencies once again had an impact on both on most balance sheet lines in EUR terms.

Speaker #2: Nothing major to report there. This leads to an operating profit for the group of €8.7 billion, as already mentioned earlier. Financial results for the first semester improved significantly versus last year, and I will provide more details on the next slide.

Speaker #2: Both assets and liabilities and consequently the structure of the balance sheet remain very similar to last year. One point I didn't comment is equity slightly up, reflecting the share buybacks that we completed at the end of June.

Speaker #2: And finally, tax rates remain at a very high level of 30%, reflecting this year again the impact of the French surtax. Moving on to slide 29, positive trends, as I was saying, in net financial result of €300 million, which includes, on one side, cost of debt and interest on lease liabilities, which both saw a small improvement.

Speaker #2: Slide 31 illustrates another strong momentum on free cash flow generation in H1, closing at 4.1 billion EUR. With the modest decline in cash from operating activities entirely offset by operating investment evolution.

Speaker #2: The cost of FX derivatives decreased by over $100 million. It's not so much the cost of the hedge, but rather it's the impact from the amplitude of currency movements, which was more contained this year versus H1 last year, where the amplitude was huge.

Speaker #2: Slide 32, net debt to equity ratio. As you can see and compare to H1 2025, our net debt declined by almost 2 billion and gained edged down 3 points to 12%.

Speaker #2: Lastly, and again, we have a strong positive impact from the revaluation method in mark-to-market of our financial investment portfolio. That led to an increase in value larger than the one of last year.

Speaker #2: I will end my comments on the figures with the interim dividend, which has been fixed at 5.50 EUR. A share, and will be paid in December 2026.

Speaker #2: However, a reminder that this impact is purely theoretical and does not reflect any profit in reality. Turning to slide 30, regarding the structure of the balance sheet, currencies once again had an impact on most balance sheet lines in euro terms.

Speaker #2: Maybe before moving to Q&A, a few words to conclude this presentation. On slide 34, so what you've seen is that despite continued instability in the macro environment, trends improved across all geographies in H1.

Speaker #2: And where wealth is created, consumer appetite for luxury and for our products in particular is strong. Secondly, the outperformance of our most iconic products illustrates the desirability of our brands.

Speaker #2: Both assets and liabilities and, consequently, the structure of the balance sheet remain very similar to last year. One point I didn't comment on is that equity is slightly up, reflecting the share buybacks that we completed at the end of June.

Speaker #2: And shows our strategy initiative bearing fruits across diverse businesses. So based on this successes, we will continue to adjust to evolving consumer expectation with distinctive stores and experience.

Speaker #2: Slide 31 illustrates another strong momentum on free cash flow generation in H1, closing at €4.1 billion. The modest decline in cash from operating activities was entirely offset by the evolution of operating investments.

Speaker #2: Attention to perceived value and increased brand desirability and innovations. Finally, while we continue to invest selectively, it's important to note our financial discipline, which continued to deliver tangible results as evidenced in H1.

Speaker #2: Slide 32, net debt to equity ratio. As you can see and compared to H1 2025, our net debt declined by almost $2 billion and the gearing edged down 3 points to 12%.

Speaker #2: Thank you very much for your attention, and we are now ready to take your questions.

Speaker #2: I will end my comments on the figures with the interim dividend, which has been fixed at €5.50 per share, and will be paid in December 2026.

Speaker #1: Thank you. This is the conference operator. We will now begin the question and answer session. Anyone who wishes to ask a question may press star N1 on their touchstone telephone.

Speaker #2: Maybe before moving to Q&A, a few words to conclude this presentation. On slide 34, what you've seen is that despite continued instability in the macro environment, trends improved across all geographies in H1.

Speaker #1: To remove yourself from the question queue, please press star N2. Please pick up the receiver when asking questions. Anyone who has a question may press star N1 at this time.

Speaker #1: The first question is from Chad Luis Cotti, Capital Chevreux.

Speaker #2: And where wealth is created, consumer appetite for luxury—and for our products in particular—is strong. Secondly, the outperformance of our most iconic products illustrates the desirability of our brands.

Speaker #3: Yes, good evening. Thank you very much for taking my questions. I have two the first one on fashion and leather goods. Is there any chance you can give us a bit more granularity of the performance by brand?

Speaker #2: And it shows our strategy initiative bearing fruit across diverse businesses. So, based on these successes, we will continue to adjust to evolving consumer expectations with distinctive stores and experiences.

Speaker #3: And especially on Dior, I'm curious to know if the brand returned to a positive growth in Q2. And it also seems that the growth at Dior was constrained by difficulties in ramping up production capacity.

Speaker #2: Attention to perceived value and increased brand desirability and innovations. Finally, while we continue to invest selectively, it's important to note our financial discipline, which continues to deliver tangible results, as evidenced in H1.

Speaker #3: Related to the reinternalization of production and maybe the change in designer, could you confirm whether this is indeed the case? And if so, if you can estimate the growth of Dior what kind of growth Dior could have achieved without this production constraints?

Speaker #3: And then my second question, is on the performance by geography. Particularly Asia excluding Japan. This was the only region where growth deteriorated secondarily in Q2.

Speaker #2: Thank you very much for your attention, and we are now ready to take your questions.

Speaker #1: Thank you. This is the conference operator. We will now begin the question and answer session. Anyone who wishes to ask a question may press star, then 1 on their touch-tone telephone.

Speaker #3: And I would have expected the demand in Korea to accelerate and the region also to benefit from to some extent the repatriation of Asians spending because they travel less in Europe.

Speaker #1: To remove yourself from the question queue, please press *N2. Please pick up the receiver and ask your questions. Anyone who has a question may press *N1 at this time.

Speaker #3: What is the main driver behind this slowdown? Is it China? And if you can elaborate a little bit on the Chen versus Q1 and what factors weighed on demand locally.

Speaker #1: The first question is from Chad Luis Scotti, Capital Chevreux.

Speaker #3: Thank you very much.

Speaker #3: Yes, good evening. Thank you very much for taking my questions. I have two. The first one is on Fashion and Leisure Goods. Is there any chance you can give us a bit more granularity on the performance by brand?

Speaker #4: So it's two very exhaustive questions. Thank you, Charles Louis. To start with, on fashion and leather goods and your question around giving. More granularity on the brand.

Speaker #3: And especially on Dior, I'm curious to know if the brand returned to positive growth in Q2. It also seems that the growth at Dior was constrained by difficulties in ramping up production capacity.

Speaker #4: What we can tell you is that Vito and Dior are both in positive territories. In Q2, Vito is consistent with the average Dior is a bit above.

Speaker #4: You have Loro Piana and Rimowa still outperforming. When it comes to Dior, all clientele were up in H1. With double-digit growth from the Americans and Japanese in Q2, all accelerated.

Speaker #3: Related to the reinternalization of production, and maybe the change in designer, could you confirm whether this is indeed the case? And, if so, if you can estimate the growth of Dior, what kind of growth could Dior have achieved without these production constraints?

Speaker #4: You have leather goods and women ready-to-wear outperforming based on the big success of Jonathan Anderson's first release collections. And so it's only after two quarters and probably more to come.

Speaker #3: And then my second question is on the performance by geography, particularly Asia excluding Japan. This was the only region where growth deteriorated sequentially in Q2.

Speaker #3: And I would have expected the demand in Korea to accelerate, and the region also to benefit to some extent from the repatriation of Asian spending, because they travel less in Europe.

Speaker #4: As there have been some issues in supply chain, I think whenever you start with creative renewal and you are in a transition, it's a bit more complex for your supply chain.

Speaker #3: What is the main driver behind this slowdown? Is it China? And if you can elaborate a little bit on the change versus Q1 and what factors weighed on demand locally?

Speaker #4: I will not give any theoretical figure. What we see I think is telling us that we have made great results. And that the trend is positive and accelerating.

Speaker #3: Thank you very much.

Speaker #4: So, it's two very exhaustive questions. Thank you, Charles-Louis. To start with, on Fashion and Leather Goods and your question around giving more granularity on the brands, what we can tell you is that Vuitton and Dior are both in positive territory.

Speaker #4: So I think it's what matters. When we look at Asia, you write to mention that Asia is decelerating in Q2. But if you look at clientele, Asian clientele spending is unchanged quarter on quarter.

Speaker #4: In Q2, Vito is consistent with the average; Dior is a bit above. You have Loro Piana and Rimowa still outperforming. When it comes to Dior, all clientele were up in H1.

Speaker #4: Same for Chinese. However, Asian clientele did spend less in Q2 in Asia and more in Europe and in Japan. That's also why in the graph I was showing you, you see an acceleration at the same time in both Europe and Japan.

Speaker #4: With double-digit growth from the Americans and Japanese in Q2, all accelerated. You have leisure goods and women's ready-to-wear outperforming, based on the big success of Jonathan Anderson's first release collections.

Speaker #4: It's also interesting to see that in Japan, tourism is more diversified that at some stage. With Americans, Koreans, and Chinese are gradually recovering. So that's for Asia and for Chinese.

Speaker #4: And so it's only after two quarters, and probably more to come. As there have been some issues in supply chain, I think whenever you start with creative renewal and you are in a transition, it's a bit more complex for your supply chain.

Speaker #5: Thank you.

Speaker #1: The next question is from Anne-Laure Bismuth, HSBC.

Speaker #4: And no, we don't hear you.

Speaker #4: I will not give any theoretical figures. What we see, I think, is telling us that we have made great results, and that the trend is positive and accelerating.

Speaker #1: Yes, hi. Good evening, Anne-Laure. So I have two questions. My first one is on jewelry and watches. Which did record a very strong acceleration in Q2.

Speaker #1: So what was the performance between categories within that segment? Was the sequential improvement mostly driven by jewelry or watches also sequentially improved? And have you seen any particular strong performance for that division in South Korea and what is the exposure?

Speaker #4: So I think it's what matters. When we look at Asia, you're right to mention that Asia is decelerating in Q2. But if you look at clientele, Asian clientele spending is unchanged quarter-on-quarter.

Speaker #1: And my question is my second question is about wine and spirits. So given the signs of recovery in H1 that we have seen through that division in H1, what directionally do we should we think about this division for the remainder of the year?

Speaker #4: It's the same for Chinese clientele. However, Asian clientele did spend less in Q2 in Asia and more in Europe and in Japan. That's also why, in the graph I was showing you, you see an acceleration at the same time in both Europe and Japan.

Speaker #1: Thank you.

Speaker #4: Thank you, Anne-Laure. On watches and jewelry, the growth momentum was mainly driven by both Tiffany and Bulgari on jewelry. We've seen a very good performance.

Speaker #4: It's also interesting to see that, in Japan, tourism is more diversified than at some stage, with Americans, Koreans, and Chinese gradually recovering. So that's for Asia, and for Chinese.

Speaker #4: I mean, both in Q2, Bulgari and Tiffany grew mid-teens. With very strong performance on icons. The acceleration when it comes to geography was both Americas, Japan, but also Korea, as you mentioned.

Speaker #5: Thank you.

Speaker #1: The next question is from Anne-Laure Bismuth, HSBC.

Speaker #4: And on Tiffany, it's really around all the part that we transform because we have now 60% of the business which is transformed, growing much quicker than the legacy that is still negative.

Speaker #4: And no, we don't hear you.

Speaker #1: Yes, hi. Good evening, Anne-Laure Bismuth from HSBC. So I have two questions. My first one is on Jewelry and Watches, which did record a very strong acceleration in Q2.

Speaker #4: We have some icon like hardware growing 75%, not is nearly 50%. So there are a lot of successes and a lot of momentum within the icons.

Speaker #1: So, what's the performance between categories within that segment? Was the sequential improvement mostly driven by jewelry, or did watches also sequentially improve? And have you seen any particularly strong performance for that division in South Korea, and what is the exposure?

Speaker #4: Same for the renovative store. So it's really for Tiffany the transformation agenda that is bearing fruits and success with the strength of the icons becoming even stronger quarter after quarter.

Speaker #1: And my question is my second question is about wine and spirits. So given the signs of recovery in H1 that we have seen through that division in H1, what directionally do should we think about this division for the remainder of the year?

Speaker #4: On Bulgari, we've seen success on really all the icons. Geographical span is very even when it comes to success as well. There has been new lines launched like Vimini, which is off Augusta.

Speaker #1: Thank you.

Speaker #4: Thank you, Anne-Laure. On Watches and Jewelry, the growth momentum was mainly driven by both Tiffany and Bulgari on jewelry. We've seen a very good performance.

Speaker #4: High jewelry has a bit overperformed as well. So it's really across the board that we've seen that. Watches are a bit negative still in Q2.

Speaker #4: I mean, both in Q2, Bulgari and Tiffany grew mid-teens. With very strong performance on icons. The acceleration when it comes to geography was both Americas, Japan, but also Korea, as you mentioned.

Speaker #4: But if you take watches as a category, adding Bulgari, Tiffany, and Viton, it's slightly growing for the period. So that's where we are. On wines and spirits, we are very pleased with the results, which is really a big work from the teams.

Speaker #4: And on Tiffany, it's really around all the parts that we transform, because we now have 60% of the business which is transformed, growing much quicker than the legacy, which is still negative.

Speaker #4: Reaching 5%, which is really an improvement in momentum for the champagne and wines in particular and wines in particular, Prestige Cuvée also. And improvement of demand for cognac in China.

Speaker #4: We have some icons, like hardware, growing 75%. Now, it's nearly 50%. So, there are a lot of successes and a lot of momentum within the icons.

Speaker #4: Same for the renovative store. So it's really funny—the transformation agenda is bearing fruit and success, with the strength of the icons becoming even stronger, quarter after quarter.

Speaker #4: That is offsetting a still soft demand in the US. Rodolphe mentioned when he was commented on his slide that we still do expect growth for the remaining of the year, but probably a bit more moderate.

Speaker #4: On Bulgari, we've seen success on really all the icons. Geographical span is very even when it comes to success as well. There have been new lines launched, like Vimini, which is off to a good start.

Speaker #4: So that's what we can give as a direction for wine and spirits.

Speaker #1: The next question is from Thomas Chauvet, Cité.

Speaker #5: Good evening, Cecile and Rodolphe. Thanks for taking my question. I have two the first one, could you come back to the second quarter fashion leather performance by nationality?

Speaker #4: High jewelry has overperformed a bit as well. So it's really across the board that we've seen that. Watches are still a bit negative in Q2.

Speaker #5: I think you said the Chinese were more or less in line with Q1. Could you comment on the other nationalities on a global basis, please?

Speaker #4: But if you take watches as a category, adding Bulgari, Tiffany, and Vuitton, it’s slightly growing for the period. So that's where we are. On Wines and Spirits, we are very pleased with the results, which is really a big work from the teams.

Speaker #5: And second one, on the FX impact on margin, if I'm not mistaken, in February, you guided for and I was very useful. Thank you for an FX headwind on EBIT for this year, broadly similar to last year, close to 1 billion.

Speaker #5: And that was going to be very H1 weighted. So you were right with over 600 million in H1. Given what happened to FX in the last few months, particularly the dollar and the renminbi, appreciation, how do you think about that FX impact in the second half?

Speaker #4: Reaching 5%, which is really an improvement in momentum for the Champagne and wines in particular, and wines in particular, Prestige Cuvée also. And improvement of demand for Cognac in China that is offsetting a still soft demand in the US.

Speaker #5: And how perhaps also it releases a little bit of pressure from you to delay any pricing into next year?

Speaker #4: Rodolphe mentioned, when he was commenting on his slide, that we still do expect growth for the remainder of the year, but probably a bit more moderate.

Speaker #4: Thank you, Thomas. So to answer your question on clientele dynamic for FNLG in the second quarter versus last year, the bulk of the growth came from the Americans who are up high single digit.

Speaker #4: So, that's what we can give as a direction for Wine and Spirits.

Speaker #1: The next question is from Thomas Chauvet, Citi.

Speaker #4: Koreans also contributed, but obviously it's a smaller base. So the impact is more marginal. You had a negative impact from Middle Eastern, but not higher than Q1, as the longer duration of the impact was offset with improving sequential and gradual trends.

Speaker #5: Good evening, Cecile and Rodolphe. Thanks for taking my question. I have two: the first one, could you come back to the second quarter Fashion & Leather performance by nationality?

Speaker #5: I think you said the Chinese were more or less in line with Q1. Could you comment on the other nationalities on a global basis, please?

Speaker #5: And second one, on the FX impact on margin. If I'm not mistaken, in February you guided for— and that was very useful, thank you— an FX headwind on EBIT for this year, broadly similar to last year, close to €1 billion.

Speaker #4: And then European and Japanese and Chinese were flattish. So that's for the clientele's in Q2. On FX impact, so H1 was around 70 beeps.

Speaker #5: And that was going to be very H1 weighted. So you were right, with over €600 million in H1. Given what happened to FX in the last few months, particularly the dollar and the renminbi appreciation, how do you think about that FX impact in the second half?

Speaker #4: So as you said, it was in line with what we had projected. We do expect that on the revenue part, we could have a slight positive impact from FX going forward on revenues.

Speaker #4: However, probably offset by a perimeter impact because there are more sales that are operations that are going to get closed in H2. However, on the margin, we still expect approximately the same impact that we had in H1.

Speaker #5: And does it perhaps also relieve a little bit of pressure for you to delay any pricing into next year?

Speaker #4: Thank you, Thomas. So to answer your question on clientele dynamic for FNLG in the second quarter versus last year, the bulk of the growth came from the Americans, who are up high single digit.

Speaker #4: Especially if you take wine and spirits, given the stock duration and the time lag between the time you put it in stock and you release it, you are still going to recycle impact from last year.

Speaker #4: Koreans also contributed, but obviously it's a smaller base, so the impact is more marginal. You had a negative impact from Middle Eastern, but not higher than Q1, as the longer duration of the impact was offset with improving sequential and gradual trends.

Speaker #4: And you already had your edging gain. So there's a bit of time impact. It's a bit technical, but that means that on the margin, probably we're looking at the same impact for H2.

Speaker #1: The next question is from Antoine Berge, BNP Paribas.

Speaker #4: And then European, Japanese, and Chinese were flattish. So that's for the clienteles in Q2. On FX impact, H1 was around 70 bps. So as you said, it was in line with what we had projected.

Speaker #5: Yes, good evening. It's Antoine Berge at BNP. Three questions, if I may. First of all, I'd like to come back on the performance on the Chinese cluster.

Speaker #5: So flat but unchanged quarter on quarter. In my memory, it doesn't fail me. Last year, the Chinese cluster went from down maybe 9% to down 18.

Speaker #4: We do expect that, on the revenue part, we could have a slight positive impact from FX going forward on revenues. However, this will probably be offset by a perimeter impact, because there are more sales or operations that are going to get closed in H2.

Speaker #5: So isn't it a bit disappointing that on easier comps, China is not improving? And also, if you could comment on the litigation between Louis Vuitton and this T company, is it adding any impact?

Speaker #5: Second question is about overall H2 and on this idea that the comp base will become tougher. The recovery of the group started in Q3.

Speaker #4: However, on the margin, we still expect approximately the same impact that we had in H1. Especially if you take Wine & Spirits, given the stock duration and the time lag between the time you put it in stock and when you release it, you are still going to recycle impact from last year.

Speaker #5: So how should we think about that? Are you confident that maybe I mean, you were mentioning that you could expect sort of sequentially improvement at the orb.

Speaker #4: And you already had your edging gain, so there's a bit of time impact. It's a bit technical, but that means that, on the margin, we're probably looking at the same impact for H2.

Speaker #5: So any so pipeline initiative at Vuitton especially in the base of H2 last year, you've got the both in Shanghai. And finally, on the margin, first of all, congratulations because the margins were well above consensus.

Speaker #5: Especially this idea that it was a flat organic growth in H1. You managed to have a flat margin at constant currency. So is it like the results of a special effort because you knew that H1 would still be a bit under pressure?

Speaker #1: The next question is from Antoine Berge, BNP Paribas.

Speaker #5: Yes, good evening. It's Antoine Berge at BNP. Three questions, if I may. First of all, I'd like to come back to the performance of the Chinese cluster.

Speaker #5: So, flat but unchanged quarter on quarter. If my memory doesn't fail me, last year, the Chinese cluster went from down maybe 9% to down 18%.

Speaker #5: Or is it a bit something a bit more structural? Yeah, because if growth come back, I mean, I guess maybe investment will come back as well.

Speaker #5: And a clarification because I think Rodolphe, on wine and spirits, mentioned that something you confirm on the top line, which would be that maybe H2 growth would be a bit less than in H1, but did I understood correctly that the margin over the full year would be rather flattish year on year versus up in the first half?

Speaker #5: So, isn't it a bit disappointing that, on easier comps, China is not improving? And also, if you could comment on the litigation between Louis Vuitton and this T company— is it having any impact?

Speaker #5: The second question is about overall H2 and the idea that the comp base will become tougher. The recovery of the group started in Q3.

Speaker #5: Thank you.

Speaker #4: Thank you, Antoine. For all these questions. So on the Chinese cluster, net net, what we've seen in H1 is that Chinese local and touristic demand has been flattish.

Speaker #5: So, how should we think about that? Are you confident that—maybe—I mean, you were mentioning that you could expect sort of sequential improvement at Europe.

Speaker #4: We have been seeing an improvement of offshore demand over the Q2. So you have local demand outperformed in Q1. And onshore demand outperforming in Q2.

Speaker #5: So, any pipeline initiatives at Vuitton, especially in the base of H2 last year? You’ve got both in Shanghai. And finally, on the margin—first of all, congratulations, because the margins were well above consensus.

Speaker #4: We are not challenging the fact that the basis of comps was easier in Q2, but when it comes to Chinese, we need to look at it.

Speaker #5: Especially this idea that, with flat organic growth in H1, you managed to have a flat margin at constant currency. So is it the result of a special effort because you knew that H1 would still be a bit under pressure?

Speaker #4: And especially we need to remember that the easier basis of comp of Q2 last year was linked to exceptional growth in Japan in 2024, which was recycled.

Speaker #5: Or is it something a bit more structural? Yeah, because if growth comes back, I mean, I guess maybe investment will come back as well.

Speaker #4: So I think it's important to have that in mind. What we are seeing is that Chinese. Local consumption is high by historical standard. What we are already seeing is that Chinese demand is increasingly clustered around shopping event.

Speaker #5: And a clarification, because I think Rodolphe, on wine and spirits, mentioned that which something you confirm on the top line, which would be that maybe H2 growth would be a bit less than in H1, but did I understood and understand correctly that the margin over the full year would be rather flattish year on year versus up in the first half?

Speaker #4: So it's important to follow that in order to have the right trends. On your question of litigation, I'm sure you agree that IP is an absolute key asset for us.

Speaker #5: Thank you.

Speaker #4: Thank you, Antoine, for all these questions. So, on the Chinese cluster, net-net, what we've seen in H1 is that Chinese local and touristic demand has been flattish.

Speaker #4: And we diligently protect our brand. Our maisons handle trademarks infringement in many countries very regularly including China, but not only. This case received media attention.

Speaker #4: We have been seeing an improvement in offshore demand over Q2. So, you had local demand outperforming in Q1, and onshore demand outperforming in Q2.

Speaker #4: It's still a legal process, so I will not comment more than that. On the comp base of Q3, maybe I should have linked it to the previous one.

Speaker #4: We are not challenging the fact that the basis of comps was easier in Q2, but when it comes to Chinese, we need to look at it.

Speaker #4: So first, we are only a few weeks in July. And July is a small month. So I will not comment on trends for H2 because it's much too early.

Speaker #4: And especially, we need to remember that the easier basis of comparison for Q2 last year was linked to exceptional growth in Japan in 2024, which was recycled.

Speaker #4: The comp base in H1 in H2 is optically tougher than H1, but it's also on the base of easier comps in '24. So overall, it's quite similar.

Speaker #4: So I think it's important to have that in mind. What we are seeing is that Chinese local consumption is high by historical standards. What we are already seeing is that Chinese demand is increasingly clustered around shopping events.

Speaker #4: And on the rest, I already commented answering previous question on the what we. For the FX. On margin, we take your congratulations. Thank you very much.

Speaker #4: So, it's important to follow that in order to have the right trends. On your question of litigation, I'm sure you agree that IP is an absolutely key asset for us.

Speaker #4: There has been of course an effort on discipline and particular cost attention in order to come to this result. And we are very happy to have managed it.

Speaker #4: And we diligently protect our brands. Our maisons handle trademark infringement in many countries very regularly, including China, but not only China. This case received media attention.

Speaker #4: And then I think you were referring to a comment of Rodolphe on wine and spirits regarding the full year margin. So indeed, you understood it well.

Speaker #4: We believe that overall full year margin in wine and spirits will be comparable to last year. Bear in mind what I was explaining on FX as well.

Speaker #4: It's still a legal process, so I will not comment more than that. On the comp base of Q3, maybe I should have linked it to the previous one.

Speaker #4: Which will impact H2 especially in wine and spirits in terms of margin hit.

Speaker #4: So first, we are only a few weeks into July, and July is a small month. So I will not comment on trends for H2, because it's much too early.

Speaker #2: Next question is from Erwan Rambour, Goldman Sachs.

Speaker #4: The comp base in Q1 and Q2 is optically tougher than in Q1, but it's also on the basis of easier comps in 2024. So overall, it's quite similar.

Speaker #5: Yeah, hi, good evening. And congratulations on the margin. I hope you can hear me. Three short questions. Firstly, on Sephora, I was wondering if you could maybe help us understand what part of the growth is linked to like for like in the different regions and what part is maybe linked to the impact of openings?

Speaker #4: And on the rest, I already commented, answering the previous question on what we see for the FX. On margin, we take your congratulations—thank you very much.

Speaker #5: How much does that weigh? Secondly, I had a question on Tiffany. You were. You've revamped 40% of the store base. I'm wondering what's next?

Speaker #4: There has been, of course, an effort on discipline and particular cost attention in order to come to this result, and we are very happy to have managed it.

Speaker #5: And presumably revamping the store base was weighing on margins. I suspect that with the type of growth you're getting, margins are going higher. Does that change your cadence in terms of revamping other stores?

Speaker #5: How should we think about that prospect? And then thirdly, if I understand correctly, Céline and Fendi are probably still negative. Can you tell us about the prospects of when that might improve for those two brands and what it would take?

Speaker #4: And then I think you were referring to a comment of Rodolphe on Wine & Spirits regarding the full-year margin. So indeed, you understood it well.

Speaker #4: We believe that overall full-year margin in Wine and Spirits will be comparable to last year. Bear in mind what I was explaining on FX as well.

Speaker #5: Thank you.

Speaker #4: Thank you. Erwan, on Sephora, when we look at the growth, it's probably half-half. In terms of expansion, it's not only country opening. It's surface expansion.

Speaker #4: This will impact H2, especially in Wine and Spirits, in terms of a margin hit.

Speaker #4: And like for like, we've seen a very sustained growth in all markets, including the US. Especially on exclusive brand, you remember, we had the launch of Rod, which is still going very well.

Speaker #2: Next question is from Erwan Rambour, Goldman Sachs.

Speaker #5: Yeah, hi, good evening, and congratulations on the margin. I hope you can hear me. Three short questions: Firstly, on Sephora, I was wondering if you could maybe help us understand what part of the growth is linked to like-for-like in the different regions, and what part is maybe linked to the impact of openings?

Speaker #4: In terms of country openings, we have opened Belgium, Croatia, and Ireland. So we'll continue. And we have continued to open in the UK, which is a market that is going very well.

Speaker #5: How much does that weigh? Secondly, I had a question on Tiffany. You were saying you've revamped 40% of the store base. I'm wondering what's next?

Speaker #4: For Sephora. Tiffany, so on Tiffany, yes, the transformation and the stores are, as you mentioned, is weighing on the margin because it increased the selling cost.

Speaker #5: And presumably, revamping the store base was weighing on margins. I suspect that with the type of growth you’re getting, margins are going higher. Does that change your cadence in terms of revamping other stores?

Speaker #4: It's not the only one. You can imagine as well that the transformation of the portfolio with the decrease in silver is also creating a short-term headwind on the margin.

Speaker #5: How should we think about that prospect? And then, thirdly, if I understand correctly, Céline and Fendi are probably still negative. Can you tell us about the prospects of when that might improve for those two brands, and what it would take?

Speaker #4: But you're right to say that with the increasing growth and the performance of the icons and soon, let's hope, the decrease in. Price, we will be able, gradually, to get leverage in order to improve the margin.

Speaker #5: Thank you.

Speaker #4: Thank you. Erwan, on Sephora, when we look at the growth, it's probably half-half. In terms of expansion, it's not only country openings; it's surface expansion, as well.

Speaker #4: We have not changed the program when it comes to store renovation. And we'll continue to do the rhythm that we discussed several times. Overall, 10% or more per year, because we still want to do it gradually.

Speaker #4: And like-for-like, we've seen very sustained growth in all markets, including the US. Especially on exclusive brands—you remember, we had the launch of Rodolphe Ozun, which is still going very well.

Speaker #4: It's not only an issue around margin. It's also making sure we do it well. And we do it gradually. On Céline, and Fendi, we see progress quarter to quarter.

Speaker #4: In terms of country openings, we have opened Belgium, Croatia, and Ireland, so we'll continue. And we have continued to open in the UK, which is a market that is going very well.

Speaker #4: On Céline, there has been some innovation in soft bag, like the soft triangle and other formats that are doing very well. Shoes are doing well.

Speaker #4: For Sephora—Tiffany. So, on Tiffany, yes, the transformation in the stores, as you mentioned, is weighing on the margin because it increased the selling cost.

Speaker #4: Ready-to-wear is doing well. So it's really progressing. And Fendi started later. We had the show of Maria Grazia again early July, but we see improvement already.

Speaker #4: So we are very confident that these two brands will continue to make progress.

Speaker #4: It's not the only one. You can imagine as well that the transformation of the portfolio, with the decrease in silver, is also creating a short-term headwind on the margin.

Speaker #3: Thank you.

Speaker #2: The next question is from Édouard Aubin, Morgan Stanley.

Speaker #4: But you're right to say that with the increasing growth and the performance of the Icons, and soon, let's hope, the decrease in the gold price, we will be able gradually to get leverage in order to improve the margin.

Speaker #5: Yeah, good evening. Thanks for asking my question. So two quick ones. Just to follow up on the margin protectory for fashion leather goods. Cécile, just you managed to have XFX flat margin on a minus one constant FX decline in H1.

Speaker #4: We have not changed the program when it comes to store renovation, and we'll continue to follow the rhythm that we discussed several times. Overall, 10% or more per year, because we still want to do it gradually.

Speaker #5: Hypothetically, assuming that you would be in a situation to grow top line by mid to low to mid single digit as consensus is currently expecting, should we therefore assume that you should be able to post some operating leverage excluding FX in H2 for fashion leather goods?

Speaker #4: It's not only an issue around margin; it's also making sure we do it well, and that we do it gradually. On Céline and Fendi, we see progress quarter to quarter.

Speaker #5: So that question number one. And then on the perfume and cosmetics division, so the division was basically, again, more or less flattish in for the H1.

Speaker #4: On Céline, there has been some innovation in soft bags, like the Soft Triangle and other formats that are doing very well. Shoes are doing well.

Speaker #5: Kind of which has been a pattern of low growth in the past few years. And I think below some of your prestige peers kind of, how do you explain the relatively sluggish top line performance for the division in the recent quarters?

Speaker #4: Ready-to-wear is doing well, so it's really progressing. And Fendi started later. We had the show of Maria Grazia again in early July, but we see improvement already.

Speaker #5: Thank you.

Speaker #4: Thank you, Édouard. So on the margin, hypothetically, on your assumption, maybe I'll come back to what I the message that I repeat often, which is for the group, probably once we reach three to four percent growth, we are starting to get operating leverage.

Speaker #4: So, we are very confident that these two brands will continue to make progress.

Speaker #5: Thank you.

Speaker #2: The next question is from Édouard Aubin, Morgan Stanley.

Speaker #5: Yeah, good evening. Thanks for taking my question. So, two quick ones. Just to follow up on the margin, technically for Fashion & Leather Goods, Cécile, you managed to have ex-FX flat margin on a minus one constant FX decline in H1.

Speaker #4: So it's true that H1 we managed to do it with less than that, with extra effort on discipline and cost. And it's a great result.

Speaker #4: But it doesn't make it a rule. So we continue to my message is not changing. And stays. On PNC flat, what I would say is that we have made a choice.

Speaker #5: Hypothetically, assuming that you would be in a situation to grow your top line by mid to low- to mid-single digits, as consensus is currently expecting, should we therefore assume that you should be able to post some operating leverage, excluding FX, in H2 for Fashion & Leather Goods?

Speaker #4: With perfume and cosmetic and some of our brands, to be very selective in distribution. To pay a lot of attention, of promotions. So there could be some areas and opportunities of short-term growth.

Speaker #5: So that's question number one. And then on the Perfume and Cosmetics division, the division was basically, again, more or less flattish for H1.

Speaker #4: But for us, it probably would mean damaging the brand equity. And we want to build to continue to build the brand desirability and equity for the long term.

Speaker #5: Kind of which has been a pattern of low growth in the past few years. And I think below some of your prestige peers kind of, how do you explain the relatively sluggish top line performance for the division in the recent quarters?

Speaker #4: So we've been working hard in order to be very selective on distribution. And we are still impacting impacted as a result by travel retail performance.

Speaker #5: Thank you.

Speaker #4: Thank you, Édouard. So on the margin, hypothetically, on your assumption, maybe I'll come back to what I the message that I repeat often, which is for the group, probably once we reach three to four percent growth, we are starting to get operating leverage.

Speaker #2: The next question is from Olivier Shen, TD Cowen.

Speaker #5: Hi. Thanks very much, Rudolph and Cécile. Regarding the US, we've seen really good momentum here, as well as you have seen that too. What's happening with the tourism in the US versus local?

Speaker #4: So, it's true that in H1 we managed to do it with less than that, with extra effort on discipline and cost. And it's a great result.

Speaker #5: And the equity markets have been strong here. But what do we know? Because it was a rapid acceleration that you saw. Second, Cécile, on your comments on China shopping events getting more clustered, what does that imply for how you're thinking about longer term?

Speaker #4: But it doesn't make it a rule. So, we continue—my message is not changing and stays. On PNC flat, what I would say is that we have made a choice.

Speaker #5: You've done a great job with highly experienced Chinese stores and also investing in the stores. And third, the marketing and selling expenses were impressive.

Speaker #4: With perfume and cosmetics, and some of our brands, we need to be very selective in distribution and pay a lot of attention to promotions. So, there could be some areas and opportunities for short-term growth.

Speaker #5: And how you manage those. How are you balancing your management of that versus long term? And what should be done at that to perpetuate that?

Speaker #5: And then finally, on artificial intelligence, we're seeing a lot of innovation there. And a balance in terms of magic versus logic. And Vuitton's had a rich history of managing inventory quite tightly.

Speaker #4: But for us, it probably would mean damaging the brand equity. And we want to continue to build the brand desirability and equity for the long term.

Speaker #5: But what are your philosophies or frameworks towards approaching AI and personalization and supply chain? Thank you.

Speaker #4: So, we've been working hard in order to be very selective on distribution, and we are still impacted as a result by travel retail performance.

Speaker #4: Thank you, Olivier. So on US, the good momentum in Q2 was both. So we had a great momentum in local. And an acceleration of tourism on top of that.

Speaker #2: The next question is from Olivier Shen, TD Cowen.

Speaker #4: That's why you see the US market growth accelerating between Q1 and Q2. Where in Q1, we still had some impact from tourism linked mainly to exchange rate.

Speaker #5: Hi, thanks very much, Rodolphe and Cécile. Regarding the US, we've seen really good momentum here, as I'm sure you have seen as well. What's happening with tourism in the US versus local?

Speaker #5: And the equity markets have been strong here, but what do we know? Because it was a rapid acceleration that you saw. Second, Cécile, on your comments on China shopping events getting more clustered, what does that imply for how you're thinking about the longer term?

Speaker #4: But it has the trend has reversed in the second quarter. On China, my comment is not deriving to having any kind of structural conclusion.

Speaker #5: You've done a great job with the highly experienced Chinese stores and also investing in the stores. And third, the marketing and selling expenses were impressive.

Speaker #4: It was rather to comment that we should be careful with very short-term trends. As you might have some weeks where it moves. But you have also purchase that are more clustered.

Speaker #5: And how do you manage those? How are you balancing your management of that versus the long term? And what should be done to perpetuate that?

Speaker #4: So you need to ensure that you have sufficient period of time in order to really analyze the demand. But for us, there's no specific things.

Speaker #5: And then finally, on artificial intelligence, we're seeing a lot of innovation there, and a balance in terms of magic versus logic. And Vuitton has had a rich history of managing inventory quite tightly.

Speaker #4: We are already, as you said, both in term of experience in store, both in term of ensuring that we have brand activation at those moments.

Speaker #5: But what are your philosophies or frameworks toward approaching AI and personalization in the supply chain? Thank you.

Speaker #4: I think we'll continue to do what we've been doing. And that has been quite successful. Balancing cost versus marketing, it's obviously something we are very vigilant around.

Speaker #4: Thank you, Olivier. So, on the US, the good momentum in Q2 was both. We had great momentum in local, and an acceleration of tourism on top of that.

Speaker #4: And we make sure that wherever we need it, we invest in the brands. When you go for creative renewal, for example, with Jonathan Andersen, you reinvest in your brand.

Speaker #4: That's why you see the US market growth accelerating between Q1 and Q2. In Q1, we still had some impact from tourism, mainly linked to the exchange rate.

Speaker #4: You activate. And that's very clear. So it's really not an marketing or margin. Where we are going to find efficiency is, you mentioned on your AI question, it's on sales rule.

Speaker #4: But the trend has reversed in the second quarter. On China, my comment is not meant to reach any kind of structural conclusion.

Speaker #4: Improving your sales rule, for example. Time to market, improving the brief, lowering your stocks. We love tremendous impact in terms of profitability. And can also help you reinvest.

Speaker #4: It was rather to comment that we should be careful with very short-term trends, as you might have some weeks where it moves. But you also have purchases that are more clustered.

Speaker #4: And then we are looking really around cost that are not cost, where it's investing for the clientele service quality. That we will never bargain you can trust us on that.

Speaker #4: So you need to ensure that you have a sufficient period of time in order to really analyze the demand. But for us, there are no specific things.

Speaker #4: We are already, as you said, both in terms of experience in-store, and in terms of ensuring that we have brand activation at those moments.

Speaker #4: Then on AI, there are several initiatives on AI. Because you can really leverage it in many areas. I think on some calls, we were discussing about clienteling and how you can really make the relationship and the conversion much more efficient.

Speaker #4: I think we'll continue to do what we've been doing, and that has been quite successful. Balancing cost versus marketing is obviously something we are very vigilant about.

Speaker #4: And we make sure that, wherever we need it, we invest in the brands. When you go for creative renewal, for example with Jonathan Anderson, you reinvest in your brand.

Speaker #4: On supply chain, you write that there are also opportunities, both for demand forecast, but also prototyping and time to market, that we can leverage.

Speaker #4: You activate, and that's very clear. So it's really not a marketing or margin issue. Where we are going to find efficiency is, as you mentioned in your AI question, it's in sales roles—improving your sales roles.

Speaker #4: So we are really using and by the way, also on corporate function and cost management. So we are really leveraged on leveraging all of them, in all our Maison.

Speaker #2: The next question is from Lucas Solka, Bernstein.

Speaker #4: For example, time to market, improving the brief, lowering your stocks. We love the tremendous impact in terms of profitability, and it can also help you reinvest.

Speaker #5: Yes. Good evening. Lucas Solka from Bernstein. Maybe stepping back and looking at the fashion and the goods division. And in particular, at the core brands, Vuitton and Dior.

Speaker #5: It's been unprecedented that for a few quarters, seven quarters or so, organic growth has been as low as we've seen. And sometimes negative. I wonder what your analysis what your diagnosis is of what is causing this.

Speaker #4: And then we are looking really around costs that are not costs, where it's investing for the clientele, service, quality—that we will never bargain. You can trust us on that.

Speaker #4: Then, on AI, there are several initiatives on AI because you can really leverage it in many areas. I think on some calls we were discussing clienteling and how you can really make the relationship and the conversion much more efficient.

Speaker #5: What is it that is missing in the market? What is it that is missing in your execution? You think. And where do you stack against some of your competitors?

Speaker #5: Would you say that at the moment, in these categories, you're getting market share gains or you're losing market share? One of my doubts is that you're actually, as the rest of the industry, missing middle-class consumer demand.

Speaker #4: On supply chain, you write that there are also opportunities both for demand forecast, but also for prototyping and time-to-market that we can leverage.

Speaker #4: So we are really using—and, by the way, also on corporate function and cost management—so we are really leveraging all of them in all our Maison.

Speaker #5: Price increases post-COVID have made some of the products more difficult for them to buy. The luster and polarized consumer demand environment is causing middle-class consumers to be on the back foot.

Speaker #2: The next question is from Lucas Solka, Bernstein.

Speaker #5: And core mega brands, like Vuitton, as well as their managed, have to deal with this thing. How you adjusting pricing and assortment as a way to address this issue.

Speaker #5: Yes, good evening. Lucas Solka from Bernstein. Maybe stepping back and looking at the Fashion and Other Goods division, and in particular at the core brands, Vuitton and Dior.

Speaker #5: Assuming that you're sharing this diagnosis and this hypothesis of the underperformance. Thank you. Thank you very much.

Speaker #5: It's been unprecedented that, for a few quarters—seven quarters or so—organic growth has been as low as we've seen, and sometimes negative. I wonder what your analysis or diagnosis is of what is causing this.

Speaker #4: Thank you, Luca. So maybe because Dior and Vuitton is not exactly the same. So to be concrete on what we're seeing, I will take one and then the other.

Speaker #5: What is it that is missing in the market? What is it that is missing in your execution? You think. And where do you stack up against some of your competitors?

Speaker #4: On Dior, you might have listened to some interviews of Delphine Arnault and Jonathan Andersen that they had in the first half. We are aiming to build lasting momentum.

Speaker #5: Would you say that, at the moment, in these categories, you're gaining market share or losing market share? One of my doubts is that you, like the rest of the industry, are actually missing middle-class consumer demand.

Speaker #4: Lasting momentum is not meaning you don't yield short-term benefits. But the reverse is not true. So today, we are very encouraged by the short-term results.

Speaker #4: I mentioned a few of them. On Dior, all key clientele are up in H1. Double digit for Americans and Japan and Japanese in Q2 that all accelerated.

Speaker #5: Price increases post-COVID have made some of the products more difficult for them to buy. The last year, and the polarized consumer demand environment, is causing middle-class consumers to be on the back foot.

Speaker #4: We have very strong ready-to-wear for women performance and very strong momentum in bags. Both on the newness that have been proposed by Jonathan Andersen, but also on some other lines that he has reinterpreted.

Speaker #5: And core mega brands like Vuitton, as well as their managed brands, have to deal with this thing. How are you adjusting pricing and assortment as a way to address this issue?

Speaker #4: Including icons like the Lady Dior. So we've made a lot of progress. The collections are super successful. What we are offering is getting success.

Speaker #5: Assuming that you're sharing this diagnosis and this hypothesis of the underperformance. Thank you. Thank you very much.

Speaker #4: And there will be more to come. It's two quarter that we started the creative renewal. On Vuitton, you know that we decided this year to put the 130 years of monogram as a key feature.

Speaker #4: Thank you, Luca. So maybe because Dior and Vuitton are not exactly the same. So, to be concrete about what we're seeing, I will take one and then the other.

Speaker #4: On Dior, you might have listened to some interviews with Delphine Arnault and Jonathan Anderson that they did in the first half. We are aiming to build lasting momentum.

Speaker #4: And what we are seeing is that it's leading into good momentum for the monogram. And both in the iconic shapes like the Alma and the Speedy that are back to growth, but also in some new shapes, that I will talk about on your comment regarding clientele pyramid.

Speaker #4: Lasting momentum does not mean you don't yield short-term benefits. But the reverse is not true. So today, we are very encouraged by the short-term results.

Speaker #4: We have launched a new monogram emblem collection that is also doing well. We have good momentum on ready-to-wear women jewelry and perfume. You know that we've been opening some very unique experiential stores and flagships that are doing very well.

Speaker #4: I mentioned a few of them. On Dior, all key clientele are up in H1—double digit for Americans and Japanese in Q2. That all accelerated.

Speaker #4: We are very strong in ready-to-wear for women's performance, and we have very strong momentum in bags. This is true both for the newness that has been proposed by Jonathan Anderson, but also for some other lines that he has reinterpreted.

Speaker #4: And lastly, maybe something you know less is the kind of ephemeral initiatives that we had, like the hotel in London, which is also happened to be a commercial success.

Speaker #4: Including icons like the Lady Dior, we have been super successful. What we are offering is gaining success, and there will be more to come.

Speaker #4: So that's for Vuitton. On the question regarding are we missing middle class, I would make two comments. The first one is that and I think it's good news for our industry is that wherever there is wealth creation, which we have seen in the US, which we have seen in Korea, there is a strong appetite for luxury.

Speaker #4: It's two quarters that we started the creative renewal. On Vuitton, you know that we decided this year to put the 130 years of Monogram as a key feature.

Speaker #4: And a strong appetite for our goods all across clienteles. And the second, because you're right, we said and we've been discussing this, we said that it's very important to continue to nourish the pyramid.

Speaker #4: And what we are seeing is that it’s leading to good momentum for the Monogram, both in iconic shapes like the Alma and the Speedy, which are back to growth.

Speaker #4: So both the very exclusive client and the aspirational, because we need to continue to recruit. And if you take Vuitton, it's not a new strategy per se.

Speaker #4: But also in some new shapes that I will talk about in your comment regarding the clientele pyramid. We have launched a new Monogram Emblem collection that is also doing well.

Speaker #4: And what we've I can take some example in H1. If you take H1, you have the P9, which is very expensive, very exclusive. Where the waiting list is continuing to grow.

Speaker #4: We have good momentum on ready-to-wear, women’s jewelry, and perfume. You know that we've been opening some very unique experiential stores and flagships that are doing very well.

Speaker #4: So that would be for addressing the very exclusive high net worth individual. And then you have we've launched some new forms of bag, like the squares and the multipass, which are successful and would be addressing a more aspirational part of the clientele.

Speaker #4: And lastly, maybe something you know less about is the kind of ephemeral initiatives that we had, like the hotel in London, which also happened to be a commercial success.

Speaker #4: And then we have all the double entry strategy. We already discussed quite a lot. So we've made great progress. I think it's good that we are back in growth.

Speaker #4: So that's for Vuitton. On the question regarding whether we are missing the middle class, I would make two comments. The first one is that—and I think it's good news for our industry—wherever there is wealth creation, which we have seen in the US and which we have seen in Korea, there is a strong appetite for luxury.

Speaker #4: And we have plenty initiatives that are resonating well with clients.

Speaker #2: The next question is from Victoria Petrova, Barclays.

Speaker #5: Thank you very much, my first question is on the comps. I think it was asked but can you repeat if Louis Shipp should inflate comps for China in the third quarter, or it's immaterial?

Speaker #4: And a strong appetite for our goods across all clienteles. And the second, because you're right, we've been discussing this—we said that it's very important to continue to nourish the pyramid.

Speaker #5: And also from our conversation during pre-close, it looks like Mina has been improving through June. Could you provide any color on the exit rate or how we should think about Mina in the third quarter?

Speaker #4: So both the very exclusive client and the aspirational, because we need to continue to recruit. And if you take Vuitton, it's not a new strategy, per se.

Speaker #5: What your base case scenario? And finally, is there any specific phasing on costs overall, but also related to watches and jewelry division on the refurbishment of Tiffany stores?

Speaker #4: And what we've— I can take an example in H1. If you take H1, you have the P9, which is very expensive, very exclusive, where the waiting list is continuing to grow.

Speaker #5: Thank you very much.

Speaker #4: So that would be for addressing the very exclusive, high-net-worth individual. And then we have launched some new forms of bag, like the Squares and the Multipass, which are successful and would be addressing a more aspirational part of the clientele.

Speaker #4: Thank you. So on the comps in Q3, what I commented is overall we have an optical more difficult basis of comp that what we had in Q2.

Speaker #4: But because it's mirroring easier comp in '24, actually it's probably quite comparable. On Middle East, indeed, we had 1 point of impact in the first quarter, which was only on one month where we commented that the months of March was down 50% plus.

Speaker #4: And then we are all in on the double entry strategy. We already discussed quite a lot. So we've made great progress. I think it's good that we are back in growth.

Speaker #4: And we have plenty of initiatives that are resonating well with clients.

Speaker #2: The next question is from Victoria Petrova, Barclays.

Speaker #4: We have still one quarter, but over a longer duration. So we have seen regular and gradual improvement. Also, we are exiting the quarter still negative, but much more muted than when we entered the quarter.

Speaker #5: Thank you very much. My first question is on the comps. I think it was asked, but can you repeat if Louis should inflate comps for China in the third quarter, or is it immaterial?

Speaker #5: And also, from our conversation during pre-close, it looks like Mina has been improving through June. Could you provide any color on the exit rate, or how we should think about Mina in the third quarter?

Speaker #4: It's still very much unknown as to how this is going to develop. So we continue to monitor the situation. Carefully. And then on the cost overall, you've seen our income statement.

Speaker #5: What is your base case scenario? And finally, is there any specific phasing on costs overall, but also related to the Watches and Jewelry division on the refurbishment of Tiffany stores?

Speaker #4: So you've seen that we've been very disciplined in making sure that the costs are managed actively. Both in marketing and selling, but also in GNA.

Speaker #5: Thank you very much.

Speaker #4: Thank you. So on the comps in Q3, what I commented is overall we had a more difficult optical comp in Q2. But because it's mirroring an easier comp in '24, actually it's probably quite comparable.

Speaker #4: On Tiffany we were able to improve the margin despite several headwinds because you had the price of gold. You had also the increase in selling expenses from the expansion and the renovation of the stores.

Speaker #4: And you had some headwind from the legacy but still, because we've been able to accelerate in terms of growth, because the AUR has increased a lot, we were able to improve the margin.

Speaker #4: On the Middle East, indeed, we had one point of impact in the first quarter, which was only for one month, where we commented that the month of March was down 50% plus.

Speaker #1: We'll take another two questions.

Speaker #4: We still have one point of impact in the second quarter, but over a longer duration. So we have seen regular and gradual improvement. Also, we are exiting the quarter still negative, but much more muted than when we entered the quarter.

Speaker #2: The next question is from Jean d'Anjou Hotel PHF.

Speaker #5: Good evening, Madame Cabanis. Good evening, Rodolphe. I had two questions. The first one is on China and cognac. It seems that the demand is improving in China, but you mentioned it was at the low end with the SOP.

Speaker #4: It's still very much unknown as to how this is going to develop, so we continue to monitor the situation carefully. And then, on the costs overall, you've seen our income statement.

Speaker #5: Could you maybe tell us if you think this is a structural improvement and at last a recovery or if it is more short term?

Speaker #5: And then the second thing, there is obviously a big gap in growth between fashion and leather and then the jewelry part, nearly 10 points.

Speaker #4: So you've seen that we've been very disciplined in making sure that the costs are managed actively, both in marketing and selling, but also in G&A.

Speaker #5: I wonder whether some geographies explain most of this gap. For example, US and Korea, or is it evenly distributed between geographies? Thank you.

Speaker #4: On Tiffany, we were able to improve the margin despite several headwinds, because you had the price of gold and also the increase in selling expenses from the expansion and renovation of the stores.

Speaker #4: Thank you. On China cognac, so yes, Rodolphe commented on the improving trends. We have also seen improving trends in ISO and overall to your question on is it short term or is it going to last.

Speaker #4: And you had some headwind from the legacy, but still, because we've been able to accelerate in terms of growth, and because the AUR has increased a lot, we were able to improve the margin.

Speaker #4: What I can answer is it's not selling. So it's not like we're stocking. We are selling and sell out that are quite aligned and the stocks are much healthier than they used to be.

Speaker #1: We'll take another two questions.

Speaker #4: On the difference between fashion and leather goods and watch and jewelry growth rate, there are probably not one big explanation and one size fits all.

Speaker #2: The next question is from Jean d'Anjou, Auto PHF.

Speaker #5: Good evening, Madame Cabanis. Good evening, Rodolphe. I had two questions. The first one is on China and cognac. It seems that the demand is improving in China, but you mentioned it was at the low end with the VSOP.

Speaker #4: But in terms of geographies, if we look at watches and jewelry where it accelerated the most is US, Japan, and Korea indeed.

Speaker #5: Could you maybe tell us if you think this is a structural improvement and, at last, a recovery? Or if it is more short-term? And then, the second thing, there is obviously a big gap in growth between Fashion and Leather.

Speaker #1: All right.

Speaker #2: The next question is from Chiara Battistini, JP Morgan.

Speaker #6: Good evening. Thank you very much for taking my questions. I just have a couple of follow-ups, actually. The first one on back home fashion and leather goods.

Speaker #5: And then the jewelry part, nearly 10 points. I wonder whether some geographies explain most of this gap—for example, the US and Korea—or is it evenly distributed between geographies?

Speaker #6: I was wondering if you could share with us the price mix and volume dynamics for Q2. And the second question, very quickly, did you have any staff refund for the US duties at all?

Speaker #5: Thank you.

Speaker #4: Thank you. On China Cognac, so yes, Rodolphe commented on the improving trends. We have also seen improving trends in XO. And overall, to your question on is it short term or is it going to last, what I can answer is it's not destocking.

Speaker #6: And should we expect anything to come on that front? Thank you.

Speaker #4: Thank you, Chiara. So price volume mix for FLNG, if you look at Q2, it's 1% growth. If we exclude Middle East impact, it's 2% growth.

Speaker #4: We have moderate price, so you can assume that volume mix overall was flat, no big moves there. And in terms of US duties, we got some refund, but it's only a few basis points to the margin at this stage.

Speaker #4: So it's not like we're stocking. We are selling and sell-outs are quite aligned. And the stocks are much healthier than they used to be.

Speaker #4: On the difference between Fashion and Leather Goods and Watches and Jewelry growth rates, there is probably not one big explanation and no one-size-fits-all answer.

Speaker #4: So unfortunately, much less than the currency very significative impact, negative. And I think we stop there, Rodolphe. Thank you very much for all your questions, for your attention.

Speaker #4: But in terms of geographies, if we look at Watches and Jewelry, where it accelerated the most is the US, Japan, and Korea, indeed.

Speaker #4: Again, it was a very solid set of results, so we are happy for that. And for those, I will not see. I wish you a very good summer.

Speaker #1: All right.

Speaker #2: The next question is from Chiara Battistini, JP Morgan.

Speaker #6: Good evening. Thank you very much for taking my questions. I just have a couple of follow-ups, actually. The first one is back on Fashion and Leather Goods.

Speaker #6: Thank you.

Speaker #6: I was wondering if you could share with us the price mix and volume dynamics for Q2. And the second question, very quickly, did you have any staff refund for the US duties at all?

Speaker #6: And should we expect anything to come on that front? Thank you.

Speaker #4: Thank you, Chiara. So, price/volume mix for FLNG: if you look at Q2, it's 1% growth. If we exclude the Middle East impact, it's 2% growth.

Speaker #4: We have moderate price, so you can assume that volume mix overall was flat—no big moves there. And in terms of U.S. duties, we got some refund, but it's only a few basis points to the margin at this stage.

Speaker #4: So unfortunately, much less than the currency, very significative impact, negative. And I think we stop there, Rodolphe. Thank you very much for all your questions, for your attention.

Speaker #4: Again, it was a very solid set of results, so we are happy about that. And for those I will not see, I wish you a very good summer.

Speaker #6: Thank you.

Speaker #1: Also, in the scenario

Speaker #1: Right, thank you. And Christian, a question for you: how did tax rates and payments vary by jurisdiction, say, between Australia and Canada? And are there any tax losses from previous years that can offset current tax liabilities?

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Speaker #2: mining tax, and we to mining tax, and we

Speaker #2: paying corporate tax when there's

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Speaker #2: forward office in

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