Operator: Good day, and thank you for standing by. Welcome to the Kering 2026 third quarter revenue conference call. Please note that today's conference is being recorded. I would now like to hand the conference over to Armelle Poulou, Chief Financial Officer of Kering. Please go ahead.
Armelle Poulou: Thank you. Good evening to all of you, and welcome to Kering's Q3 2026 revenue call. I will be reviewing our performance and will be joined by Philippe Néron, Head of IR for the Q&A session. Start with the key highlights of the quarter. Against an uncertain macroeconomic backdrop, we continue to roll out our ReconKering Plan, tackling step by step the changes needed to build a more resilient and integrated group and giving us the agility to better navigate these increasingly challenging environments.
Armelle Poulou: First, our houses keep on deploying their strategies, with product execution being the clear priority. This was, for example, visible through the recent fashion shows, which gave each house the opportunity to translate strategic choices tangibly. Second, we continue to strengthen our leadership with appointments at Bottega Veneta, Pomellato, Dodo, and at group level.
Armelle Poulou: These moves reflect our focus on building leadership depth, combining the recruitment of external experts with the promotion of internal talents. Finally, as part of our long-term commitment to nurturing the craftsmanship and talent that underpin our houses' industrial base, our Kering Academia per l'Eccellenza launched its first full academic year, welcoming more than 1,500 students across programs developed with our houses and seven partner schools across Italy. Taken together, these actions mark continued progress on our roadmap.
Armelle Poulou: I will now turn to our financial performance in more detail. On slide 5, group revenue in the quarter reached EUR 3.3 billion, down 1% on a comparable basis, and flat as reported, reflecting the positive impact of the US dollar and the Chinese yuan, partially offset by a negative impact from the Japanese yen. There was no scope effect.
Armelle Poulou: The quarter reflects fading effects at Gucci, together with a more pronounced seasonal effect at Kering Eyewear, a demanding comparison base as last year's sequential progression from Q2 to Q3 was particularly strong and more challenging macro trends. Traffic remains the main constraint across the group. However, other retail KPIs were supported by various initiatives reflecting solid engagement from clients visiting our stores.
Armelle Poulou: As anticipated during our H1 call, Gucci's performance in Q3 is impacted by the fading effect of our collections before benefiting from the ramping up of our ongoing work on products. In the meantime, the group can rely on the strength of its portfolio with Saint Laurent, Bottega Veneta, and Brioni, as well as Kering Eyewear and Kering Jewelry, which continue to extend their strong trajectory.
Armelle Poulou: Overall, against the current macro backdrop, we remain focused on the levers within our control, and our priority is clear: execute better, move faster, and remain relentlessly focused on desirability, product, and client response. Moving on to our quarterly revenue in more detail on slide 6. The performance remains uneven. By segment, Kering Fashion and Leather Goods was down 3% on a comparable basis and down 1% as reported, with Gucci down 6% on a comparable basis and 4% as reported as the house continues its turnaround.
Armelle Poulou: Kering Jewelry increased by 11% on a comparable basis and by 12% as reported, supported by strong performance at Boucheron and Pomellato. Kering Eyewear grew 4% on a comparable basis and 6% as reported, confirming the resilience of its business.
Armelle Poulou: Corporate and other decreased by 5%, both on a comparable basis and as reported, reflecting the end of rental income following the real estate deals, despite the continued strong performance of Ginori 1735. Overall, our geographic mix stays well-balanced, with the main shift being a lower contribution from Asia Pacific amid mixed regional trends. Mainland China is our major headwind as consumer confidence stays subdued and customers are increasingly selective, while South Korea continues to grow.
Armelle Poulou: On slide 7, let's review the top line by channel. The split by channel remains stable, with retail, which represents 75% of revenue, down 3% on a comparable basis. Within retail, e-commerce grew 3% year on year on a comparable basis and represented 11% of retail sales, a rather stable proportion. Traffic remained under pressure overall in our stores.
Armelle Poulou: This was partly offset by better conversion across most houses, supported by stronger product execution and improved client engagement, together with higher average unit retail price and average ticket. These indicators point to healthier product dynamics and reinforce our focus on product transformation. Our directly operating network now counts 1,614 stores, a net reduction of 105 stores since the end of last year, including 25 net closures at Gucci. With this, we have reached our objective of 100 net store closures before year-end.
Armelle Poulou: The group now anticipates at least 125 net closures for the full year 2026. Alongside closures, we continue to open stores in selected locations. At the same time, we keep focusing on maximizing the productivity and appeal of our existing network with store refurbishments, strengthening the expression of each house, and elevating the client experience. Wholesale and other increased by 3%, in line with the previous quarter.
Armelle Poulou: When zooming in on distribution split per segment, Kering Fashion and Leather Goods retail sales declined by 4% on a comparable basis. The sequential slowdown reflects a more challenging environment with less supportive contribution of Gucci and lower traffic this summer, especially in mainland China. Wholesale increased by 1%.
Armelle Poulou: Kering Jewelry was driven by the strong retail performance of our jewelry specialists, posting 18% growth, while wholesale declined by 5%, affected by softer performance in mainland China and retailization in the Middle East. Kering Eyewear, whose revenue entirely derives from wholesale, keeps on enjoying positive momentum, with revenues increasing by 4% on a comparable basis. Moving on to retail regional performance on a comparable basis on slide 8. Western Europe was flat and posted its third quarter of sequential improvement, with both local and tourist spending improving sequentially, driven by Saint Laurent and Bottega Veneta.
Armelle Poulou: In North America, trends have softened this quarter after several quarters of strong growth. Performance remains strongly positive for most houses, and the region posted a 1% growth on a comparable basis despite normalization in consumer demand. Japan eased this quarter, posting 4% growth, boosted by the dynamism of our jewelry houses in the country. Tourism dynamics became less supportive than in Q2.
Armelle Poulou: Asia Pacific declined by 8% in the quarter, with the low traffic in mainland China being the main headwind, partly offset by continued strong momentum in South Korea. Nevertheless, in-store indicators were more encouraging. The dedicated China plan remains focused on rebuilding desirability. I will get back to this in more detail later. Finally, Rest of the World declined by 5%. The Middle East continued its sequential recovery and posted a positive growth in Q3. Let's now move to Kering Fashion and Leather Goods on slide 9.
Armelle Poulou: Revenues stood at EUR 2.7 billion, down 1% as reported and 3% on a comparable basis. Excluding Gucci, the segment grew by 2% in retail with Saint Laurent, Bottega Veneta, and Brioni enjoying momentum. This broad-based contribution highlights the strength and diversification of our portfolio, helping to partially offset Gucci's current transition. Before turning specifically to Gucci, let me first say a few words about the other brands within the segment. At Saint Laurent, the house keeps benefiting from strong traction, driven by sustained growth in North America and Western Europe, and engagement from VICs and core clients. Bottega Veneta continued to outperform, supported by sustained brand desirability, solid traction across key markets, and continued strong momentum in leather goods with successful product introductions. The house also advanced its diversification strategy, notably in ready-to-wear, while benefiting from strong engagement among VICs.
Armelle Poulou: This performance confirms the methodological rollout of the house strategy unveiled at the Capital Market Day, with growth increasingly driven by value. At Balenciaga, performance was more challenging as the house works through its creative transition. Leather goods remain the engine of the house, while ready-to-wear and shoes remain key areas of focus. Basket size improved both in value and units. McQueen continued to execute its repositioning and the reset of its retail network. The house is refocusing its identity as a British tailor, and its latest show in London further reinforced this renewed focus on its British roots. Finally, Brioni maintained its solid growth trajectory, supported by its highly personalized approach to client relationships and the strength of its bespoke offer. Wholesale and other revenues were up 4% on a comparable basis.
Armelle Poulou: Royalties and other revenues recorded very strong performance, driven by the beauty and eyewear licenses of our fashion houses. Focusing on Gucci now on slide 10. The house recorded sales of EUR 1.3 billion in the third quarter, down 4% as reported and 6% on a comparable basis year-on-year. Retail ended down 7% as reported and 9% on a comparable basis. This performance reflects several factors. An 11 percentage points tougher comparison base this quarter, and a less pronounced newness effect than in Q2, partially offset by the first benefits of our ongoing work on product development from creative teams to retail excellence. On phasing, Primavera started to reach stores in mid-July and was fully deployed in September, with advertising rolling out from late August. The collection contributed positively to newness. Being fashion-forward, it primarily speaks to a fashion-led clientele.
Armelle Poulou: It is now being complemented by Gucci Core, which is more focused on the core wardrobe and will begin to reach stores in November. Traffic remains a main concern across region, with mainland China our key headwind. That said, conversion, average ticket, and average price continued to improve. This quarter was primarily about execution. We continued to reshape the product architecture, sharpen category priorities, and improve pricing and perceived value while bringing new collections into stores. Handbags are at the forefront of this work with a richer offer and a clearer price architecture. Ready-to-wear and shoes remain key areas of focus. The recovery will be gradual over time as we keep on working towards progressively translating improving dynamics into traffic and sustainable growth. Wholesale and other revenues were up 35%.
Armelle Poulou: Wholesale, which represents around 9% of sales or EUR 120 million in the quarter, was up 45% on a comparable basis, reflecting a low comparison base and order book effects as new collection came through. On slide 11, Kering Jewelry again delivered a strong performance, reaching EUR 239 million in revenues. Sales were up 12% as reported and 11% on a comparable basis. Sales in the directly operating network increased by 18%, while wholesale and other revenues decreased by 6%, both on a comparable basis and as reported. The segment is benefiting from a growing retail footprint and the first effects of the integrated platform supporting synergies. Boucheron posted another strong quarter, driven by the continued strength of its iconic collections, Quatre and Serpent Bohème, and good performance in Japan and South Korea.
Armelle Poulou: Pomellato also benefits from positive momentum, supported by strong traction in Japan, thanks to the Nudo, Iconica, and Together collections. Performance at Dodo and Qeelin was mixed, though the houses continue to advance their product initiatives, notably with Qeelin's successful launch of Wulu Purple Jade. Beyond the quarter, Kering Jewelry is confirming its role as a structural growth engine for the group. The category benefits from strong underlying fundamentals and from the disciplined way we are scaling it across houses and regions. We are also investing in the communication of our brands. With strong desirability, a growing retail footprint, and an increasingly integrated industrial backbone, we are confident in jewelry's ability to increase its contribution to group revenue over time. We will present our key priorities for the jewelry business during a Kering Jewelry day, which will take place on 2 December in Paris.
Armelle Poulou: Moving on to slide 12, let's focus on the revenue of Kering Eyewear, which posted another quarter of solid performance. Sales reached EUR 373 million and were up 6% as reported, and 4% on a comparable basis, reflecting strong demand across the portfolio and the anticipated more pronounced seasonality effect during the H2 of the year. This performance highlights the strength, resilience, and scalability of the eyewear platform across geographies. Growth was supported by a combination of several product launches, including Maui Jim fall/winter 2026 collection and the continued rollout of the activations supporting Lindberg 40th anniversary. Commercial and marketing momentum remains strong, supported by a successful spring/summer 2027 sales campaign and media investment across key brands and targeted activations. Beyond the quarter, eyewear is demonstrating again the relevance of our integrated model.
Armelle Poulou: With its diversified brand portfolio and recurring demand profile, Kering Eyewear is a highly attractive and reliable growth engine for the group. On slide 13, I will make a few comments about the corporate and other segment. This quarter, revenue from corporate and other amounted to EUR 27 million, down 5% as reported and on a comparable basis, primarily reflecting the end of rental income following the real estate transaction.
Armelle Poulou: Despite the very strong double-digit growth delivered again by Ginori 1735, highlighting the continued progress in brand development and desirability across key markets. On slide 14 and before concluding, I would like to step back from the quarter and show the steady progress we are making on our transformation brick by brick. Clearly, the performance of the Q3 is not where we want it to be. But beneath the top line, the actions we have taken are becoming increasingly visible.
Armelle Poulou: First, at Gucci, our priority is to rebuild desirability. Creative renewal is underway. The store show in Milan at the end of September brought the house strategy fully together, building on Primavera and GucciCore, presented earlier this year. The collection stood out for the diversity of its look, product, and style across both men's and women's. We have also sharpened the organization around creativity with product, merchandising, marketing, and retail now working more closely together. At the same time, we are increasing media investment, strengthening communication, and intensifying clienteling in Q4, making sure our actions resonate more strongly with clients. We are already seeing tangible results, with improvements in conversion, average ticket, and average price. Traffic remains a missing piece. We are also working on retail excellence, deploying our new store concept, optimizing the network, and stepping up sales force training.
Armelle Poulou: Second, in China, we are tackling the challenge head-on. On the operating model, we are adapting our organization and leadership, with more decisions now taken locally. On client relevance, we are putting Chinese clients more firmly at the center of our actions, stepping up outreach to top clients, timing major product moments around local occasions, and conceiving campaigns in and for China rather than adapting global ones. As part of this effort, I am pleased to announce the launch of a content factory in China for China. On the network, we remain disciplined. We are optimizing our stores while investing in refurbishment and restylings. Format and visual merchandising are the levers we hold on traffic itself, and we are using them first where footfall has fallen most. Third, we are enhancing the offer across the houses.
Armelle Poulou: Product and price architectures are becoming clearer, quality is being upgraded, and we are reducing the number of SKUs. Buying is becoming more responsive to actual demand. These also support our objective to reduce fashion and leather goods inventory by around EUR 1 billion by year-end. Finally, on efficiency, we are building an integrated group. Our shared industry, client, and tech platforms are increasingly supporting the houses for manufacturing and procurement to client engagement, forecasting and inventory management. On change management, we are embedding a stronger culture of execution with clearer accountability, faster decision-making, and a collective mindset. On cost discipline, we are further reducing our cost base without compromising investment in our houses. CapEx remains disciplined, and we confirm full-year OPEX below last year, with H2 2026 below H2 2025.
Armelle Poulou: Before turning to the outlook, a word on creative leadership, which sits at the heart of our model. At Saint Laurent, we are opening a new chapter from a position of strength with the house back to growth, a clear strategy, and solid momentum. At McQueen, we will build on the repositioning already underway, sharpening the house focus on what makes it distinctive: British tailoring, women's ready-to-wear, and occasion wear. In both cases, our approach is the same. The creative vision fully aligned with a clear house strategy and supported by the strength of the group platform. We look forward to sharing more on creative leadership soon. While the benefits of the transformation are not yet fully visible in our revenues, the actions behind them are well underway. To summarize, our focus is on rebuilding desirability, improving retail productivity, and translating these changes into healthier and value-creating growth.
Armelle Poulou: As you know, we continue to operate in an uncertain geopolitical and macroeconomic environment, with limited visibility in some of our key markets. This is weighing on our short-term revenue trends. Nevertheless, we continue to prioritize the quality of our revenue with several of our brands showing strong momentum and the recovery at Gucci gradually taking shape. On profitability, we confirm our objective of improving recurring operating margin in 2026. This will be supported by the continued implementation of our efficiency measures while maintaining strong investment in the desirability of our houses. Today, our focus remains firmly on the execution of our strategic plan with agility, discipline, and flawless execution, concentrating on the levers that are within our control. We are clear-eyed about the work still ahead. Q3 reinforced the necessity of our transformation, but it does not change its direction.
Armelle Poulou: Our priority is to translate the progress we are making across our houses and the group into sustainable growth, stronger profitability, and cash generation. With that, we are ready to take your questions.
Operator: Thank you. To ask a question, you will need to press star 1 and 1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1 and 1 again. We will now go to the first question. One moment, please. Your first question today comes from the line of Anne-Laure Bismuth from HSBC. Please go ahead.
Anne-Laure Bismuth: Yes, hi. Good evening, Armel and Philippine. My first question is on the performance for the fashion and leather division ex Gucci, which was flat in Q3. Can we have a bit more granularity about the performance of Bottega Veneta and Saint Laurent if it was above average? Yes, it would be good to have that granularity. My second question is about the consumer reception of the Primavera collection, if you can share a bit of feedback on that, and then how the core collection has been rolled out a bit earlier in some of the location globally. Maybe a last one, I know it can be a bit premature, but can we see a bit of an improvement on the back of these collections being in stores in Q4 for Gucci? Thank you very much.
Armelle Poulou: Thank you, Anne-Laure. First, let me comment on the fashion and leather goods brand ex Gucci. Yes, it was flat. It was up 2% in retail. Very happy to see a positive momentum at Saint Laurent, driven by North America and Western Europe. We saw a very strong traction in ready-to-wear and shoes, supported by a lot of newness that was very successful. Also, I would say a very interesting traction on the VIC. You remember that is part of the strategy to elevate the part of VICs at Saint Laurent, and we had a very good recruitment of new VICs at Saint Laurent over the quarter. Regarding Bottega Veneta, Bottega Veneta delivered another high single-digit growth in the quarter, despite tougher comparison basis. Leather goods remains the key driver, supported by the Andiamo, but also by new launches.
Armelle Poulou: We are also happy to see the good reception to the ready-to-wear collection, which allow diversification to develop at Bottega Veneta. At Bottega Veneta, we are also seeing a double-digit growth of our iClient category. For the other brands, Balenciaga and McQueen, the quarter was a bit more challenging. Balenciaga is seeing very good results on the leather goods with the City and the Rodeo, and we just launched a new bag, the new Hourglass Avenue, that has a very good start. At the same time, it is suffering on the ready-to-wear and shoes, where we need to focus on introducing new lines and new products. McQueen, it is working on its repositioning, but it is making good progress on the network optimization, the restructuring of the company, and the repositioning with some early good signs in women's ready-to-wear and formal footwear.
Armelle Poulou: Brioni delivered a very strong growth with a large success of the bespoke offer. Also here again, a good development of a very highly personalized client relationship. Your second question was on Primavera. Primavera gained traction throughout the quarter. It is a collection that was very fashion-led, which for us was very important because the objective, you remember, from the beginning of the year, was to regain visibility at Gucci and to get Gucci back into the conversation, which we did with Generation and then Core. The objective of the next collection that is coming, as you said, in Q4, will be to enlarge the appeal of the collection. It is going to introduce more daily wardrobe, and it should resonate more to a larger audience of our clientele. Asking how is it doing for Core, it is really too early because I think it just arrived in the store.
Armelle Poulou: The full deployment in store will be done over the month of November. It is a bit early to give a feedback on Core. Then, of course, you have seen the show of the store. That will be the next step with, here again, a collection that will be even more large in its offer across category and size. You asked me. Well, that was it. Thank you, Anna.
Anne-Laure Bismuth: Thank you.
Operator: Thank you. Your next question today comes from the line of Antoine Belge from BNP Paribas. Please go ahead.
Antoine Belge: Yes, good evening. It is Antoine at BNP. Three questions, if I may. I know it is probably difficult to estimate, but you think that there is a calendar impact from the phasing of the collection on deliveries. Is it possible for you to try to get an estimate of how much it weighed in the quarter. Maybe it is not possible until you get the answer about the new collection, but if there is at least an internal view on that, I would be interested to know it. Question number 2 is about the performance in retail. There has been a deceleration. Can you maybe give a flavor by the key clusters for retail. Also, maybe in conjunction with my first question, which maybe there is a particular region that suffered more from less newness.
Antoine Belge: Finally, on margin, you said that you are confirming a full-year target of higher margin, but if I am not mistaken, there was also a target on the H2 margin being higher than H1, which would mean above 12.8%. If that would be achieved, that would mean 170 basis point more for the full year. Can you comment a bit on, is it fair to say that now you are abandoning this 12.8 for H2? If that is the case, maybe I think you gave a bit of flavor on OpEx, but also, gross margin, which was down 110 or 1 basis point in H1. It seems that the three drivers that drove the decline are still there. The China mix, the gold price, and the investment in better quality. Thank you.
Armelle Poulou: Thank you, Antoine. On your first question, it is a tough one, of course, because it is very difficult to measure precisely. What is sure is that we are introducing those new collection one after the other, and there is both, as I was saying, the calendar effect of the collection coming to store in September and the fact also that, remember, in Q2, we had two collection. We had the Generation and La Famiglia both in store. For us, what is important is to continue to deliver the plan and to enlarge, I would say, the breadth of the collection, one collection after the other. So difficult for me to give you a precise answer. In terms of retail and deceleration, where we had the most headwind was in China, as you probably well imagine. For sure, that was true for the Chinese cluster as well.
Armelle Poulou: We also had a deceleration. Your question is on Gucci? For Gucci, we also had a deceleration in the US. In terms of performance, that is China that weighs the most on the performance of Gucci retail in Q3. I cannot say it was linked to less units in a region or in another. It was more linked to the dynamics of traffic. Now, even in this environment, in every region, we are pleased to see that we had an improvement of the conversion, an improvement of the average ticket, and average unit price, and also cross-selling. So difficult traffic, but once the customer is in the store, good reception with the newness. On margin. Yes, we have done some further improvement on our discipline on OpEx, which is a good thing. We confirm that we can improve margin for the full year in 2026 versus 2025.
Armelle Poulou: We will not improve H2 margin versus H1 margin, considering the challenging environment. We will still improve the full year margin, which was what we indicated at the beginning of the year. This is driven, as I said, by good discipline on OpEx. Even if we continue to strongly invest in communication behind our brands, we also strongly invest in the refurbishment of our stores. We do some efficiency effort in other areas. The same area I mentioned many times, and it is always said it was not one of effort. We are raising the efficiency within the company in every house, but also leveraging on the group platform, to be more efficient as a group for our houses, with more and more mutualization of services for the brands. Gross margin, you know that we are not guiding on the gross margin.
Armelle Poulou: It is true that the elements you mentioned on the regional mix, the raw materials, and the investment of quality still remains. Over time, you know that we are counting on the group platform over time to have some efficiencies. Some of it we will reinvest in the product, as the product is an absolute key priority for us.
Antoine Belge: Maybe just to follow up on the clusters, because, at the group level, that is usually where you communicate. I am looking at my notes. In Q2, I think the mainland Chinese, they were down around 10% and American up high single digits. Is it possible to have these two clusters for Q3 at the group overall?
Armelle Poulou: Chinese, we were sort of low teens in Q2, and we lost, I would say, around 5 points. Americans, we were high single digit, and we lost sort of the same number of points roughly. So deceleration in both clusters, but America still is a positive region for us.
Antoine Belge: Okay. All right. I thought mid-teens down was for Gucci in Q2, not the group, but I might have that one wrong.
Armelle Poulou: Which one you are saying, for Chinese?
Antoine Belge: Yeah, the Chinese because you say down mid-teens.
Armelle Poulou: It was low teens in Q2.
Antoine Belge: All right. Okay. Thank you.
Armelle Poulou: For the group.
Antoine Belge: Yeah. Thank you.
Operator: Thank you. Our next question today comes from the line of Thomas Chauvet from Citi. Please go ahead.
Thomas Chauvet: Good evening, Armelle and Philippine. I have two questions, please, and just a quick follow-up on the slide deck. On the first one, coming back to the cost, you have explained well, you have taken a lot of cost out of the business since the end of 2024. As you shift from restructuring towards investments, ramp up of new collection, new designers coming at Saint Laurent, McQueen, should we expect a more normal pace of OpEx cost next year? I see consensus is currently assuming around +4 for the OpEx at reported rates. So very different number from both H1 and H2 2026. Secondly, on your guidance, very clear on the margin comments you just made. It seems you have removed from the last slide of the deck the sales growth target for the year that was provided in H1.
Thomas Chauvet: The 9 months at group level are flat at constant effects. You are not assuming growth anymore, I suppose. Is that because of this uncertainty you described earlier, the lack of visibility, maybe the France situation, that you are not comfortable with delivering growth in Q4? Perhaps if you could comment maybe on how October has trended. Just thirdly, on clarification on the Europe performance. Western Europe was flat in retail in Q3, but Gucci was down. Sorry, fashion leather was down 5 and jewelry was also down in Europe. How does that reconcile? I must be missing something. It has been a long day with a lot of reports. I am probably tired, but I just cannot reconcile that great performance in Europe with the fashion leather and jewelry that are both down in Europe. Thank you.
Armelle Poulou: On your first question on cost, first, those efforts we are doing on cost are, as I was saying, based on efficiency effort. It is also coming from the optimization of the network. We are continuing to work in that direction next year. It is really early for me to give you any indication on the OPEX for 2027. Regarding the outlook, it is true that we are in a very uncertain environment at the moment in France, but not just in France, also in other parts of the world. So we want to concentrate on the quality of the sale. That, for us, is the most important. We are working on what we can control, and it is very important for us to concentrate on the execution of the plan and on the quality of the sales.
Thomas Chauvet: Was there anything on
Armelle Poulou: We do not guide on quarterly revenue now. But I can tell you the quality and the transformation are progressing. Now, your question on October, what I can say is that for the moment, broadly, it is in line with the Q3 trends in most of the regions.
Thomas Chauvet: Okay.
Armelle Poulou: Your last question on Europe. You are taking me by surprise. I am sure the numbers are right. Let me come back to you on this one.
Thomas Chauvet: I am sure they are.
Armelle Poulou: We will check.
Thomas Chauvet: Okay. Thank you.
Armelle Poulou: You take it offline, Thomas.
Thomas Chauvet: Thank you, Philippine.
Operator: Thank you. Your next question today comes from the line of Luca Solca from Bernstein. Please go ahead.
Luca Solca: Yes, good evening. It's Luca Solca from Bernstein. Thank you for taking my question. I wonder if you could summarize how you are seeing the new creative directors coming on board, and when they could potentially be launching their new collections in the brands where you have announced recent departures. Do we expect the new creative director to be preparing the fall-winter collection for Saint Laurent to go on the catwalk in early 2027? Is that going to be the same for Alexander McQueen? I think that there was a lot of media reports about potential changes of Balenciaga. So if you could confirm that Piccioli is staying, that would be very helpful. That is my first question. The second question is on off-price. I remember you have announced a significant ambition to reduce inventory.
Luca Solca: I think that a part of that is getting inventory or old inventory out of the system through factory outlets. I wonder how that is proceeding, and if you could give us any update on how you are realizing your ambition and how the off-price channel contributed to the retail performance. Thank you very much.
Armelle Poulou: Okay. On your first question, we are very happy to welcome shortly two new designers. I am not going to announce their name today, but we should be able to give you more indication very shortly. Those successions were well anticipated and planned. That is why we are very positive on the impact it will have with the brand. The situations are a bit different because Saint Laurent is starting from a strong momentum situation. It is more the opportunity to open the new chapter and to unlock all the key area of growth that we see at Saint Laurent and that we explained at the CMD. For McQueen, it is also going to help the repositioning of the brand with a British tailoring approach, with a very bold point of view. I am not going to give you more detail on the collection and the timing.
Armelle Poulou: It is a bit early, and you will see that later on when those creative designer will join the brand. On Balenciaga, I am going to be disappointing, but you know I am not commenting the rumors. Regarding off-price, first, I am happy to confirm that we are very well on track on our objective to reduce inventory for the year end. This has been done in many ways. Yes, some products have been sold in outlet, some products have been sold in family sales. But the most important for us is that we have reviewed completely the buying strategy.
Armelle Poulou: It is not just the buying. We are mentioning from time to time the work that we are doing on the product architecture. Number of SKUs, reducing the number of lines. It is a full work of, I would say, S&OP, where we try to improve the planning, we try to improve the industrial agility.
Armelle Poulou: We try to improve also the correct assortment by cluster of stores. We have reduced, quite importantly, the number of units we produced. But because we are much better organized in terms of planning and distribution, we manage to reduce our leftovers along the year and to reduce the months of coverage of our carryover. That is really the way we want to proceed. I would say, of course, there has been some outlets. But I recall that our objective is really going forward to reduce the number of outlets and to reduce the share of sales that we do in outlets. That is all the point of inventory. It is not just reduce the size of the inventory, but it is also to enhance the quality of the inventory and to enhance our capabilities in terms of S&OP.
Armelle Poulou: We have a strong project at group level together with the houses that we call IBP. This is a good example, I think, of where the group platform can help and influence our efficiency. This is a project that is held at group level, but it is done with the houses all together, and we are quite satisfied to see already some improvement in some KPIs. Inventory is one, but sell-through and months of coverage is another one.
Luca Solca: Thank you, Armelle. Just as a follow-up, could you maybe also update us on your ambition to reduce the number of stores, and how is this proceeding just ahead of the full year end?
Armelle Poulou: Yes. In terms of stores, we are proceeding well because we had announced at the beginning of the year an objective of 100, and we are already at 105. That is why we are revising the ambition of 125. in this number, you have also some new openings because it is a net number. We have
Luca Solca: Right
Armelle Poulou: closed more stores, and we are also opening stores. More importantly, we are accelerating on refurbishment. We think it is extremely important, especially in the brands where we had a creative transition, to make sure that not only we rejuvenate the product offer, but that we also refresh our stores. Having less stores, we also can concentrate our CapEx on refurbishment. We have a strong plan in all brands. At Saint Laurent, for example, this year, we have already deployed a new store concept in many new flagships. At Gucci, we have also started refurbishment. The new store concept will be unveiled in November in Avenue Montaigne.
Armelle Poulou: But we have a full program for next year where there will be some, I would say, strong large refurbishment, but also restyling of our stores, where we will be able to be quite agile and quick in changing the look and feel of the stores without being too disruptive to the sale.
Luca Solca: Thank you very much.
Operator: Thank you. Your next question today comes from the line of Edouard Aubin from Morgan Stanley. Please go ahead.
Edouard Aubin: Good evening, Armelle and Philippine. So maybe most of my questions are on Gucci. Apologies to come back to that. But Armelle, you talked about the weakness in China, but I think maybe one of the biggest surprise is North America, because you turned negative in Q3. I get the point that the comp base is obviously more difficult for sure. But you had talked about the brand perception remaining strong in the US. You did the show on Times Square in May. What are you hearing from your teams in North America? What's the analysis of the contraction of Gucci in Q3? So that would be question number one. Question number two is on Gucci wholesale. So you talked about the order book and so on. Are we going to see a bit of a reversal, wholesale at Gucci being down year-over-year in Q4?
Edouard Aubin: If you could give us a little bit more detail. What is the regional push? Was it rest of the world, or where was wholesale particularly strong in Q2? Then finally, on Gucci, there is a lot of talk about ASP potentially being down via either price cuts that you are taking and the way you play with the mix. I have seen some figures on price cuts in the mid-single digit. If you can comment on, are these discontinued lines that you are heavily discounting to reduce your inventory and do a cleanup? Also if you can just comment on either the straightforward like-for-like price cut, but also the efforts you are making with the mix and the strategy, because I think that is a key focus of investors these days. Thank you.
Armelle Poulou: Thank you, Edouard. Regarding North America, before I go to Gucci, I cannot prevent myself to comment on the fact that Saint Laurent and Bottega Veneta are double digit growing in the US. Regarding Gucci, I think the analysis we do at Gucci is when we look at the collection that we are in store and also at the customer that bought it, we see it is a collection, Generation and Tour Eiffel, but also Primavera, that was very much fashion forward. That attracted more the higher end of our clientele. We saw in the mix more resilient in the VICs than in, I would say, the core part of the clientele and the aspirational.
Armelle Poulou: That is exactly why, and that was the plan, the collection that you saw in May in New York that we got to the store in November as a brand that is much more large and it is more daily wardrobe than fashion-forward. This is for us one of the explanation. We had a very demanding base in the US industry, but certainly more resilient and with the fashion-forward clientele. For us, it is very important. It is also what is putting back Gucci in the conversation. It is also what is going to help us gain traction. Then we need in the store to have a larger offer. We know we need to work still on the product. We are seeing good result on handbags.
Armelle Poulou: We know that on ready-to-wear and shoes, the new collection are going to bring some more newness and probably more attractive to a larger audience. For wholesale into Q4, it is always very difficult to wholesale. There is a bit of phasing, so probably it will not be as much up into Q4, maybe even a bit negative into Q4 due to some savings. It is not our first focus, wholesale. Maybe coming back to your question on price, and thank you for asking the question because there has been a lot of talk about what we have done about price at Gucci. I am very happy to give a bit of explanation. Our approach is really based on common sense. What we want to do is to give to our clients the right product at the right price. Yes, we have done some recent price cuts.
Armelle Poulou: They were done on a very limited number of SKUs, and they were seasonal SKUs from the previous creativity. It is not products that are reproduced. That was part, yes, of the cleaning strategy. It is also a way sometimes to bring some clients to store, and actually, it was very interesting to see that we did a lot of cross-selling between sometimes a still valid, old still valid, and a new product. For us, the focus is really on recreating a desirable offer with the right pricing architecture and an improved quality perception, and both are very important. That is actually why you see that we are happy to see that the AUR went up, and it is good in every region. It is because we also gain in handbag and also in the middle range, I would say.
Armelle Poulou: You saw the success of the Borsetto and the Paraphernalium that are bags that are priced on EUR 3,000. We are not going through a repositioning in pricing of Gucci. At the same time, we want to introduce new product creative with a higher quality, but that are perceived as good value for money for our customers, and that can be at the very high end, at the entry point or in the middle.
Edouard Aubin: Okay, thank you. If I can just keep a quick one on net financial expenses. How do you see the trajectory in 2026 and 2027 now that you have delevered the balance sheets? If you could comment on that would be helpful. Thank you.
Armelle Poulou: The cost of that debt is going to follow the size of the debt, so it is going to go down, which is good news. In Q1, in the net financial expenses, we had also some foreign exchange negative effects, so that is very difficult to forecast going forward. On the cost of net debt, it is going to go down.
Edouard Aubin: Okay. Thank you.
Operator: Thank you. Your next question today comes from the line of Erwan Rambourg from Goldman Sachs. Please go ahead.
Erwan Rambourg: Yeah. Hi, good evening. Erwan Rambourg from Goldman Sachs. I mostly have follow-ups now. I was wondering if within the quarter you saw any difference between the beginning of the quarter and the month of September. Bizarrely, some of your peers have mentioned weather and other elements that weighed more on the beginning of the quarter before things got a bit less bad or even better in September. Secondly, a follow-up on your store closures. You are well ahead of plan. Does it mean you are going more quickly in negotiating these exits, or does it mean that you will eventually go deeper, meaning, you will, on a three-year view, cut more number of stores that you had in mind, or are you just quicker at doing it?
Erwan Rambourg: Thirdly, and this is probably a question that is difficult to answer, but maybe you can give us feedback from the people on the ground. If you look at China, I am just wondering what you are picking up in terms of what is weighing most on psychology, because obviously it is the entire sector which is under pressure in China. Is it real estate? Is it equity markets? Is this new taxation law? Is it something else you have in mind that is explaining how sequentially this market has become a lot worse in the quarter? Thank you.
Armelle Poulou: Thank you, Erwan. Regarding your first question, September was slightly above the quarter. Regarding your second question on store closure, I think this is a result of, we have been cautious in the number that we communicated because we knew it was dependent on the negotiation, as you said, because we also closed store before the end of the lease. I think it is good news to see that our real estate team has been very efficient in the negotiation. We did not change the list of stores.
Armelle Poulou: It is just that the negotiations went well, and we had been a bit cautious with the communication of the number because we did not know at the beginning of that exercise how difficult it could be. It is not always easy, but mostly it went well, which is good because you know that we are doing this effort at group level.
Armelle Poulou: This is also part of the benefit of having some mutualized function at group level for all our houses. On China, of course, there is a combination of all the effects that you mentioned. What we can say is that, and see is that for us, the main headwind is the traffic. Regardless of the reasons that are creating a weak traffic, first, we are encouraged by the fact that the conversion, average ticket, and tickets are up nonetheless for us, in China. But-
Erwan Rambourg: Average price and tickets.
Armelle Poulou: Average price and tickets, sorry. What we do is that, we focus on our China plan. We know we have a lot of work to do in China. We know that we are starting from a position where we need to rebuild the desirability, especially of Gucci in China. We are reviewing our playbook in China. This plan that is led by Luca is looking at, I would say, at many elements, but I will mention four. One is the organization and the operating model, and we are evolving our operating model. We are going to strengthen the teams locally, but also empower them more in order to be able for them to take quicker decision, and more relevant from a Chinese standpoint. The second point is that we are working also on the product.
Armelle Poulou: We need to make sure that the assortment of product that we put in store in China is relevant for the Chinese customer. It is something probably where we did not pay enough attention in the past. We are going to become much more client-centric in the assortment. Here again, using much more the feedback of our teams on the ground. Third thing is on marketing and commercial activation. As I said in the speech, here again, it is extremely important in China at the moment to be relevant, to be culturally relevant for the Chinese. We are launching a content factory that will be based in China to ensure agility, speed, but also to be locally relevant in terms of content. The last one we already mentioned is the store network.
Armelle Poulou: Very important also to make sure that when the client comes to the store, the retail experience is perfect. The store network, by having a more concentrated store network, we will also do a lot of refurbishment and restyling of the store network in China. We know that in some brands like Saint Laurent, but also like Gucci, it is much needed, because you still have stores with a very old style coming from previous creativity.
Erwan Rambourg: I am sorry, I just wanted to come back on the question of store. The shutting stores, the negotiations have gone a lot better than expected, but if we look at the three or four-year out plan, is the total number of stores shut going to be higher, or is it just that you are doing better in doing it quicker?
Armelle Poulou: No, the plan is executed quicker, but the list is staying the same. We are not increasing the number of stores to be closed.
Erwan Rambourg: Okay. Very clear. Many thanks. Best of luck.
Operator: Thank you. Your next question today comes from the line of Charles Scotti from Kepler Cheuvreux. Please go ahead.
Charles Scotti: Good evening, and thank you for taking my questions. I have two. The first one regarding Gucci. Down 6% like for like in Q3, 9% in DTC. Could you please give us an indication of the impact of the store closures to help us understand the underlying same-store sales trend? Because given you are closing an increasing number of stores each quarter, I would assume that the impact is becoming more significant quarter after quarter. Could you confirm whether this is the case? Looking at Gucci retail, it decelerated seven percentage points sequentially in Q3, and your peers were down between four and nine percentage points. So I am just trying to understand whether on the same-store sales basis, Gucci may actually have held up better than some of your peers. Secondly, just a quick follow-up on the creative director changes.
Charles Scotti: This announcement, obviously, have naturally led some investors to question the position of other designers across the group, who were also appointed before the change in management, including at Gucci. The market environment is obviously making the Gucci turnaround more challenging, but could you confirm whether the new management team is currently satisfied with the recent collections and the brand new creative direction, and whether Gucci overall trajectory remains in line with the management expectations. Thank you.
Armelle Poulou: Thank you, Sean Louis. On your first question, yes, I am going to give you some numbers, but not at Gucci level, at group level. Because you know also this network optimization is done across the group, not just at Gucci. It is true to say that the store closure, and it is very difficult, but we try to estimate the impact on sales. It is not easy because it of course depends where you close the store. If you close the store in a city where you have many stores and one that is just opposite the street, it is very different than if you close a store in a city where you have only one or two stores. But, I am going to give you a rough number that are just an estimation.
Armelle Poulou: We estimate that in H1, the store closure had represented a headwind of 1 point on the sales before sales recapture. It is important to say. In H2, of 2 points. Regarding your question on the deceleration of Gucci, here again, it is important to remind you that we are also facing an 11-point base from Q2 to Q3. Regarding designers, of course, I am not going to comment apart from Saint Laurent McQueen, but I think what is important to say is that we are working at the moment to set up a more efficient operating model around creativity. It means that it is making sure also that we have product development, marketing, and merchandising that are set up around the creative teams, and making sure that we make the best of the creativity of our designer. That is extremely important.
Armelle Poulou: The creative designer is very important, but it is also very important that the team is able to deploy, and insisted already on the important for us on the enhancements of the product offer, that we have a team, and that early stage is working together. It is true for merchandising, but also marketing and product development, in order to be able to translate the creativity of the designer, the best way in the product offer, and to make sure, and in the campaigns, so that at the end of the day, we have the best offer for the customers in store. This is, I would say, where the management is mostly concentrated at the moment.
Armelle Poulou: Here again, using also the help of the houses and the group platform all together to see how we can optimize the model, to give us more agility, more time to market, but also a better translation of the creativity in the product offer.
Charles Scotti: Thank you.
Operator: Thank you. Your next question today comes from the line of Oliver Chen from TD Cowen. Please go ahead.
Jonna Kim: Thank you. This is Jonah on for Oliver. Thank you for taking our question. To the extent that you can give us any color, how should we think about your exposure to aspirational customer versus ultra-high-end income consumer, both across, in China and other regions, if any color that you can give would be helpful. Thank you.
Armelle Poulou: Thank you, Oliver. On this question, as I said, we see that the high-end customer at the moment is more resilient. We are in a moment where the macro backdrop is weighing on confidence and discretionary spending. Uncertainty adds to the pressure on middle-income customer. We also know that those customers are very attracted by newness and creativity. What we are doing at the moment in the price and the product architecture is to make sure that we have the relevant offer for all our clients, from the VICs to the core and the aspirational customer, in different categories and at different entry points. Certainly, we are paying a lot of attention in all the categories, because we know that the aspirational customers can enter the universe of our brands through categories like eyewear, like perfume, like small leather goods.
Armelle Poulou: But what is sure is that what we want to offer them extremely high qualitative product at the right price. It is true for the aspirational customer, but also for the other one. But certainly at the moment, what we see is aspirational customer that is facing more uncertainty for sure, and that is true all around the world.
Jonna Kim: Thank you so much.
Operator: Thank you. Your next question today comes from the line of Viktoria Petrova from Barclays. Please go ahead.
Viktoria Petrova: Thank you very much for taking my questions. I have very short follow-up ones. First of all, do you think it is fair to assume that now your sales densities are below EUR 20,000 per square meter, so down from last year? That at least looks like that, but maybe I am missing something. Secondly, you are talking about traffic not coming back. Do you see any indication in any regions that traffic is recovering, and which we could use as a leading indicator? Finally, on Saint Laurent, this is one of the best-performing brands. Why are you changing creative direction there? Thank you so much.
Armelle Poulou: Thank you, Victoria. On sales density, we see some improvement in some of our brands, but I will not give you a number. I see that you do your own math. Of course, what we do on the network as an objective over the plan is to increase the sales density. We are closing stores, we are rejuvenating the offer, and we know that over time, this is going to increase sales density, which is, of course, a strong objective of our CMD plan, as it is also a strong lever for our profitability. It also comes with the refurbishment plan that I was mentioning. We are working on it, of course, in many different directions. Regarding traffic, I would say, difficult to call for a region, another one. Traffic is quite soft. It may depend from time from some brands.
Armelle Poulou: One thing I could say is we see some encouraging signs in Europe for Saint Laurent, for example. Saint Laurent is a brand that is resonating very well with the tourists in Europe, but also the European customers. What we focus on is really to improve conversion, our average ticket, because what we do is we work on what we can control. For us, it is encouraging to see that once a customer enters our store, we see a better response. Regarding your question on the change of creative director at Saint Laurent. Saint Laurent is experiencing a strong momentum, and we are very happy about it. The change of creative director, it is opening a new chapter after 10 years of success. It is also good from time to time, to bring a new point of view to the brand.
Armelle Poulou: We know that we have, as you know, our priority and our growth level at Saint Laurent is to develop the daywear offer, to develop the main line, to be more relevant in China. We are very confident that the new creative designer, together with the Saint Laurent teams, will be able to contribute to the development of this plan.
Viktoria Petrova: Thank you very much.
Operator: Thank you.
Viktoria Petrova: Thanks.
Operator: Your next question comes from the line of Zuzanna Pusz from UBS. Please go ahead.
Zuzanna Pusz: Thank you for taking my questions. I have actually just two, or no, maybe three, actually, but I will be quick. First of all, on Gucci’s performance in retail, in relation to the inventory cleanup you are also still doing. May I just confirm, when you look at Gucci’s performance in retail, can you confirm if full-price stores are outperforming or they are underperforming outlets? Because I know your focus is to sort of de-emphasize outlets, but in the meantime, as you clean up the inventory, I am just wondering what is the dynamics. Secondly, sorry, it is also on Gucci. On wholesale, unless I misunderstood something, but I think at the beginning of the year, you were talking about wholesale being slightly negative for the year. I believe every quarter so far has been actually positive.
Zuzanna Pusz: Unless, again, I misunderstood it, I think you said it is going to be still probably slightly positive or is negative, slightly negative in Q4. So it looks like it is not going to be negative for the year. What is the specific reason for that? Is it maybe regional mix, that franchise stores are performing better? Is it the response of maybe wholesale to the new collection? I do not know if you can give a bit more color on that. Then final question. So you are making some changes to designers, the two ones you have discussed. I think it was mentioned before that you do not really expect this to have any impact on sales, sort of any disruption.
Zuzanna Pusz: But at the same time, I think you did mention that in Q3, the reason why Gucci was a little bit weaker is because it had to do with the flow of newness of the products from Demna. I am just trying to understand how these brands are less driven by the designer. I just want to get an idea because I guess we are all a bit worried that those brands may also go for a bit of a transition. Thank you.
Armelle Poulou: Thank you. I am going to answer all your questions. Maybe I start with the designer. Each brand is on a specific trajectory, and each situation is very different. I was mentioning Saint Laurent and McQueen. It is two different situations. What I can say is that those transitions were planned and have been well planned and anticipated, and they are coming on top of a strategic plan that is under execution, that it is very clear. So it is not changing at all the execution of the plan for each of those brands. It is enhancing the execution of the plan. The situation of newness of Gucci is different. We know that we have more work to do at Gucci on the rejuvenation of the offer, and that is the work that Demna is doing with the team. On your question regarding wholesale.
Armelle Poulou: Yes, actually, for Q4, I am expecting a more negative number, but I do not think this is really what is important. Wholesale is only a small part of our sales, and it is a channel that can vary from one quarter to another quarter because of phasing, because of also the willingness of our partner to buy the product. What is important for us is that it represents a very small part of our sales.
Armelle Poulou: Our focus is in our DTC stores, and that is where we are putting all our efforts that I mentioned before in terms of store optimization, refurbishment, relocation, and reinvestment in the store and the retail experience. Then finally, your question on full price stores and outlets. The direction going forward over the plan, our intention is to reduce the share of outlet, because our focus is really to sell our product full price in our store.
Armelle Poulou: I am not going to give you some details. We never communicate on the split of the sales. This, of course, will be done through enhancement of the product offer, better engagement with the client, and as I mentioned before, first and foremost, a more efficient S&OP within the company. That really is the objective, because the outlet is not a channel of sale for us, it is a channel for the leftovers. Of course, what we are focusing at the moment is to reorganize in a way, and it is a question of organization, but it is also something where we can lever on technology and AI, where we can increase substantially the efficiency of our production towards the client demand in order to reduce strongly the leftover at the end of the season. So that is the objective of the company going forward.
Operator: Thank you.
Zuzanna Pusz: Sorry, just to follow up on.
Operator: Sorry, I had already moved on to the next question. Shall I get Zuzanna back?
Armelle Poulou: No. Yeah, you can.
Operator: Let me just get Zuzanna for you. One moment.
Armelle Poulou: Sorry, Zuzanna, the operator cut the line.
Operator: Zuzanna, your line is now open.
Zuzanna Pusz: All right. Thank you so much. Sorry, I just wanted to clarify that I understand, and I think that is totally the right strategy to de-emphasize outlets going forward. But I was just more curious as Gucci is performing now, because the H1 gross margin was a bit weaker. So I am just trying to get my head around how we should think about the gross margin for H2. Because if, let us say, if you are still clearing the inventory through the outlet channel for Gucci, then we could expect a bit more gross margin pressure. So, I understand your long-term strategy, but I was just trying to understand what is performing well and if outlets are outperforming or underperforming now for Gucci.
Armelle Poulou: What I can tell you is that the pressure we had on gross margin was mostly coming from the regional mix, the fact that we lost market share in the mix in China, and the cost of the raw materials. If that can help, we do not know exactly what will happen in Q4, but probably those elements will stay there for H2.
Zuzanna Pusz: It was not the outlets in H1, it was just other aspects?
Armelle Poulou: No, it was not the outlet. It was many elements. We talked about the raw materials, we talked about the gold price, we talked about the
Zuzanna Pusz: Investments in product mix.
Armelle Poulou: You know also that we have. So those were the main reason of the gross margin.
Zuzanna Pusz: You had some Forex impact in H1.
Armelle Poulou: True, as well.
Zuzanna Pusz: Okay. Thank you.
Operator: Thank you. Your next question today comes from the line of Atiyyah Vadu from Avior Capital Markets. Please go ahead. Atiyyah, your line is open.
Atiyyah Vawda: Thank you. Good evening. Thank you for the opportunity to ask questions. I just have one on the Jewelry division. The North America sales growth in Q3 slowed to -10%, from +10% in Q2. That is quite a significant deceleration. Could you give us some color on what led to that very sharp drop? Thank you.
Armelle Poulou: Sorry. Thank you for your question. Regarding Jewelry in the US, you know that our position in the US at the moment is very limited in terms of mix. This is one area for us of development for the future, because we are mostly very strongly present in Europe, but very strongly present in APAC and in Japan. In the US, the reason for that drop was, I think that we had some very strong high jewelry sales at Boucheron in Q2 that did not anniversary in Q3. Conversely, Pomellato had a very good performance in the US in Q3.
Atiyyah Vawda: Thank you. Appreciate it.
Operator: Thank you. Our next question today comes from the line of Chiara Battistini from J.P. Morgan. Please go ahead.
Chiara Battistini: Hello. Hi. Thank you for taking my questions. Just a couple of very quick ones. Firstly, following up on jewelry, on the jewelry division, because it was a broader slowdown sequentially, I guess to the extent the comp got tougher. Anything to call out more broadly and high level on the jewelry category that you have seen in Q3 versus Q2? Any changes in consumer behavior there, or it is just a function of the comp base? Second question on Bottega Veneta, as I think the CEO has now joined us. Any early indication of his priorities or where he is focusing at the moment, besides of course, getting up to speed? Any first steps that we should be expecting from there? Thank you.
Armelle Poulou: Hi, Chiara. Thank you for your questions. On the first one, it is mostly due to the comp base. We had a very demanding comp base in Q3 in the jewelry division. I would say some of our brands, but pretty small, like Celine, suffered over the summer from the deceleration of the Chinese market. The other brands did well, but the comparables was the main reason for the deceleration. Regarding Bottega Veneta, very happy to have welcomed Romain on board. What he is doing is that he is, of course, executing the strategy that we have for the brand. He is not going to change the strategy. He is fully focused on helping the teams to deploy the strategy. His priorities thus are to boost the brand visibility and awareness, to elevate the retail network and experience.
Armelle Poulou: There is a point for China because Bottega is very successful in the Western world, but still not incurring that success in China. It is mostly a problem of awareness. So he has a lot of initiatives towards awareness, but also towards engaging with high-end customers. Of course, he is also working on the consolidation of the brand success beyond leather goods, notably in ready-to-wear, which is part of the diversification and the potential that we see at Bottega. You know that the very high-end clients generally are very fond of high-end ready-to-wear. So we see, of course, a lot of potential for Bottega Veneta clients in leather goods to extend their purchases to ready-to-wear. Okay, I think we are at the end of our call. I want to thank you very much for your interest and for your questions.
Armelle Poulou: Before we close, a quick word for Victoria, who will be leaving the IR team to join group communications at Kering. Victoria, thank you for everything you have contributed to, and all the best in your new role, which will keep you close to the team. Philippine and the IR team remain available for any follow-up you may need. Thank you again, and have a good evening.
Operator: Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect.
