LVMUY Q1 2025 Earnings Call
Rodolphe Ozun: Ladies and gentlemen, good afternoon, and welcome to today's conference call. I'm Rodolphe Ozun, Director of Financial Communications at LVMH. And with me is Cecile Cabanis, our Chief Financial Officer. Cecile will start by taking you through the key highlights of the first quarter of 2025. I will then comment on performance by business groups, after which Cecile will conclude and then we'll be happy to take your questions. As a reminder, certain information to be discussed on today's call is forward-looking and subject to important risks and uncertainties that could cause actual results to differ materially. For these, I refer you to the safe harbor statement included in our press release and on Slide 2 of our presentation. Turning now to our announcement. Our release was issued a short while ago in both French and English and is available on the LVMH website, lvmh.com, as are the slides for today's call. Let's now move on to the next topic, our first quarter figures, passing on to Cecile.
Cecile Cabanis: Thank you, Rodolphe. Good afternoon. Welcome, and thank you all for attending this call. Starting with Slide 3, let me give you a few broad comments on the first 3 months of the year, where LVMH continues to demonstrate resilience. Let me share a few highlights. First, on Chinese demand. On the domestic market, trends were consistent with the end of last year. The main swing factor year-to-date is Chinese demand in Japan, as you can imagine. It remains strong in absolute terms, but recycles last year's sharp increase and therefore no longer contributes to growth in percentage point. Second comment, despite the context of uncertainty preceding tariff announcement, American demand for Fashion & Leather Goods and Watches & Jewelry remained well oriented and accelerated modestly compared to the second half of last year. Sephora, on the other hand, faced very challenging comps after growing double digit last year, and this explains the sequential deceleration of the U.S. market at group level. Third comment is that Europe continued to grow. I will let Rodolphe comment on the different activities. Maybe as a broader comment, we continue to witness, across our brands, the merits of innovation and creativity. When new products are exciting and functional, they perform very well. Moving now to Slide 4, where you have the revenue bridge for the first 3 months of 2025. Group revenues reached EUR 20.3 billion, down 2% on a reported basis and 3% inorganic, including a positive 1% currency impact. Slide 5 details the geographical breakdown of revenues in euros, which as you can see, has remained broadly stable. However, versus Q1 last year, Asia fell 3 points in the mix, while United States, France and other markets all rose 1 point. This is the reflection of Q1 regional performance that you have on the next slide. Starting with U.S., moderate deceleration at minus 3%, despite, as I was mentioning, a good performance of Fashion & Leather Goods and Watches & Jewelry. Japan is slightly negative at minus 1%, recycling last year's exceptional growth of 32%. Asia at minus 11% is reflecting the continued soft demand, which is consistent with the end of last year. And finally, Europe continuing to display positive dynamics with a 2% growth. Rodolphe will now comment the performance of our activities in more detail.
Rodolphe Ozun: Thank you, Cecile. And we start, as usual, with Wines & Spirits on Slide 9, which shows the Wines & Spirits business group delivered EUR 1.3 billion in revenue for the first 3 months of 2025. This represents a 9% decrease on an organic basis versus the same period last year, an 8% decrease on a reported basis after taking into account a positive 1% currency effect. Broken down, Champagne & Wines generated EUR 0.7 billion in revenue over the 3 months period, down 1% on both organic and reported basis. Cognac & Spirits recorded EUR 0.6 billion in revenue, down 17% on an organic basis and 15% on a reported basis, after taking into account a positive 2% currency impact. On Slide 10, we highlighted some of the elements which shaped the quarter with 2 different situations. Champagne & Wines proved resilient in the first 3 months of 2025. We saw a modest decline in volume in champagne, partly due to unfavorable phasing effect linked to distributors in Europe and to the timing of price increases in Japan. However, champagne benefited from positive price/mix effect and the outcome was broadly flattish trends. The start of the year was marked by the return of Moët & Chandon as the official champagne of Formula 1, once again celebrating every victory on the podium with champagne as well as the global launch of the limited-edition Moët & Chandon collection in collaboration with Pharrell Williams. In Cognac & Spirits, Hennessy's first quarter reflected soft sellout in the U.S. and China. We replenished inventories at our distributors level but kept inventory days unchanged and selling was, as a result, consistent with sellout. Given uncertainties around tariffs, we also kept a healthy level of inventories in our local warehouses. These cases have been shipped but not sold in and, as such, did not have any impact on our first quarter revenue. Finally, in spirits, Glenmorangie welcomed Harrison Ford as the face of its whiskey, unveiling a 12-episode series entitled Once Upon a Time in Scotland and taking us behind the scenes at the distillery, and the Maison also benefited from the success of its Triple Cask Reserve rollout. We're now turning to Fashion & Leather Goods on Slide 12. Revenue reached EUR 10.1 billion for the first 3 months of 2025. This represents a 5% decrease on an organic basis versus the same period last year and a 4% decrease on a reported basis after taking into account a positive 1% currency impact. Moving on to Slide 13, which is the key highlights of the quarter by brand. Louis Vuitton saw the unveiling of a new collaboration with renowned Japanese artist, Takashi Murakami, which after a very successful first chapter revisiting the multicolor pattern created in 2003, recently unveiled Chapter Two featuring the cherry blossom pattern. The Maison also enriched its leather goods offering with the successful launches of the LV Biker and All-In and debuted the latest collections designed by Nicolas Ghesquière and Pharrell Williams, including a fashion show retracing Louis Vuitton's travel heritage in Paris next to the iconic Gare du Nord station. Faithful to its rich heritage of innovation and extraordinary craftsmanship, Louis Vuitton unveiled a new venture in beauty called La Beauté Louis Vuitton and welcomed internationally renowned makeup artist, Pat McGrath as Cosmetics Creative Director. The first of these new products will be available this fall. Lastly, Louis Vuitton crafted bespoke Trophy Trunk for major Grand Prix circuits and was the title partner of the first race of the season in Australia. Christian Dior saw inspiring fashion shows to unveil the new collections designed by Maria Grazia Chiuri as well as the successful start of recent novelties in leather goods, including the Dior Toujours and D-Journey bag collection with inspiration from Christian Dior's beloved Milly-la-Forêt gardens. Additionally, in just a few days' time, the Dior retrospective exhibition, Christian Dior: Designer of Dreams will open in South Korea. And to mark the occasion, Dior is renewing its partnership with Ewha Womans University, a historic private women's university in Seoul. Now to mention a few highlights from some of the other Maisons. Loro Piana continued to see strong momentum in ready-to-wear and leather goods and unveiled its first-ever exhibition at Shanghai's Museum of Art Pudong to celebrate the Maison's 100th anniversary. Likewise, Fendi, which also celebrated 100 years of craftsmanship, hosted a special coed runway show designed by Silvia Venturini Fendi in the brand's Roman headquarters. Celine is embarking on its new creative journey with creative director, Michael Rider, to unveil his first collection in the next few months. Loewe announced the appointment of Jack McCollough and Lazaro Hernandez as the House new creative directors, succeeding JW Anderson after 11 exceptional years. And Givenchy unveiled its first collection by new creative designer, Sarah Burton, at the historic headquarters located on Avenue George V. Finally, RIMOWA extended its RE-CRAFTED service to the U.S., while Berluti welcomed several new brand ambassadors and celebrated its 130th anniversary. Moving to Perfumes & Cosmetics on Slide 15. Revenue reached EUR 2.2 billion for the first 3 months of 2025. This represents a 1% decrease on an organic basis, which after taking into account a positive 1% currency impact, resulted in stable revenue on a reported basis. Turning on to Slide 16. In Perfumes & Cosmetics, fragrances continued to outperform for most of our brands. Parfums Christian Dior benefited from the enduring appeal of J'adore, supported by a new Eau de Parfum with a fresh design for its legendary amphora bottle and from a new Dior Homme Parfum created by Francis Kurkdjian. La Collection Privée, Dior's high-end fragrance offering enjoyed excellent growth and now includes a new unisex perfume called Bois Talisman. Finally, the success of Dior Capture and Prestige Nectars de Rose also enabled Christian Dior to grow in skincare. Strong innovation was on display across the other Maison with several new scents, including Rosa Verde by Guerlain, who also had a good performance in makeup with Rouge G, while Givenchy also added scents to both L'Interdit and Gentleman Society with Pierre Gasly announced as its new global ambassador. Acqua di Parma continued to expand, thanks to its emblematic Colonia collection with the release of Colonia Il Profumo and Maison Kurkdjian released a new [ per key order bottle ]. In Watches & Jewelry on Slide 18, revenue came to EUR 2.5 billion in the first 3 months, stable on an organic basis and up 1% on a reported basis after a positive 1% currency impact. On Slide 19, as you can see, our Maison made good progress on strategic priorities starting with jewelry. Tiffany enjoyed excellent growth across all of its iconic lines, Tiffany T, Lock, Hardware, Knot. The quarter was also marked by the third chapter of Tiffany Titan by Pharrell, which features an innovative setting for diamonds and in High Jewelry by the latest Bird on a Pearl collection, revisiting Jean Schlumberger's iconic Bird on a Rock design. In the first quarter, Tiffany made progress on its objective to renovate its store network. Recent opening includes a new Taikoo Li flagship in Chengdu, China. And lastly, the Maison unveiled the official FIFA Club World Cup Trophy, which will be awarded to the winning team and lifted for the first time this year at the final. Bvlgari, in celebration of the Year of the Snake, unveiled Serpenti Infinito, an exhibition in Shanghai and Seoul exploring the meanings and interpretation of the snake, which remains one of Bvlgari's most successful and distinctive designs. Bvlgari also unveiled its new flagship in Milan on Via Montenapoleone and took this opportunity to display the first 2 Bvlgari bracelets and watches created in the 1940s. And on the production front, Bvlgari inaugurated a new watchmaking workshop in Switzerland and announced plans to expand its jewelry manufacturing capacity in Valenza. Chaumet meanwhile unveiled its rejuvenated Bee de Chaumet collection and paid tribute to Asia in high jewelry collection called Bamboo, while FRED began a new chapter for its iconic Force 10 collection with Force 10 Rise. A few words on our watchmakers, starting with TAG Heuer, which released new edition of some of its best-known racing watches to celebrate its return to Formula 1 as official timekeeper. Hublot unveiled the world's first multicolored ceramic watch, the Big Bang Unico Magic Ceramic, and then it released 3 chronographs powered by its high-frequency El Primero movement in the middle signature blue color. Now looking at our final business group, Selective Retailing on Slide 21. Revenue in the 3 months period reached EUR 4.2 billion, representing a 1% decrease on an organic basis and stable revenue on a reported basis after taking into account a positive 1% currency impact. Moving on to Slide 22. Despite the demanding comparison basis, Sephora continued to grow in the first quarter of the year, driven by success of its exclusive brand curation strategy, which resulted in good growth in brick-and-mortar. First quarter also saw good performance from Sephora's own product range. Additionally, Sephora premiered a first global film, Beauty & Belonging at the Sundance Film Festival, which encapsulates Sephora's core values and role as a catalyst for emotions and creativity. And Sephora hosted also a unique pop-up event in London called Rare Beauty and Sephora Dreamland. DFS continued to be held back by low traffic in Hong Kong and Macau. As previously announced, DFS' Venice galleria, Fondaco dei Tedeschi will cease operation in H1 this year. And lastly, Le Bon Marché continued its progress, thanks to its exclusive and distinctive concepts and a rich array of controlled events. The quarter also saw Le Bon Marché and La Samaritaine reunited with a new single governance structure. This ends the business group presentation, and I'll hand back to Cecile who will conclude.
Cecile Cabanis: Thank you, Rodolphe. A few closing remarks on my part before moving to Q&A. We continue to face macro uncertainties and lack of visibility on external factors. And in that context, we remain confident while staying, of course, alert and vigilant. The cycle continues its normalization phase after years of exceptional growth. The best way through downturn cycle is to stay focused. As far as we are concerned, it means continue to deliver the best product with the highest level of quality and excellence. It is also a time to demonstrate our agility and capacity to adjust and react. And while we are being very disciplined in our resource allocation, we also make sure we keep the right level of investment behind our products and brands to continue to increase our competitive edge and be ready to accelerate when the cycle eases. That concludes the presentation. And Rodolphe and I propose we move to Q&A.
Rodolphe Ozun: Yes, operator, thank you. Please open the line for questions.
Operator: [Operator Instructions] And our first question is from Anne-Laure Bismuth from HSBC.
Anne-Laure Jamain: Anne-Laure Bismuth from HSBC. I have 3 questions, please. The first one is about the performance by brand within the Fashion & Leather division. Would that -- sorry, for the Fashion & Leather division, so was Louis Vuitton in line with the division, worse or better? Is it the other smaller brands that bring down the overall performance of the division? What about Dior? So that's my first question. My second question is about the performance by nationality for the Fashion & Leather division. Would it be possible to have some indication? And finally, last question about the U.S. Since the announcement of tariff, have you seen an immediate impact on the feel good factor and traffic in stores?
Cecile Cabanis: Thank you. So on your first question on performance by brand. In Fashion & Leather Goods, as you imagine, there is some discussion around the average. What we can say is that LV continues to perform slightly better than the average, and Dior continues to perform slightly below than the average. Rodolphe mentioned the very strong performance of Loro Piana. He also mentioned that some of our brands are transitioning to a new creative era. So it's different realities. I don't -- I'm not going to be more precise, but this is overall what we have. When it comes to nationalities, what we've seen in Q1 is that the main swing factor is really linked to last year's Chinese demand in Japan. So it continues to be strong in absolute terms. But given the fact that there was a sharp increase that I mentioned, around 32% last year in Q1, we are not having the benefit of the growth this year. For other client sales, we have not witnessed major inflection. American clientele was rather well oriented. European were slightly better, but of course, the impact is very small to total growth. And overall, to your last question in terms of tariffs, we didn't see a major change in trend, and we have nothing to report specifically for Q1. What we can see is that on Fashion & Leather Goods, we continue to see solid growth and it has been the case for the past 6 months. Now it's true that aspirational clientele is always more vulnerable in less positive economic cycles and uncertainties, and it might have had some impact in the recent weeks but rather on categories like Wines & Spirits and beauty.
Operator: We will now take our next question from Zuzanna Pusz from UBS.
Zuzanna Pusz: I'll stick to 3 as well. So maybe, first of all, on pricing, would you be able to confirm, please, if there's been any pricing taken for Vuitton or just Fashion & Leather Goods as a whole in Q1? And if you plan anything incremental perhaps for Q2 in light of the potential U.S. tariffs? So that's my first question. And then secondly, I know this is not necessarily an earnings call, but I guess, well, I'll give it a go. Is there any chance you could tell us how we should maybe think about the margins for Fashion & Leather Goods? I don't know whether it's better to talk about H1 or full year. I guess just to understand because minus 5% is obviously -- it's probably quite difficult to control costs. So if there's anything -- any color at all you could provide to help us a little bit with modeling, I would really appreciate that. And then finally, maybe on the performance of various consumer segments. So have you seen any changes specifically in Q1 in terms of sort of the higher-end consumer performing weaker than previously? Or I presume your comments on perfumes and Wines & Spirits being weaker recently, that means that maybe only the aspirational consumer is weaker in the current environment. Just any color around the sort of various consumer cohorts and what you're seeing would be very helpful, specifically in the U.S.
Cecile Cabanis: Okay. Thank you for your question. So in terms of pricing, I'm not going to comment on Q2. On pricing, we have the rule that is quite clear. We refrain to use price as a growth driver. We rather use work on mix, selling more expensive items on average. Still in core luxury, we believe we have still some pricing power. And we've been proving that as long as the value perceived is the right one, products sell. And we've seen current and recent innovation that can prove that in most of our brands as is the case of [indiscernible] at Fendi, the [ Toujours ], the Biker at LV, et cetera. Now to your point, it's true that we use prices sometimes to offset inflation moderately. Sometimes if there is some swing in currencies. And in the case of tariffs, it's a lever that we are going to consider. What you have to take into account is that it's not one-size-fits-all because we have very different brand, very different model. So it's something that is done by the Maison on a very precise basis to make sure that what we do is competitive and serve the brand. So I will not comment further. And on your question in terms of impact in Q1, there was a very slight, in the revenues, a very slight price positive impact. So that would be on pricing. On margins, for Fashion & Leather Goods H1 full year, so the usual answer I got from Jean-Jacques was it's a sales call. What I can say, obviously, given the uncertainty that we've been very mindful and very disciplined on the pace at which we allocate resources. You know that it's more difficult to control COGS than OpEx. And you also know that on OpEx, there are different nature of costs. So for example, we know that selling expense will continue to grow given their nature and given the acceleration and the investment behind the network. We are working hard on controlling G&A, but there's always some inertia, especially because it's mostly also people. And still, we believe we have some room to adjust on marketing costs, which we will do when we need. Of course, we prefer to have growth in order to enhance and have lever to improve margin. And having said what I said on cost, remember that for us, it's key to continue to invest in our networks and behind the brand because we want to make sure that we exit this downturn cycle very strong and ready when demand bounce back. So it's all a matter of balance between adjusting to the current context and ensuring that we keep investing in our long-term growth. With all that in mind, what you need to keep in mind is that the margin will certainly not improve in H1 because the basis of comparison of last year H1 margin was still very high. And with today's assumption, we are trying to ensure that we can have some sequential margin improvement versus the exit of last year. But again, tomorrow, there might be new parameters because, as you know, these days, parameters are changing every hour. And lastly, on your question on consumer segment, so we are not really working -- we do not believe that the offer structure is leading to the -- what is the behavior of the aspirational customer. We believe that it's a matter of sentiment, of cycle, of bearing the inflation. And so what we do is we continue to invest and innovate as you've seen in all kind of price points to make sure that we address these 2 segments. There is no specific strategy for aspirational customer. And in Q1, there was no specific change in trend for aspirational customers versus Q4.
Operator: We will now move to our next question from Thomas Chauvet from Citi.
Thomas Chauvet: I have 3, one on U.S. manufacturing. If I'm not mistaken, the 3 Vuitton atelier in California and Texas produce about half of your volume output for Vuitton USA. Is there any opportunity to increase that share, particularly on the more sophisticated bags to mitigate potential tariff risk? And could other brands be produced in these U.S. ateliers, maybe some bags of Dior, Fendi, Celine, and share the sort of manufacturing platform with Vuitton? Secondly, a follow-up on pricing in Q2. I understand, Cecile, you won't reveal the commercial strategy, of course. But can you tell us how you think about future U.S. prices in the case of a 10% or maybe 20% tariffs? Would you want to pass that on fully to the U.S. consumer or think maybe spread the price increase across multiple regions to also balance the regional price gap? That's my second question. And finally, on -- a follow-up on OpEx as well. Last year, I think you did -- you put a very tight grip on expenses in both Q1 and Q2. You had 2%, I think, OpEx growth in each half with marketing costs down in absolute value. Is it the minimum threshold? You talked about how to continue to invest, to be ready for the end of that cycle. Is plus 2% OpEx growth sort of a sensible budget for at least the first half? And have you already taken specific cost control measures, particularly in the U.S.?
Cecile Cabanis: So today, it's a specific rule of 3 questions per person. On your question on U.S. manufacturing, so yes, LV has 3 production facilities in the U.S. But on your numbers, it's rather around 1/3 of local needs than the number you mentioned. There is still capacity but we'll see at what pace and how much we want that to evolve. On local manufacturing, we also have Tiffany that is doing most of the U.S. product in the U.S. but not all, so there are still some room in order to move that a bit between the production in Europe and the production in the U.S. So we are looking at that obviously. It's not something we can do over time -- overnight, sorry, because it takes quite something to prepare, but it's something that we can contemplate in a reasonable framework and time frame. Then on your Q2 pricing question and tariff mitigation, I think we all need to stay very calm because we are in unknown territories. And we are now in a process with 90-day suspension period, which we can hope will enable some negotiation and bring some maybe positive outcomes. The worst is never certain. Having said that, this is not under our control. So back to what is under our control, it's price increase is one part, but there are also some other mitigants. And on price, again, it will not be one-size-fits-all. So it's very difficult to answer your question with one number because it can be very different depending on the brand, depending on the categories within the brand. Obviously, you have more pricing power when it comes to core luxury brand rather than Wines & Spirits where we need to be careful, and also beauty. So it's a very detailed, precise and important work that we need to do quietly. What I can say is that, and especially for Wines & Spirits, we have shipped some stock. So this is not a sustainable solution, but it means that we have a bit of time to reflect and make sure that we have the proper parameters to take the informed decision when we will need to take action. And on OpEx, so I should have done the Jean-Jacques way, and I will do it now. No, no, I won't go into more details. I think already with what I said, I think it's good for Q1 and the sales call. We are working on making the right balance. And what I said in terms of direction should help you model.
Operator: And our next question is from Antoine Belge from BNP Paribas Exane.
Antoine Belge: It's Antoine at BNP. So 3 questions. I'd like to come back on the clusters because we need to explain the 4-point delta quarter-on-quarter. And so if I hear you that Europe actually slightly improving -- European, sorry, and U.S. not collapsing. And I noted they were up mid- to high single digit last quarter. So have the Chinese gone from, I think, low single-digit down to double-digit down? Or are there also other nationalities? Question #2 is about what you commented about the Vuitton brand doing a bit better but not massively better. Is it a little bit disappointing since the brand activated the Murakami collaboration and launched this new Biker bag, which I think is the first proper, I mean, truly new bag in a number of years? So are we going to see a bit of -- when there will be the nonrecurrence of Murakami later in the year, a softening on that innovation path? And finally, sorry to come back on the margin to make sure I understood. So for Fashion & Leather, H2, there was a 35% margin, which we -- at the time, so it was a trough, especially including some one-off, a lot of provisions. But now I see that there is a Formula 1 investment and also with all these activations that I mentioned. I've seen more advertising recently. So what is your comment about 35% was the trough for H1, and the slight acceleration or reacceleration in H2 would be from that 35% bar?
Cecile Cabanis: Thank you, Antoine. So in terms of the different dynamic and cluster to help your math, the first swing factor and the main one is Chinese, and Chinese is very much linked to the deceleration of Japan. So this explains around, so you said 4 points in total. It explains around 3 points. So that's the main factor, and it's really an important one. We don't see a change in trends in domestic demand for Chinese clientele. And then the rest of it is we said that American demand has held pretty well and it's increasing versus H2 last year. It's a bit less than Q4, so that might explain your last point. And I think the math are right. Then on your question, so I believe I heard it correctly. It was on Murakami and the impact on Murakami. So first, what is very interesting is that Murakami was sold at a premium and it sold out, so it was indeed a success. But it was not, in terms of proportion, the major part of the sales and the agenda of LV over the quarter. Still, it was a great success, and it also shows that when you have the right execution and the right product and collaboration, then it sells even if you put it at a premium because again, it was sold out. The second phase is much smaller but it's an interesting one. Then maybe I wasn't totally clear, but I really didn't want to enter into margin by segment and so on. So when I was commenting the overall margin improvement or not versus last year, and the margin, I was talking overall and not for Fashion & Leather Goods in particular. Again, if we could just refrain from looking at margin, there are many unknowns. What you need to understand is that we are adjusting, we are reacting. We are doing the work on what we can control and where we believe it's important to adjust. But I cannot say more. And lastly, maybe to your question on top line and cluster. Keep in mind that Q1 is always overweighted for Chinese, given Chinese New Year, which is always creating a boost in the proportion of Chinese demand versus the rest of the portfolio.
Antoine Belge: Okay. Just to make sure so I understood. So my -- on the Chinese cluster, so it was down probably low teens?
Cecile Cabanis: No. Why low teens? I didn't give that number, so...
Antoine Belge: Okay. But because if you have to explain 3 points divided by the weight, you're not close to [indiscernible].
Cecile Cabanis: Antoine, I will let you make your math and maybe give the mic to Rodolphe. Thank you.
Operator: We will now take our next question from Chiara Battistini from JPMorgan.
Chiara Battistini: Also 3 questions from me. First one on Fashion & Leather Goods on mix and volumes. Maybe you mentioned that pricing was slightly positive. Can you also comment on the mix and the volume components of growth? The second question on Watches & Jewelry. I was wondering whether the slowdown sequentially is also down to the Chinese consumer in Japan, or maybe there was a bigger slowdown of the American consumer there versus Fashion & Leather? And finally, a very quick question on Wines & Spirits. We saw some articles today going around about a potential spin-off. So just wanted to check on your latest thoughts about the Wines & Spirits division, please.
Cecile Cabanis: So maybe I'll start with this one because we were quite surprised to see another false information by the same media that is now publishing very regularly more and more cases, including sometimes wrong information on numbers. It was the case for [ February ] last week or 2 weeks ago. And it starts to really be a problem to have people writing things that are both very precise but also very wrong. I don't want to give any airtime on this because I think we have more important things to discuss, but one piece of advice. If you want to know things around all those questions, please contact investor relations or the media at LVMH because we know the numbers and we know the story. And I will not comment more on this part. Then on mix and volume. So yes, I made a comment saying that price was slightly up. Volume were slightly down and the mix was flattish overall. So that would be the way you can look at it. Then on Watches & Jewelry, so you're right to say that the Chinese sequence was a bit different because it started to decrease earlier than for Fashion & Leather Goods last year. So the basis of comparison is a bit different and it's less and it's easier. And then what we are seeing in Watches & Jewelry that we have great progress on the execution of the transformation plan of Tiffany, with both all the iconic range and the renovated stores. So we continue to deploy that very consistently, and it's paying off. So we continue to progress. And overall, I think that what I would -- that's why I would comment on Watches & Jewelry.
Operator: And our next question is from Luca Solca from Bernstein.
Luca Solca: Maybe the first question on creativity. We saw a number of new appointments in the creative responsibility in the Fashion & Leather Goods division. Can you tell us where you stand in this updating of creative responsibilities? I think there may be a few loose ends still. I don't know whether I missed the news, but we saw Jonathan Anderson, for example, leaving Loewe there but not being appointed anywhere else. I may be mistaken, but if you could give us a sense of where you stand in this process, that would be very helpful. Then I was just wondering, in previous difficult times when we look at 2008, 2009 or even more recently, LVMH has been on the attack when it comes to M&A and when it comes to potential opportunities to secure assets in a market which is more difficult. It seems that this is the shape of things to come, if we look at the impact that all of this debate about tariffs and the most recent decisions in the U.S. have produced on the stock market and the macroeconomic expectations. Would there be any reason this time to expect a different approach and a different attitude from LVMH? Or would this be again one of the times when you work to consolidate your leadership in the industry? And then third, in general, one of the excesses that industry insiders have been reporting is price. Is it sensible, you think, to anticipate that mix could potentially be negative as we normalize from the previous successes, especially if we look again at the Fashion & Leather Goods division?
Cecile Cabanis: Thank you, Luca. So on creativity, what I would say is that we always need designers which are both creative and aligned with the DNA of the brand and are the right one for the journey that we want to put the brand on. We have some creative change as you rightly read, so you have the right information. And I think we are pretty excited by the different changes that will display soon, some collection and shows. And I don't think I have more to add then. The second one is coming back a bit to the previous comment. So I won't comment much further. We are always working to consolidate our leadership. There are a lot of moving pieces. And so as you said, we are very much focused on continuing to execute our agenda in a context where there are uncertainties, and we need our full concentration to be continuing to consolidate and to be very agile at the same time. And on the mix, so our strategy is always to improve mix. It's the comment I made, we prefer to work on mix than to work on price, which is the comment I make because price shouldn't be a growth driver, mix should be. So we will aim at continuing to work on the mix. And as we saw on recent launches and Murakami, I said it was priced at a premium and it was sold out. And on the recent launches in terms of bags, it was also a success. So back to the point that whenever you are able to deliver the right product with the right level of quality and in trend with the demand, then product sell and you have pricing power.
Operator: We will now move to our next question from Edouard Aubin from Morgan Stanley.
Edouard Aubin: So just sorry to come back on the -- on Fashion & Leather Goods. So your CEO at the end of January talked about the year starting well and Vuitton being up 10%. So yet you published, you reported a double dip kind of decline in terms of Q1. Can you just comment on the trends throughout the quarter? I know it's quite difficult to read given the timing of Chinese New Year, which obviously helped January, but did things got worse in a linear fashion or clearly towards the end of the quarter? So that's number one. Number two on the nationality, Cecile. If you can just come back on the Europeans and Japanese. Are we right to understand that they remain negative, maybe low single digits for European and mid- to high single digits for the Japanese in Q1? And then lastly on Sephora. I think earlier, I don't know if it's you or Rodolphe talked about Sephora being positive still in Q1. But obviously, it looks like there was a sequential deceleration. Can you just comment about Sephora by geography? And if you think you're still gaining share in the main U.S. and European markets?
Cecile Cabanis: Okay. Thank you for your questions. So on Fashion & Leather Goods and regarding your question in terms of volatility intra-quarter, a few comments there. So yes, because also Chinese New Year was in January and most of Murakami was launched in January, we had a very good month of January, especially for Vuitton. But overall, we have not seen, and that's what I was trying to explain when I said -- when I commented on the American demand, the American demand continued to be positive throughout the quarter. So this is an important one because since now, 6 months, we've been enjoying positive growth in Fashion & Leather Goods. So we didn't see any specific change. The only thing is that February did offset January because of the Chinese New Year reversal, and it was last year in February. So this is overall what happened. And then I mean, we could find thousand reasons to explain small movement and volatility if we go into the details, but I think we would be here for the full night, and I'm not sure it would really help you in terms of understanding the trends, so I will stop there. As for Japan demand, largely, the Japan local demand was consistent with what we had in previous quarters. So we didn't see a change on the trend on local clientele. And then on Sephora, so yes, there was normalization, which we expected given the pace and the rhythm of growth that we enjoyed throughout last year sequentially. In terms of geographies, what we can say is that in the U.S. and quite across the region, including Middle East and Europe, we continue to have successful Sephora model when it comes to exclusive brand in store, and we continue to gain market share in those. In the U.S., we have a bit less momentum when it comes to e-commerce, especially because Amazon is being very aggressive, and being aggressive is mostly regarding price and we try to avoid this technique. So that would be a place where there is a little bit less momentum. But otherwise, it continues to be very strong and gain market share. And the model, which is really made Sephora differentiation is continuing to work well.
Operator: And we will now move to our next question from Louise Singlehurst from Goldman Sachs.
Louise Singlehurst: Just 2 for me, but I'm going to come back on the U.S. and Fashion & Leather Goods...
Cecile Cabanis: Sorry, can you speak a bit louder because we hear you from afar?
Louise Singlehurst: Apologies. Can you hear me better now?
Cecile Cabanis: Perfect. Thank you very much.
Louise Singlehurst: I'm going to apologize. I will come back again to the U.S. and just Fashion & Leather. The minus 3% for the group for the U.S., and you talked about Fashion & Leather being a good performance relatively. I think in the last question, you were talking about the American cluster obviously still being positive. But presumably, in the U.S., that was negative given the weight. And just thinking about the performance during the period, presumably, there was a bit of a benefit for the American cluster at the beginning with currency dynamics when we think about spending into Europe. I suppose what we're trying to understand, we've had a period of unprecedented headlines. Typically when we think historically, you would assume there's an immediate reaction to the consumer. And it'd be really helpful to understand that exit of the American cluster regionally and locally as we look into Q2. I know we can't have the answer or a crystal ball, but it would be very helpful to get some context.
Cecile Cabanis: Thank you, Louise. So several points on the U.S. The first one is that, again, on Fashion & Leather Goods as well as Watches & Jewelry, the growth was consistent within the second half of the year and slightly above when we include tourist demand. So that's the first one. The second one, U.S. deceleration was essentially driven by Sephora, which faced double-digit comps in Q1, given the rate of growth of last year and beauty, where the demand is softer than last year as well as Wines & Spirits. And we believe that on this part, there might be, in the most recent week, some impact of demand given the uncertainty. But overall, honestly, we don't have much to report regarding an underlying trend that would have changed in Q1. This is not what we see in the numbers at this stage. April will maybe be different. But in March, except for a softer demand in beauty and the continued soft demand in cognac, the rest was holding pretty well and sometimes better than sequentially last year.
Louise Singlehurst: That's very helpful. And given the environment we're in, I know you mentioned demonstrate agility earlier on in the call, and that's clearly what we're looking for. But in terms of the plans for the year ahead, is it now time to think a little bit more about the streamlining of activities, a different allocation of investment by region? Is there a review of some of the smaller brands, i.e., in beauty or Selective Retail? Can you give us any color in terms of what you're asking from the teams?
Cecile Cabanis: Yes. I think it's not really in the group DNA to just cut activities whenever we face a difficult context. So I think today, the focus is really on managing the current context. We mentioned all the mitigation plans and the upcoming news that will continue to have on U.S. tariffs as well as monitoring the demand. And at the end of the day, doing what we do best, which is continue to ensure that we have the right creative work and highest quality of products to put on the market. And I think that's really our response.
Rodolphe Ozun: We're approaching an hour. I suggest we take another 2 questions.
Operator: And the next question is from Charles-Louis Scotti from Kepler Cheuvreux.
Charles-Louis Scotti: I have 2, please. The first one on Wines & Spirits. The CEO mentioned a 2-year time frame to turn the Wines & Spirits division around and return to growth. Could you please elaborate on the key initiatives currently being implemented and particularly within the cognac segment? And has there been, in our view, a structural shift in demand for cognac in China? Or is it purely cyclical? And second question, could you please provide more granularity on the performance of jewelry brands versus watch brands in Q1? It appears that jewelry, especially Tiffany, has probably proven more resilient. So can you share any insight on that, please?
Cecile Cabanis: Okay. So on your first question, maybe I'll start with the demand on Wines & Spirits. So overall, what we've seen is champagne held up reasonably well in the U.S. and in Europe, and cognac continues to suffer from weak demand. And probably, this is what I mentioned but it's anyone's case. The U.S. political context might have not helped on demand in the most recent week. As you know, Wines & Spirits is a category that remains very much linked to contextual issues as it addresses aspirational customers. So on that part, we didn't see any change in demand and we continue to have, in cognac, a soft demand. And then your second question, sorry, I didn't catch.
Rodolphe Ozun: Jewelry versus watches.
Cecile Cabanis: So jewelry versus watches. On jewelry, I think I mentioned that we are seeing continued very good progress on Tiffany transformation plan. And we continue to -- we said last time that we would continue to renovate stores at a rhythm of 10% per year. We are now around 27%, and we continue to see that renovated stores are performing very well. And same from the icon where we've been very consistently, last year, putting all the efforts behind the icons and continue to gain some weight within the total portfolio and overperform versus the rest of the portfolio. So this is for Tiffany. Bvlgari is very much resilient, enjoyed quite a good Chinese New Year. It was the snake year. But the idea was not to do a very big thing around that. We continue to be very focused on the core product and to deliver growth. There were some phasing topics for Bvlgari last year, but I will not enter into detail because we'll end by commenting the performance in the district for one specific SKU, and I don't think it's good. And on watches, we had quite good response at Watches & Wonders. And we continue to -- so TAG Heuer is doing very well. You've seen that we have now named Mr. Babin who will take over. So the Maison will stay independent, but he will continue to -- he will coordinate and build on the very good work from Frédéric Arnault on this brand and the others. And then Hublot has been in more difficult times, and we are really making sure that we have the right innovation and the right product to put back some energy behind the brand. So that's overall in Watches & Jewelry.
Operator: And we will take now our final question today from Dana Telsey from Telsey Advisory Group.
Dana Telsey: As you think about the U.S. and capital expenditures, is the remodel program on Sephora going as planned or any adjustments? And also as you think about Tiffany. And lastly, as you think about your production in the U.S., will that stay the same, increase? How do you think of that in the grand spectrum of, as you said, Cecile, every half hour, something is changing?
Cecile Cabanis: Yes. You're right to mention that, so it will be part of my answer. It depends when you ask me. No, no. More seriously, so today, we have some production facility for both LV, which is 1/3 of the production and Tiffany, which is the majority of what we sell in the U.S. So for both, we can increase the capacity or the production for the U.S. Still, it's something that you don't do overnight. It's with some constraints in terms of recruiting, training, having the right level of experience and expertise. We are not, today, contemplating to change radically, but this is what we could do. And there was another question on Sephora. Yes, no, on Sephora, honestly, the performance continue -- I mean, they continue to grow. They continue to gain market share. Their model is very strong when it comes to their own store and their shop-in-shop with all their differentiation with exclusive brands and models. So today, we are being disciplined for any brand when it comes to investment. So it will really depend where, what is the growth plan. I mean it's like for any investment, it will depend on the ambition and in the place and the time. Thank you. Any more question?
Rodolphe Ozun: No. Thank you very much.
Operator: Please go ahead, sir.
Rodolphe Ozun: Thank you, operator.
Cecile Cabanis: Thank you very much. Have all a nice evening, and thank you for attending the call.
Operator: Thank you. This concludes today's conference call. Thank you for your participation, ladies and gentlemen. You may now disconnect.