LVMH Moët Hennessy - Louis Vuitton, Société Européenne

Thank you. Ladies and gentlemen, good day, and welcome to this conference call.

I am Jean-Jacques Guiony, the CFO of the LVMH Group. Before I begin, I must remind you that certain information to be discussed on today's call is forward-looking and is subject to important risks and uncertainties that could cause results to differ materially.

And for this, I refer you to the safe harbor statement included in our press release. Let's now move to today's topic, full year 2020 figures.

After a brief discussion on the year's highlights, Chris Hollis, Group's Head of Investor Relations, will cover the main developments of our different groups, business groups. I shall then comment on the main figures.

And after this, as usual, both Chris and I will be available for your questions. The press release is available on our website as well as the slides for today's presentation and the financial report.

Moving to Slide 3 of the presentation. I would say that 2020 showed LVMH's good resilience in a very adverse environment, which I'll go into some details, but the main points to bear in mind, in my view, should be, first and foremost, the successful emphasis we put on the health and safety of our employees and customers as well as our direct support in fighting against this pandemic, our top priority in this unprecedented environment.

On the negative side, the impact of the global health crisis in all geographies and all businesses. This unprecedented situation led to the closure of most of our physical stores, much reduced purchases, I should say, the destocking from our wholesale clients and an almost complete suspension of travel retail-related activities.

On the positive side, I would mention the resilience of our main brands, the strength of our online businesses, the strength of the underlying demand in China despite a very tough first half and the good rebound experienced in the second half across most of the businesses and geographies. Finally, the finalization of the agreement with iconic American jewelry brand, Tiffany.

I will now turn to Chris who is going to review the main developments within our various business groups. Chris?

Thanks, Jean-Jacques. I'll start with the Wines & Spirits and the key figures on Slide 5.

As you'll see, the 2020 revenue fell 14% on an organic basis to EUR 4.8 billion, reflecting a strong comeback from the 23% decline in the first half. Looking at the 2 categories, Champagne and Wines revenue reached EUR 2.12 billion, down 15% on a reported basis, but declined 16% on an organic basis after taking into account a positive 3% perimeter effect, mainly relating to the integration of Château d'Esclans and a 2% negative currency impact.

Cognac and Spirits revenue reached EUR 2.64 billion, a 14% decline in reported revenue, but a decline of 12% on an organic basis after taking into account a 2% negative currency impact. Profit from recurring operations in this group for the year was EUR 1.388 billion, a decline of 20% versus 2019, and this reflects a 29% decline in the first half, but a strong improvement to a decline of 13% in the second.

Breaking down the total, Champagne and Wines contributed EUR 488 million, and Cognac and Spirits, EUR 900 million. If you turn to the highlights on Slide 6.

On an overarching basis, our performance in this business in the second half reflected a strong recovery in the U.S. as well as better trends in China.

In Champagne and Wines, volumes were down 19%, reflecting a significant decline in consumption given lockdowns and dramatically lower traffic in restaurants and nightclubs. We are glad though that in addition to the U.S., we saw improving trends in Europe.

As I mentioned, our results include the integration of Château d'Esclans, the fabulous rosé we acquired at the end of 2019. In Cognac and Spirits, Hennessy volumes were down only 4% for the year, reflecting a return to growth in the second half, thanks to a strong performance, in particular from the VS quality.

There was a strong rebound in the U.S. driven by the off-trade where stocks remain at low levels and probably helped by the stimulus measures taken to support consumption.

We saw improved trends in China where the earlier Chinese New Year last year led to a more challenging comparable at the end of this year. Finally, a new high-end rum from Cuba, Eminente, was launched in Europe in September 2020.

Looking now at our Fashion & Leather Goods brands for 2020, you'll see the key figures on Slide 7. Revenue was EUR 21.2 billion in this group, a decline of just 3% on an organic basis after a 2% negative currency impact.

This reflected a strong second half with consecutive double-digit growth quarters. Profit from recurring operations fell 2% to EUR 7.188 billion for the year, reflecting an exceptional increase of 32% in the second half compared to a decline of 46% in the first.

Looking at the highlights, Slide 8. As Jean-Jacques mentioned a few moments ago, our major brands drove strong performance, and this was the case in Fashion & Leather Goods.

Louis Vuitton and Christian Dior each delivered double-digit organic revenue growth in the last 2 quarters. That would be a triumph at any time but even more so in 2020.

Now Louis Vuitton, its proven strategy centered on creativity and quality, has driven consistent success. Recent new product lines include Pont 9 and the 1854 canvas.

The Maison also generated excitement with its in-person shows in Shanghai, Tokyo and Miami, all with strict COVID protocols observed, as well as with the opening of a new iconic Maison in Japan, Louis Vuitton Osaka Midosuji. Another important driver of Louis Vuitton's growth is its commitment to responsible creativity that it brings alive through focusing on sustainability throughout the production process.

Lastly, in terms of recent Louis Vuitton highlights, the Maison also continues to make strides in its digital offering, which has been a key contributor to sales growth. At Christian Dior, the Maison saw outstanding momentum and market share gains in all regions driven by selling new products such as the Bobby bag and the Dior Chez Moi in ready-to-wear.

They also held a spectacular women's show in Lecce, some exciting artistic collaborations for men collections and Christian Dior, Designer of Dreams exhibition was enjoyed in Shanghai. We are also glad to note that the new Christian Dior flagship store opened here in Paris on the rue Saint-Honoré.

Moving along. Fendi continued to show good resilience and was very creative in maximizing visibility in this period, including through collaborating with the musical group Anima Mundi with performance in several cities.

Turning to some other fashion brands, Loro Piana opened a flagship store in Ginza, Tokyo. Céline had a strong recovery in the fourth quarter driven by sales in Asia.

Loewe's unique show-in-a-box and show-on-a-wall have been very well received. And lastly, at Marc Jacobs, the accessories business continues to progress nicely and the online business is performing well.

In the Perfumes & Cosmetics group, Slide 9, revenue fell to EUR 5.2 billion, a decline of 22% on an organic basis after a 1% negative currency impact. Profit from recurring operations fell 88% to EUR 80 million.

The key highlights on Slide 10. This business is particularly impacted by the sharp decline in international travel and in makeup.

Recognizing this, each of the brands moved swiftly to maintain a selective distribution approach and limit promotions in order to support brand equity. At the same time, there was ongoing process in the skincare business and growth in online sales due to the brand's focus on digital strategies.

Parfums Christian Dior showed good resilience based on the continued success of its iconic lines and the strength of its product innovation. Successful launches in 2020 included Miss Dior Rose N'Roses, J'adore Infinissime and new Rouge Dior, all off to a nice start in spite of the environment.

Across this business, revenue improved in Q4, especially in China, reflecting, in part, a strong acceleration of online sales as well as -- this is the revenue improvement as well as in Japan and the U.S. China was also a strong market for Guerlain with outstanding performance in skincare.

The Abeille Royale and Orchidée Impériale lines continue to perform well. And the Aqua Allegoria collection in perfumes is also a strong seller.

In some of the other brands, we saw a good performance of the makeup line, Prisme Libre at Givenchy and progress on the digital front at Fresh, while Fenty launched its new Fenty Skin line. And finally, Benefit business was impacted by the suspension of the offers in its stores due to the lockdowns.

Turning now to Watches & Jewelry, Slide 11. This business has been impacted by destocking across retailers, though there was a marked improvement in the second half.

Revenue for the year was EUR 3.36 billion. On an organic basis, this was a decline of 23% after a negative 1% currency impact.

Importantly, in the fourth quarter, organic revenue in this business was down just 2%. Profit from recurring operations was EUR 302 million, a decline of 59%.

Slide 12, I'll start with the biggest news in the business. The Tiffany transaction closed at the start of this year, and we are now starting the integration process having already named a new leadership team with Anthony Ledru from Louis Vuitton assuming the CEO role; Alexandre Arnault as the EVP; and Michael Burke becoming Chairman.

Now moving on, let's begin with Bvlgari. We saw a strong recovery in the second half in China, fueling this, in part, were the introductions of exciting new products such as the Serpenti Viper and the B.Zero1 Rock lines and the high-end jewelry collection Barocko.

In addition, the new Bvlgari Aluminium watch is being very well received, and Octo Finissimo received its sixth world record relating to its ultrathin movement. TAG Heuer has shown good resilience as well.

It launched the third generation of the Connected Watch in New York before the lockdown started in the U.S. and is having great success.

The brand also celebrated its 160th anniversary with the launch of wonderful new limited editions. Hublot continues to bring excitement to the luxury watch world, including most recently launching new products, such as Big Bang Integral and Spirit of Big Bang Meca-10.

The brand is also Official Timekeeper of English football Premier League for the 2020-2021 season. Chaumet has also had an active period, including reopening its store at its historic Place Vendôme site in Paris and also strengthening its footprint in China.

The brand also presented its high-end jewelry collection Perspectives in Monaco and in China. And finally, at Fred, they, too, are bringing newness to the market, including with the development of the Force 10 line and the launch of Chance Infinie, but also expanding in China and further enhancing their digital capabilities and offering.

Moving now to the final business group, Selective Retailing, on Slide 13. Revenue in this business declined to EUR 10.2 billion.

On an organic basis, this reflects a decline of 30% after a negative 1% currency impact. The result from recurring operations in this business was a loss of EUR 203 million.

Let me start with Sephora, this is Slide 14, which adapted well and showed strong resilience over the course of 2020. While in-store shopping was deeply impacted by the crisis, online sales grew very sharply.

This is due, of course, to the strength of the product offering, including notably in skincare and the growing success of new products, such as Sephora Collection Good For and as well as Sephora's best-in-class digital capabilities and successful strategies to drive growth through, for example, events such as the Virtual Sephora Day where beauty trends were presented in China. At DFS, where suspended travel had a significant impact on its traffic, steps have been taken to drive sales outside of the core travel retail business, including with new services geared towards local customers as well as strengthened online offerings, which have been well received.

With respect to stores, we did see improved revenue in Macau at the end of the year. Lastly, at Le Bon Marché, the department store has taken great measures to remain in close contact with customers to continue to serve them.

And this also played a role in driving strong revenue growth at its e-commerce site 24S.com. So now I'll hand back to Jean-Jacques, who will go through the key consolidated figures before opening up for Q&A.

Jean-Jacques?

Thank you, Chris. So let's now discuss 2020 figures a little bit in more detail.

I shall start with a review of revenues on Slide 16, where you can see a comparison between quarters in terms of organic growth. As you can see, it has been a story of, I would say, 2 halves.

Two points worthy of note. One is a strong rebound in organic revenue in the second half from a decline of 28% in the first half to only a 5% decline in the second, with all business groups contributing; and two, the increased negative currency impact in the second half from 1% to 3%.

Let's now move to Slide 17, which shows the geographic breakdown of revenues in euros. Given the suspension of travel, there was repatriation of spend from Europe towards Asia representing 4 points, while the U.S., Japan and other markets remained stable in relative share.

Moving to Slide 18. You will clearly note that the group's geographical performance was contrasted, to say the least.

With the exception of Europe, which has remained stable compared to Q3, all regions have improved during the last 2 quarters of the second half with a notable double-digit growth in Asia. On Slide 19, as Chris has already touched on the business groups, I just wanted to point out the gradual improvement in organic revenues since the beginning of the second half, with total organic revenue only declining at single digits.

In the fourth quarter, the later Chinese New Year this year had an impact on the timing of shipments compared to last year in Wine & Spirits. But otherwise, all business groups improved compared to Q3, especially in Watches & Jewelry, but most notably, obviously, in Fashion & Leather Goods, which recorded double-digit growth in the last 2 quarters.

Let's now move to the next slide, which is 20, on the absolute figures as well as the reported and organic changes. Once again, it illustrates the impact of the suspension of international travel while demonstrating the resilience of the Fashion & Leather Goods as well as the Wine & Spirits.

Turning now to our simplified P&L account for the period, which is on Slide 21. The main comments are the following.

Obviously, we already discussed revenues with, on average, for the year, minus 17%. Gross margins decreased by 180 basis points, essentially related to the first half, where half of the drop was due to depreciation of unsold products and the other half reflected the impact of under-absorption of fixed costs in manufacturing activities.

In H2, the gross margin was comparable to last year. Marketing and selling expenses are down 16% in organic terms, while admin is down 5%.

Overall, operating costs decreased 14% on a constant currency basis, reflecting the group's effort to contain costs in an adverse environment. Profit from recurring operations is down 26% at EUR 8.3 billion.

Other operating income and charges are negative by EUR 333 million, reflecting mostly amortization and depreciation of intangibles, but also this year some donations and acquisition costs. Financial charges are a little higher than last year due to the impact of the mark-to-market of our financial investment portfolio.

I will comment on this on a separate slide in a minute. The group's income tax rate is around 33%, 5% above last year, resulting from exceptional impacts of certain nondeductible charges incurred in 2020 and the uncertainty around the future application of some losses with a fall in minority interest.

Overall, the group share of net profit is EUR 4.7 billion, obviously. Let's turn to Slide 22.

You can see on that chart the impressive rebound in the second half profit from recurring operations with a 7% improvement over last year. Looking at this by business group, Fashion & Leather was in strong positive territory at plus 32% driven by improvement across the group and notably, Christian Dior and Louis Vuitton.

Wines & Spirits and Watches & Jewelry were resilient at minus 13% and minus 16%, respectively, in the second half, with margins similar to the same period of last year. Perfumes & Cosmetics showed a small profit in the second half in a highly promotional market.

And Selective Retailing also returned to profit in the second half of the year but remain loss-making on a full year basis. Let's now look at the profit from recurring operations, which is broken down by business groups on Slide 23.

Wines & Spirits profit declined 20%, underpinned by a 29% decline in profit in Champagne and Wines and a more moderate 13% decline in Cognac and Spirits. After a particularly strong second half, Fashion & Leather Goods profit ended up almost stable, actually down 2%, which is, in my view, quite remarkable.

Perfumes & Cosmetics and Watches & Jewelry also renewed with profitability in the second half of the year and achieved EUR 80 million for Perfumes & Cosmetics and EUR 300 million for Watches & Jewelry. And Selective Distribution remained loss-making to the tune of EUR 200 million, reflecting the division's exposure to travelers as well as a lower level of the margins than the other divisions.

Let's now turn to Slide 24 and the analysis of the net financial expense. A few points to mention.

The cost of debt declined significantly courtesy of negative interest rates. The cost of hedging strategies and the financial cost of leases under IFRS 16 were quite stable compared to last year.

The market value of our financial portfolio was essentially flat after increasing by about EUR 82 million in '19. We have opted, as you know, for mark-to-market accounting for our financial asset portfolio.

And as a result, this item shows market fluctuations of latent capital gain and not actual profits and losses. Moving on to Slide 25.

The balance sheet structure remains very sound. The slight decline in intangibles and tangible fixed assets reflect more limited capital investment during the pandemic.

Inventories edged down as a percentage of total, reflecting unfavorable currency moves toward the end of the year. Finally, the increase in debt and other current assets is related to the preparation for the acquisition of Tiffany, obviously.

Turning to the important Slide 26, a few words on the cash flow statement. As you can see at the bottom of the slide, operating free cash flow was almost stable, an impressive feat in this very challenging year.

The decline in the cash flow from operations reflect the lower operating profit adjusted for noncash items, mostly inventory and intangible depreciation. This was almost entirely offset by the 25% decline in capital expenditures, consistent with the objective we have given ourselves, lower working capital requirements, which we just discussed, and to a lesser extent, lower taxes.

A quick comment on the group's net debt, which stands at EUR 4.2 billion, as you can see on Slide 27, about EUR 2 billion below 2019 level and a gearing ratio of 11%, obviously, prior to the acquisition of Tiffany, which was completed by the 7th of January, and therefore, not included in these numbers. Finally, a word on the dividend.

After having reduced last year's final dividend by 30% from the original amount, we propose a dividend of EUR 6 per share at the April AGM, in line with the level paid in 2018. Given the interim dividend of EUR 2 paid in December 2020, the final of EUR 4 would be paid in April '21.

I would like to conclude this very brief overview of the activity with a few comments highlighting the most important point of this half. First, I would like once again to stress the quality of the work achieved by the teams and their agility throughout this unusual crisis.

The strength of our brands, which once again demonstrated the resilient nature and the quality of the distribution, both offline and online, all of which enabled us to look at the future with confidence. Secondly, we look forward to integrating another star jewelry brand with Tiffany.

We will pursue the digitalization of our Maison to continue to enrich customer experience, and we will accentuate the group's commitment to preserve the environment and corporate responsibility, including diversity, equality and inclusion. Thirdly, the revenue and profit achieved in this most challenging year demonstrates the outlook has certainly got better, or should I say, gets progressively back to normal.

We are optimistic and confident, although there are 2 things we should not forget in order to be able to react quickly to any changes in the environment. The resolution, one is that the resolution of the pandemic crisis lacks visibility, and we cannot rule out further difficulties.

And two, the travel retail business is and will be suffering for a number of months or quarters before we come back to normal. So that's basically all Chris and I wanted to say.

Operator, could you open the line for questions, please? Thank you.

Can you hear me well because I think the line broke for a second.

Yes, we can, Zuzanna. Thank you.

Yes.

Perfect. I have 3 questions, please.

So the first question will be on the Fashion & Leather Goods division. Would you be able to discuss the nationality in Q4?

I guess it would be just mainly to ask if you've seen the continuation of trends from Q3. And if I remember correctly, growth was driven by the American consumers and the Europeans, and the Chinese consumer was positive, but I think still slightly lagging the Americans and the Europeans.

And also related to the Fashion & Leather Goods division, if you could just quickly confirm what was the contribution of pricing to the division for 2020. Second question is on profitability also Fashion & Leather Goods division.

So I'm being a bit boring here. The profitability was really impressive in H2 at 41%, but just trying to understand in light of the FX headwinds and also the fact that if I understand correctly, you probably didn't have the chance to spend as much marketing -- on marketing in H2 because sales recovered way faster.

So how should we think of -- could some of this additional spend to be kind of moved to 2021? It will be very helpful to get some comments to understand that.

And my final question will be this time about jewelry. You've seen a nice improvement in Q4.

I presume that's been driven also by jewelry. And generally, looking at the trends in the market, the jewelry category has been quite strong in the last 2 quarters.

And because of that, I think there's been some concerns whether this is something sustainable or is this some sort of short-term change in patterns of spending by the consumers because of the pandemic. So if you have any high-level thoughts on that, it would be very helpful to understand that.

Thank you, Zuzanna. A good list of questions to start with.

So nationality, I will answer in broad terms for Louis Vuitton, as always, which is the brand where we monitor that with some good accuracy. Q4 trends were in line with Q3 with some changes, nevertheless.

As far as Americans are concerned, which are leading the charge, I would say, we were in line. So the American customers was up in a very strong double-digit way.

As far as Japanese, we registered in Q4 positive growth, which was not the case in Q3, but mostly due to the comparison base being complicated by the VAT impact in '19 that you all remember. So I will not elaborate on.

But we ended the quarter in 2020 with the Japanese on a very high note. And as far as Chinese, they were also up, quite a sizable acceleration compared to Q3.

So we are quite pleased with all the numbers with the various nationalities. Not to mention European nationalities, I commented Q3 with all European nationalities being strong.

They were, I would say, even stronger in Q4, although, as you always know, it's not sufficient to offset the almost disappearance of tourist inflows in Europe. So Europe altogether is down, but European clienteles are up in a significant way in Q3 -- in Q4 as they were in Q3.

As far as pricing is concerned, there were some price hikes in the course of 2020 after, as you know, several years of flat prices. I think 2020 was the year to do that.

I mean, if you don't do it in 2020, when do you do it, particularly after 4, 5 years of no price increases. So it varies a lot from one brand to another and from one geography to another.

But in the growth, particularly in the second half, there is some contribution, obviously, single-digit contribution from price increases. As far as profitability is concerned, there was nothing coming from FX.

I mean, the contribution of ForEx to profitability is negligible in 2020. It's a little bit positive in H1 and a little bit negative in H2, nothing really significant.

Obviously, you mentioned marketing, but all the cost base was under control, and we ended up with revenues growing faster than cost, which, sorry to say that, is a good recipe for increasing margins. So we all know that it cannot last forever.

At some point, we shall have to reinvest into marketing, into distribution, et cetera. But we were able in 2020 to control very much the cost base and to decrease it even at a time when the revenue base was growing faster than we expected.

And all in all, we have enjoyed a good ride on the margins in 2020. If your question is whether this is sustainable or not, probably not, but the idea is not.

For this to be sustainable is to show our ability to react to an adverse environment. Finally, jewelry.

You're right, I mean, the improvement was significant in Q4. Bvlgari did well.

I mean, if we look at the retail business at Bvlgari in Q4, it was up low double digits. So it's quite encouraging.

Was there anything connected with the pandemic and nonsustainable? I really don't know.

The environment is what it is. The readiness of it is not ideal, to say the least.

So we'll see what happens. But at the very least, at the end of the year with our main jewelry brands so far was extremely encouraging and bodes well if things continue to improve for 2021.

But there is a big if in what I said.

Perfect. This was very helpful.

Just to follow up, I would say, to clarify on nationality. So I mean, you mentioned the Americans and the Japanese.

Is it the right way to think of -- did you mention them by kind of growth in Q4 or was it just random order? So would the Americans be the faster in Q4 than the Japanese?

The order I have on the paper that I read so that I don't say stupid things when I answer the question. So that take it as you want.

I wonder how you're thinking about Chinese New Year because this is a rather special situation. Chinese consumers are not going to travel abroad this time, and this is typically the time when they buy in Europe, mostly.

But at the same time, there's been some resurgence of COVID-19 cases, which could potentially disrupt the pre-Chinese New Year shopping in China itself. So I wonder what you make of the situation knowing that very strong support in China has been instrumental in producing these very, very good results.

The other question I have is on beauty. There's so many moving parts because of COVID-19 that I wonder if you see any structural developments.

You changed the CEO of Sephora recently. And so I wonder if any of the, let's say, more structural and fundamental goals and plans that you have for this business could potentially show any improvement against the disruption from COVID-19.

And certainly, I appreciate what you said about SG&A and the ability to contain cost and the agility that you've shown in performance, but would it be very wrong to assume that part of this lower cost is potentially going to be showing sticking power and benefit some of the 2021 performance knowing that uncertainty is still prevailing?

Okay. Chinese New Year, well, your guess is as good as mine.

I mean, unfortunately, if you want to point out that there are risks connected with the sanitary situation in Chinese or anywhere else, I agree with you. I mean, nobody knows exactly where we are heading for, neither in China nor elsewhere.

I mean, China has proven quite in control over the last few quarters, I would say. So it is not the place where I would assign the largest lockdown risk.

But anyway, nobody knows. So there are risks.

And obviously, such risks, if they materialize at the time of Chinese New Year, the impact would be compounded, which is exactly what happened last year. So I mean, I don't think I can elaborate further.

I mean, nobody knows. As far as beauty is concerned, no, there were no CEO change at Sephora.

There was an appointment of CEO. And Chris de Lapuente was appointed in the whole division of Selective Distribution.

So you mentioned disruption from COVID, which is quite obvious. I assume you're talking about distribution, and Sephora and to a lesser extent, DFS, mostly, we suffered from a big disruption from a physical traffic viewpoint, a switch to Internet, a massive negative operating leverage in the brick-and-mortar business.

So all this has been at play in 2020, will not disappear at any point in time soon. I mean, it could take a while for everything to normalize.

I think we can be reasonably pleased with the way we have handled the situation, which was very adverse with a lot of stores, at some point, all of them being closed, which makes things quite difficult. I mean, generating revenues when all your stores are closed is a fairly challenging situation, you will admit.

And we handled that throughout the year with obviously negative financial consequences. But all in all, I mean, I think we were able, we turned a profit for Sephora for the full year, which was not obvious, frankly, at the beginning of the year.

And I think the Sephora teams reacted extremely well. The future, I mean, forecast are uncertain, particularly as far as the future is concerned.

So it's always difficult to say what will happen. I didn't catch your last question on cost.

Whether some reductions, whether some will stick.

Well, yes, some will stick but will obviously very much depend on the overall environment. I mean, the necessity to invest into all businesses at some point will emerge.

Obviously, it will emerge. It will be a function of the normalization of the environment.

I mean, if all of a sudden the disease disappears and everything is back to normal, obviously, we will reinvest into the business, both in terms of OpEx and CapEx. If not, we will manage the situation in a fairly flexible way as we have done in 2020.

So for me, it's hard to say, to be more precise than that. I mean, we are navigating depending on the weather conditions.

And should the conditions improve, we'll act accordingly. If they deteriorate, we'll also do the same.

On Vuitton and Dior, sorry, 3 questions for me. The first one is on Vuitton and Dior.

Jean-Jacques, I know you don't like to get the question, but I'll ask it anyway. When you step back and you look at the year as a whole, how do you explain the very significant outperformance of these 2 brands?

Again, just curious to have your analysis on things. The second question is on DFS.

I think it's quite likely that the losses were quite significant in 2020. And to what extent could we -- on what basis could we assume that a breakeven this year is likely?

To what extent the shift to online is a structural headwind or not for this business? And maybe lastly, on the e-com strategy.

I think if I'm not mistaken, Dior beauty went on Tmall in June. I think some of your smaller fashion brands, such as Kenzo are on the platform, and obviously, some of your competitors, Coach and Gucci, recently joined as well.

So to what extent some of your other Fashion & Leather Goods could be joining the platform and your take on the concession model?

Thank you, Edouard. I love the first question.

I love to talk about what went well in the year. So why is it that there is an outperformance?

I would say I'm not going to be very original there. There are 3 reasons.

One is product. The other one is marketing.

And the third one is distribution. Basically, what I mean by that is that when we look at the brands, I mean, there was the 2 brands.

It's true, it goes beyond LVMH and Christian Dior, but it's particularly significant there. If you look at the pipeline of products and the products that were introduced in 2020, which obviously were designed before that, there was a very strong pipeline.

I mean, I could spend some time on Vuitton or Dior. I mean, there were a lot of introduction of new products.

I mean, the Pont 9 for Vuitton, the Game On, the Since 1854, et cetera, et cetera. So there were a lot of novelties and strong ones, which is a testimony to the creativity of the brand.

And likewise, with Dior, as Chris mentioned, in his outline. So I think the product front was fairly busy, but it was designed in the prior years.

As far as marketing is concerned, it was a tricky year because people were not so much concentrating on reading newspapers and magazines. So we have to find other ways to talk about the brands.

And I think we were quite efficient and bold, I would say, in the way we have decided to talk to our clients. You've probably seen the many initiatives that we have taken, the Lecce runway show for Dior in the middle of nothing was happening.

Apart from that, the various shows that we did for LV Men, for instance, in China. And in Japan, the exhibitions, et cetera.

So we did all that at the time. The point to bear in mind that we did it when nobody else was talking.

So it was really Dior and Vuitton taking the bulk of the customers' attention because nobody else was talking. We did it in the relevant geographies in Asia, basically.

And this is thanks to the fact that we have very, very strong local teams that were able to do it themselves. I mean, take a runway show, main runway show in Shanghai.

It's the Chinese team. I mean, the Asian team and actually, the Chinese team that organized it.

No one from Paris moved to Shanghai because it was not authorized. So they had to do it.

And the strength of the team was such that they could do it. So all in all, I mean, we took a lot of initiatives.

And I think all these initiatives, be they product or marketing ended up helping the business and showing the performance that we are generating, the performance that Chris and I have described previously. DFS, obviously, losses this year, is breakeven in sight for 2021, I hope.

But this is a function of the return of tourists to the traditional DFS locations. So nothing could be granted on that front.

So we are hopeful. What I would like to stress with regards to DFS is that they were really hammered by negative operating leverage in 2020 with a big drop in the customer base.

But this goes both ways. I mean, the minute customers come back, I mean, the profitability will come back to where it was previously, and it will be all the more so that DFS has been extremely active in 2020, as I said before, in cutting costs.

So the cost base and the breakeven point has been lowered tremendously in 2020, and it is to the credit of the team there. And we expect that the minute the business comes back, we shall be able to benefit from that in a tremendous way.

It's a volatile business. We cannot hide the fact that it has ups and downs, and 2020 was down.

But let's hope that with the return of the tourists, we should be able to generate a much more, a much healthier financial performance. And finally, your question on Tmall.

Tmall could be different things to different people. We think Tmall is a powerful vector to reach customers, but you can do different things with that.

I mean, it could be a way to promote products and to offer discounts, which you expect people will not see because it's on the web and it's not in the stores or it could be another distribution channel, I mean, an online distribution channel, which has exactly the same pricing and merchandising strategies than the regular stores. As far as we are concerned, this is the second option.

We have decided that whatever we do in Tmall, we should be able to do it. Whatever we do in brick and mortar, we should do it on Tmall.

So there is no such thing as price discounts on Tmall. We are reasonably pleased with the outcome.

This generates a sizable and healthy business. Whether we will extend that to other brands, I mean, the question with online is always the same.

I mean, is it additive, is the introduction of new channels additive to the overall business? Tmall is a fairly expensive way of distributing products.

If the idea is to get there and to cannibalize other channels that would be more profitable, it makes no sense. So this is the way we look at it.

I don't have definitive answers for all the brands, and I don't want to provide them anyway as we speak because we don't know them all. But that's the way we think about it.

We do the same thing at Tmall that we do elsewhere, and we make sure that we don't cannibalize at a higher cost the business we do elsewhere. These are the main principles on what we do on Tmall.

Congratulations. I'll stick to 3 questions as it's tradition.

So first of all, on Cognac, I'm just wondering if you can help us understand depletions and inventory levels. Notably in the U.S., there was a sense that there was almost an issue of supply rather than demand.

And I'm just wondering where you're at for this category in the U.S. specifically.

Secondly, just a question on online because there seem to be very different exposures and strategies. I mean, some of your competitors like Chanel, they don't actually sell online.

Hermès sells very little online. And on the opposite part of the spectrum still outside the group, you have people like Moncler or Gucci doing a lot.

So I'm just wondering what is the exposure for a brand like LV and where do you see this going in the year ahead, in the years ahead, sorry, post-COVID. And then thirdly, I just had a question on staycationing because, ironically, it seems that there have been comments on the fact that if people stay at home and they're not spending on fancy hotels and restaurants and flights, they might be spending more on personal goods and luxury.

And so I'm just wondering, is it a risk, again, counterintuitively, if the world reopens, is it a risk that consumers might be spending more on the travel part and possibly less on products. How do you think about this?

Thank you, Erwan, for your 3 questions. On Cognac and depletions in the U.S., well, depletions were slightly higher than sell-in numbers.

So we enjoyed sell-in numbers in the U.S. throughout the year at, on average, at a double-digit rate, but the second half of the year was extremely high, I mean, in excess of 20%.

And the depletion, so sell-out was commensurate to these numbers. We started the year with a level of stock around 50 days.

We are at 30 days more or less. This is not entirely precise, but this is a ballpark of the number.

So we have reduced our inventories, which enabled -- I mean, our distributors have reduced their inventories, which enabled sell-out to be a bit higher than sell-in in volumes but also in percentage. So a fairly strong year after a difficult start of the year, a very, very strong recovery from May, June onwards.

Online sales. I mean, it's a very -- I know that you've been emphasizing your questions on LV, but it's a very broad question because when it comes to online sales, there could be different things.

I mean, you have e-commerce, you have e-concession and you have e-wholesale. And we have a different attitude towards the 3 segments.

The first one is a must-have. I mean, we believe that e-commerce, basically what we do on the vertical website of each brand is something that we need to do and that we do.

I mean, I don't think there is one single brand within the group that doesn't have a website today where they do sell most of their product. And this has proven very useful in 2020 due to the closures of the stores.

Although like competition, I think we noticed that the brand is doing the better -- having the better performance were the ones that had invested into online sales and on e-commerce ages ago. I mean, it's not something that you develop in the middle of a crisis.

I mentioned that already for H1 numbers. With regards to e-concession.

On paper, there is nothing wrong, apart from the fact that capturing the data is not always very easy. So we could develop that, provided we can have access to the data, which is not always doable.

So why not? But probably for not all the brands, particularly if we end up, as I commented on Tmall previously, considering that it would be cannibalization of existing sales at a higher cost.

So this will not happen. So we have a cautious view, but there is nothing wrong on paper on going to e-concessions.

Finally, e-wholesale, we are against it. In the same way as we try to limit it in the physical world, there is no question to develop it in the digital world.

Last question on staycation. Well, the short answer is, I don't know.

I mean, there is, bear in mind that as far as we are concerned, we have a better ability to analyze offer than demand. I mean, what happens with demand necessitates a little bit of hindsight, and it's difficult for us to know what happened over the last 3 weeks and whether this is due to XYZ factor.

So it's quite complicated. There could be some element into the strengths of the business in the last few months.

And if things normalize in the near future, there could be some impact. On the other hand, we are talking about so many moving pieces that I frankly think it's very difficult to isolate some explanation and to make it sort of routes for any future development in the business.

So frankly, I have a hard time answering your last question, Erwan.

Okay. Just wanted to follow up on the online question and just focusing on e-commerce.

I think it was Moncler who mentioned that pre-crisis they were at about 10% of sales online, looking to go to 20% over the next 3 years. Is that a ballpark, a magnitude in terms of contribution that could make sense for your portfolio of brands?

Well, last year, we were all together for the group, we were 9%. That's the only number -- sorry, last year, 2019, we were 9%.

That's the only number that we gave. I don't want to give you the 2020 number, as you know, because it's very high, but it's not sustain -- hopefully, it's not sustainable because it means that the whole thing will normalize.

And we'll go back to normal with the people going to the stores as opposed to shopping online. There is nothing wrong with shopping online, but we would like a better balance than the one we had, particularly in April and May in 2020.

The question of the objective of the 20% mark, you mentioned, depends very much how far we want to go into e-concession and from e-concession into e-wholesale. I mean, as I said, we are pretty reluctant to go into each of them.

We are pretty cautious in our approach. So I think this limits the potential.

I will not confirm any number, but you have the main elements of our strategies there with a big emphasis on e-commerce as opposed to the other 2 segments.

Just a couple of follow-ups for me, please. If we could just go back to that very impressive margin for Fashion & Leather, which I know will be on top of everyone's mind.

But I wonder if you can just help us, Jean-Jacques, think about what's truly variable versus fixed cost because I suppose what we're all learning is how quickly you are able to amend that cost just given the grim circumstances of 2020 and particularly given, obviously, Europe remains very challenging in terms of tourism. So either we're getting the profit pooling by region, I presume wrong.

But if you can just help us with that dynamic, would be very helpful. And then secondly, on the LV customer base.

Can you tell, is it lots of new customers coming on? What's the team learning about the CRM data?

Is it lots of customers already in the existing database who are coming back and spending more and just price-wise as well in terms of the key product areas? And then finally, on digital, just a follow-up from Erwan's question just before.

With the e-concessions, is it possible to tell us which brands have e-concession relationships beyond 24 Sèvres?

Thank you, Louise. I wish I could help on your first question, which would certainly be helpful when it comes to spreadsheet forecast, but the reality is quite complex there because your analysis is fixed versus variable, which, in the real life, you have fixed, variable but also discretionary.

I mean, marketing cost is not something which is either fixed or variable. It's something that you decide to engage or not.

And this is an example of cost that we can decide to engage or not, and therefore, a big element in our ability to react to adverse environment or when things are going well to sort of overinvest in order to widen the gap with the competition as we have done many times in the past. So it's really important to bear this in mind to understand how we react.

Frankly, I don't know the answer to the question because it varies a lot. I mean, in some geographies, we have fixed rent, in other we have variable.

It moves from an area to another. In some brands, we have a lot of fixed pay, a lot of variables for other brands.

I mean, there is no such thing as a unique answer to this question. What we try to do is to be as flexible as we can, as you've seen.

And frankly, I'm happy to report that we're able to grow the profits in the context of declining revenues, which is a testimony to the ability we have to reduce our cost base. That's all I can say.

And in the cost base, part of it was mechanical, obviously, with the variable portion of it, but part of it was engineered with the idea that discretionary spending should be adjusted in tough times as in good times. Your second question about the customers.

By and large, there were no major differences in terms of new and old customers. What we saw, which is not entirely intuitive as we saw across the board the drop in traffic, not in business, but in traffic.

In other words, conversion was much higher, which means that people pushing the door of a Vuitton store, and it's true across the board, actually, were more decided to buy something than they would be otherwise in normal times, which would normally be the behavior of existing clients. If you look at the hard facts and the numbers, in reality, the acquisition of clients is almost at the same rate, slightly lower, but almost at the same rate as it was in the preceding years.

So there is no major difference between 2019 and 2020 in this respect. With regards to e-concession, the bulk of the brands in e-concession are the cosmetic brands.

We don't have that many e-concession in Fashion & Leather. The bulk of them are Dior, I mean, Parfums Christian Dior, Guerlain and Givenchy.

I would have 3 questions, including some follow-up. Starting with Cognac.

You mentioned 30 inventory days at the end in the U.S. at the end of the year.

If I'm not wrong, I think this is slightly higher than at the end of the 2 previous quarters. Should we expect some -- the level is still very low compared to the history.

Do you expect some inventory buildup over the coming quarters that could support the sales in the segment or not, notably in H1? Secondly, on Perfumes & Cosmetics, if I'm not mistaken, a few years ago at the Christian Dior trip, you highlighted that the target was for Dior to be the #1 beauty brand in luxury in the world by 2020.

Now you have lost some ground in recent quarters admittedly due to your low skincare exposure. Can you update us on your positioning versus peers on your targets and on focus now versus then?

And lastly, a more general question. I was wondering, have you seen a pattern in 2020 and notably in Q4 of outperformance of the key brands in their respective segments, meaning Parfums Christian Dior versus the rest of the beauty business, Bvlgari versus watches and jewelry, Vuitton versus its own segment, Moët & Chandon versus champagne?

So do you see anything clear? And any lesson to draw from that or is it not as clear as that?

Thank you, Thierry. No, I don't think -- I mentioned 30 days, which is a ballpark.

I think the precise number is 28. And at the end of Q3, it was 26.

So we are pretty close. So I don't think you should draw any conclusions from that.

Inventory buildup -- well, the problem with inventory buildup is that what is inventory is not sold out. So basically that then into the sell-out and the depletions, it's mostly the distributor score.

I mean, they have to make an arbitration in between whether what we sell them is something they want to sell immediately or keep in their inventory for future business. Usually, they don't do that.

So whatever they get, they sell it. And if they can sell more by -- than what they get from us by reducing inventories, they would do it.

So don't expect a lot of inventory buildup in the current environment, at least. So you mentioned the Parfums Christian Dior target being the largest luxury brands in 2020.

As you have seen, 2020 did not work exactly as expected for a few brands inside of LVMH or outside, but the objective is exactly the same. The question is to whom we compare ourselves because you've clearly seen that a lot of the so-called competition have adopted strategies, particularly distribution strategies that are very different from us.

Basically, the Korean Duty Free operators have never done such a good business that they have in 2020 because they've been buying from the brands and selling into China a discounted -- I mean, to dilute that, in turn, we are selling into China at discounted prices. And we decided we didn't want to go that route because we want to preserve the quality of the distribution and the price of the product so that in the long term, we preserve the value of the brand equity.

Not so many players have done that. It's mostly limited to LVMH Group and maybe to its most renowned competitor, Chanel.

Otherwise, I mean, the rest of the industry went through the discounted channel that we don't want to play. So that's a very important point, which, in our view, limits the comparability of what's going on, what happened in 2020.

We have a very restrictive distribution strategy in order to preserve long term the brand equity. You can only compare us to the ones doing exactly the same.

And as I said, they are not many. I missed your last question.

I mean, outperformance of...

Maybe it was little too global. But the idea is, have you seen a pattern of outperformance of the large brands -- the largest brand in every segment?

I mean, Dior in beauty, Bvlgari in high-end jewelry, Vuitton in its own segment, Moët & Chandon in champagne. I mean, have you seen anything in that sense in Q4 and for the full year?

Do you draw any conclusion or are there more specific instances every time?

Well, we don't know all the numbers from the competition as we speak. So it seems that we've been outperforming some of them.

But I...

Sorry, Jean-Jacques. Sorry, I meant within your portfolio.

The big one? The big ones within the portfolio and what the conclusion we draw for the smaller one.

Sorry, I misheard your question.

Sorry. And vice versa.

Yes. I mean, as always, in crisis time, the big brands do better than the smaller ones.

It's not new. I mean, remember in 2009, it was exactly the same thing.

Should we decide that we should be concentrating only on a handful of brands because they do better in bad times and give up on the other ones, certainly not. I mean, there are benefits to having a large group of brands, as we discussed many times together, and we intend to -- we do not intend to change our strategies in this respect.

What is important is that crisis after crisis, the number of brands doing better in crisis time than the preceding times is increasing. It is certainly the case this time.

I mean, a brand like Fendi suffered like hell in 2009, much better this time, for instance, just to move away from Dior and Vuitton one second. I mean, we were very pleased with the outcome of Fendi in the current situation, where they did very well.

Céline had a very, very difficult first half, but the second half was very strong. Some brands that we never speak about.

I mean, I know Marc Jacobs is positive in -- I mean, it's profit-making in 2020, not ideal year for turning out a profit after 5 years of losses. I mean, there were some achievements there that make us quite hopeful that the portfolio has very strong assets, and it's probably not in the midst of the crisis that you have to judge whether the winners and the losers -- who are the winners and the losers.

We certainly know the winners, but there could be other ones that we hope to develop in coming years.

I have 3, hopefully, quick ones. My first question is looking at the really impressive rebound in demand and the sales trend, especially in Fashion & Leather, in the second half, despite the fact that you haven't -- travel hasn't returned to normal, work -- going to work hasn't returned to normal, the social occasions haven't really returned either yet, what do you think is behind this underlying demand?

Is it pent-up demand from previous quarters, misspending? And then how do you think about how demand could unfold given that dynamic as we get to a world where we're reaching herd immunity and the vaccine uptake is much more widespread?

That's my first question. And then my last 2 questions.

One is if you could just make some comments on the Sephora news with Kohl's. What you think the opportunity is there and why you think Kohl's is the right partner?

And then lastly, I don't know if you can speak to this yet, but any early thoughts on the areas of the biggest opportunity you see with Tiffany?

Thank you, Omar. Well, your first question, I think it's a little bit what Erwan asked staying about -- talking about staycation.

I mean -- and as I said, I mean, analyzing demand is hopefully difficult without the benefit of hindsight. You could be -- I mean, it could be true that no travel, no social, no, nothing, I mean, pushes people into stores because nothing else to do.

I don't think it is -- life is as simple as that. I mean, it's not a simple choice between eating out, traveling or going to luxury stores.

I mean, there are other things to be done, but anyway. Could -- some element of that, that could explain the strength in demand in Q3 and Q4, but I mean, it's difficult for me to elaborate on that because we don't really know.

I mean, we shall need a few quarters to really understand what's going on. We have to make surveys.

And also, we also have to observe the behavior of customers when the situation normalizes, which will probably come this year, but we -- nobody really knows. So I -- again, I mean, as I said to Erwan, I have a little bit of a hard time on this question.

On your second question on Kohl's, why we think it is the right partner? Well, first of all, we think there is a good equation in terms of client base.

Secondly, if you look at the geographic complementarities, they are pretty strong. They are where we are not -- and vice versa.

So it's pretty favorable. Thirdly, the format of our shop-in-shop case, whichever you call it, I mean, it's a store within the store, is exactly what we wanted to be.

We think we have a strong proposition and something really nice for the Kohl's shoppers. So all in all, I mean, we're pretty familiar with the formula because we have experienced it in the past with JCPenney.

With -- now with Kohl's, with a partner, we are particularly at ease with. So we are extremely hopeful it will take a little bit of a while to develop, not so much.

But we need some quarters to unfold the stores, but we are extremely hopeful that it will resonate very well with the client. Tiffany, I mean, I could answer, but I will repeat what I've said before.

We'll be working on products, on distribution and on marketing. A bit early to be more precise and to get into more precise strategies.

So I will just repeat general ideas, and I will spare you that at this time in the day.

This is Kimberly Hong on for Oliver Chen. We just have 3 quick ones.

Following up on the prior questions on the COVID-19 recovery. How many new customers have you seen domestically, specifically in China and the U.S.

during the period? Do you think it's reasonable to think that domestic spending could be higher permanently compared to prior -- to pre-COVID-19 levels even when travel comes back, particularly in the U.S.

and China? And then secondly, just a quick one on Sephora.

Could you just touch on the holiday trends you saw this year? And have you seen any color cosmetics recovery in the last quarter?

And then lastly, on Tiffany. Just where on the cost side, do you think we can see cost leverage with Tiffany now in Jewelry & Watch segments?

We know you've previously mentioned that Tiffany is going to operate without major changes to its strategic vision and plans prior to the acquisition. It seems like that's still the case, but if you could just remind us on where on the cost side you can see leverage for that segment?

Thank you. So on the domestic spending, maybe, maybe not.

I mean, it's hard to say. The trend with client base that used to shop a lot as tourists and less so as locals has been, over the years, repatriation.

30 years ago, the Japanese were shopping 70% outside Japan. Today, they shop 85% inside Japan.

Likewise, for American customers, I mean, 85% or even 90% of the business we're doing with American, with U.S. citizens is done in the U.S.

So what happens to Chinese customers, I don't know. We have had some form of, how can I say, forced repatriation in the course of 2020.

Will it come back to the previous trend immediately when the COVID situation is over, I don't think so. But I also don't think that we should rule out any touristic business from Chinese in the coming years.

So there will probably be a rebalance, maybe not as high as it used to be because the move towards more local spending will probably stay for good. But this being said, I mean, there is no reason to believe that the domestic -- the touristic business will disappear forever.

I don't think it will be the case. As far as Sephora is concerned and your question about the festive season, we've seen pretty good numbers, although they happened very late in the month of December.

We saw pretty good numbers in our main geographies, namely the U.S. and France and also in, to a lesser extent, in China.

As far as color cosmetics are concerned, well, not too good. I mean, frankly, we -- neither from a Sephora viewpoint nor from a cosmetic brand viewpoint do we see any marked improvement in the U.S.

It's probably not as bad as it was in the first half of the year. But overall, I mean, the year has been very, very tough in the U.S.

and elsewhere, frankly, but the U.S. was by far the worst.

And we don't see any marked improvement lowering the corner. So it's wait and see as we speak.

Well, the cost leverage at Tiffany, I mean, I will not repeat what I said before. We expect to do more with -- in terms of revenues in a significant way.

We shall have to engage more costs to do so, be it OpEx or CapEx. That's the sort of basic financial equation of Tiffany.

This should lead to higher margins, certainly higher than 2020 in the COVID context, which we do not satisfy ourselves with. So we shall improve margins through operating leverage, but I cannot elaborate further.

I mean, we never communicate our -- neither our targets nor our plans to develop margins. And Tiffany will be no exception to that.

I mean, there have enough pressure from the inside of LVMH. I don't want them to have external pressure on top of that.

Enough is enough.

As you think about the physical footprint globally and what's come out of COVID and the pandemic, how do you foresee the physical footprint plans changing? Are there opportunities to enhance or lower your costs with more variable rent structures?

Do you see that globally? Is it more one region than another in terms of what you're looking for and the ability to continue to grow the operating margins?

And then just lastly, just on a different tact of Tiffany. How do you foresee the integration of Tiffany and cadence different than Bvlgari?

Thank you, Dana. So the physical footprint -- I mean, the question of fixed versus variable depends on 2 things, whether we want to do it or not or whether -- and whether the landlords want to do it or not.

So at the end of the day, it's not that easy to decide if we want to do so to move from one to the other. And when we move from fixed to variable, usually, it is at our expense.

I mean, the landlords would like it to -- are okay with it as long as they get more dollars out of it. So I've not seen many, many conversion of -- from fixed to variable in the past, although -- and variable is a mixed blessing.

I mean, in bad times, obviously, it helps. But in good times, people would question our operating leverage.

I mean, selling expenses are rising as fast as sales. Don't you get operating leverage?

Well, the reason why we don't is that we have a lot of variable rents. So all in all, I mean, it's not under our full control, to say the least.

And whether this is desirable or not is questionable. I mean, we have benefited a lot in the past from fixed rents, but even fixed rents, at some point, get adjusted.

So jury's out whether this makes sense or not to move from fixed to variable. And sorry, I missed your question in Tiffany.

How do you foresee the integration of Tiffany and cadence different than when you acquired Bvlgari?

It's a bit too early to say, frankly. I mean, that's -- we need probably 3 good months to really assess the situation there and really to identify the key challenges.

We have some ideas, but it would be foolish to take them as sort of preconceived ideas and to move forward without checking whether our ideas are the right one -- I mean, the issues that we have identified are the right ones or not. So basically, the management team is refocusing on really discovering the business model in much more detail than we have been able to do in the due diligence phase, and we'll assess its action plan on that basis.

So it's hard for me to say whether things will take different direction from Bvlgari. I mean, as far as Bvlgari is concerned, I mean to make it -- to make a long story short, we had, when we bought the company, a very strong product pipeline and a lot of mistakes in marketing and distribution.

So it was somewhat a fairly ideal situation because we could introduce new products fairly quickly. And at the same time, we fixed the marketing and distribution issues reasonably quickly as well.

And this, with the help of a strong demand, enabled us to really get a strong increase in business -- overall business volumes and margins. I could not describe Tiffany's reality in as simple words as I just said about Bvlgari because I don't have the benefit of hindsight.

So it's as simple as that. So give me a few quarters to really be able to answer your question in a more precise way.

Jean-Jacques, it's Robert. I wanted to ask you, how do you see the store network adapting in the year to come?

As tourist flows appear to be coming back quite slowly, I'm curious if there will be any actions taken to kind of rebalance the network as the U.S. and Asia appear to be performing quite well and your European store network continues to really struggle to stay relevant.

Thank you, Robert. Your question is basically European question, I would say.

As you suggested, actually as you said, I mean, U.S. and Asia held up quite well.

But if you look at the numbers in Europe, roughly speaking, the business is down 25% in 2020 in Europe, and it's true for the big retail brands. I mean, for Fashion & Leather, it's also 25%.

So basically, the challenge we have ahead of us, assuming there is no such thing as tourists coming back, which, as I said before, is not our assumption. But anyway, let's assume that, is that we are able to grow the business we did in 2020 by 1/3 to recover the volumes we had in 2019.

And this sales we would get from locals. Obviously, this will not be achieved in a year or even in 2, but we think it is achievable to develop locals in a significant way to offset at least in the short term part of the lost business with tourists.

And on top of that, as I said before, I mean, the tourist business may not come back at its preceding levels but will come back. So as far as we are concerned, I mean, we see no particular reason why we should be shutting down stores, particularly in Europe, as where is a more obvious answer, we don't want to do that.

But even in Europe where there was a full -- in the global volume of business and the recovery in it is less obvious than it is elsewhere, well, we see no reason to do that. I mean, we think we can recover the lost business with tourists coming back and developing the local client base.

So we see no reason to take action in the short term or medium term on that, apart from the fact that we are concentrating our efforts, and particularly marketing and CRM efforts, to develop the locals as we've done pretty successfully in 2020, which was not ideal, you will admit. Thank you.

I think it was the last question. So I thank you all for attending this call, and I look forward to discussing with you an interesting Q1 performance and Q1 numbers in early April.

Thank you and have a good day.