Thank you for standing by, and welcome to Kering's complete third quarter revenue conference call. At this time, all participants are in listen-only mode. There will be a presentation followed by question-and-answer session. At which time, if you wish to ask a question, you will need to press star one on your telephone keypad. I would confirm the call is recorded today on Tuesday the 19th of October 2021. I would now like to hand over to your speaker today, Mr. Jean-Marc Duplaix, Chief Financial Officer. Please go ahead. Good evening to all of you, welcome to Kering's third quarter 2021 revenue call. Starting on slide four. Group revenue reached EUR 12.2 billion in the first nine months of the year, with a strong year-on-year increase of 34.5% in reported terms and 36.6% comparable. Revenue is up 9% comparable over the first nine months of 2019. A slight acceleration versus H1, when the two-year growth rate was 8%. In the first nine months, revenue from our luxury houses grew 36% comparable or 8% on a two-year stack. Focusing on Q3, reported group revenue was up 12.6% year-on-year, reaching EUR 4.2 billion. Comparable revenue growth was nearly equivalent, implying a modest FX tailwind. On a two-year basis, group revenue was up 10% comparable. A consistent growth rate compared to Q2 and 2 points ahead of the H1 growth rate. Revenue from our luxury houses stood at EUR 4 billion in the quarter. On slide five, some insight on growth by channel. Retail, which includes e-commerce, accounted for 77% of revenue and grew 12% year-over-year, 11% on a two-year basis. Worldwide, an average of 4% of our network was closed in the quarter, the bulk being in Asia Pacific, where 8% of the stores were shut down. Royalties and other grew 37% comparable. Moving to the retail performance of our luxury houses by region on slide six. Western Europe was up 15% in Q3, down 32% on a two-year stack, still impacted by the lack of tourism when compared to Q3 2019. However, trends improved sequentially compared to Q2, supported by local demand and some inbound tourism slowly resuming, so far, mostly intra-European, Middle Easterners, and Americans. North America grew 31%. Compared to Q3 2019, growth was 83%, in line with Q2. The store network experienced a high conversion rate and increases in average ticket. All age groups contributed to the region's sales growth. Japan was up 3% year-on-year in Q3, improving on a two-year stack, though still 21% below the 2019 level. Our brands are re-engaging with locals, it does not yet fully mitigate the absence of tourists. After a very strong H1, Asia Pacific was up 1% in Q3 and 19% compared to the same period in 2019. We enjoyed a good July performance, softer trends emerged with the resurgence of Covid cases, mobility restrictions in mainland China, and new lockdowns in other countries. Rest of the world was up 24% year-on-year and 44% when compared to Q3 2019, improving sequentially in both the Middle East and Latin America. Turning to slide seven You see that our online sales are progressing well. E-commerce revenue was up 24% in Q3 on high comps. Compared to Q3 2019, we grew online revenue 2.5 x. In terms of online penetration, our worldwide average is 13% of retail sales. In certain regions, namely North America and Western Europe, penetration is already around 20%. In Asia Pacific, there is still plenty of room for growth. Our brand.com internalization is complete since Q2. This is yielding multiple benefits with the rollout of new omni-channel capabilities and services, reduced lead time, leveraging our new logistics infrastructure, enhanced customer experience and KPI. We are also making good progress on the conversion of online partnerships. We are satisfied with the development of our existing implementations, in addition to generating incremental business that significantly improve client service. I now provide comments on our individual houses, starting with Gucci on slide eight. Q3 revenue rose 4% comparable with retail up 7%. Wholesale declined 19%. On the two-year stack, retail is up 2% and wholesale down 44%, as we steadily pursue the downsizing of this channel. In retail, Gucci had a contrasted quarter. In Western Europe and Japan, trends improved sequentially. In North America, once again, traction with local clients resulted in a very high growth rate. Asia Pacific, where Gucci enjoys significant positions, was more challenging. New COVID restrictions impacted store traffic and led to the cancellation of retail events and activations planned for the final chapter of the Ouverture collection. The pace of novelty injections tied to this collection was also milder this quarter. The key introduction was that of the Diana bag in early July, which delivered great results, showing the appeal of the brand across generations and allowing it to tap into the high-end segment with new and existing clients. If we look at overall growth drivers, Gucci is on the right track. The shortfall in traffic temporarily penalized volumes, but the combination of price and mix is having a very positive effect on AUR. The structure of the Aria collection should further confirm this. In line with Gucci's calendar, Aria started hitting the shelves in late September with scores of launches and initiatives planned for Q4. On slide nine, Saint Laurent's revenue growth versus 2019 accelerated this quarter. Comparable sales were up 28% year-on-year or 32% over two years, highlighting the house continuing strong momentum. Retail was up 31% or 37% compared to 2019. Growth was particularly impressive in North America and Western Europe, while its resilience in Asia-Pacific underscored growing brand awareness and the fruits from Saint Laurent's network building in a region where it still enjoys great potential. The house's performance was particularly well-balanced across product categories; all up double digits compared to 2019 third quarter. Successful ready-to-wear attract growing numbers of local clients to its stores. Carryover continue to shine, and newness is also doing very well. Wholesale was up 22%, primarily reflecting delivery of the women fall 2021 collection. In line with our group strategy, Saint Laurent is working on making that channel ever more exclusive. Overall, this was an extremely positive quarter for Saint Laurent with resonance with local effective communications and distinctive styling translate into solid numbers. Turning to slide 10, Bottega Veneta again demonstrated that the sound foundations it has built in the recent years are delivering healthy, balanced growth. Keep in mind, as you look at these numbers, that Bottega already had an outstanding performance in Q3 last year. This quarter, revenue rose 9% year-on-year and was up 31% from 2019. Retail was up 6% versus 2020 or 18% on a two-year basis, all from a network that was essentially unchanged. All product categories contributed to two-year growth. Bottega Veneta continues to do a great job attracting new clients, with sales to younger generations growing faster than the average. At the same time, it is strengthening its appeal with existing customers, resulting in a very well-balanced client mix. At +18%, the increase in wholesale showed a sequential inflection. Bottega Veneta further streamlined but scaled its third-party distribution, which remains an important channel for its shoes and ready-to-wear. Bottega Veneta is demonstrating quarter after quarter the success of our strategy as it expands the house territory, tightens its exclusivity, and turns into a truly global luxury brand. The other houses segment on slide 11, achieved, once again, a excellent quarter. Total revenue increased 26%, with both hard and soft luxury up robust double digits against the 2020 and the 2019 quarters. In couture and leather goods, Alexander McQueen, as well as Balenciaga, made further progress in strengthening their brand architecture, expanding their reach into new creative territories. Balenciaga continued to build its presence in the U.S., where it posted a sharp revenue increase against high comps and performed very well in China. Benefiting from the house's emphasis on couture and its well-rounded offering, all product categories were up, with notable performances in ready-to-wear and leather goods. Alexander McQueen experienced solid sales growth in North America and Asia Pacific. Retail sales were up double digits in all product categories on a two-year basis, with a notable showing in ready-to-wear. On the back of their acclaimed fashion shows presented in the past weeks, Balenciaga and Alexander McQueen should extend their successful run. At Brioni, we subdued Q3. We have returned to the 2019 level on a smaller network, supported by good performances at some of its flagships. In jewelry and watches, our houses posted notable sequential acceleration on a two-year basis. The jewelry brands were all up double digits or more on both a one- and two-year basis. Boucheron jumped in Asia Pacific, notably Korea and Taiwan, in addition to mainland China, combined with robust retail performances in Japan and Europe. Pomellato, a permanent best seller, drove its sales growth while its high jewelry offering is heightening visibility. Qeelin sales were again very dynamic, at more than twice their Q3 2019 level. Our watch brands confirmed their return to positive sales growth in the quarter. A word on corporate and other on slide 12. Revenue was up 24%, with Kering Eyewear consolidated sales up 25% at EUR 138 million, though travel retail remains impacted. Growth was positive across the board. We closed on the acquisition of Lindberg on September the 30th and started consolidating the brand in the current quarter. To conclude on slide 13, Kering delivered a very solid third quarter at the group level, with revenue up 10% from Q3 2019, ahead of the comparable growth rate in the first six months. We are pleased with the performances of Saint Laurent, Bottega Veneta, and the other houses, while Gucci transitions to a new collection and prepares for a fourth quarter that is rich in events and new developments. We are implementing our strategy in a steadfast manner, focusing on short-term priorities as well as on long-term priorities. First and foremost is the upscaling of our brand positioning and of their distribution. They are working on their high-end offering to round out their presence across all relevant segments. In line with our roadmap, we are also reducing the overall contribution from wholesale, keeping only top quality partners, and this move will continue. We are cutting down the contribution of third-party online retailers through a switch to e-concession and focus on our own brand.com development. Our businesses rely more and more on their knowledge of local conditions and familiarity with local clients. This is a long-term trend, not just a reaction to the events of last year. This requires increasingly agile logistics and sophisticated systems, notably to digitize retail activities, improve efficiency, and retain retail excellence. Above all, this requires the right people, and we are actively hiring, training, and retaining our teams. Our infrastructure is getting more effective every day. Sustainability is central to our strategy, and we have achieved new ESG milestones in recent months, including our decision to go entirely fur-free. The Watch and Jewelry Initiative 2030, we launched with Cartier and the Responsible Jewellery Council a few days ago. This is open to all the players who share our commitment to a sustainable future for the industry. I like to end by stating that we are continuing to invest at all levels across our organization to secure our long-term trajectory, emphasizing profitable growth and significant cash flow generation. As a group, we are confident that all the building blocks are in place to successfully pursue this journey. Claire and I are now ready to take your questions. Operator. Thank you, sir. As a reminder, ladies and gentlemen, if you wish to ask a question, press the star and one on your telephone keypad and wait for your name to be announced. Press the star and one for any questions. Your first question today comes from the line of Antoine Belge with Exane BNP Paribas. Yes. Good evening. It's Antoine at Exane BNP Paribas. Three questions, if I may. First of all, with regards to Gucci, I think you made some relatively positive comments about Aria and all the events that are expected to happen in Q3. Have you seen towards the end of September and already early October, an acceleration and maybe it was more just from the product itself, but it was the fact that maybe you may have noted a sort of wait-and-see attitude or clients knowing that there would be new products ahead, maybe postponing some purchases. Any sort of information on this would be great. Regarding Gucci and the fact that probably Q3 was below what you had expected end of July because you couldn't really expect the geographic restriction and the typhoon, et cetera. What are the implications on the margins outlook for second half from this lost sales, which are probably going to be difficult to recoup instead of fully on Q4? Finally, regarding Bottega. Is it fair to say that after a first half of a recovery, there is a bit of a plateau happening, and especially in Asia was negative? Maybe there is now a different perception or, I would say, stage of the recovery, maybe not so obvious, more obvious in the U.S. and rather than in Asia. If that's okay. Okay. Good evening, and thank you, Antoine, for your three questions. You may ask three questions indeed. First of all, I would start with Gucci and how the Aria collection is welcome. It's true that as we mentioned during my speech, that there was a transition between two collections, and you know that the previous collection had less SKU, compared to Aria. It was a less comprehensive offer in terms of products. It's true that there was a lot of expectations around the Aria collection among our customers. As you may know, the collection has been introduced gradually since the end of September, with some teasing during the summer in many regions with some presentation. The worldwide advertising campaign was launched the 10th of September. Indeed, Aria is achieving extremely positive first results in all the regions. We had already an indication with some trend show that we organized before the official launch. As soon as the second week of October, if we look more specifically at the newness by season, we see really an acceleration. What is very encouraging is that it's across the different categories. Women ready-to-wear shoes, the new leather goods items that are introduced in the collection among the luggage and the GG Retro, as well as the handbags with some seasonal variations of the carryover that you may have seen during the show. Clearly, the impact of Aria, because it's a broader collection, we expect some clearly increase both in terms of traffic and therefore in terms of volumes. It's a good conversion. On top of that, you know that there is a mix. In the collection that should push the average price, which by the way, is increasing since the beginning of the year, and it's the work done by the merchandising team at Gucci, which is work on the collections to gradually increase the average selling price. Clearly there will be a boost, thanks to the Aria collection. Just to conclude, you will have further drops along the season, until the next collection. Let's say February 2022. With a lot of animation in the store. For that, as you may know, we will have more animations, more activations in the store, a lot of activities to support the new collection as we go, and to transition in a way, about the profitability. First of all, I would like to stress that, as you can see, the trajectory of the other brands is very impressive. Many of these brands are, as you know, are recording already a very good level of profitability, especially if I think about Saint Laurent. Globally, we remain quite confident about the trajectory of the group as a whole in terms of profitability. That being said, it's true that compared to the last call we had, we may consider that we need to continue to invest in Gucci to support the launch of the collection. Our views haven't changed in the sense that we need to reinvest in all our brands to support their future growth, to create long-term value and brand equity. We are actually convinced that it makes sense to invest even more short-term to accelerate brand momentum when it's needed. We will definitely always favor long-term value over short-term profitability. The fact that Q3 may have been slightly softer for Gucci, does not lead us to decide some cuts in terms of OpEx for the last quarter. On the contrary, we think we need to push. You may remind what I said during the H1 call, as in a more normative environment, the profitability of our brands should sequentially improve in H2 compared to H1, the magnitude being in a range of 1.5 points-2.5 points. For sure, considering the Q3 at Gucci and the investments we had in the pipe for the last quarter, we should be below that range for Gucci. As I said before, what is interesting to me is more the trajectory of all the brands, both in terms of revenues and in terms of profitability. Regarding Bottega Veneta, I don't see really what you mean by this plateau in Asia, I must say. For sure, it depends, in fact, if you look at the different regions or sub-countries in Asia. At the end of the day, like all the other brands, there was a deceleration in APAC in Q3 on a two-year stack basis due to the store closures, principally, as you know, in August. Clearly, APAC was still up strongly in Q3 on a two-year basis, driven by Korea for sure. China was a little bit more contracted, but you may remember that the network in China for BV is not optimal in the sense that we have not a huge proportion of the store footprint where we can display the three categories. Also, in Q3 2020, the performance of Bottega Veneta was particularly high in China and Shanghai, with something above 100% of growth. All in all, we believe that today, if we look at the performance over two years, the performance of Bottega Veneta is quite well-balanced across the different regions. Very balanced across the different categories. Now also very balanced if we look at gender, between men and women collections. M aybe just one follow-up on that. Is it possible just to quantify the acceleration in two areas? Kering Gucci in retail in Q2 on a two-year stack and at 20% and now it was something softer. I know as you said, the benchmark on a two-year stack basis. I'm confident that I don't think that could be before the first quarter. Are you coming back to the store fronts as in back in Q2? Antoine, you know, ask me what is the situation of the industry today. There's a lot of volatility. You may remember that in August, we had a more challenging situation in APAC. We saw some improvement, starting from September. In the U.S., also, you have some volatility from one city to another, from one week to another. I will not make any predictions based on what's happening currently with the reception of the Aria collections. Let's say that, as I said, we are very pleased with the sell-out we see today with the Aria collection products. We are very pleased with the price architecture, and we are very pleased with the latest trend. I will not make any sort of prediction for the last quarter. We have dimension, in a way, the investments to support a very robust growth and an acceleration in Q4. I will not make further predictions. Thank you very much. Thank you Antoine Thank you. Your next question comes on the line of Zuzanna Pusz from UBS. Thank you for sticking my questions. I have three, please. The first question will be on Gucci margin. You mentioned investments, which will need this business to help launch the new collections. Would you be able to maybe give us a little bit more color on the margin further out? I know you don't have time, but just to get an idea of if these investments last into 2022 and maybe how quickly at this stage, with the visibility you have the plans to go back to the, I think it was 41% margin. That's my first question. The second one is also on Gucci. Sorry, I promise the last one won't be on Gucci. Can you comment on Gucci's performance by nationality for Q1 versus Q2? Because it looks like Europe improved a bit, although I think it's maybe a little bit less than what we've seen for some of your peers in Europe. There was a little bit of a return of tourism, but at the same time, maybe you're more exposed to local support. I don't know. Any color on performance by nationality would be very helpful just to get an idea of where you've seen some substantial improvement. The last question is more broad on e-commerce. Would you maybe share with us the key learnings from the internalization of e-commerce? Where you had to, what you've achieved so far? Would you be potentially interested in joining forces with some other e-commerce giants to support the development of any set of bigger platforms? You probably know where I'm trying to, but I'm just trying to give it a go. Thank you. Thank you, Zuzanna, I will try to assume what you have in mind for the third question. I will work hard to find what you have in mind. Starting with your first question. Once again, I love this focus on Gucci, of course, and I understand it very clearly. As I said before, during years, we have mentioned that we were managing a portfolio of brands, and it was particularly true looking at the trajectory of revenues. It is now also true when it comes to the trajectory of the profitability, concerning the level of profitability delivered by many of our brands. However, here again, when it comes to Gucci, there is not an obsession to get back to the 41%. We know that the brand has the potential to deliver, again, this profitability, considering what we are doing in terms of elevation of the distribution as regards the elevation in terms of average price, plus the focus we are putting on the high-end segment, and with very positive results during the quarter, with an increase of the contribution of VVIC and VIC and also deeper-end multi-timers, what we call multi-timers, so people who are buying several times in a year. Therefore, the 41% does remain an ambition, and we can achieve that profitability in the long term. Short term, the focus is about investing in the brand. I will not give you any guidance. I already indicate to you that we would be below the improvement of EBIT margin we have mentioned during the summer call. Below 150 basis points, and it's already far below because we are working on investment in Gucci, but we are still working also to have a sequential improvement of the profitability from H1 to H2. That does remain an ambition. It's a question of discipline, but without impairing our capacity to invest in the brand. Therefore, in 2022, we will continue on the same trajectory, but we won't deliver the 41% for next year. That's not the objective, and it will not be sound considering what we are doing at Gucci. As regards the performance by nationality. Obviously, if we focus on the quarter, it's globally very positive across the board. Of course, you can imagine because of some restrictions still in China and still the lack of tourism, we are still slightly negative compared to 2019 and flat compared to last year, 2020. Now, if we look at all the other nationalities, we have posted very solid progress in almost all key nationalities. We are double digits up with Western European clients. Of course, considering the share of tourism in 2019, it's not so obvious if you look at the performance of Western Europe, because as a reminder, we had for Gucci something around 70% of tourists in 2019. We have a double-digit increase with local clients in Europe, in almost all key countries of Europe. We are, of course, as you can imagine, very positive with the American cluster. With the Korean cluster, which is a very important cluster, we continue to improve, and it's almost double-digit increase with the Korean cluster compared to 2019, a year where the focus was more about tourism in Korea, which is, according to me, a great achievement for the brand. In fact, if you make your math and you look at the performance of Gucci for the quarter, the main difference comes from Asia Pacific. On the Chinese cluster, something which is strategic compared to 2020 and still negative compared to 2019. However, since the beginning of the year, on the Chinese cluster, we are remaining quite strategic compared to 2019 over nine months. Clearly, the appetite of Chinese customers for newness, especially for a brand like Gucci, which has a general fashion positioning. Clearly, there was a wait-and-see behavior before the Aria collection. E-commerce. That's a very good topic, and I have a lot to say about this in the sense that, yes, definitely, the 44% is about the brand.com business. It does remain the priority of the group. You know that also we are working on converting some partnerships into e-concessions, we have made solid progresses here again. By the end of this year, we will have achieved all the discussions as regard Gucci business, not for the other brands, as some discussions will be finalized rather next year. For at the end of 2021, we will have a shift to the concession model for almost all the key accounts with whom we have started some discussions. Today, the priority is given first to the brand.com business, and two, to finalize the conversion to e-concessions. As regards the e-concessions, I must say that we are very happy, as I mentioned in my speech, about the quality of the experience for our customers, the delivery time, the display of products, the pricing policy. By the way, for Gucci, the e-concession contribution to online revenue. Okay. Thank you very much. Most of the business today is made on brand.com. Perfect. Thank you. Thank you, Zuzanna. Thank you. Your next question comes from the line of Luca Solca from Bernstein. Yes, good afternoon, Jean-Marc. When we look at Gucci and take two steps back, Gucci has produced an incredible revival in the most recent five years. Given that this seems to be a traffic issue, is traffic low because consumers know what to find at Gucci? And, would it be important for you in reviving and pushing Gucci to get new ideas in the brand, in the case of this Aria continuation that you have, and potentially building on that, possibly strengthening Alessandro Michele's team to build the most on the momentum that you will achieve in the fourth quarter? Do you stick to the Prima Donna creative director model that has worked well for you with a number of iterations? My second question is on Balenciaga. I think that, or I assume that Balenciaga is producing a lot of the other houses' organic growth, probably together with Alexander McQueen. Is it fair to say that it's now in sight of Saint Laurent in terms of size or maybe above it already? Given initiatives in China, I wonder if you have any feedback on brand momentum from Balenciaga, specifically, more than what you already disclosed. Thirdly, back to the brands, there were speculation in media, I think, that watches are about to exit the perimeter of the company. I wonder, in jewelry as well, how satisfied are you, with the progress of Boucheron and Pomellato in the jewelry category? Thank you very much. Thank you, Luca, thank you for your first question because it's not an easy one, but it's good to start to remind what has been the trajectory indeed of Gucci. If we look at the last five, six years, the average of growth of Gucci is still above the market. However, you know that there was a need, and we were among the first to highlight this a few years ago, to reposition Gucci, at the core, at the center of the fashion industry. To do so, considering the DNA of Gucci, we thought that creativity was absolutely needed, and we put a big emphasis on creativity. There was a time when there was clearly a need to have a different specificity to pursue the trajectory of Gucci. It was about being more exclusive in terms of distribution. Also, it's important to remind that in the performance of Gucci, we have something like -40%, -45% on the wholesale revenue part, which is quite significant. We have not extended the number of stores. A lot of initiatives to elevate the brand while keeping the creativity at the core, which is absolutely needed. You know that we are working also on the more timeless positioning of the brand, and the centennial is a good occasion to remind this and to work on that very important component of the brand. Aria is particularly with an extension in terms of number of SKUs, but also in terms of type of products. The way it should reengage with the broad base of consumers. What you have described, in a way, as an action plan, is exactly the one which is implemented at Gucci, with a reinforcement of all the structures in the different layers of the organization, including in the studio to support Alessandro. I think typically that in the past few years, and that's something maybe that is not very visible from your standpoint, but there was a need to reinforce globally, the structure, because Gucci grew very rapidly. This is actually what we have done, and what I was mentioning that we were hiring, it was on purpose. Definitely, even if we are not communicating every day about this, there is a huge reinforcement among the Gucci teams, with very high profile, more skilled in all the different areas, the merchandising, communication, marketing, CRM, and of course, creation. I think there is an evolution in the way we are organizing our brand, and what is happening at Gucci will happen also at a point in all the other brands, the more mature they will become. By the way, I think that you know perfectly well the personality of Alessandro. He never behaved as a prima donna, and he's someone really working very well with a lot of people around him, supporting him in the different domains of the creation. We don't provide figures about Balenciaga, but you have already mentioned that it's a brand which had exceeded the EUR 1 billion mark some time ago. You can imagine that in terms of size, it's not something which is very far and very different in terms of revenues as Bottega Veneta, but with a slightly different, let's say, a breakdown of the sales, with a higher contribution of wholesale and a higher contribution of e-commerce. Also considering the positioning of the brand and its penetration among the young customers. I think that here again, like Gucci, there is a work which is done to have the right balance between creativity, innovation, fashion, and also timeless. Those couture collections had really an impact, in terms of perception of the brand. The brand momentum is obviously very excellent, with probably a shift to certain categories with a lower contribution gradually of sneakers and casual wear, but also more contribution of more formal shoes and ready-to-wear. Good results also in terms of leather goods. That's exactly the evolution we were expecting for the brand, with a gradual rebalancing to certain categories and certain clientele. Of course, it does open some new opportunities in terms of store openings. It's like Saint Laurent, typically a brand which has a huge potential in terms of store footprint. Finally, as regards watch and jewelry, of course, you may imagine that I won't comment on the rumors. I can answer you about the progress made in our jewelry houses. We have been, actually, very impressed by the work done by our team at Boucheron, Qeelin and Pomellato. Boucheron is doing extremely well now in all the regions, with more penetration in APAC. You know that Boucheron was very strong in Japan. Now we have opened some new stores in mainland China, in Hong Kong, and in some other countries in the region, with great success, I must say. We see that for a brand like Boucheron, with such a legitimacy in high jewelry, when you are investing in communication, you have the right products, there is an immediate response of the market. Very pleased with the development of Boucheron. Qeelin continues to perform very well in China. As you can imagine, this is a true Chinese brand in a way. We are very pleased with the development we have, both in terms of, let's say, store expansion and also reception of the products and the sales too we have in all the different categories. We start to have also more high jewelry offered also at Qeelin, with also very good response of the market. Finally, Pomellato is doing very well with so far limited investments, because you may remember that we had decided to push first Boucheron. Here again, very good results both in the carry-over lines, specifically the new collection but also now more and more traction in the more high-end segment in high jewelry. Globally, we are very pleased with the success and the trajectory of the jewelry brand. There is no intention at all to dispose the assets. On the contrary, we continue to invest and to push them. Thank you very much indeed, Jean-Marc. Thank you, Luca. Thank you. Our next question comes on the line of Louise Singlehurst from Goldman Sachs. Good evening, Jean-Marc, Claire. Thank you for my questions. I just have a follow-up, and I'm sure we'll try to ask the same question, but in different ways. Could we just go back to Gucci and the performance during Q3? We know widely across the peer group that August was softer, particularly for China, with the COVID restrictions. Can you give us any comment in terms of what you saw during September and the end of the quarter? I suppose as we reflect back and what we've heard from the peer group so far, the consumer environment remains pretty for luxury consumption, and that's very broad-based and across price points. What, in your view, apart from the timing of Aria, what else is it that you think Gucci was missing? Any executional misses or delays or something that happened during that quarter to change the course or the path of Gucci from Q2? It's the same question, with a different angle, definitely. I will try to answer anyway. Yeah, it's true that August was softer. I think if we look at the portfolio of brands, the trend started to improve in September, but we still, a certain degree of volatility. We had some regions or some cities where we had less traffic than in some others. The fact is that when the traffic started to resume in China, we had, as I mentioned before, maybe less products available in the store, waiting for the introduction of Aria. Clearly, there was probably a lack of units at that time in September. We cannot say that there was an issue with the Chinese market in August, by the way, because if I look at the trend in online month by month, August was very strong in August for the online business of our brands, showing in a way that it was really due to the COVID restriction, that there was a decline of traffic in the store, in the offline channel. September improved, but clearly Gucci was impacted partly because of the lack of units. As soon as we had the introduction of new products, we had a very good response of the market. For sure, we continue to, let's say, to be impacted considering the size of Gucci, by what happened in 2020 with the COVID issue we had in Italy particularly. We had mentioned in 2020 that we had some, let's say, question of scheduling in terms of product development. Clearly September specifically may have been a little bit more impacted by that. At the end of the day, what we see here again is that Aria is receiving a very good response of the market, whatever the region. In China, we see a rebound that I will not qualify. When it comes to execution, I would not dare to assess if there was an issue of execution. I don't think it's the case at all. When I look at the lead time in terms of delivery, shipping of the products to China, there is no specific issue on the logistics side. In terms of quality of the retail network, I think that 10 years ago, there were some debates about the quality of the stores, but now I think we have a very sound network in China, so nothing to say about execution. Just one follow-up, if I may. On the timing for the launches coming up for the end of the year, can you just remind us if there's any change at all as planned for Gucci by Balenciaga? I think that was for November. Just to hopefully give some clarity around that into year-end. Thank you. Hi, it's Claire. No, I can confirm the Hacking Project will be in the stores in November. Great. Thank you both very much. Thank you. Your next question today comes from the line of Anne-Laure Bismuth from HSBC. Yes. Hi, good evening. Anne-Laure Bismuth from HSBC. Actually, I have three questions. The first one is, if you can comment about the calendar of marketing events planned in Q4 for Gucci and especially initiatives around the 100 anniversary for Gucci. What do you plan to do around the launch of the movie, "House of Gucci" in November, end of November? Actually, I have three questions. My second question is about the wholesale strategy for brands such as Saint Laurent and Bottega Veneta. What do you plan in terms of wholesale exposure for these two brands along the process of the streamlining of wholesale with tech, and when it will start to have a more meaningful impact on Saint Laurent and Bottega Veneta. The last question is about M&A. Thank you very much. Yeah. Hello, everyone. This is Claire. I think when you talk to your firm, we already mentioned the centennial celebration. You already have the collection that is on the shelf for this one in October. You will have the hacking project with Balenciaga we mentioned for November. For December, it has not been disclosed yet. You will have a succession of additional activation, of course, to cover for the gifting season and to cover for early Q1 next year. It's a pretty full agenda, and this is about protecting production, taking also into account that there is, I would say, a collection, a main collection that is not about only capsule or drops or collaboration, where you will have, I would say, every month, some launches, some introductions to cover for all the seasonal needs of the collection. That's what I can say. In terms of events around, you're going to have, of course, a big mix of client activation in stores. That's going to be big ones. You're going to have what we call pop-in. You're going to have, of course, as usual, some pop-ups, also activities. You will have, of course, I would say, bigger picture branding events when it comes to the new fashion show that will take place early November in the U.S. You know also that Gucci has not commissioned the movie, but the movie is going to provide for sure another halo on the ground, and that's going to be end of November. As with wholesale, as we had mentioned, there is a group strategy which has been decided and approved by all the CEOs at the end of 2019, with a gradual shift to e-concessions or a reduction of the number of accounts we are working with across the board. Some initiatives we have already at Saint Laurent or Balenciaga or Bottega Veneta are not so obvious because of the success of the collections and also because, as I mentioned during my speech, it's very important, as long as we have not the full network at the Bottega Veneta to support the development of the ready-to-wear and shoes collections, to rely on some very qualitative accounts in wholesale. In wholesale today, part of the expansion of the Bottega Veneta is really driven by these two categories. Personally, that's also clearly a square view for Bottega Veneta to have such a penetration in these categories. Starting from Q4, we start to have a moderation of the growth at both Saint Laurent and Bottega Veneta. Of course, it's too early to predict what will happen in 2022, but it could turn negative or being flattish if we continue to decide to work with some accounts. Globally, the objective is to reach a number of accounts which is very comparable to the one we have at Gucci, and to push the retail. The M&A, I will be very fast, quick on that, because I think if I remember well, Mr. Pinault had answered to that question during H1 call. I think I could repeat exactly the same. Our views have not changed. When it comes to M&A, at least we have closed the Lindberg deal, which is a very smart deal according to us, and we are very pleased to welcome the Lindberg brand, the Lindberg people in the Kering family. Thank you. The next question comes from the line of Ashley Wallace from Bank of America. Thank you so much. Here is my question. I have three as well. The first question is on Gucci retail. Sorry, just to keep going on Gucci. In Q3, the quarter was obviously quite affected due to COVID in China. As we move into the fourth quarter and the back half has largely normalized, and additionally, you will have Aria in stores, the movie, and generally a lot going on at brand. Is there any reason that Q4 Gucci retail won't get back to 11%, to your set policy line in the second quarter? I understand you don't want to give guidance, this is more a qualitative question around any additional headings that aren't existing in Q4 that were not there in the second quarter. My 2nd question is just on the supply chain. We know the industry is facing all sorts of pricing pressure. While we believe that Gucci is largely immune from this, I was just wondering to hear how you think that will be driving into cost pressures. Have you seen anything to call out from a supply chain perspective? My third question is just on Saint Laurent. Obviously very solid performance there, accelerating in the U.S. and the Asia-Pac. Is that improvement all like-for-like, or is there anything else you're seeing the acceleration in this quarter? Please. If I might, just a clarification on the last question that you answered for Zuzanna. I think the line dropped out when you were saying the percentage of Gucci online revenue from e-commerce and brand.com and wholesale. If you wouldn't mind repeating those, that would be great. great. Thank you. Hello, Ashley. This is Claire. I am going to take the first one because we are not going to give any quantification. I think Jean-Marc mentioned already. We can just reiterate that we are confident with Q4 at Gucci that with the brand can re-accelerate compared to Q3. That was a transition for a quarter and not going to be a good proxy to assess the wrong trajectory. Now, we hope, as we all do, I guess, that Q4 will be more normalized in terms of business conditions. If things are clearly more normalized, we are confident in the ability of Gucci to clearly re-accelerate on a three-year base. I think that is the comments we can make for the first question. On the supply chain side, in fact, let's look first at the manufacturing process. In fact, we are not facing particular issues. Our manufacturing activities are either internalized or relying on long-term partnerships with selected suppliers principally based in Italy. No issue on this side, even if you know that there is a competition to internalize some capacities. In terms of raw materials, we have secured the sourcing, and we have not identified so far any specific issue as regards the raw materials. When we look rather at the logistics side, there is clearly on the cost of transportation from inflation, some shipping costs which are increasing. We have adapted the freight strategy to either offset or contain that inflation with more volumes concentrated on some freight operations. Keeping in mind that at the end of the day, considering the level of margin, we can absorb this inflation on the transportation cost. Not really an issue there. Thank you for asking the question of Saint Laurent, because here again, we have already highlighted that Saint Laurent had much room to grow further through a higher degree of penetration of certain markets. It's true that year after year, we are adding some units in the core footprint of Saint Laurent. The study is very strong with that brand, in that if we look at the like-for-like growth, it's very strong in all regions if we compare to 2019 with, of course, the exception of Europe, because of the lack of tourism, which is not a surprise, as you may imagine. Globally speaking, the growth is very well balanced, as it has always been the case at Saint Laurent between like-for-like growth and space expansion. Just, I'm not sure if I understood your question about e-concession, but yeah, because at the end of my answer, unfortunately, was cut. I don't know if there was a sound issue at the time, but what I was saying is that, as regards the e-business of Gucci, the wholesale contribution of e-commerce should reduce and be focused on a very limited number of partners, as it would be the case for the offline distribution. What I mentioned is that the repatriation of some businesses through e-concession, at the end of the day, the vast majority of the online revenues of Gucci are the ones made through the brand.com business. There is generally some, let's say, a lot of debates and discussions about e-concessions for Gucci in the market. At the end of the day, I re-insist on the fact that the priority is given to the brand.com business, which represents the very large majority of the e-commerce of Gucci. The contribution of e-concession is material but is not significant in retail. Okay. Thank you. That's very helpful. Thank you. Your next question comes from the line of Thomas Chauvet from Citi. The line is open. Good evening. Jean-Marc, it's g etting late, so I'll try to be brief. I have three questions. One on e-com strategy, the second one on the share buyback, and three on watches. On the fashion tech investment strategy, which you've sort of intensified, you've done this with Vestiaire, you've invested in Cocoon, a rental business, and more recently in this live shopping app. In each of four months of 2018, you said Kering was now group focused on personal luxury goods and that non-luxury investments would be done at an Artémis level. What is the criteria today given or what's happening in the e-com world for Kering, and also from Pinault who heads the Artémis, to decide what tech investment should be called out in this, like for instance, Farfetch, and which ones makes the sense to integrate within Kering at the cost of sales? Secondly, on the share buyback, you've bought back nearly 500,000 shares, if my calculation is correct. That's nearly all of the first tranche of 0.5% of the capital. With luxury shares obviously in the pressure since mid-August, are you tempted to launch quickly the second tranche? Will you do that? Concurrently, that's the best use of cash in the absence of a large M&A transaction. Finally, on watches, I understand you're not looking for a potential divestment of the Ulysse Nardin and Girard-Perregaux. Nevertheless, for that to happen in a sensible way for all parties involved, I guess you need to be ideally close to cash flow positive. Can you talk about where you see the evolution of losses, the magnitude, but also the capital needs of this unit, so that you can competently either continue to invest, or keep the asset, or divest it with a decent outcome for the parties involved? Thank you. Yeah. Regarding the investments we are making, I think there is a big difference. We continue to consider that the investments we have made with Vestiaire Collective and all the other names you have mentioned are managed by the innovation team at Kering. The mission of this team, led by Grégory Boutté, that you have met, is really to accelerate our learnings about some new business models. That really is the point we have here. It's not about the financial investment. Of course, we are very vigilant about the quality of the investment. It is really to set some collaborations, or to have a seat at the board to make some tests with the partners. When it comes to the investments made at Artémis level, there is no need necessarily to have some collaborations with the Kering brand. It's a completely different approach. The criteria is more about, can we develop some collaboration, make some tests with the target? It has to do with our business model to a certain extent, whether it's because secondhand, because it's subscription, it's about the new age and the new practices in the industry that we want to test. We believe that sometimes to have a minority stake can help to accelerate our learning curve on this aspect. Clearly the criteria is about what's going to happen with the brand of the group and what we did, the intensity of the collaboration. Because sometimes you may have some collaboration between companies in which Artémis has invested in our brand, but generally it's more something which is not touched. It's just because there is already sometimes an existing collaboration. That's really the main difference. Of course, the way it is analyzed is different. We have already an angle which is brought by the innovation team. We continue also to have a really venture capital approach. We have invested in some venture capital funds, by the way, also to continue to track some good opportunities for the group, not as a majority shareholder, but rather, as we could do in terms of collaboration and a new business model. The share buyback, you're right. We should finalize the first tranche in the coming days. It's too soon to react about what are our intentions for the next tranche when it will happen. First of all, we'll analyze what has been the outcome of this first tranche. We will work on the allocation of the shares between what will be allocated to cover, to hedge the free share plans, and what will be the destination, or the ones which will be canceled. We will keep you posted, of course, if we would resume another tranche this year or next year. When it comes to watches, and sorry to be politically correct, but let's first celebrate what has been done by the brand, the watches brand during the quarter. There are a lot of encouraging signs, both in terms of reviews, but not only in terms of reviews, it's also about the quality of the offers, the quality of the distribution that has improved dramatically. I think the team of working on Ulysse Nardin and Girard-Perregaux is doing a great job. The visibility of the brands has increased massively. We are very pleased with a lot of initiatives with Vendée Globe, with Aston Martin, and clearly the brand awareness is increasing. You know also that the group is very agile and very flexible. We generally try to measure and to follow all the different options we have in hand. You know perfectly that this brand, are very confident that this brand can improve that trajectory. They are the excellent brands with a very good reputation, but globally on the market, Kering is quite small on the watch market, which has an impact in terms of distribution, because it's more challenging, of course. We will take the right measures in due time. For the moment, as you will have noticed, we have invested massively to support our brands with good results, I must say. We keep all the options open so far. Thank you. Jean-Marc, when you said that watches return to growth in the quarter, do you mean year or is it just year on year? It's year-over-year. Year-on-year. Still down significantly on a two-year basis then, yeah. Yeah, it was already the case in Q2 where we were back on growth, with an acceleration in Q3. We are not yet at the level of 2019, of course. Okay. Thank you, and good luck with that. Yeah, maybe. We still have a few questions lining up. It's already 7:15 P.M. If I can ask everyone in the line to just stick to one question, that would be super nice. Thank you. Thank you. Your next question comes from the line of Thierry Cota from Societe Generale. This is Thierry from SG. What I had is a question on Gucci. Let me speak to two. I was wondering whether you raised Gucci prices as you go off on your own new collections, and Jean-Marc, you mentioned the mixed effect of Aria in all of it. I was wondering whether you could measure for us the difference in terms of price mix into four for Gucci. If you just once more, can you comment, you know, you're in September with 100 basis points rise of Gucci margin versus H1. Given the Q3 sales that you just reported, is that still something that you think is doable or not? Yeah. Hello, Thierry. I think the second question has been answered already. We won't take this one. On the price mix, what I can say is that, yes, there is a pure price increase also coming with Aria collection, which is a low single digit, I would say, in average worldwide. Some SKUs have not been increased. Some SKUs have a higher increase in terms of%, the comment I'm giving is on the average. Yes, we do expect a positive price mix into Q4, as it has been the case already since the beginning of the year. When you present two, high single-digit is possible? Is it too hard? I'm not going to give any quantification. Okay. Thank you. Thank you. Thank you very much. Thank you. The next question comes from the line of Edouard Aubin from Morgan Stanley. Yeah. Hi, Jean-Marc and Claire. Sorry, just one question in the interest of time. In terms of on Gucci, to make a slightly different question. We understand that the interest of this new focus is on newness and Aria, obviously, given the DNA of the brand. But in recent quarters, you had launched or focused slightly more on more timeless products, particularly taking more emphasis on some of your icon clients, also launching more higher priced Diana bags. Just two questions related to that, is to what extent you've been broadening your customer base, both in terms of income or in terms of nationalities and with Europeans? Also, related to that, is there any way to kind of de-risk the Gucci brand or because of the nature of the brand, being a fashion-forward brand, it will go through a full cycle, and there's little you could do about that? Thank you. It's important to clarify when we mention Aria, it's not only about newness. Aria is an environment in which you have both newness and also, seasonal variations of carryovers. You will see a lot of bags of the famous beloved lines with new fabrics, new leather, new patterns. It's always a collection, a combination of carryover and pure newness. The reason why we continue to observe that you have something, at least in the leather bags or in the leather goods segment, something like 2/3 of the products which are carryover. It's not contradictory at all with what we have mentioned before. What we just mentioned is that there is a broader offer with Aria, which is the first collection for a while, where you have such a coverage of all the different functionalities and all the different clusters of clients. By the way, I've mentioned also the successful launch of Diana bag, which hit the shelves end of June, the beginning of July, if I remember well, starting with Japan, with a very good reception in the major countries, but also in some other markets, and the price point is quite high. I was mentioning before, if you listen to me, that we had also increased the contribution of the GG IT and GIC, which is a demonstration that we are working on the offer in a way to also engage with the more high-end segment. Everything is very consistent in the way in the approach. I would say also that Aria is the first collection marking really an evolution in the aesthetic. It was not yet the case with the Ouverture collection. Aria is the first one, where you have, let's say, rebalancing between the different types of products, both the timeless component and still the fashion-forward component. We believe that today, the brand has the maturity, the positioning, the distribution to work in a different way on this balance between timeless and fashion-forward. Also, the brand, considering its DNA and its history, will remain a brand with a strong component about creativity. You will see when you will visit the store that you have that balance between the two components. Thank you. The next question comes from the line of Rogerio Fujimori from Stifel. Hi, Jean-Marc. One on Gucci. I was interested to call out on the sequential trend in e-commerce in Q3 and Gucci's performance on Tmall, which I believe is the first 10 months since joining, it was coming January. Satisfactory expectations. Thank you. Hello, Rogetrio, this is Claire. I think the performance of Gucci in China has remained very strong, including on digital dividends. Both on the brand.com and on this platform. It's very satisfactory. I think Gucci is already very penetrated, mainly in Western Europe and in the U.S. The trends have been a bit softer, on a very high base, as you can imagine. I think nothing to mention, the only region where really online penetration is more difficult and where you clearly don't see any, I would say, shift when the stores are either, I would say with restricted hours or more difficult to get in the stores. You don't see any shift from online is really Japan. Japan is still a region there where online is definitely behind. For the rest, Gucci is doing super well online and very well in China. I think we are going to take maybe the last question now. Thank you. Your final question comes from the line of Carole Madjo for Barclays. Yes. Hi, good evening. Just wanting to comment on this. To comment on the U.S. market, which was, of course, very strong in Q3. How do you expect this market to evolve going forward with the end of the stimulus? Do you see already any kind of normalizations? Thank you. Thank you, Carole for your question. We had some volatility in September. We are looking at what could be the cause of this volatility we observed in September. At the end of the day, as soon as the first days and the first weeks of October, we observed a great sharp rebound of the business in America. We cannot really say that the end of the stimulus so far has an impact. It's something we are fearing a little bit, looking at the volatility in September, combined with some other events, like some bad weather conditions. At the end of the day, it's not so obvious when we look at the most recent trends, that there is any sort of slowdown beyond just a clear normalization of the growth, we start to have a very demanding comp and global tweaking. Another point which is interesting is that in the U.S., we have a level of retention rate, which is quite good, with also some new customers, which came back to the store, so that we have a frequency of repeated sales, which is clearly above the average of the trends we see on a worldwide basis. For now, we believe that the U.S. environment is very supportive, besides some restrictions that could occur because of COVID. So far here again, it had not had any sort of drag on the business. So far, the U.S. environment remains very strong and for all the brands in the group. Thank you all for being on our call and for your questions. A lot of questions today, and we appreciate, of course, your interest in Kering. As always, we care, and our team, we are available to answer any questions you might still have and continue this very fruitful and pleasant dialogue. Wish you a very nice evening. Thank you. That concludes our call for today. Thank you all for participating, and you may now disconnect.