Moelis & Company Price & Performance (MC)

Thank you, Rodolphe. Good afternoon, welcome, and thank you all for attending this call. Starting with Slide three, let me give you a few broad comments on the first three months of the year. Where LVMH continues to demonstrate resilience Let me share a few highlights. First, on Chinese demand. On the domestic market, trends were consistent with the end of last year. The main swing factor year to date is Chinese demand in Japan as can imagine. It remains strong in absolute terms, but recycles last year's sharp increase and therefore no longer contributes to growth in percentage point. Second comment, despite the context of uncertainty preceding tariff enhancement, American demand for fashion and leather goods and watches and jewelry, remained well oriented and accelerated modestly compared to the second half of last year. Sephora, on the other hand, faced very challenging comps after growing double digit last year and this explained the sequential deceleration of The U. S. Market at group level. Third comment is that Europe continued to grow I will let Rodolphe comment on the different activities Maybe as a broader comment, we continue to witness across our brands the merits of innovation and creativity when new products are exciting and functional that perform very well.

Moving now to Slide four, where you have the revenue bridge for the first three months of 2025. Group revenues reached €20,300,000,000 down 2% on a reported basis and 3% inorganic including a positive 1% currency impact. Slide five details the geographic geographical breakdown of revenues in euros. Which as you can see has remained broadly stable. However, versus Q1 last year, Asia fell three points in the mix, while United States, France and other markets all rose one point. This is the reflection of Q1 regional performance that you have on the slide. Starting with U. S, moderate deceleration at minus 3%, despite, as I was mentioning, a good performance of fashion and leather goods and watches and jewelry. Japan is slightly negative at minus 1% recycling last year's exceptional growth of 32% Asia at minus 11% is reflecting the continued soft demand, is consistent with end of last year, And finally, Europe continuing to display positive dynamic with the percent growth. Rodolphe will now comment the performance of our activities in more detail.

Thank you, Cecile, and we'll start as usual with Wines and Spirits. On Slide nine, which shows the Wines and Spirits business group delivered €1,300,000,000 in revenue the first three months of 2025 This represents a 9% decrease on an organic basis versus the same period last year, and 8% decrease on a reported basis after taking into account a positive 1% currency effect. Broken down, Champagne and Wines generated EUR0.7 billion in revenue, over the three months period down 1% on both organic and reported basis. Cognac and Spirits recorded 600,000,000.0 in revenue, down 17% on an organic basis and 15% on a reported basis after taking into account a positive 2% currency impact. On Slide 10, we highlighted some of the elements which shaped the quarters. With two different situations, Champagne and Wines. Proved resilience in the first three months of 2025. We saw a modest decline in volume in Champagne partly due to unfavorable phasing effect linked to Distributors In Europe and to the timing of price increases in Japan, However, champagne benefited from positive price mix effect and the outcome was broadly flattish trends. The start of the year was marked by the return of Moiete Chandon as the official champagne of Formula one once again celebrating every victory on the podium with champagne.

As well as the global launch of a limited edition edition collection in collaboration with Sai Williams. In Connac and Spirits, Fantasy's first quarter reflected soft sellouts in The U. S. And China. We replenished inventories at our distributors level, but kept inventory days unchanged. And selling was as a result consistent with sell out. Given uncertainties around tariffs, we also kept a healthy level of inventories in our local warehouses These cases have been shipped, but not sold in. And as such did not have any impact on our first quarter revenue. Finally, in Spirits, Glenmore Energy welcomed Harrison Ford as the face of its whiskey unveiling a 12 episode series entitled Once Upon a Time in Scotland, taking us behind the scenes at the distillery and the Maisons also benefited from the success of its triple cask reserve rollout. We're now turning to Fashion and Leather Goods on slide 12. Revenue reached €10,100,000,000 for the first three months of 2025. This represents a 5% decrease on an organic basis versus the same period last year. And a 4% decrease on a reported basis after taking into account a positive 1% currency impact. Moving on to Slide 13, which lists the key highlights of the quarter by brand.

Louis Vuitton saw the unveiling of a new collaboration with renowned Japanese artist Takashi Murakami which after a very successful first chapter review revisiting the multicolor pattern created in 02/2003, recently unveiled Chapter two, featuring the cherry blossom pattern. The Maison also enriched its leather goods offering with the successful launches of the LV. Biker and All In and debuted the latest collection collections designed by Nicolas Esquiere and Fial Williams including a fashion show retracing Louis Vuitton's travel heritage in Paris next to the iconic Gardunor Station. Faithful to its rich heritage of innovation and extraordinary craftsmanship, Louis Vuitton unveiled a new venture in beauty called [indiscernible] and welcomed internationally renowned makeup artist, Dame Pat McGrath as Cosmetics Creative Director. The first of these new products will be available this fall. Lastly, Louis Vuitton crafted bespoke trophy trunk for major Grand Prix secrets and was the title partner of the first race of the season in Australia. Christian Dior saw inspiring fashion shows. To unveil the new collection designed by Mayagard Zakuri as well as the successful start of recent novelties in leather goods [indiscernible] [indiscernible] [indiscernible] with you inspiration from Christian Dior's beloved Millie LaForet Garden. Additionally, in just a few days' time, the Joretro exhibition Christian Dior Designer of Dreams will open in South Korea.

And to mark the occasion, Jaw is renewing its partnership with Eva Woman's University. This is private women's university in Seoul. Now to mention a few highlights from some of the other Maisons Lower Optima continued to see strong momentum in ready to wear and leather goods. And unveiled its first ever exhibition at Shanghai's Museum of Art. Pudong to celebrate the Maisons one hundredth anniversary. Likewise, Fendi, which also celebrated one hundred years of craftsmanship hosted a special co ed runway show designed by Silvia Ventolini Fendi, the brand's Roman headquarters. Celine is embarking on his new creative journey with Creative Director Michael Ryder to unveil his first collection in the next few months. Louis Vey announced the appointment of Jack McCollough and Lazaro Hernandez as the House New Creative Directors. So succeeding JW and Destin after eleven exceptional years and Givenchy unveiled its first collection by new creative designer, Sarah Burton, at the historic headquarters located on Avenue Jean De Sanc. Finally, Rimovar extended its re crafted service to The U. S. While Berouti welcomed several new brand ambassadors and celebrated its one hundred and thirtieth anniversary. Moving to Perfumes and Cosmetics on Slide 15. Revenue reached €2,200,000,000 for the first three months of 2025.

This represents a 1% decrease on an organic basis, which after taking into account a positive 1% currency impact resulted in stable revenue on a reported basis. Turning on to Slide 16 in Persuas and Cosmetics, Fragrances continued to outperform for most of our brands. Parfums Christian Dior benefited from the enduring appeal of Jadore, supported by a new Eau de Parfum with a fresh design for its legendary Amphora bottle. And from a new Jorg Hong Parfums created by Francis Couche. La collection Privet, Dior's high end fragrance offering enjoyed excellent growth and now includes a new unisex perfume called Bois Tadisson. Finally, the success of Joerg Capture and Prestige Nectar Bloss also enabled Christian Gior to grow in skincare. Strong innovation was on display across the other Maisons with several new scents including Rose Verde by Gerna, who also had a good performance in makeup with Roger, while Givenchy also added sense to both Lantern D and Gentleman's Society. Pierre Gasly announced as its new global ambassador. [indiscernible] to its emblematic Collegna collection with the release of Colonia Ile Profumo [indiscernible] In Watches and Jewelry on Slide 18, revenue came to €2,500,000,000 in the first three months. Stable on an organic basis and up 1% on a reported basis after a positive 1% currency impact.

On Slide 19, as you can see our Maisons made good progress on strategic priorities, starting with jewelry. Tiffany enjoyed excellent growth across all of its iconic lines, [indiscernible] [indiscernible] Hardware, Not, quarter was also marked by the third chapter of Tiffany Titan by file, which features an innovative setting for diamonds and in high jewelry by the latest burn on a pearl revisiting Jean Schlumberger's iconic Belle on rock design. The first quarter, Tiffany made progress on its objective to renovate store network. Recent opening includes a new Taikouli flagship in Chengdu, China. And lastly, the Maisons unveiled the official FIFA Club World Cup trophy, which will be awarded to the winning team and lifted for the first time this year at the final. Bvlgari in the celebration of the Year of the Snake and Vais Sarponte Infinito an exhibition in Shanghai and Seoul exploring the meaning and interpretation of the snake, which remains one of Balkari's most successful distinctive designs. Bourguis also unveiled its new flagship in Milan on Via Monte Napoli, took this opportunity to display the first two Bogaard bracelets and watches created in the 1940s. And on the production front, Bourguer inaugurated the a new watchmaking workshop in Switzerland and announced plans to expand its jewelry manufacturing capacity in Valanda.

Chaumet meanwhile unveiled its rejuvenated Bied de Chaumet collection and paid tribute to Asia. In high jewelry collection called Bamboo, while Fred began a new chapter for its iconic Force Disconnection with Force Dis Rise. A few words, our watchmakers starting with Tagroya, which released new edition of some of its best known racing watches to celebrate its return to Formula One as official timekeeper. Hublot unveiled the world's first multicolored ceramic watch [indiscernible] And then it released three chronographs [indiscernible] in the Maisons signature blue color. Now looking at our final business group, Selective Retailing. On Slide 21. Revenue in the three months period reached €4,200,000,000 representing a 1% decrease on an organic basis and stable revenue a reported basis after taking into account positive 1% currency impact. Moving on to Slide 22. Despite a demanding comparison basis, Sephora continued to grow in the first quarter of the year, driven by success of its exclusive brand curation strategy which resulted in good growth in brick and mortar. First quarter also saw good performance from Sephora's own product range. Additionally, Sephora premiered a first global film, Beauty and Belonging, at the Sundance Film Festival, which encapsulates Sephora's core values and role as a catalyst for emotions and creativity.

And Sephora hosted also a unique pop up event in London called Rare Beauty and Sephora.

Dreamland.

DFS continued to be impacted by low traffic in Hong Kong and Macau, As previously announced, DFS' Venice Galeria Maccod de Tadeski will cease operation in H1 this year. And lastly, Le Bon Marche continued its progress thanks to its exclusive and distinctive concepts and a rich array of controlled events. The quarter also saw Le Bon Marche and La Serra Aiten reunited under a new single government structure. This ends the business group presentation and I'll hand back to Cecil who will conclude.

Thank you, Rodolphe. A few closing remarks on my part before moving to Q and A. We continue to face macro uncertainties and lack of visibility on external factors. And in that context, we remain confident while staying, of course, alert and vigilant. The cycles continue its normalization phase as years of exceptional growth. The best way through downturn cycle is to stay focused. As far as we are concerned, it means continue to deliver the best product with the highest level of quality and excellence. Is also a time to demonstrate our agility capacity to adjust and react And while we are being very disciplined in our resource allocation, also make sure we keep the right level of investment behind our products and brands to continue to increase our competitive edge and be ready to accelerate when the cycle eases. That concludes the presentation and Rodolphe propose we move to Q and A. Yes, operator. Thank you. Please open the line for questions. Thank you. And our first question is from Arndor Bismuth from HSBC. Please go ahead.

Yes. Hi, Rodolphe and Cecile.

Alain Bischwitz from HSBC. I have three questions, please. The first one is about the performance by brand within the Fashion and Leather division. Would that sorry, for the Fashion and Leather division, So was LVMH in line with the division worse or better? Is it the other smaller brand that bring down the overall performance of the division? What about Dior? So that's my first question. My second question is about the performance by nationality the Fashion and Leather division. Would you possible to have some indication? And finally, last question about The U. S. Since the announcement of tariff, have you seen an immediate impact on the feel good factor and the traffic in stores? Thank you very much.

Thank you. So on your first question, on performance by brand in Fashion And Leather Goods, As You Imagine, There Is Some Discussion Around The Average. What We Can Say Is That LV Continues To Perform Slightly Better Than The Average And Europe continues to perform slightly below than the average. Rodolphe mentioned a very strong performance of La Rociana. He also mentioned that some of our brands are are transitioning to a new creative era.

So it's different realities. I won't I'm not going to be more precise, but this is overall what we have. When it comes to nationalities, what we've seen in Q1 is that the main swing is really linked to last year Chinese demand in Japan. So it continues to be strong in absolute terms. But given the fact that there was a sharp increase that I mentioned around 32% last year in Q1, we are not having the benefit of the growth this year. For other clientele, we have not witnessed major inflection American clientele was rather well oriented European were slightly better, but of course, the impact is very small to total growth. And overall, to your last in term of tariffs, we didn't see a major change in trend, and we have nothing to report specifically for Q1. What we can see that on Fashion and Leather Goods, we continue to see solid growth, and it has been the case for the past six months. Now it's true that as the national clientele is always more vulnerable, is less positive economic cycles and uncertainties. And it might have had some impact in the recent weeks. But further on categories like wine and [indiscernible] And beauty.

Thank you. We will now take our next question from Susana Pus from UBS. Please go ahead.

Good afternoon. Thank you for taking my questions.

I'll stick to Fri as well. So maybe first of all on pricing. Would you be able to confirm please if there's been any pricing taken for Vuitton or just fashion leather boots as a whole in Q1? And if you plan anything incremental perhaps for Q2 in light of the potential U. S. Tariffs? That's my first question. [indiscernible] then secondly, I know this is not necessarily an earnings call, but I guess well, I'll give it a go. Is there any chance you could tell us how we should maybe think about the margins for Fashion and Other Goods? I don't know whether it's better to talk about H1 or full year. I guess just to understand because minus 5% is obviously probably quite difficult to control costs. So if there's anything any color at all you could provide to help us a little bit with modeling I would really appreciate that. And And then finally, maybe on the performance of various consumer segments. So have you seen any changes specifically in Q1 in terms of sort of the higher end consumer performing weaker than previously? Or I presume your comments on perfumes and wines and spirits being weaker recently, that means that maybe only the aspirational consumer is weaker in the current environment.

Just any color around the sort of various consumer cohorts and what you're seeing would be very helpful, specifically in The U. S? Thank you.

Okay. Thank you for your question. So in terms of pricing, I'm not going to to comment on Q2. On pricing, we have the rule that is quite clear. We refrain to use price as a growth driver. We rather use work on mix selling more expensive items on average. Still in core, actually, we believe we have still some pricing power. And we've been proving that as long as the value perceived is the right one, product sales. And we've seen current and recent innovation that can prove that in most of our brands, right, it's the case of the Mama at Sandy, the Tour du Adior, the Biker at LV, etcetera.

Now to your point, it's true that we use prices sometimes to offset inflation, [indiscernible] Sometimes if there is some swing in currencies, And in the case of tariffs, it's a lever that we are going to consider. What you have to take into account is that it's not one size fits all. Because we have very different brand, very model. So it's something that is done by the Maison on a very precise basis to make sure that what we do is competitive and serve the brand. I will not comment further. And on your question in terms of impact in Q1, there was a very slight in the revenues, a very slight price positive impact. That would be on pricing, On margins, for Fashion and Measure H1 full year, so the usual answer, I got from Jean Jacques was it's a sales call. What I can say, obviously, given the uncertainties that we've been very mindful and very disciplined on the pace at which we allocate resources.

You know that it's more difficult to control COGS than OpEx. And you also know that on OpEx, are different nature of costs. So for example, we know that selling expense will continue to grow given their nature and given the acceleration and the investment behind the network. We are working hard on controlling G and A, but there's always some especially because it's mostly also people. And still, we believe we have some room to adjust on marketing costs, which we will do when we need. Of course, we prefer to have growth in order to enhance and up lever to margin. And having said what I said on cost, remember that for us, it's key to continue to invest in our networks and behind the brand. Because we want to make sure that we exit this downturn cycle very strong and ready when demand bounce back. So it's all a matter of balance. Between adjusting to the current context and ensuring that we keep investing in our long term growth. With all that in mind, what you need [indiscernible] to keep in mind is that the margin will certainly not improve in H1. Because the basis of comparison of last year, H1, margin was still very high.

And with today's assumption, we are trying to ensure that we can have some sequential margin improvement versus the exit of last year. But again, tomorrow, there might be new parameters because as you know, these days parameters are changing every hour. And lastly, on your question on consumer [indiscernible] So we are not really working we do not believe that the offer structure is leading to what is the behavior of the aspirational customer.

We believe that it's a matter of sentiment, of cycle, of bearing the inflation, And so what we do is we continue to invest and innovate as you seen in all kind of pipeline to make sure that we we address these two segments. There is no specific strategy for aspirational customer. And in Q1, there was no specific change in trend for our spin rational customer versus Q4.

Thank you. We will now move to our next question from Thomas Chouvet from Citi. Please go ahead. Good evening, Cecil and Rodolphe. Thanks for taking my questions.

I have three. One on U. S. Manufacturing. If I'm not mistaken. The three Vuitton atelier in California and Texas produce about half of your volume output for Vuitton USA. Is there any opportunity to increase that share particularly on the more sophisticated bags to mitigate potential tariff risk? And could other brands be produced in this U. S. Atelier [indiscernible] sort of manufacturing platforms with Vuitton. Secondly, a follow-up on pricing in Q2. I understand Cecile, you want to reveal the commercial strategy of course, but can you tell us how you think about future U. S. Prices in the case of a 10% or maybe 20% tariffs? Would you want to pass that on fully to The U. S. Consumer or think maybe spread the price increase across multiple region to also balance regional price gap. That's my second question. And finally, the on OpEx as well. Last year, I think you did you put a very tight grip on expenses in both Q1 and Q2, you had 2%. Think OpEx growth in each half with marketing costs down in absolute value. Is it the minimum threshold you talked about how to continue to invest to be ready for the for the end of that cycle is plus 2% OpEx growth.

So sort of a sensible budget for at least the First Half And Have You Already Taken Specific Cost Control Measures, Particularly In The U. S? Thank you. Today, the specific call of three questions per person. On your question on U. S. Manufacturing, so yes, LV has three production facilities in The U. S. But on your numbers, it's rather around onethree of local needs than the number you mentioned. There is still capacity but we'll see at what pace and how much we want that to evolve. On local manufacturing, we also have Tiffany that is doing most of The U. S. Product in The U. S, but not all. So there are still some room in order to move that a bit between the production in Europe and The in The U. S. So we are looking at that obviously. It's not something we can do over time. Overnight, sorry, because it takes quite some some thing to prepare, but it's something that we can contemplate in a reasonable framework and timeframe. And then on your Q2 pricing question, and tariff mitigation, I think we all need to stay very calm because we are unknown territories. And we are now in a process with ninety days suspension period, which we can hope will enable some negotiation and bring some maybe positive outcome.

The worst is never certain. Having said that, this is not under our control. So back to what is under our control. Its price increase is one part but there are also some other mitigants And on price, again, it's will not be one size fits all. So it's very difficult to answer your question with one number. Because it can be very different depending on the brand depending on the categories within the brand. Obviously, you have more pricing power when it comes to core luxury brand rather than wine and spirits where we need to be careful and also beauty. So it's it's a very detailed precise and important work that we need to do [indiscernible] What I can say is that and especially for wine and spirits, we have shipped some stock So this is not a sustainable solution, but it means that we have a bit of time to reflect and make sure that we have the proper parameters to take the informed decision when we will need to take action.

And on OpEx, so I should have done the Jean Jacques way. And I will do it now. No, no, it was I won't go into more details. Think already with what I said, I think it's good for Q1 and the sales score. We are working on making the right balance what I said in terms of direction should help you model.

Thank you. Thank you. And our next question is from Antoine Belsh from BNP Paribas Exane.

Please go ahead.

Yes, good evening. It's Anton at BNP.

So three questions. I'd like to come back on the clusters because we we need to explain the four points delta quarter on quarter. And so if I hear you that Europe actually slightly improving European, sorry, and U. S. Not collapsing. And I noted they were at mid high single digit last quarter. So have the Chinese gone from, I think, single digit down to double digit down? Are there also other nationalities? Question number two is about what you commented about the Vuitton brand doing a bit better. But not massively better. Is it a bit disappointing since the brand [indiscernible] this new biker bag, which I think is the first proper I mean, truly new bag in a number of years. So are we are we going to see a bit of when there will be the non recurrence of more Akemi later in the year. And softening on that innovation path. And finally, sorry to come back on the margin to make sure I understood. So for Fashion and Leather H2, there was a 35% margin, which we at the time saw was a trough, especially including some one off, a lot of provisions. But now I see that there is a Formula One investment and also with all these activation that I mentioned, I've seen more advertising recently.

So was your comment about that 35% was the the trough for H1 and then did a slight acceleration or reacceleration in issue would be from that 35% bar. Thank you.

Thank you, Antoine. So in terms of the different dynamic and to to help your math. The first swing factor and the main one is Chinese. And Chinese is very much linked to the deceleration of Japan. So this explain around so you said for voice in total, it's around three points. So that's the main factor. And and it's really an important one. We don't see a change in trends in domestic sorry, demand for Chinese clientele. And then the rest of it is we we said that American demand has held pretty well.

And it's increasing versus H2 last year. It's a bit less than Q4. That might explain your last point. And I think the math are right. Then on your question, so I I believe I heard it correctly. It was on Moacami and the impact on Moacami. So first, what is very interesting is that Moakami was sold at a premium and it's sold out. So it was indeed a success. But it was not in term of proportion, the major part of the sales and the agenda of LV over the quarter. Still it was a great success and it also shows that when you have the right execution and the right product and collaboration then it says even if you put it at the premium because again, it was sold out. The second phase is much smaller. But it's an interesting one. Then maybe I wasn't totally clear, but I really didn't want when into margin by segment and so on. So when I was commenting the the overall margin improvement or not versus last year. And the margin, I was talking overall and not for Fashion and Leisure goods. In particular. Again, if we could just refrain from looking at margin, there are many unknowns What you need to understand is that we are just we are reacting, we are doing the work on what we can control and where we believe it's important to adjust.

But I cannot [indiscernible] And lastly, maybe to your question on on top line and cluster. Keep in mind that Q1 is always overweighted for Chinese, given Chinese New Year, which is always creating a boost in the proportion of Chinese demand as the rest of the portfolio.

Okay. Thank you. Just to make sure, so I understood, so my math regarding the just on the Chinese customers, it was down for the low teens No.

Why notions? I didn't give that number, so Okay. But because you if it we have to explain three points divided by the weight, you're not close to Okay. I will let you make your math and maybe give the mic to others.

Okay. Thank you.

Alright.

Thank you. We will now take our next question from Kiara Battistini from JPMorgan. Please go ahead.

Thank you very much. Good evening, Christine and Modolf. Also three questions for me. First one on Fashion and Leather Goods on mix and volumes. Maybe you the pricing was slightly positive. Can you also comment on the mix and the volume components? Of growth? The second question on what and Jewelry. I was wondering whether the slowdown sequentially is also down to the Chinese consumer in Japan or maybe there was a bigger slowdown of the American consumer there versus fashion and leather? And finally, a very quick question on Wines and Spirits. We saw some articles today going around about the potential spin off. So just wanted to check on your latest thoughts about the Wines and Spirits division, please. Thank you. So maybe I start with this one, because we were quite surprised to see another false information by the same media that is now publishing very regularly more and more cases in including sometimes wrong information on numbers. It was the case for Tagorea last week or two weeks ago.

It's not to really be a problem to have people writing things that are both very precise. But also very wrong. I don't want to give any airtime on this because I think we have more important thing to discuss. But one piece of advice if you want to know things around all those questions, please contact Investor Relations or the media at LVMH because we know the numbers and we know the story.

And I will not comment more on this part.

Then on mix and volume, so yes, I made a comment saying that price was slightly up. Volume were slightly down and the the mix was flattish overall. So that would be the way you can look at it. Then on Watches and Jewelry, so you're right to say that the Chinese sequence was a bit different because it's started to decrease earlier than for Fashion and Leather Goods last year. So the basis of comparison is a bit different and it's less. And it's easier. And then what we are seeing in Watches and Jewelry is that we have kept progress on the execution of the transformation plan of Tiffany. With both all the iconic brands and those renovated stores. So we continue to deploy that very consistently, and it's paying off. So we continue to progress. And overall, I think that's what I would why I would comment on watches and jewelry.

Great. Thank you very much.

And our next question is from Luca Solca from Bernstein. Please go ahead.

Yes. Good evening, Cecil and Rodolphe. Maybe the first question on creativity. We saw a number of new appointments in the creative responsibility in the fashion and leather goods [indiscernible] Can you tell us where you stand in this update of creative responsibilities? I think there may be a few loose ends still I don't know whether I missed the news, but we saw Jonathan Anderson, for example, leaving Lueva, but not being appointed anywhere else I may be mistaken, but if you could give us a sense of where you stand in this process that would be very helpful. Then I was just wondering in previous difficult times when we look at 02/2008, 02/2009 or even more recently, LVMH has been on the attack when it comes to M and A and when it comes to potential opportunities to secure assets in a market, which is more difficult It seems that this is the shape of things to come if we look at the impact that all of this debate about tariffs and the most recent decisions in The U. S. Have produced? On the stock market and the macroeconomic expectations. Would there be any reason [indiscernible] time to expect a different approach and a different attitude from LVMH or would this be again one of the times when you work to consolidate your leadership in the industry?

And then third, in general, one of the excesses that industry insiders have been reporting is price [indiscernible] is it sensible, you think, to anticipate that mix could potentially be negative as we normalize from the previous successes, especially if we look again at Fashion and Leather Goods division? Thank you.

Thank you, Lucas. So on creativity, what I would say is that we always need designers which are both creative and aligned with the DNA of the brand. And are the right one for the journey that we want to put the brand on.

We have some creative change as you rightly read. So you have the right information. And I think we are pretty excited by the different changes that [indiscernible] and shows. And I don't think I have more to add them.

The second one is coming back a bit to the previous comments. So I won't comment much further. We are always working to consolidate our leadership. There are a lot of moving pieces And so as you said, we are very much focused on continuing to to execute our agenda in the context where there are uncertainties and we need our full concentration to be continuing to consolidate and to be very agile at the same time.

And on the mix, so our strategy is always to improve mix, right, the comment I made We prefer to work on mix than to work on price. Which is the comment I made because price be a growth driver. Mix should be. So we will end up continuing work on the mix. And as we saw on Reston's launches and more Kami, I said it was priced at the premium and it was sold out. And on the recent launches in term of bags, it was also a success. So back to the point that whenever you are able to deliver the right product with the right level of quality and in trend with the demand, then product sale and you have pricing power.

Thank you, Cecile. Thank you. We will now to our next question from Edouard Auburn from Morgan Stanley.

Please go ahead. Yes. Good afternoon, Cecil and Rodolphe. So just sorry to come on Fashion and Leather Group. So your CEO at the January talked about the year starting well and Vuitton being up 10%. So yet you published your reported a double dip kind of decline in terms of Q1.

Can you just comment on the trends throughout the quarter? I know it's quite difficult to read given the timing of Chinese New Year, which obviously helped January, but did things got worse in a linear fashion or clearly towards the end of the quarter So that's number one. Number two on the nationality, Cecil, if you can just come back on the Europeans and Japanese, are we right to understand that they remain negative, maybe low single digit for European and mid to high single digit for the Japanese in Q1? And then lastly on Sephora, I think earlier, I know if it's you or Rodolphe, talked about Sephora being positive still in Q1. But obviously, it looks like there was a sequential deceleration. Can you just comment about Sephora by geography and if you think you're still gaining share in the main U. S. And European markets? Thank you.

Okay. Thank you for your questions. So on Fashion and Leather Goods, and regarding your question in terms of volatility intra quarter, a few comments there. So yes, because also Chinese New Year was January and most of Moacami was launched in January. We had a very good month of January, especially for Vuitton.

But overall, we have not seen, and that's what I was trying to explain when I said when I commented on the American demand, the American demand continued to be positive throughout the quarter. So this is an important one because since now six months, we've been enjoying positive growth in fashion and leather goods. So we didn't see any specific change. The only thing is that February did offset January because of the Chinese New Year reversal and it was last year in February. So this is overall what happened. And then I mean, we could find thousand reasons to explain small movement and volatility if we go into the details, but I think we would be here for the full night, and I'm not sure it would really help you in terms of understanding the trend. So I will stop there. As for Japan demand, largely, the Japan local demand was consistent with what we had in previous quarters. So we didn't see any change on the trend on local clientele. And then on Sephora, yes, there was normalization, which we expected given the pace and the rhythm of growth that we enjoyed throughout year sequentially. In terms of geographies, what we can say is that in The U. S. And and quite across the region, including Middle East and Europe, We continue to have successful C4R model when it comes to exclusivity exclusive brand and store, and we continue to gain market share in those.

In The U. S, we have a bit less momentum when it comes to commerce, especially because Amazon is being very aggressive.

And being aggressive is mostly regarding price, and we try to avoid this technique. So that would be a place where there is a little bit less momentum. But otherwise, it continues to be very strong and gain market share.

And the model, which has really made Sephora differentiation is continuing to to work well.

Okay. Thank you.

Thank you. And we will will now move to our next question from Louise Singlehurst from Goldman Sachs.

Please go ahead.

Hi, good evening, Cecilia and Rodolphe. Thank you for taking my questions.

Just two for me. So I'm going to come back on The U. S. And Fashion and Leather. Sorry, can you speak a bit louder because we hear you from a Apologies. Can you hear me? Perfect.

Thank you very much.

I'm going to apologize. I will come back again to The U. S. And just Fashion and Leather. The minus 3% for the group for The U. S. And you talked about Fashion and Leather being a good performance relatively. Think in the last question, were talking about the American cluster obviously still being positive. But presumably in The U. S, that was negative given the weight and just thinking about the performance during the period, presumably there was a bit of a benefit for the American cluster at the beginning with currency dynamics when we think about spending into Europe. I suppose what we trying to understand, we've had a period of unprecedented headlines Typically, we think historically, you would assume there's an immediate to to the consumer and it'd be really helpful to understand that exit. Of the American cluster regionally and locally as we look into Q2? I know we can't have the answer or crystal ball but it'd be very helpful to get some context. Thank you.

Thank you, Isle. So several points on The U. S. The first one is that again, on Fashion and Leather Goods as well as Watches and Jewelry. The growth was consistent within the second half of the year and slightly above when we include tourist demand. So that's the first one.

The second one U. S. Deceleration, was essentially driven by [indiscernible] which faced double digit comps in Q1 given the rate of growth of last year. And Beauty, where the demand is softer than last year as well as Wine and Spirits.

And we believe that on this part, there might be in the most recent week some impact of demand given the But overall, honestly, we don't have much to report regarding an underlying trend that would have changed in Q1. This is not what we see in the numbers at this stage. April will maybe be different But in March, except for softer demand in Beauty and the continued soft demand in Cognac, I'm The rest was holding pretty well and some better than sequentially last year.

Thank you. That's very helpful. And given the environment we're in, I know you mentioned to demonstrate agility earlier on in the call and that's clearly what we're looking for. But in terms of the plan for the year ahead, is it now time to think a little bit more about the streamlining of activities? A different allocation of investment by region? Is there a review of some of the smaller brands, I. E, beauty or selective retail Can you give us any color in terms of what you're asking from the team? Thank you.

Yes. I think it's not really in the group DNA to to just cut activities whenever we face a difficult context. So I think today, the focus is really on managing the current context. And we mentioned mentioned all the mitigation plans and the upcoming news that will continue to have on U. S. Tariffs. As well as monitoring the demand.

And at the end of the day, doing what we do best, which is continue to ensure that we have the high creative work and right highest quality of products. To put on the market. And I think that's really our response.

Thank you very much.

We're approaching an hour. I suggest we take another two questions. Thank you, sir. Noted. And the next question is from Charles Louis Scotty from Kepler Cheuvreux. Please go ahead.

Good evening. Thank you for taking my questions. And I have two, please. The first one on the Wines and Spirits. The CEO mentioned a two year timeframe to turn the wine and spirits divisions around and return to growth. Could you please elaborate on the key initiatives currently being implemented in part particularly within the cognac segment? And as there have been in our view a structural shift in demand for cognac in China? Or is it purely cyclical? And second question, could you please provide more granularity on the performance of jewelry brands? Versus watch brands Q1 and it appears that jewelry, especially Tiffany has probably proven more resonant. So can you share any insight on that, please? Thank you. Okay.

So on your first question, maybe I'll start with the demand on wine and Spirits. So overall, what we've seen is champagne held up reasonably well in The U. S. And in Europe. And cognac continues to suffer from weak demand. And probably, this is what I mentioned, but it's it's anyone's case. The U. S. Political context might have not helped on demand in the most recent week. As you know, our Wine and Spirit is a category that remains very much linked contextual issues. As it addresses aspirational customers. So on that part, we didn't see any change in demand, and we continue to have in cognac the sub demand. And then your second question, sorry, catch [indiscernible] Jewelry versus watches. On jewelry, I think I meant that we are seeing continued very good progress on Tiffany transformation plan, and we continue to we said said last time that we would continue to renovate stores at the region of 10% per year. We are now around 27%. And we continue to see that renovated stores are performing very well.

And same from the icon, where we've been very consistently last year putting all the efforts behind the icons. They continue to gain some weight within the total portfolio. [indiscernible] the rest of portfolio. So this is for Tiffany. Bvlgari is very much resilient, enjoyed quite a good Chinese New Year. You know it was the next year. But the idea was not to do a very big thing around that. So we continue to be very focused on the cost product and and to deliver growth. There were some phasing [indiscernible] Bulgari last year, but I will not enter into detail because we land by commenting the performance in discrete for one specific SKU. And I don't think it's good. And on watches, we had quite good response at Watches and Wonders. And we continue to so TAGOYA is is doing very well. You've seen that we have now named Bavant who will take over. So the Maisons will stay independent, but he will continue to he will coordinate and and build on the very good work from Frederic Arnaud on this brands and the others. And then Hublot has been in more difficult times.

And we are really making sure that we have the right innovation and the right product to put back some energy behind the brand. So that's overall in watches and jewelry.

Thank you very much.

Thank you. And we will take now our final question today from Dana Telsey from Telsey Advisory Group. Please go ahead.

Hi, good evening, Cecile and Adaf. As you think about The U. S. And capital expenditures, is the remodel program on Sephora going as planned or any adjustments and also as you think about Tiffany? And lastly, as you think about your production in The U. S, will that stay the same increase? How do you think of that in the grand spectrum of as you said to CL every half hour something is changing?

Yes, you're right to mention that. So will be part of my answer. It depends when you ask me. No, no. More seriously, so today, we have some production facility for both LV is one third of the production and Tiffany, which is majority of what we sell in The U. S. So for both, we can we can increase capacity of the production for The U. S. Still, it's something that you don't do overnight. It's with some constraints in term of recruiting, training, having the highest level of experience and [indiscernible] We are not today contemplating to change radically but this is what we could do.

And there was another question on Sephora.

Yes.

No, on Sephora, it's honestly, performance continue I mean, they continue to grow, they continue to gain market share. Downloader is very strong when it comes to their own store and their shops in shop. With all their differentiation, with exclusive brands and models. So today, we are being disciplined for any brand when it comes to investment. So it will really depend where, what is the growth plan. I mean, it's like it's like for any investment. It will depend on the ambition and the place and the time.

Thank you.

Thank you.

Any more questions?

Thank you very much.

Please go ahead, sir.

Thank you, operator.

Thank you very much and all nice evening, and thank you for attending the call Thank you. This concludes today's conference call. Thank you for your participation, ladies and gentlemen. You may now disconnect.