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Good evening to you all. I’m delighted to welcome you here to talk about the results for 2019 and a word about the outlook for 2020, 2019 you'll say that I'm perhaps repeating myself but it's another record year, thanks to the team here.
And I'd like to immediately congratulate, we have managed to deliver a record in terms of figures, many analysts here are interested in the figures record in terms of revenue up 15%, we have topped €50 billion record in profit from recurring operations, €11.5 billion profit from recurring operations very healthy financial situation, sharp improvement in free cash flow and we've managed to preserve a gearing of the order of 16% the ratio between net debt and equity in spite of number of the investments including the investment in Belmond this year. And so 2019 in terms of figures is an excellent year.
Now, if we explain that through the details of our business groups, let's start with Wines & Spirits, that also delivered an excellent year marked by the sustained growth in Champagne, notably the most prestigious champagne, the vintage cuvées Dom Pérignon gone down that old cuvées that expanded strongly and the sales limitation stems from the limitation on available quantities.
On Spirits, Hennessy is going from record to record because this year once again, we've extensively exceeded the quantity. So last year, let me remind you that now, Hennessy has become the number one premium spirit in the world that continues to grow. I'd like to thank Mr. Bernard Peillon, Chief Executive for everything he's contributed to the business and acknowledge his successor from the group, Mr. Laurent Boillot.
Many events mark the growth of Wines & Spirits this year, just an example the inauguration in the Spring of the shattered in theChampagne region, that's become a symbol
for all our customers worldwide for all our partners and we have restored and it henceforth represents a good business and really epitomizes the spirit of our champagne houses notably and the region.
Turning now to Fashion & Leather Goods. Beginning with Louis Vuitton that has also achieved considerable success this year, many new products very successful collections, new color organized many shows including the show in New York and during those shows, we presented a whole set of new leather goods, products and accessories supervised by Delphine that
all met with some considerable success.
I have to say that Vuitton continues to be by far and away the world's number one luxury brand. And we have but that’s deliberately we have production issues could we've opened a new workshop in France, a new workshop in the United States and that's not enough to meet the extensive demand for our products. But that doesn't really matter because we've got a good growth and we'll be able to concentrate on the new products and the new Vuitton zones we've opened a certain number this year just like to flag the outstanding zones that we opened in Seoul at the end of 2019 with an iconic building, I don’t know if you have a photograph perhaps not by Frank Gehry, it's an absolutely outstanding building and since the Maison was opened, it was already a Maison for Vuitton in the past but sales have increased significantly.
Vuitton continues to go from strength to strength with a focus on quality because Vuitton products reputed to be of the finest quality in the world and our customers appreciate that the men’s lines in full-year in our stores this year met with considerable success, second fashion
brand Christian Dior which also met with considerable success many shows that in London was an historic success with over 600,000 visitors.
Many new locations the store open this year with Pietro on the (inaudible) is a temporary during the renovation of the historic Maison close by on Avenue Montaigne 2 exceptional designers Kim Jones and Maria Grazia for the women's line that both very successful, no need to dwell on that what you're interested this evening, the figures they’re excellent and that will continue given the collections that planned all the ancillary products that are being designed and the distribution throughout the world with the substantial growth rates.
Of the Maison’s Fendi that unfortunately mourn the passing of its historic designer Karl Lagerfeld. There were a number of tributes to him one runway show in Rome in front of the Colosseum with high fashion and fair collection that met with wide acclaim and this iconic Italian brand continues to grow and the other brands of the fashion group that’s Loewe with J.W. Anderson, a very talented designer with whom we've been working for many years now and allowed us with Loewe to develop stores throughout the world whose success is growing year after year and now achieving remarkable growth rates.
Similarly, Berluti that’s also faring very well with high quality men's products Loro Piana, and of course Rimowa that is also achieving remarkable growth rate since we acquired it. That's for Fashion & Leather Goods, Perfumes & Cosmetics also delivered very good growth, 9% significantly above the cosmetics markets you saw the results are not growing in the same way. It's not due to the iconic brands such as Joe, that are growing very well both in revenue and profit but as Jean-Jacques Guiony will tell you that a charge booked on certain small American brands that is impacting the profit.
Christian Dior delivered great performance, the Home Sauvage fragrant is the leading men's fragrance in the world that’s noting and the Rouge lipstick from Dior is also the world's number one lipstick. We’re selling one lipstick every second in the world, that’s quite impressive, great product, not to mention the other products that have just been launched.
Care products, rose oil, total capture with serum for the ladies, I urge you to give it a try. It's absolutely outstanding. I've tried it I tell you that it works wonders. Great success based in part on care, skincare, we got great products there in particularly the (inaudible) that is meeting with great success across developed countries.
And has always been highly focused on sustainable development and has major initiative aimed at preserving insects and bees in particular because one of the problems today is that with everything that's happening in the world in terms of the environment, the number of insects over the past 10 years has decreased drastically when you're driving in your car. It's actually quite striking to note, which when I was young, driving my car and after a few hours, the windscreen was littered with insects and now there aren't any, the insects are disappearing.
So if we don't try and stem that soon we'll end up and fully aware that there won't be any insects left. So that's why we're trying to look after the bees and other brands are doing very well. Notably, the collection that we launched with Kase and Rihanna very successful and Rihanna, we launched but it's small brand. With the Fashion business, Watches & Jewelry there again great progress.
Let's start with Bvlgari that is delivering strong performance, new product lines with the development of existing lines, shown here is the new watch that’s very iconic made and it's designed, it's an exclusive Bvlgari designed Sephora that’s a big hit and excellent financials, Bvlgari since we acquired it, we’ve multiplied the revenue by just over two and operating profit five-fold and soon we'll be acquiring Tiffany that's a target we're setting to our Tiffany teams, okay took 10 years but we won't deliver that tomorrow morning. But if we can achieve that, it will have been a good acquisition but don't mention that it has to have to keep that under wraps otherwise, people were saying that we're buying on the cheap because we’re paying rather lot in dollars.
Watches, things are going well, Hublot very strong growth many new products. TAG Heuer, this year we revamped the distribution network, we've reduced inventories, we did away with a number of retailers who won following our recommendation. We tried to reduce inventory levels, so that's why the figures for the year little strained on TAG Heuer but it'll pick up this with a launch of a great connected watch that has lots of applications, apps simply one for golfers that's quite incredible. And Chaumet, Chaumet has been very successful this year with many new creations including Bee My Love, so successful that there again it's out of stock, selective retailing.
Well, Sephora, Chris is here very successful doing very well. I won't give the figures because we said we weren't going to disclose them but they're impressive. When we bought the business and I think back 20 years ago, it generated €100 million in revenue. Now, there we've added a few notes, a few zeros that's insane, but it's pretty good thanks to our team's great business that expanded strongly its Internet business, DFS slightly tougher because DFS is largely based in Hong Kong. You’re all familiar with the difficulties in Hong Kong, we really cut costs, there remains profitable, but profitability is down.
And it's set to pick-up once again as soon as there are problems that are others that have arrived since the problems faced by the region will disappear and that Hong Kong's difficulties once again disappear. Center of business for retailing is Le Bon Marché very fine store that works very well. And also the integration in 2019 of the wonderful Belmond hotels in the group and we're working on them and that will extend our business to more experiential area. There's a lot of synergies with our products and I won't go into details now.
So for 2020 as with previous years, the climate is buoyant, it will remain so as I've said on several occasions today, in the coming years we're not going to be able to escape a financial crisis at some point or another. It's very unusual situation or at least unique as compared when I started in the business where interest rates are at an all-time low close to zero negative where
the world is wash with liquidity, asset prices continue to rise that count last eternally there's bound to be a readjustment.
Where will it come from? I don't know but for over 10 years now, there hasn't been a major global economic crisis. So it will necessarily end-up by happening. But I think that this year, given the U.S. Elections, given a whole set of factors, growth that must be kick started in Europe, I don't think that will happen. It won't happen this year. So this year from the macro economic standpoint, it should be a good year.
But if there are questions, while I mean there's the influence of the outbreak of the disease in China, I can speak to that later if you like and just say that the group continues to grow, continues the cost it has set itself by building on its values, creativity at the heart of everything we do the quality of our product, one of the prime reasons why customers buy our products, the agility, the entrepreneurial spirit of our teams, we’re a family business and the fact that we're a family business allows us to take a long-term perspective that’s vital in our business and analysts here mustn’t expect us to look at the quarter with the share price for the next six months.
I see some skeptical looks, but we're pretty indifferent to that. I mean, it doesn't matter in the least to me, I don't manage things on that basis. But for the company, that’s good news. The last value I've added is commitment, commitment, the group's commitment is fundamental for young people for our customers. It means that when the group's products are bought, it must have meaning. And we want to understand what the group is doing aside from making great
products that people aspire to what we do to address current problems, those are of general interest. That's what we've been doing now for over 20 years on the environment with Madame Bernadette and successor who's just arrived Madame with a very dynamic and inclusion policy with our human resources of cultural diversity and we’re keenly interested in our social economic environment and we support a number of causes. I'm sure you're familiar with them, but it's very important for us. That's what I wish to say about 2019. And the outlook while this year we have many things to achieve, many products, many creative ideas. But I won’t unveil them all here, rather my competitors discover them when it's too late. Over now to Jean-Jacques Guiony.
Good evening, everyone. Let's take a closer look at the figures and as usual start with revenue. This is somewhat complicated chart but on the, you can see that sales were up upwards of €53 billion up 15% competitor, 15% it can be broken down into three parts versus a currency effect 3%.
If you look to the left, you can see that the currency effect is positive and that is not always the case, it was not the case last year and almost constant quarter-after-quarter about 3%, the small percent, one percentage point structure impact that is the integration of Belmond.
It was consolidated as of April, so that's why the structure effect is higher in Q4, and then profit growth, organic growth 10%. There was again pretty much consistent 11%, 10%, 11%, 8% Q4 seems to be slightly less than the others, but that's something of a illusion because there were two
factors in the basis of comparison, basis of comparison in Q3, there were two factors first, you had an increase VAT rate in Japan in October 1 and so the Japanese took advantage while bought much more in September, much less in October because of the increase in VAT.
So there was an increased business in September in Wines & Spirits, there was some replenishment of inventory restocking in Q3 in Cognac in the U.S. and so there was the opposite effect afterwards because of course, all the sales that took place in Q3 could not of course be repeated in Q4.
But all in all, you have 1.5% organic growth and if so if you reshift Q3 and Q4 you end up with 9.5% organic growth quarter-on-quarter and that sort of smoothes out this step that you see from Q3 to Q4, if you look at the geographic breakdown by region of sales, you have about 30% in Asia, an additional one percentage point in Europe and that is also to do with the currency effect in Europe, America being pretty much the same.
So what happened in the various parts of the world, you can see that more or less everything went the right way in the U.S. up 6%, growth was somewhat less in Q4. That is partly to do with the stocking and destocking of Cognac that happened between Q3 and Q4. Hence the performance in Q4 was somewhat less than the rest of the year, Japan where the minus 4% is all to do with this VAT effect, we believe it's although it's difficult to measure that but I think this is mostly behind us. So we made up for the losses of Q4 and so that's pretty much the case. It may not be always the case for Watches & Jewelry, it may not be the case but elsewhere it is. Asia, excellent. So and we had up 16%, 7% in H1, only 12% in H2.
This is to do with Hong Kong, Hong Kong in Q3 was down 25%. And of course the deterioration in Hong Kong was only one week in the 12 weeks of the Q3 whereas in Q4 you had minus 40% over the quarter. But in Europe, revenue not only was stable but actually improved in the last quarter compared to the first three quarters. And this is pretty unusual. If you look at revenue by business group, I look on the at the right hand side organic growth 6% on Wines & Spirits, you have mostly to do with the mix price effect, the price mix effect but also it is to do simply because we have premium wines & spirits, so 6% organic growth is excellent.
Fashion & Leather Goods significant growth 17%, up 17% and last year spaces of comparison already was pretty challenging. And so this was an outstanding year in Fashion & Leather Goods, Perfumes & Cosmetics up 9%. Again, a pretty good year, a bit more challenging in Watches & Jewelry, we had the contrasting picture, at the one end Bvlgari had an excellent year but TAG Heuer being repositioned had suffered some decline hence the mitigated organic growth of 3%, the Hong Kong effect was somewhat out of proportion in Watches & Jewelry plus there was as I said, the Japan effect where we had trouble making up for the losses of Q3, well we had to make up for the losses of Q4.
But we have well selective retailing only enjoyed 5% growth in mostly to do with the Hong Kong situation in DFS. If you look at revenue growth, so Wines & Spirits without destocking, it will be 6% in Q4 and somewhat less than 7% in the first nine months. Fashion & Leather Goods still a very high performance in Q4, Perfumes & Cosmetics ended the year beautifully. But as I said it was a bit more complicated in Watches & Jewelry for the reasons I mentioned just now.
If you look at the income statement per se and you have it up on the screen, let's the sales revenue up 15%, gross margin 66.2%. That's pretty much in line with sales is slightly negative currency effect. Marketing and selling expenses within that you have marketing and selling expenses, not including currency effect, selling expenses were up 10% and marketing 11% whereas G&A not including currency effect were up 8% and so all in all we have a profit from becoming operation €11.5 billion compared to €10 billion.
So that's quite significant. Other operating income and expenses we have quite a few one-off items mostly the subsidy of the €100 million to repair Notre-Dame de Paris after the fire, there was also the acquisition costs of Tiffany and that was already recognized as early as 2019 plus some depreciation of intangible assets.
Financial income and expenses were expenses rather, I have a special slide we have, I will get back to that, taxes were up, we have a slight increase 27% income tax rates slightly one percentage point more than last year, minority interest is pretty much the same. You have of course more revenue from Vuitton X but less from DFS because of the situation of DFS.
But all in all, we’re looking at a group share that offering upwards of €7.1 billion up 13% compared to last year. If you look at the profit from recurring operations by business group first, you can see that Wines & Spirits up 6% have slightly less than revenue. But still pretty good. Again we had a negative currency effect in the first half of the year Fashion & Leather Goods, up 24% so that’s more than revenue with splendid performance driven by Vuitton and Christian Dior as Mr. Arnault said but true for other businesses as well, Perfumes & Cosmetics suffered only one plus 1% in terms of profits, there was a number of brands and other assets with depreciated, without that depreciation it will be almost 10% but that here so in line with revenue.
So this is a bit deceptive, the figure here for Perfumes & Cosmetics, Watches & Jewelry, there was some competition between TAG Heuer and Bvlgari, as I said same situation for revenue and selective retailing again, there was the counter effect of DFS in the second half of the year in Hong Kong.
For the half year changes, no significant changes and that's the main message on that slide. No degradation in H2, in fact the other way around because you have a better growth in H2 than in H1 plus 16% compared to 14% in H1, you have the depreciation of H2 in Perfumes & Cosmetics and Watches & Jewelry you have the Hong Kong effect.
But as I said Fashion & Leather Goods up 29%, 10 percentage points more than the growth of revenue in H2. If you have a breakdown of the profit from the current operation, you have the structure impact plus €94 million that’s Belmond, currency effect positive to the tune of €266 million that was only in H2, there was nothing in H1 and the balance is of course organic growth. I don't know if the word organic means much in terms of profits as such.
But the idea is that the two other items are highlighted here. Regarding from -- regarding financial income now, it was about €400 million, now it’s €559 million, that's the net financial expense. The cost of financial debt is pretty much the same, interest rates of the same, principal is about the same. Interest on lease liabilities now that means a portion of the rental income shouldn't be here, but that is a result of IFRS 16.
So €219 million and because the standard prohibits us from restating 2018 which would have given us a chance to present numbers clearly, I'm afraid I have no basis of comparison here. So this is completely incomprehensible. The cost of currency derivatives that was up, that was up for two reasons. Number one, there was more hedging for receivables and because of course the overall volume was up, so we had more subsidiaries, more revenue. And there are some technical effects on the value of calls sold in we sell through that. And that was down because the volatility and the unit cost of hedging went up, then fair value of adjustment available for sale of financial assets. That's a bit complicated, but that's our portfolio of financial assets that that's not an actual capital gain that is recognized, it is underlying capital gain.
Last year, this was down, this year it is up. So we had on paper, a charge of €100 million last year. Now we have on paper again, a profit of €82 million, but that's not recognized capital gain. Now, if you look at the balance sheet, there is a slight increase, I’ll talk about that later on. But you have the consolidation of Belmond of course that has brought in lots of assets, Belmond owns most of its hotels and there's also because we’ve taken, we recognized €12 billion in assets on leases and €12 billion in debt and so because of IFRS 16, all these items are affected.
If you look at the cash position, that's incomprehensible, I'm afraid. But the one thing that is constant, that's the last line that is operating free cash flow. Now that is up €5.4 billion to about €6.2 billion from about 13% increase, that’s what's left when we've paid for capital expenditure and working capital requirements have absorbed the growth dividends and the rest is in non-operation part is the balance, so €6.2 billion was used, there was €3.7 for dividend, €3.3 billion for acquisitions, and the balance is €0.8 billion or €700 million to €800 million and so the
net debt stands at about 6.2 which is almost the same amount as the free cash flow. And that accounts for 16% of equity, the debt to equity percent ratio is 16%, dividends by way of conclusion dividend is up 13% as will be proposed to the general meeting annual meeting, there was an interim dividend in December.
So 460 is the balance that will be paid out in February and one slide which I will spare you but that's the effects of IFRS 16 and our accounts, the only thing that will say that you can, it explains clearly how we made a great step backward in terms of financial legibility. Thank you for your attention.
Well, ladies and gentlemen, we are now available to take your questions. [Operator Instructions]
Edouard Aubin on for Morgan Stanley, I got three questions. The first obviously if you could give us an update on the impact of the coronavirus these past few days, on Fashion & Leather Goods two questions, market expectations for this year in terms of organic growth of about 10%.
You're not giving any guidance but earlier you mentioned production manufacturing constraints, those manufacturing constraints on the year on the way will prevent you from delivering on the market expectations that are high point these past few years and on the margin for Fashion & Leather Goods, you didn't have any operational leverage in the first half with a negative impact in terms of currency, strong expansion of the margin into H2, 200 basis points if I'm not mistaken could you return to the reasons that account for the strong expansion of the margin in terms of currency possibly price increases have reached Vuitton volume growth, thanks.
Well on the outbreak of the disease what can we say what I said the group as each and every time an unexpected event occurs. First reaction let's not panic, let's analyze the situation calmly, next one we, question our teams in China because that's where it started. They all say it's very early days to have an answer to know I mean how long all this will last. Having said that several points.
They say several things to me firstly, it would appear that this virus is not as aggressive as that that was detected back when there was the SARS outbreak in Hong Kong, secondly, Chinese government has reacted very strongly, very robustly and given the strength of the reaction we can assume that their reaction will have consequences, very marked consequences on curbing on fighting this epidemic when we then the question on, I can’t really subscribe to that because we don't know what the outcome will be at the end of the day, but they do seem to say that
the peaks are high point of this epidemic should be reached over the coming weeks.
And then we ask them well, how long would it last? How long will it take to resolve? Their answer is that it may be partially or partly resolved during the course of March or the end of March. That's the information that is available to me. I cannot confirm that with certainty. That's what we're hearing right here, it’s probably wrong, but that's the information available to us.
Having said that, by comparison someone who's highly informed to me early is sitting in the front row here. Do you know how many people die from the Flu every year in France about 10,000. So I mean, that's what you said, right. So I mean, I'm far from being a leading flu specialist. I'm not saying that this virus can be compared to the flu virus. I don't know. I'm not a doctor. So that's the state of play. It all depends on the impact is you’re saying, what’s the impact on your biz, on the business, we can't answer. I mean, if it lasts a couple of months, or if it's resolved over the next two, two and a half months, then it won't be that bad. I mean, if it were to last two years, it would be a totally different matter. That's what I can say.
Manufacturing constraints, well, we're going to have new workshops, we will be opening this year and we’re going to try and meet that demand. But growth for the sake of growth is not our objective. What we want is to continue to produce quality products to satisfy our customers. I mean growth is good. I mean, it delights the shareholders. I mean, I'm also a shareholder. So I can't say that I look askance at it, but it's not, it's not really the object, you'll get a bit of growth.
On question number three and profit margins in yes in that division, margins were down about one percentage points in Q2 it's mostly to do with currency effects because there was a positive effect in 2018, for H2 there was the profit margin was down 3.5% mostly to do with operational factor, slightly less for currency effects.
So growth of revenue was faster than growth of costs and growth of revenue was mostly volume growth. It's not in terms of price for Vuitton, there was maybe 1% in price effects last year. So it's mostly to do with volumes in Vuitton, it’s mostly price and not volume. And so this is throughout the production line by the way.
Thank you. So Zuzanna Pusz from UBS. I have three questions. So first of all on just a follow-up on the price increases, so you mentioned it was 1% for Vuitton for the year. But can you just give more color what exactly was the price increase? I think it was in November was around mid-single digit if I'm correct. And also just out of curiosity because I think historically price increases were implemented usually at the beginning of the year. So is this just a change, the pricing policy or the growth was so strong that it make sense to increase prices?
Secondly, also in Fashion & Leather Goods. So we never see 15% is still very, very good growth in Q4, but it seems like it's a pretty big deceleration versus Q3. So I'm just wondering if it's all just driven by Japan and Hong Kong or could it be that as you've mentioned, there were some capacity constraints. So maybe you decided to hold some volumes for the Chinese New Year. And then thirdly also on the coronavirus, sorry, maybe that will be the last question on that. But just for us to have an idea because it's obviously very unclear how the situation will develop. So how should we think of your ability to control costs because margins are very impressive at historical highs. So would you say that versus the history, you have more ability to control costs because there's a lot of A&P you could cut or any color around that that would be very helpful. Thank you.
Regarding price increases at Vuitton there was no price increase in 2019 not across the board. There was some price increases here and there in various countries and then there were some effects for price increases that occurred at the end of 2018. But that will again one-off items and it's pretty negligible. There were some price increases to compensate for monetary depreciation for devaluations. Regarding organic growth in Fashion, this rather pathetic 15% increased three to four now in Japan, we had a 25% increase in Japan in Q3 and stable in Q4. So there alone, you have 10% of our business there.
Hong Kong, we already mentioned, we were down 25% in Q3 and looking overall at minus 40% in Q4. Of course, this had an impact but it meant that growth instead of being 19% in Q3, it was only 15% in Q4. That's still pretty good. Now the last question about keeping costs under control, that's always something of a challenge. But the epidemic is occurring in the country where variable cost is the highest part. I mean leases is the highest percentage, highest cost in percentage of revenue. It's not the case in Hong Kong, but certainly the case in Mainland, China. So there will be a mechanical adjustment of costs. Should there be less business, there would be less costs as well.
Thank you. So I have a question for you about the dynamics of cosmetics in the United States. We noticed a slight slowdown that we sense that Sephora in Q3 if I recall correctly. Today you're mentioning an adjustment of the value of inventories of small cosmetics brands in the U.S. Is there a pickup in that slowdown that we've noticed in American cosmetics, if there's something more significant underway at that level?
Secondly, I was wondering looking at the possibilities to recover and some of the brands in transition whether you have reasonably or hope for an improvement of few small sections that were lagging behind such Marc Jacobs, we haven't really said very much about that brand, but I know that you had recovery programs on the way for that, any news about selling and the transition of watches, the decisions that were taken, the Swiss Competition Commission are they going to have an impact on you in any way, I'm referring to what was decided about the sale of movements the part of the state in Switzerland. And thirdly, if you could give us an overview of your new initiatives in the field of ESG that have increasingly interest to investors, you brought in a brand that's well known for being a leader in that field. So if you could give us some color on your ambition so that would be very useful.
The cosmetics market, so I think that globally, we're seeing performance that remains in line with the past. But in terms of geography, the growth rates are not evenly distributed, Asia growing strongly and American market that’s not faring so well, that's reported data and within that we see after skyrocketing sales and make-up from 2013 to 2017. While of late, that growth has slowed.
And more there's actually stronger growth in instinct. That's what I can say on that front.
Following up on what Mr. Arnault and John said about inventories is true that we launched a whole set of new brands and on those brands, we should maybe have done some more gradual cleanup. It happens that we actually did it in one fell swoop for those brands.
Aside from that brands continue to do well, the Fenty brand with Rihanna had a great year. But there was some tidying up that we should have done earlier. On the two brands that you mentioned, Marc Jacobs and Celine, there are improvements in both cases, Celine, you saw we've totally revamped the aesthetics. It's off to a good start. We just launched in 2019 perfumes, so we added a product line with great products. Some of you may have seen it. It's quite an extraordinary product and Marc Jacobs, we're working on improving and we're gradually improving with the new management team that's been in place for two years now where operating profit, we talk about January, but what January is off to a very good start. That's the scoop for you. Just to contribute to help you write your piece.
But the last question, yes, I'll take that. I think that Mr. Arnault mentioned commitment as a value that is growing in strength. It's not as if we just started our efforts on the environment
started many years ago and delivering very good results in our life program, we had set specific goals for 2020. And I can say that three out of the four goals have already been reached at the end of 2019. There's still work to be done on the fourth.
What is true is that we're strengthening the teams, both for the environment and social front to give renewed impetus and to strengthen our efforts in areas that are important for our stakeholders, customers, employees, all of us and I'm sure that these initiatives will be more widely disseminated. It's not the work of improvisation, in fact we should have invited you to the reception that we hosted here two months ago and everything we've achieved in terms of the environment.
Thanks to Sylvie Bénard, dating back to the early 90s, it’s very impressive, the conclusion I mean, I can say without false modesty, that we're better in the know how than others who are perhaps better, perhaps more efficient when it comes to shutting it from the rooftops.
Good evening. Paolo Levy from the Italian Press Agency, Could you confirm or deny the noises that have been during the rounds for some time on a presumed interest by LVMH or the family for the acquisition of the Milan AC Football team?
Well listen, this is a subject that really does hold the mystery because I really admire Milan AC, it's a great team, great club extraordinary players, some of you phone me or write to me asking what's happening, what's going on is probably the sixth or the seventh time the past six years that I denied having the slightest operational interest or compensation to acquire this great soccer club, don't know what I'm saying this evening will come to anything probably not just feel the rumor mail and a number of magazines people say well, he's really keenly interested. Will the mystery continue? I just don't know maybe an Italian mystery, who knows.
Antoine Belge from HSBC. I have three questions, number one I would like to congratulate you on this outstanding performance for Fashion & Leather Goods the best since the year 2004. I mean, I believe that handbags did extremely well and Leather Goods in particular but I think that the other products also enjoyed significant growth.
So outside leather goods, what are the main items and I believe that this purchase of Gemstone, that is course is a very strong gesture. Can you comment on that? Then there was something about the online sales, should you sell only on your own website. Richmond has been spending lots of money trying to develop the websites, I believe that save about 24/7 became 24 S. But you haven’t mentioned this but is this one area that is of lesser interest or is this or is the outlook not quite as good as others and then finally, about Cognac and Champagne in 2020, Cognac we saw that Q4 was a bit slower and of course, there was a change in management but could you say something about depletion and set out, on Champagne I believe that last year you wanted to go for premium brands, but volumes were stable. There was maybe a mixed price effect.
Well on Vuitton, I will not reveal the details of Louis Vuitton. But as you rightly pointed out, the product line has become broader we have of course, perfumes, we have watches, you have jewelry. Of course we have and all of these have been very successful, ready to wear that is fashion both the men and women both have been very successful. We have that, I mean and that includes shoes by the way, these are very successful. So, we've expanded our lines of business originally fair enough. It was the trunks and bags, that of course we've expanded and diversified greatly since then.
Jewelry in particular, that businesses shows great potential. Have you seen the gemstone, have you seen you should take a look this gemstone comes from Botswana, it is 1,750 carat, it is Rose stone. This is just it’s pure magic. And if you look at the number of visitors that come to see this stone is quite incredible. It will, it's on its way to Taiwan I think we'll ship it to Taiwan in two or three weeks for where it will be displayed there. But in any case, Louis Vuitton as a brand has diversified away from just leather goods, but its core business was leather goods, but from that we gained legitimacy in many other fields and perfumes are enjoying significant revenue.
In fact, there is one business where we can't even keep up with demand and that's what we call the nomadic objects that involve a number of designers. Some of them are in display plasma and there again, they are very much in demand. And you have actual items of furniture that sell extremely well. Now online sales, now when I look at online sales from the big sites,
I’m somewhat skeptical. Maybe I'm old school but when I look at a business, I look at profits to see how well they're doing. All of them, all these online sites are losing money. So that's a poor indicator.
And the bigger they are, the more money they lose. We were asked to become involved in this. I was not never keen. There is one minor site called 24S. But that is no exception to the rule. Well, it because it's small, it doesn't lose much money. So we developed it modestly, but well maybe we'll find a way to make money.
At this point, we haven't found a way to make it profitable. I mean it's almost insignificant for us but the Internet is a service that we provide say for Sephora, online sales are very effective why because you have people who come to the site because they know exactly what they want. But on most of the sites, I'm not going to name names, but people go out there to look for discounts or bargains or as a result of which websites can these sites cannot be profitable because they have to have low prices, otherwise they lose their customers.
But look at Amazon, of course, this is an outstanding company, but if you look at the figures,
the products they sell online having bought them beforehand lose money where they do make money is on what they call the marketplace.
So they don't own the stock, they don't own the inventory. They use their database to provide customers to other merchants, they take a commission and that by the way and we will try and resist this because that is how they sell counterfeit and so that is a connection to organized crime because when you have a site selling counterfeit products, this is always financed either by organized crime or indeed it ends up with the pockets of terrorism. So is it right that big websites should make money being associated with organized crime, I don't know what you think, I find this shocking.
And so we have to do a lot, if we want to avoid the sale, the sale of counterfeit pie, we have luxury products but you also have counterfeit medicine and such like and that that's not right because the sale of these counterfeit products serves to finance terrorism and organized crime.
There was a question about Cognac and Champagne. Yes, on Champagne there was an outstanding year for the Prestige names. The 28 Vintage was an outstanding success. And we will continue down that path not just with Dom Pérignon but (inaudible) will be doing the same this year as last year. Just as previous years, we will try and ensure that we give priority to high value than high volumes.
Regarding Cognac last year, we started with low inventory levels in the U.S. So there was some restocking. We also were there was a big advertising campaign. You may remember Ridley Scott Expo did extremely well. And because there was some restocking and because of the advertising campaign, there was more depletion that is more sales and hence the good sales performance, especially for VS in the United States and we certainly intend to continue this year, stocks will keep going up because they still haven't reached the right level, but there's good depletion as well.
And we believe that we will be as good this year as we were last year. Two final questions and then Jean-Jacques Guiony will be available to take your questions directly.
Good evening, I'm from newspaper, could you say a word about the setup you put in place in the U.K. for Brexit, do you plan to increase prices across the channel and just return to Amazon, Amazon has a plan for a platform for selling luxury goods. I assume that given your assessment of Amazon, you won't be a part of that. Am I mistaken thirdly, if you looked at the buyback of product in December as the Italian Press seems to indicate, while the Italian Press lends me many ideas which number of cases wider the mark in Amazon, you're absolutely right. That was your first Brexit, do you want to answer about Brexit?
Well, just like everybody else, we went through all sorts the whole spectrum of emotions about Brexit but now we know pretty much what to expect. So we’re not concerned about stocking or things vanishing from inventory. Regarding prices, there's no currency depreciation inside the Pound Sterling apparently is looking up rather than down.
Final question please. So you see, I'm giving you the floor.
Thank you. I really do appreciate that Mr. Arnault. Thank you, congratulations for the pretty good results. Three questions for you. First of all, Rihanna had a great success with cosmetics. Congratulations, fashion, the fashion company you set out with her it's far slower in achieving growth, a big success of Rihanna for the time being is in luxury where the tech world Los Angeles, maybe you've had negotiations with her about what's happening there. Secondly, you have a fine brand in Italy called Fuchi. You haven't appointed a new creative artistic designer there are noise is that you're trying to sell. I know that generally you're an entrepreneur who prefers to buy brands rather than selling them. That is their decision in the offing there. Thirdly, almost 10 years ago, John Galliano left your group, you still hold the brand, but there are no Galliano stores to my knowledge, no revenue. Why didn't you sell the brand because once again apparently there seem to be buyers for it.
On Rihanna, well I mean it’s off to a good start, wait and see what comes next and what we do. She's got loads of ideas. I'm sure we'll do some very interesting things. Next on the Galliano brand, well we own the brand, it doesn't pose a problem. It's not losing any money. We'll wait and see how things develop. We can come up with some ideas and details small brand for the time being. I'd say that it's never really taken off. But it's good to have small brands two we say, maybe one day we'll come across a great designer says I got wonderful ideas from this small brand we’ll make something very good really just tapping the archives.
Thank you all very much.