Earnings Call: H2 2019

Mar 11, 2020

Good evening. Chorus Call operator speaking. Welcome to the presentation of the Full Year Results for 2019 of the Brunello Cucinelli Group. I'd like to remind you that all participants are in listen only mode. Following the initial presentation, you will have a chance to ask questions. Speakers will be Mr. Brunello Cucinelli, Chairman and CEO of the company Monero Charapica, CFO and Pietro Napoli, Head of Investor Relations. In order to receive help from an operator during the conference call, press star followed by 0. And now I'd like to give the floor to the President and CEO of the Group, Mr. Brunello Coccinelli. So welcome to you all, dear investors, analysts, journalists. It is with my utmost pleasure that we are about to start this call at a time that I call of insidious apprehension that is spawning uncertainty and fear. Although in these very last few days, our scientists worldwide have somehow confirmed that we have almost gained control over the virus. And our governments worldwide are seeing to it that everything gets done with priority and authority. Well, personally speaking, the human fear that I was feeling about 2 months ago has come down slightly because from the human point of view, I'm slightly less dreading the situation. However, I have always claimed that creation has its own rules and it is not always up to human beings to rule over them. That's how what history teaches us. So I'm still here in my office at Sodomayo, and I'm sure you all know them. But this time, there's a bit more of us. There are my daughters, Camilla and Carolina Francesco, the person in charge of the e commerce and Michele, you all know, who is in charge of production. So I would say about 10 people gathered here today. So we are all here because we have defined, set up this kind of smaller group that we call alertness committee because our task is that of watching over on a daily basis to be super alert focused without giving into any distraction since we have to make very timely decision according to the daily developments of the situation. We are fully aware that we are about to face a crisis that we decided to call an economic crisis or a temporary crisis. Maybe it will last for 3 or 4 months, but it has absolutely nothing to do with the 2,008 recession that was a structural recession. And actually, you might remember that we didn't really know our way around that. So we would like to follow this schedule for this call. First of all, I'd like to read out all the highlights of the full year 2019 results. Then I'd like to give the floor to the CFO, Moreno, who will be enlightening you and give you some insight on important data and numbers. Then I'd like to resume the floor to give you the highlights of 2019 and 2019 and also focusing on who we were up until January 19, then a summary of our plan 2019, 23 and also the 10 year plan. And then another very important point, mine ends my company's take on this 2 months period. And also the ways in which we are tackling the present year. And last but not least, some results as of 29 February, very important ones. So we have an hour available. But as far as we are concerned, I also said to all the other attendees, we are available for all the time you might need, because as usual, your questions and opinions play an extremely important relevant role for us, especially at this time. And now I'll read out. So basically, net revenues EUR 610,000,000.8 plus 9.9 percent at current exchange rate, plus 8.6 percent at constant exchange rate visavis EUR553,000,000 last year. EBITDA EUR 106,100,000 rising by 11.5 percent. Net income EUR 49,000,000 adjusted rising by 7.1%. Then revenues in International Markets plus 11.5 percent Italian markets EUR 1.7 percent Europe EUR 12.9 percent plus North America, EUR 9 percent China, EUR 14.6 percent and Rest of the World, EUR 12.4 percent. Then growth in all the different distribution channels, retail EUR 14.7 percent monobrands wholesale EUR 8 percent, multi brand wholesale 4.1 percent. Also significant investments of EUR 52,600,000 to support the brand within the 3 year plan with a financial net debt amounting to EUR 30,100,000 visavis2019. And then the Board will propose to the shareholders meeting on the April 23 distribution of €0.35 dividend, some sort of 45% of the profit, which is basically we have a target there is 50%. So what about my comment on that? We have defined the past year 2019 as an excellent one because of the growth enjoyed by our company, both from a financial point of view with a sound increase in sales and margins and in terms of also brand positioning. We are leading our brand with balanced apprehension collective commitment as we try to implement all of the indications provided by the World Health Organization and our government, fully sharing their strategies and anxiously awaiting reassuring news from the scientists around the world. With the very same dedication, we are taking care of the relationship with our Italian external production chain that represents something special for us and for our beloved nation, fully aware that what is happening to the economy is something that will soon be solved and does not resemble the deeply structural 2,008 recession that weighed upon us for years. Knowing that the trend in fashion has veered towards a taste that is most suited to our own, having completed the springsummer 2020 So knowing that the trend in fashion has veered towards a taste that is more suited to our own And having completed the springsummer 2020 deliveries as well as the fallwinter 2020 order collection, and I have to say with excellent results and with pleasing feedback from buyers and the trade press alike, We look towards 2020 with a positive attitude. We are fully aware that the coming year will call for a very careful reading and we will see it as a standalone year because it will not affect our 2019 2022 plan and the 10 year 1, 20 nineteen-twenty 20 weight in which we expect to double our turnover and achieve healthy, balanced and sustainable profits. So this is what we have written. So we have called 2019 as an excellent year. I'd like to convey to you what we felt our sentiment, so to speak, on January 18, 2020, just to make a comparison. Well, undoubtedly, what we are most pleased with is that the taste of fashion in general has veered very much towards our own taste. And this was very strongly confirmed during the fashion shows in Florence first during the men's fashion week and then in Milan with the ladies fashion week. And as you know, these can be considered some sorts of 5 year cycles. We have the feeling that the image enjoyed by our boutique, boutiques really shows this idea, very dear to us that whoever enters into our doorstep, you basically feel at home where you experience a very serene and pleasant experience whilst shopping and where you basically buy something that could last for a long time, especially for women, something that for men, sorry, something that can you can men, they can recondition. These items and garments that are produced at places where we try not to harm creation. This idea of absolute luxury brand made in Italy synonym of craftsmanship, quality, exclusivity and contemporary taste, this is basically the core of what we do. So we are very particularly pleased with the image that we have been able to convey in our e commerce and we have Francesco here who is in charge, also both as a presentation of the company and also in terms of sales results. And in these very days, we have increased our staff by 60% approximately, but we're just talking about staff because the space was already fully fitted because we think there has been an increase in demand in the last few weeks. Another important thing is the fruitful relationship with the community. They have confidence in us and we have esteemed in regards of them. And this enables us to work in serenity, creativity and foresight. So this is the sentiment we felt back then. So in terms of numbers, we think we are a pretty sound company, almost debt free, although we have EUR 30,000,000 net financial position with equity around 55% of revenues more or less. And we have always nurtured the idea to work in order to achieve healthy, balanced and sustainable profit. In 2012, we went public and it has been a great experience that we would be ready to do it tomorrow morning. It's been 8 years now, 8 years down the road. And from the 1st year since the listener turnover has doubled, slightly more than doubled at an average annual average of 11%. EBITDA stabilized between 17% 18%. And we feel this a healthy number. So this is how we felt until a couple of days ago, but we don't want to change any of this. Let's now talk about the great theme today, the coronavirus. Towards the end of January, when rumor about the virus started spreading around in a strong manner, we immediately convened a general meeting at the company. We usually hold these meetings once every 3 months. And back then, I said, no, no, no, just a second, just a second, the speaker corrects himself. Just one minute backwards. So I'd like to give the floor to Moreno, the CFO now. So he will give you some insight on 2019 and then we will talk about the rest. Thank you. Good evening and thank you, Brunello. I'd like to start immediately from Slide 10, the income statement. And I'll try and be as brief as possible, so we can leave room for the further discussion. And I will definitely be available for any further requests you might have, any detail you want to receive more in-depth after the conference call. The full year numbers have been processed neutralizing the effect generated by the application of the new IFRS 16 principle in effect since January 1, 2019, in order to make comparison with December 31, 2018, as it has been already the case for the numbers as of June 30, 2019. The impacts IFRS 16 are anyway referred to in Slide 17, 2018. EBITDA EUR 106,100,000 with plus 11.5 percent visavis95,100,000 last year. Margins improved by 20 basis points, moving up from EUR 17.2 to EUR 17.4. This increase is driven by the first margin development whose margins moved from 65.9 to 68.5 with plus 260 basis points additional thanks to the favorable business developments, the increase by 4.2 of like for like sales, very positive sellout rates, favorable price mix, increase of retail from 53 percent to 55.8 percent. Operating costs increased by 240 basis points from 48.7 percent to 51.1 percent and driven by the business development and the strengthening of facilities in terms of staff, services, communication, investments for ongoing initiatives including the digital, world and new projects, including the natural extension of the kids line and the bespoke men's suit. There is also the increase in the cost of rents driven by the development of the network. In 2019, 6 mono brand retail boutiques were opened with some extension of existing boutiques and 5 new spaces directly managed in concession inside malls and luxury department stores. The growth in staff costs was impacted by the business development, by the new boutiques and the increase of staff to support new projects. Investments in communication, very relevant to support the allure of the brand and the setting up of customized relations with each customer. In 2019, they amounted to €35,500,000 up €3,200,000 visavislast year. The incidence of D and A, the depreciation and amortization moved from 4.7% to 4.8%, highlighting a gradual growth in relation to the important investment plan that is ongoing that is about that it will carry on into the coming years. The incidence of net financial expenses amounted to 0.9 percent unchanged visavis0.8 percent of last year. Then adjusted net income excluding the tax benefits ensuing from the so called patent box reached €49,300,000 up 7.1 percent visavis the EUR 46,000,000 in 2018. Including the benefits of a Patent Box in the tax burden amounting to EUR 5,600,000 in 2019 against EUR 5,000,000 in 2018, net income improved by 7.7% thus achieving €55,000,000 And as to the net working capital, Slide 13, there is an increase of its incidence from 23.4% to 25%, mainly incidence of on sales of inventory amounted to 33.7% visavis31.3 percent as of June 1, 2019 due to the development of the net worth, the expansion, high growth of production levels because of very positive order intake and new initiatives including kit line and a strengthening of the bespoke main suits and the development of the digital channel. Trade receivables decreased, thanks to the usual careful management of cash ins and with the impact of the wholesale channel sales. Trade payables increased mainly because of the increase in production in the second half of the year following very positive order intake. Let's now move on to Investment and Financial Position, Slide 14. Investments, EUR 42,600,000 and they are part of the multiyear plan whose target is to maintain our company on the cutting edge in the long term, support our presence of the market and have the most innovative production logistics and IT for such available. Trade investments amounted to €37,700,000 and other investments achieved EUR 14,900,000. And finally, Slide 15, net financial position EUR 30,100,000 that is sound and healthy, thanks to the positive gas generation of the operating activity of the healthy management of the net working capital and the significant ongoing investment plan. I give the floor back to Brunello. I apologize, Brunello says, but I was so much focused on the current topic. I was people in a bit were actually staring at me, so I then realized. So let's now move on to 2020. Towards the end of January, when rumor about the virus started spreading around, we convened a general meeting. The company usually do it once every 3 months. But then I said that I did not know what was going on. But we had to proceed in 2 ways business wise. The first thing was to go along and comply with all the indications ensuing from the WHO and our government and implement all the good practices that we knew. And now they have become common knowledge. These infects as much as possible to keep more distance and avoid close contact. And then also we have large workspaces going to the restaurant in 3 shifts to favor air circulation. We are in the countryside anyway and we use technologies instead of a person meetings and also anxiously awaiting the results of science. Hopefully, they'll find a solution soon. The second aspect of business, up until a few days ago, the world economy was proceeding and faring pretty well with good fundamentals. So we still consider this to be a cyclical nonstructural moment. And I said, this is very important, mind you, it is a lighter, more lighthearted way of looking at the problem, which we believe is temporary. So hopefully, this large issue, big issue will last as short as possible, 3 months, 6 months, maybe a year, hopefully not. And at the end of the general meeting, we agreed that we would definitely throw a huge party as soon as we defeat the virus. But I asked all my staff as we did in September 2008, we I asked them to be fully available to be concentrated, focused, creative, respectful, graceful, understanding towards every human being wherever they may come from. And we said let's work in a focus banner, devoting all of our time to creativity and let us not spend too much time discussing what we cannot change and that instills fear and negative attitude. As my great master, Thomas Moore said, my God, help me change what I can change. Help me accept what I cannot change. This is the truth. So as in 2,008, a few days ago, we spoke with all our 500 multi brand accounts and we told them that we can mutually support each other. And like back then, you should believe me, we received very moving answers. I believe that 5% of today's revenues actually stems and ensues from those letters that we wrote in 2,008, because we have this great relationship with them. And there is no doubt that if you stand by me when I'm in difficulty, I will never give up on you. And we have been receiving really fascinating letters as a sort of response to what I wrote years ago. So these letters are moving to us, but at the same time this really reasserts what the great value of our company is. Let's now move on to the operating part and the results. As of February 29, as we say in Italy, we say that usually a skip year is usually a very unsafe and unfortunate year. So on February 29, we have a like for like of the 1st 2 months that was very, very positive as in line with expectations and of course excluding China because we started with 2 types of management. Our business in China accounts for more or less 10% and 2% out of this 10% is accounted for by multi brand customers. So in this market, the 1st 2 months, we have basically delivered 50% less. But honestly speaking, in the 1st 10 days of March, we have witnessed a clear improvement. And as of today, we have no closed store. No store is shut over there. As you might know, we have not yet started with the travel retail initiative, which is part of the new project future projects we are working on. Revenues is currently broken down as follows: 45% wholesale and 55% retail. So we have already completed the springsummer 2020 deliveries where we have enjoyed a great season. We have basically completed the order intake for the winter 2020 with particularly pleasing results. But as we said, what really supports us is the fact that the trend really is in line and very much akin to our taste. So before moving on to production and inventories, I'd like to read out to you a letter that was sent to us. We call him President, but it's a 40 year old guy who basically leads the Chinese market, Michael. And it is very, very interesting because of the human and economic development of the whole situation. Just a minute and a half, but it's a really beautiful lesson. My dear Brunello, in China, it all started in the last week of January with the lockdown of the Hubei state, fear first as a perception of the real danger a second later. This fear has reached all the different provinces of domestic China. Hong Kong and Macau have been overwhelmed by the very same feelings immediately afterwards. The timely measures, regulatory net measures by government have given way to an abrupt and painful change in our living habits. A month and a half down the road, the scenario is already very different. Emotionally speaking, the drive to start again has definitely beaten fear. And practically, I want to give you a snapshot of the current situation because it can definitely offer solid reasons for hope for your country. As of today, all our stores are open. We had as much as 70 percent of our stores shut when the outbreak was at its peak. My homework travel time is increasing on a daily basis. And I can estimate that the city traffic has already achieved 80% of its regular volume. Of course, this gentleman lives in Shanghai. There are more and more people dining out every day. Yesterday, President Xi actually visited the city of Wuhan and his visit played a very important role, has very important significance for the whole of nation in marking the end of the emergency time. Individual confidence is growing as the number of diagnosed cases declines. This said, in order to give you a fully updated picture, I'd like to tell you that in order to fully go back to normalcy, what is still missing is the following. Well, we are waiting for schools to reopen the international traffic in inbound and outbound from our country. But domestic travel in China have now happening for nearly all regions, but they are discouraged by mandatory quarantine measures on returning home. Of course, we are missing events that usually living up to the calendar of our stores. Then Brunello, Luca, Ricardo, I cannot yet carefully predict what time we will still need in order to cover the last mile. You can tell that he started in he started the U. S. And he loved the movie The Last Mile. And I can guarantee however that this short break that our country has taken in its great race for development has not changed our ambitions, our desires and our potential. The recovery has already started. It might reach out to Hong Kong with a few months later, but we are already feeling confidence. The whole of our team is looking at the future with balance and courage and we feel fully fit to resume our path. Then just to night a couple of lines, you will receive a small gift, but very highly from the human point of view. That has been from our sales associates to show the gratitude for what you have done for them and their families in the past month. Of course, during this time, we gave them the very same remuneration as the past year. Once again, in this gesture, I have could appreciate the authenticity of the values that our company features and our brand features. And I'm sure that all our Chinese friends will appreciate and hopefully choose for this reason too. So this letter, I was really keen on reading it out to you because hopefully it can be an inspiration from the human psychological point of view and maybe from the economic point of view too. So as you know, we manufacture everything in Italy. 70% of our production is located in Umbria and the remaining parts in Tuscany and in Marche region. We have 3 64 small businesses, employing 15 people on average, very high quality, so 5,000 people in terms of 3rd party contractors. We are working normally, but with our extremely, extremely alert because of what we have been saying so far. We have plans with the 3rd party contractors with this extraordinary event in 2020. So we monitor everything on a daily basis. And based upon this, we push or slow down production. However, we are ready at any given time to double, if needed, the work shifts, if needed, and maybe postponing holidays, so maybe in September, October, so that co workers can also gain some important rewards and bonuses. And I have to say that this extreme flexibility that we have really is also a peace of mind for us. And also what we really want to highlight is the value of our community. In terms of inventory, we have set up a team of reliable people, valuable people headed by Ricardo and myself to monitor together with Michele the daily extraordinary daily variations. So past experience tells us that 8 in the 8 years since listed listing, sorry, average in terms of inventory has been 31% of revenues. So this year, we must be very smart and flexible. As far as investments are concerned, well, investments are mainly focused in the first half of the year with 3 important openings for us for the image of the brand: London, towards the end of March Paris, May and New York opened in January in the Meatpacking District, a charming neighborhood. So we are also working on the 3 new opportunities, boutique opportunities, and we have just received a confirmation from Tokyo that it might be done and that we had scheduled between 2021 2022. But as you know, these beautiful locations in Prime Street, you cannot possibly choose when this can happen or not. But where we do have the opportunity, we think that we might open towards the end of this year, I. E. New York, Madison Avenue, Tokyo, beautiful location in St. Petersburg. So these are three opportunities and projects we are working on. Hopefully, they will be secured. This is an extra something additional in 2020 that was scheduled for 2021. But actually, we would remove if that was the case, we would remove that part share of the investment from the 2021 accounts and transfer them to 2020. So my dear friends, it's a very important call this one. We'd like to seize the very important opportunities that arise so that we can be among the stars when it will all start again. And I think it will not be too far away this idea this restarting point. And we also want to consider 2020, see 2020 as a stand alone year that should not absolutely impact our medium to long term plans. So thank you very much. For now, I really wanted to highlight all these concepts. I'm sorry for being a bit lengthy, but we really wanted to be there for you. We wanted to convey this message. One last thing before Q and A. The next call is scheduled for May 10, I believe. But if you need it, if you need some more clarifications, you investors, analysts, journalists do not hesitate to call us because we can help each other. We can give suggestions or advice. So please do not hesitate. So thank you for the time being. Let's open the floor for discussion. Chorus Call operator speaking, Let's now start the Q and A session. The first question from Savio Cheda, Jefferies. Thank you. Good evening, Brudaylo. Can you hear me? Yes, I can hear you. We're all here. I apologize, but I'm working from home. So I don't know whether you can hear me properly. Yes, because you want to protect yourself and others. Well, maybe others more than myself. So March 11, I have two questions. So the quarter has completed. Can you give us a bit more color on how you think you can close the quarter in terms of revenues? So this is the first question. The second question has to do with the production value chain that you already mentioned. So let's talk about maybe a negative case because unfortunately in Italy, the trend is still pretty dangerous for a couple of weeks and it is moving southwards, so southbound. What kind of flexibility do you have? We know that you have many small businesses and suppliers, but if, for example, a dozen of them are not more are not able to work and manufacture for 2 weeks, what kind of flexibility do you have to shift the production of one specific garment from one business to the other? Well, very, very interesting questions. As far as the first one is concerned, we think that the quarter could be closed at pretty in line with last year. Of course, we have 40% of our business in the wholesale channel. So we are not very much dependent on the retail. If you ask me what do you envisage for the year? Well, as you know, usually at the beginning of the early months of the year, we always try and give you visibility for the whole year. So what I can say is like in 2,008, we have depicted 4 scenarios on which we work on a daily basis from the economic and also equity points of view. Well, we work on the second scenario basically in 2,008, in 2,009 this was a strike of luck because we were able to actually be successful in the second scenario and Moreno is smiling here. But this is what I want to say. We envisage a positive year in line with how the world will develop because we can't possibly know what is going to happen. But this great relationship we enjoy with our multi brand partners is very important. This week they asked, they wrote to us how are you worried? Are you concerned? And we said, no, we are absolutely working. No problem whatsoever. So second question, these 3 64 businesses that I mentioned, more or less 15 employees each. Of course, if 5, 7 of them actually experience some difficulty and if they take a break, so to speak, for a month, actually nothing will happen because there's 364 of them. But I'd like to say something here. So we are very, very we have a lot of flexibility as we did in 2,008. But I said to everyone, my dear friends, if we were to work in June, July August, then we might take our holidays in October or September, October. We will give out rewards and bonuses and everybody will be happy. So we feel very flexible from the production point of view. Something else that really helps us is that precisely in March Well, March is usually a good month for us because we would go on holiday in March. Because since we never close our company, not even in August, the way we organize our holidays is a couple of weeks in March, then a couple of weeks in July or August. So we can say that this outbreak is actually hitting us at the best time, so to speak, for our best time in the year for our company season wise. And I'm pretty confident because I have to say the last couple of days, the Italians have responded in a very strong way. We were slightly more lighthearted before. I go back to the meeting on January 30th when I say stated we should not really underplay and underestimate the outbreak. But now there is an awareness, a pretty strong awareness that has spread. So I would say that we feel more confident because of this. But this relationship we enjoy with our community is very, very important as we said this morning during the board meeting. Yes, we have believed in the made in Italy. We believed in the multi brand stores. That's why maybe we are slightly more confident. And thank you for your questions. Best wishes to you too. Next question from Melanie Fluke, JPMorgan. No. I want to ask in English no, in Italian. Thank you and good evening. I wanted to know I wanted to have an idea whether the global growth that you saw in March is better or worse than the 1st 2 months and what the trade was in the 1st 2 months because BRELOCUNCHINEL is less exposed to the Chinese market. That's why I'm asking this question. My second question, And what is the slowdown in production for the second half? Thank you. So, Melanie, production. For the time being, Melanie, we have not slowed down anything because as I was saying strong production starts in April and March and strong production starts in April May. So we have not slowed down anything we are normally slow because we have important orders. So everything is actually going very smoothly. But I have the impression that you said that you have changed your plan and for the second half. No, what we said is that we spoke with the 3 64 businesses and whatever we have to do in the coming months, we are willing to do it together. If we have to push more, we will. If we have to slow down, we will. But for the time being, there is no change underway. Is it clear? Yes. Thank you. No, because it's really important that you understand. I will learn English sometimes. So what you say is very, very important, the 1st days of March. So we have broken down Chinese revenues from January 19, where we had 50% less in the 1st 2 months because the 1st 19 days were positive. Now we saw that in these days, there is a clear cut change for China, just 7 days, obviously, not much. But last year, we had last week, sorry, had minus 16. But you should be very careful in how you see our results because we have a very small business there. But the trend is improving. There is a reversal in the trend. This week, we did see some slowdown in Europe and for the time being, no slowdown in the United States. In fact, that's some really important months. So this is the situation nowadays. Thank you. The next question is from Paola Carboni, Equitasim. Good evening, Brunello. Good evening, Brunello. I just wanted to hack back to what you were saying before, I. E, that the performance of the whole sale is mitigating the general effect that we would otherwise experience in the retail channel. And so maybe there could be a flat Q1. So I was wondering what kind of approach will you adopt or will you ask your multi brand clients to adopt so that maybe because their sellout is slightly weaker. So we have known these accounts for more or less 30 years. And these clients, well, we represent a pretty important company for their budget, especially for the ready to wear because there is a need, there is really a lack of ready to wear. So we enjoy a special relationship with them as we did back in 2,008. Nothing absolutely happened in 2,008. And I have to say they keep asking us, are you worried for the production? And I say, no, Paola, I'm not worried even for June, July, August or September for what awaits us. As usual, together, we can deliver great results. If we have to support, we will support like we did in 2,008, 2,009. I'm not they are the best in the world. We have known each other forever, so we're not worried. But the only thing I'd like to say is that I'm particularly in love or passionate about the wholesale channel. I have always thought that a wholesale store is there stands there for 100 years, whereas a brand does not last that long. Thank you, Paola. Next question from the English conference from Benjamin Lacay. Hi, Brunello and everybody there. Just had two questions from my side. Just on the wholesale, so the orders seem to be going quite well this year, which is great. I just wonder whether you could give us a bit more visibility around the full year growth that you're now expecting for 2020. Clearly, the Q1 seems to have got off to a good start. And then second question, just on the space expansion, what should we be expecting in terms of contribution for this year? I mean, it sounds as if actually we might be have a few more openings than we perhaps had anticipated in the second half now. So just I wonder if you can give us any guidance around that. Thanks very much. Yes. Let's start from this last question. As we said, we are But they were not accounted for this year. Well, actually what happened is we came across them. That's what happened. And now because we want to be present in that market. Ladies and gentlemen, the conference call will start shortly. Please stay connected. So as far as the wholesale is concerned, I'm always, always very much in favor of wholesale, truth be told. Of course, we have this partnership with them where we cooperate for the visual merchandising. We organize events with them and their DSAs, sales associates, they come to us and we go to them. There is really a great exchange. And of course, the fall winter season has gone really, really well both for men's and for women's. And we can say that maybe for men's, we are some sort of reference point for a non fashion taste. And for women, we are a good point of reference that is really in line with what the fashion taste is experiencing. So I would say we are confident. Of course, for the business well, we're pretty confident for the business, a bit less confident for the mood generally speaking, of the situation we're in. I hope it was clear in my answer. Very clear. Thanks very much. Thank you. But mind you call us, call us whenever you feel like it. Well, you should know that until April 1, we work here, then we go home in the evening. And then I can't say positivity, but we are all focusing very much on our business. So there are not many external distractions. So we all have a bit more time. On on Next question from the English conference call, Antoine Belge, HSBC. Yes. Hi, good evening. Antoine Belge, HSBC. I've got 3 questions. Actually, I'd like to follow-up on the previous question about the contribution from new stores and also conversion from wholesale to retail. I think last year in 2019, you posted around 15% retail growth with a bit more than 4% like for like, but also around 10 points of contribution. That type of magnitude of around 10% contribution from new stores? My second question is relates to online. Is it possible to have some figure about the performance of online in 2019? How much it grew and how much it accounted for in terms of sales? And what's your policy for 2020 in terms of your own way online retailers? And my final question relates to the gross margin or what you call the first margin. It was up 260 basis And what was the impact of the channel mix, especially the outlook? And what's your outlook for gross margin in 2020? Thank you very much. Well, some very difficult questions, Antoine, but we'll try and give you an answer. So e commerce first. We can say that for us it accounts for more or less 2%, 2 point something 20%. And this year over the 1st 2, 3 months, we are growing slightly more, nearly 30%. But what we are really interested in is that the people actually logging in and also how much this converts into shops because it is a very special way of showing garments. So for the e commerce, we have already added 60% additional staff to provide more service. As of today, e commerce accounts for plus 30% this year. Then as far as if they are actually completed and secured because negotiations will be in this year to be deducted from the revenues, but the revenues will be non existent because if it goes well, we will open in November. And we are talking about 3 additional things. The CEO adds that net of the Our prediction, the contribution of the non comp, I. E, the new stores visavis, the like for like was around 7%, 8% in addition to our ordinary like for like. This was our estimate with a small number of openings in terms of ordinary business. But now we wish that in the second half of the year, we can add the 3 new stores that Brunello mentioned to partially offset the effects, the slightly negative effect of the virus that of course we cannot now predict and forecast. But we are preparing margin. In this year, the channel mix was pretty relevant, the growth of the retail channel. This year, it will be the channel mix will grow slightly less. So mix of the first margin, we think that the growth of next year will be slightly lower than the one we had in 2019. Thank you very much. Thank you, Antoine. There are no more questions. Council operator,