Earnings Call: H2 2018

Mar 14, 2019

Good evening. Call and call operator speaking. Welcome to the presentation of full year 2018 of the Brunello Cucinelli Group. I'd like to remind you that all participants are in listen only mode. Following the initial presentation, there will be the opportunity to ask questions by the financial community. The speakers will be Brunello Cucinelli, President and CEO Moreno Charapica, CFO and Pietro Arnabaldi, Head of Investor Relations. In order to receive help from an operator during the conference call, press star followed by 0. Now I'd like to give the floor to Brunello Cucinelli, please. Thank you very much. Here we are, and welcome, ladies and gentlemen. As usual, all my esteemed investors, analysts and journalists, well, for us this is a very important call. Do you know why? Well, 1st of all, because it celebrates 40 years of our business, the 7 years since the listing on the stock exchange, which took place in 2012 April. And I have to say that at least for me, it was really a memorable day, but for everybody for that matter. I still hold in my memory that beautiful picture with the 3 generations. And the caption was, today we are listing human dignity and we are still very touched and moved by that caption. So it is a very important moment to take stock of what we have been doing together for us, for mankind and in order to imagine and plan and design the next 10 years, 10 years of life, 10 years of work without ever losing sight of something that I really fond of that is the eternal vision of creation. You should also bear in mind that I'm 65 years of age. So it is an important age. So what about our call? I will be telling you the results of our 40th financial statements, but then the CFO, Mariano Charapica, will drill down to details. Then I'll take the floor again to give you good visibility on 2019 and the plans we have for the next 10 years, so the rough project. Luca Lisandroni, unfortunately, is absent. All the rest we are here. He's in China because we had an event in Beijing. So net revenues, EUR 553,000,000, plus 8.1% at current exchange rate, plus EUR 10.7 percent at constant exchange rates, visavis EUR 511.7 percent last year. EBITDA EUR 95.1 million plus 8.8 percent net profit adjusted EUR 46,000,000 plus 9.4 percent. There was a significant increase in the sales in international markets, EUR 8.8 percent. And also in the Italian markets, we reported growth by 4.2% and we're always happy with that because we are Italian. Then how did Europe perform, plus 8.5 percent North America, plus 3.9 percent? Actually, it was all eaten away by the exchange rate, so 7% Greater China, 28.6%. Once again, it is not a really sizable amount for us. And then rest of the world 10.6%. So we delivered growth in all distribution channels, retail 6.3%, wholesale monobrand 19% and PAG four percent and wholesale multi brand 9.1 percent sales plus. CapEx 45,000,000 a further rise visavis EUR 35,700,000 of the past year because we want to try and maintain the very high image, we still have in the physical and online world. The net EUR 14,500,000 as the net financial position, slightly improved than 2017, thanks to the cash generation and the positive management of net working capital. The board will propose to the shareholders meeting on convened for the 29th April, the distribution of a dividend equal of €0.30 per share amounted to a payout ratio of 40 point 2%. So this is my definition of the past year. 2018 has been a year that we have defined as splendid in terms of both economic performance and image. It's been the year when we have opened the doors of Solomeo that we call the Hamlet of the Spirit to over 500 journalists from all over the world who came to visit us to seize the opportunity to exchange ideas and share values. It was a very high it was really a highlight for our company. As for 2019, considering the excellent performance of sales in the 1st month of the year, the extraordinary results of our order collection that is basically finished for fallwinter. So therefore, we feel confident in envisaging good growth of around 8% of revenues as well as a healthy profit growth, whereby we keep pursuing our important investments. This year, 2019, will also mark the 1st year of a new decade, 20 nineteen-twenty 28, in which we expect to double our sales, and we will try and keep working with passion and dedication in harmony with creation, always believing in our beautiful Italy and in the top notch quality and creativity of the manufacturing heritage that is coveted and sought after by the whole world. This is just a small support targeted at our Splendid Italy. Now Moreno will go into detail, and then I'll take the floor again. Thank you for now. Thank you, Brunello, and good evening, ladies and gentlemen. After publishing the revenues preliminary results on January 7 that will then confirm the final results. I would start analyzing the income statement starting from Slide number 10 of our presentation and comparing full year 2018 results with restated figures of 2017 because we applied the new IFRS 15 accounting principle, which came into force as of January 1, 2018. Revenues, as Brunello already mentioned, reached EUR 553,000,000 rising by 8.1% at current exchange rate and by 10.7% at constant exchange rate with a negative currency impacting 2.5 points. I'd like to focus on our very careful hedging of the ForEx risk. Its target is to neutralize the effect of currency fluctuation on the absolute value of EBITDA. Considering the level of current exchange rates and of the existing hedging, we can envisage a slightly positive ForEx impact. EBITDA, EUR 95,100,000 with a healthy improvement of margins by 20 basis points from 17.0 percent to 17.2 percent. This has to do with the business development and a channel balance in 2018 that was basically the same as last year. This is also to do with a very healthy management of operating costs. Depreciation and amortization increased their weight and moved up from 4.4% to 4.7% against the imported investments we performed over the last few years. Net financial charges decreased to EUR 4,200,000 from EUR 5,300,000 of last year. We would like to remind you that financial charges are linked to the net average net financial position and impacted significantly by the accounting for ForEx engine, which are temporary by nature as they depend on the ForEx at the end of the period. As you can see on the box at the bottom right of Slide 10, the adjusted net income excluding the tax benefits arising from the so called patent box. So the net income amounted to EUR 46,000,000 plus 94 percent visavis42,100,000 at 31st December 20 17, with a tax rate of 29.5 percent, visavis 29.2 percent of the previous year. In our view, we have always believed that a tax rate of around 30%, excluding any extraordinary tax benefits like Patent Box, for example, while 30% can represent a fair level of taxation in the medium term, considering that our company is nearly exclusively taxed in Italy. The net income as of 31 December 2018 amounted to €51,000,000 including tax for €5,000,000 of tax benefit for Patent Box in 2018 visavis50 2,500,000 last year, 2017. In 2017, accounted for the sum of the tax benefits of the first 3 years 2015, 2016 and 2017 amounting to €10,400,000 in total. I'd like to remind you that 2019 will be the last year when we'll be enjoyed the tax benefit for the Patent Box, and we think that 2019 will be in line with 2018. Let's now move to Slides 1112 and drill down on the performance of first margin operating costs and EBITDA. The incidence of the first margin moved from 55.8% to 65.9% with an absolute value increase of EUR 27,100,000, thanks to the positive impact of performance like for like, 3.5% as of 31 December 2018 and thanks to the sellout rates whereby the channel mix in 2018 was basically the same as last year. The increase in operating costs amounted to 7 0.8% or EUR 19,500,000. And it had to do both with the development of new initiatives and also investments in communication supporting brand exclusivity in the physical such as in the very important digital one channel. Personnel cost rose from EUR 89,100,000 with an incidence of 17.3 percent to EUR 98,300,000 incidence 17.7 percent. This increase arises from the need to staff the new DOS stores to boutique openings and full conversion in 2018. It has also to do with some extension of existing shops and new spaces directly managed in concession within department luxury department stores and it has to do with the strengthening of central facilities, in particular, in strongly expanding markets as well as to some insourcing processes, sales, research and development. Investment in communication rose by EUR 3,600,000, up from EUR 28,700,000 with an incident of 5.6 percent to EUR 32,300,000 incidence 5.8 percent, thus supporting the allure of the brand and the development of new initiatives. As far as the purchases of raw material, personnel cost and cost for services are concerned, we have invested massively in relevant research and development projects to expand our proposal to the market, both in terms of product mix and services provided and also in terms of presence on international markets and also the digital world and the made to measure suit proposal. We are furthermore widening our ready to wear offering by including the kids line with dedicated collections that will start in the second half of twenty nineteen, thus completing the internal staff supporting the project. And in 2018 already, there was research and development that was carried out. Rents amounted to EUR 71,100,000 visavis EUR67,200,000 of last year. This increase had to do with the further development of the retail network. Let's now move on to net working capital, Slide 13. And including other credits and debts, the net working capital amounted to EUR 129,500,000 vis a vis 127,000,000 last year, increased by EUR 2,500,000 with an incidence on sales decreasing from 24% to 23.4%. Well now as to the trade working capital, we can say that the increase amounted to 10.6% or EUR 14,000,000 for a total of EUR 146,000,000 with an incidence on net revenues that went up from EUR 25.9 €25,900,000 to €26,500,000 The incidence of the inventories decreased from 29.8% to 29.3%, with an increase of €9,100,000 mainly linked to the selected opening of direct stores, conversions, extensions and new spaces within Luxury department stores that are directly managed. So as well as to the business growth in all channels, including the digital segment that impacted production levels. The increase in trade receivables went from EUR 45,200,000 to EUR 61,400,000 with the relevant incidence moving from 8.1 percent to 11.1%. It has to do with the relative incidence of wholesale multi brand sales from 40.6% to 41%, so rise here. And wholesale monogram sales from EUR 4.9 billion to EUR 5.5 billion and important development of retail sales in Luxury Mall in and the corresponding payment terms and then our desire starting from 2018 to grant the same payment terms we use in well established market to the already important and historical multi brand clients in the former Soviet Union area visavis the previous inclusions conditions, which implied an advance when the order was defined. Trade payables increased from EUR 65,300,000 to EUR 76,600,000 and natural growth that has to do with the development of the business, whereby the premium terms stay the same, new initiatives were developed and important investments were performed in communication excessively, and they accelerate in the last part of the year. Other credits and debts, negative for EUR 17,200,000 visavis 5.6 €1,000,000 in 2017 due to the fair value of the derivatives to hedge for the Forex risk. Let's now move on to Slide number 14 and let's talk about investments. EUR 45,000,000 in 2018 in a further rise visavis35,700,000 in 2017 within the multi year plan to maintain the brand and the company and as contemporary as possible over the long term. CapEx. Commercial CapEx, EUR 30,700,000 mainly for extension and opening of shops, among which we'd like to point out the new boutique Monte Carlo boutique that opened in July, together with the expansion and revamping of showrooms and larger selling services in department stores. Investments in production, logistics and IT digital amounted to EUR 14,300,000 and they support both the digital development and the IT infrastructure for EUR 9,200,000 and the consistent renewal of production and logistics for €5,100,000 On 5 June 5, twenty eighteen, we acquired the minority stake in the Russian subsidiary for an amount of EUR 6,500,000. And this way, the parent company now fully owns the subsidiary. The effects of this transaction are not accounted in investments, but among equity reserves in application of the IFRS accounting principles. But as a consequence, they impact the net financial position. So you can see in Slide 15, net financial position EUR 14,500,000 slightly decreasing visavis €15,700,000 as of December 31, 2017. Considering the important investments, ongoing investments and the payment of EUR 18,500,000 in dividends for the Distribution 2017, the favorable debt performance is supported by cash generation and the positive management of net NWC. The healthy financial situation and the NFP guide our long term planning with a possibility to keep investing in an important way to develop our company. With investments between 7% 8% of revenues. And we are envisaging a further increase of the payout ratio, which following the increase in 2018, I. E, 40 point 2% visavis35.9 percent or 2017, we would intend to rise it to 20% to 45% in 20 19 50% in 2020, a healthy level for the medium term. Thank you for your attention. I give the floor back to Brunello. My friends, here we are again. So 2018, so we called it a splendid year. And we have the impression that somehow our company is really going through a very gracious momentum of Image Worldwide, and we're very happy with that. I would like to give you to take stock of the company since its listing in 2012. So first, why did we go public? Well, back then, we had EUR 270,000,000 revenues, EUR 45,000,000 debt and a net equity of 50% of revenues more or less. So we tell to tell you the truth, we did not go public because we had too much debt. So you might wonder why we did go public. Well, we decided to list our company because we wanted to be more international to open up to the world. And truth be told, we wanted to most more easily attract managers because we live in a small hamlet. But actually, it is no longer a problem to leave far away from the city because of the Internet. We went public because we wanted to engage in ongoing discussion with you analysts and investors. Because if we are willing and able to listen, although if we are successful, we tend not to, well, that's what usually happens. You feel unique. You feel a genius that you stop listening. I always remind my staff of the piece of advice of Plutarch in the art of listening. When Plutarch said 50% of our issues could be solved and settled just by listening. We went public because we wanted to have a sound company financially. And we listed a company because, well, I had and still have 2 daughters. And this is something important, mind you. I've always thought that you do never inherit a business. What you do inherit is the ownership of the business. And then last but not least, I have always claimed and argued that a listed company can live forever. Last evening, I was having a dinner with very top quality entrepreneurs from non listed entrepreneurs from Modena, and we were discussing precisely this. I think that a listed company can survive a few centuries. So we went public in 2012 and we were the only company to go public that year in Milan. 7 years down the road, we say this from the bottom of our heart, we are very, very happy with the choice we made. So we have a very positive feedback as far as the stock exchange is concerned. And whoever asks for a piece of advice, we always say do it, you should do it. But you should give the market healthy expectations if you want your business to survive forever because that was our objective, obviously. So in the last 7 years, we had pleasant results. So we doubled our sales nearly EUR 550,000,000 with an average growth rate of 11%. Something I'd like to point out is in over the 7 years, the ForEx differential was 0.2, so really not very it was really negligible. We have achieved a good balance between a fair profit and but what is this fair profit, you might wonder. Well, I think that many of you are familiar with my idea. But you see, for new generations, this is an important topic to find the balance between profit and giving back. And whenever we meet, I keep saying, would you purchase something from a company that makes a preposterous profit? I don't think so. And very young people have done wonders on the world stage. I see the youth reawakening somehow because they are really demanding from us that we not destroy their future. And maybe this is a duty not just for politics, but also for the manufacturing industry. We were saying commenting on a statement by a very wise peasant who said, you need 100 kilos of wheat to just have a haircut. But he said, but if to harvest 100 kilos of wheat, you need 1 year. So I think that this splendid statement should set us thinking. So that said, we think that this will be one of the key topics for the coming future. Net equity on sales just over 50%. And for you I'd like to say to your investors that the price of the share was EUR 7.75 in 2012, then EUR 30 at the end of 2018. So that's you. So hopefully, between you and us together, we hope that you are satisfied. Well, we are particularly satisfied. Another topic here that I really like, the idea of succession. When I was about 45, I thought long and hard about this. I've always lived following on the teachings of Marcus Aurelius, the Emperor, who said you should live as if it was the last day of your life, but you should plan as if you were there to live forever. So at when I turned 60, I established a British style is an irreversible trust. And whereby I said that the corporate governance is still in my family in my hands until I'm alive. But when I die, and hopefully it won't happen very soon, but we have the eternal almighty ruler that he does pull the ropes. Anyway, on the day of my death, my 2 daughters who own 50% each, they will be helped and supported by 3 wise men. They have already been identified. They all work in the company, 48 years of age. And they will be the guardians, which means that the company has no chance of getting stuck. And this has always been my fear, my dread that the company may get stuck. So when I established this deed with my wife, it was a very good time, good moment because it was as if I had identified the future guardians of our company. So what about today? Who are we? Just a few figures. The 1800 employees, 66 percent women and 34 men, average age 38 years. Important thing, there is no wages distinction or gap between men and women employees. We have one single headquarters in Sodomao, one single brand, the Brunello Cucinelli brand and made in Italy only, 60%, 62% manufactured in Umbria, and then we have Tuscany, Marche and Veneto for footwear especially, 85% ready to wear and 15% accessories because we are ready to wear. That's our DNA. 65% womenswear, 35% menswear in terms of revenues, but for items, it's 6040 because the price for women's wear is slightly higher. Then we have 100 DUS and 30 franchisees. And we are positioned at the top of the true luxury pyramid. So we believe in craftsmanship, quality and exclusivity in distribution. But what I'd like to say is that I have always claimed that the product is what really matters the core of the company. And then sustainability, that is also an important topic. We talk about it with you very often. We call it human sustainability, which means living and working in harmony with the creation, which is basically what we did in the countryside. We were basically cleaning all the woods and looking after the wildlife, we have always thought that the purpose of our business was to all of our ideals was to live and work respecting the human being. You see all that we say is not certified by 3rd parties nowadays. But from the very 1st year from year 1, our balance sheet has a very important report, which we call a strategic philosophical report in which we always try to highlight the important concepts we believe in. We think that that is the most important document. This is all that we have been doing over the past 40 years. And now my friends, what about the next 10 years? I am 65, all my managers are 44. So in the coming 10 years, we'd like to double our sales, growing by 8% on average. We would like to target healthy profits and upholding all the values that we believe in. We would like to pay out to have a payout ratio of 50%. This is the idea, which we think is fair because the other half can be used to capitalize and strengthen the business. We want to keep investing in a robust manner, the way I like to call it, in order to support the contemporary feature of the brand because our brand needs to be young, useful, fascinating, charming and the brand must convey the vision that we have, the responsibility that we all carry within ourselves. Another important topic, the future governance. In this case, we have Brunello as the CEO and then we have the 2 younger co CEOs. As I'm 65, I'm flanked by these 2 young gentlemen, Riccardo Stefarelli, 38 years of age. He has been with us for 13 years. He was very, very young. And he represents the family branch because he is the husband of my eldest daughter, Camilla, who is 36 and deals with the products in full time. She lives and works in Sromao. Then we have Luca Lisandroni, 41 year old. From Luxottica, a company I hold very high. So an outsider, so to speak, to the family. He's been with us for 3 years. So someone from the family, someone from outside the family, Ricardo and Luca. As you know, this has always been my great job in my life. I do not hold any interest in any companies. I've always tried to feel accountable for everything that comes out of this company. As of today, all managers are 44 years of age. But if I was to step back, then the average would drop to 43. So we are fit, I would say. What about the future development in about a year or so? What would happen to these 2 co CEOs? So I will be an Executive Chairman and Creative Director. Well, especially in the past 10 years, I drew inspiration from the great Lagerfeld, Mr. Lagerfeld, who left, passed away a few weeks ago, when in the last part of his life, he basically devoted himself to committed to this important task, a senior guardian of the brand. That's precisely what I would like to do because that's my passion. I was born with products. And the 2 younger CEOs, Ricardo and Luca, well, Luca lives is based in Milan. He will be working mainly from Milan because there's nothing to do about it. Milan really is the center that propels Italy abroad. We live in a small hamlet. Riccardo is based here in Suromeo, and he mainly deals with the products, the factory and the finance. So I really like to highlight the fact that it's been now a year that these 2 gentlemen are working, acting as CEOs. It is somehow some sort of general trial. When we went public, we started a year in advance. We started managing the company as a listed one, although we were not listed yet. So to conclude, I'd like to say 2 important things. I believe in the great value of the family in the company. Our family is in this company. It is very strongly rooted in the area we work for the company. We are a listed company, yes, but I'd like to show you this attachment, strong attachment of my family to the company itself. And now to conclude, I'd like to mention something that I said during the listing day in Milan in April 2012. And I'd like to it to be a wish for the next for the coming years. Listen to these words. I was moved and touched. But I said to all investors, if you are looking for a company whereby you want to profits to be made to the detriment of mankind, do not join us. If you are looking or if you're searching, seeking a company with staggering growth without respecting craftsmanship, quality and exosuity of the product, look elsewhere. This is not the right company for you. You should not join. Whereas if you're looking for a company that is pursuing healthy profit, well, maybe ordinary profit and definitely not an exaggerated profit, well, then you might try and join us. With this kind of wish, I'd like to leave you. We thank you once again with gratitude. And hopefully, we will be able to implement all our plans for the next decade. Thank you, Mensli. Here we are. The first question from Alberto Dagnano, Goldman Sachs. Good evening, Brunello, Moreno, Pietro, Ricardo. Yes, we're all here. Thank you for the long term information you provided. Well, my questions is the are the following. Burello, do you have any ideas of what your company would look like in 10 years' time, number of stores to how important will the online business be or the category mix, how will it change? Then as to 2019 profit growth, can we still expect profit to grow more than revenues, always bearing in mind the fair profit. So how much room is there for a further improvement of profitability? And the last question as to the new growth guidance of the top line, 8%. In the last few years, it's always been double digit. This is a downward adjustment, not a the demand if the demand for your products is still high and if it exceeded 8%, would you be willing to meet it and increase production? I'd like to start from the last question. As for production, no problem whatsoever. Over the years, we have put together very important workshop for craftsmanship. Growth project, so it's EUR 500,000,000 revenues. We can say we can still call it a small enterprise. But if we want to survive for the next 30 years, I believe that this growth can be very, very interesting. As far as the fair profit is concerned, Alberto, I believe that each and every one of us, we all work to improve profit to optimize profit, but it must be a small optimization of company. We cannot expect laying off people or extreme reduction. And then if you ask me to what extent will the e commerce have a weight, we do not know. But what we do know that we are equipped with the proper structures and facilities. And even if it doubles year on year, it would be not be an issue nowadays. But if you want my thoughts, I think that it could grow definitely, but physical brick and mortar stores will always play a very important role always, especially when we talk about true luxury. As to the number of stores, we would like to open maybe 3, 4 stores a year. It depends on, of course, the location that you find. Of course, we try and open in important locations. But you see, Alberto, we don't want to change anything. That's the strategy. The same that we have been following until today, but we must be contemporary, modern with our showrooms. Our stores must always look fresh and useful. Collections inside the stores, We need to have fresh and young capsule collections every 2 months. We must have a continually evolving visual merchandising. The other day coming back from America, I saw a great visual by Nike. They really are great. So being contemporary is what matters to us. The values are always the same. And of course, what you call a growth reduction, 8%, well, today, we do not carry any debt, truth be told. And although my dad keeps saying that debt works on Sunday too and I've always been scared of debt, if we wanted to, we could open 20 stores and we would not have any debt. We could grow 30%. But the idea is that we want to still be here in 30, 40 years' time. The inspiration is always the same. Hermes, Chanel, these are my mentors. But these large brands, 15 times our size, make us think that maybe we do have growth opportunities for the future. I hope I have answered your questions, Alberto. That's great. Thank you. Next question from the English conference call, Mariana Hope. Hi. I have two questions, please. My first question is around growth. Could you please confirm that you're still happy with your historical implicit guidance of 3% to 4% in terms of like for like? And also if you could confirm the net openings, the U. S. Openings for next year? Is it still going to be between 3% 5 percent? And also in terms of your new top line target of 8%, could you please confirm if this is excluding FX or including FX for 2019? And my second question is in terms of your full price sell through, could you please tell us what it was at the end of 2018 and how that has evolved over the past couple of years? And also if you could please share with us what your aim is in the midterm for full price sell through? Thank you very much. I'd like to start from the last question. As far as the full price is concerned, we are particularly happy with the sell through rate because we never had to do with large sales or price downs or rebates. So we start the sales at the very last. In the U. S, I think we start 8, 9 December for women and 26 December for men. So we are very happy with how things are performing. The aim and purpose is what I said. Of course, whenever as it happens in Italy on 6th or 7th January, every shop starts sales with its price that is 30%, 40% of the full season. So nothing is going to change with this policy. As far as the like for like is concerned, what I say is that a brand without logo, if it delivers 3%, 4% a year like for like, I call it a great growth because I always make a distinction between a logo brand and a no logo brand. When I was young, I was modeling. I modeled for L. S. It was top number 1 ski wear company, and my friend is the owner, still exists. And it was back in 1982. And in 18/84, my friend called me and said, you see, you are 28 years of age. What's wrong with my collection? Why doesn't it work anymore? And I said, my great master Leonardo, it's the logo, that's your problem. And that's the way it is. It is a market thing. So we have always tried to have a no logo product. As far as the 8% top line is concerned, that's precisely what we said before. We want to govern and control this growth for the next decades. This is the plan for the next decade, the plan for 2019 where we already have all the orders collected for men'swear and women's wear. They're very happy with the order intake and collection. We have 50% of our sales in the multi brand channel and 50% mono brand. And as you know, when you have received a positive feedback from multi brand representatives, What you can be sure of is that in your stores, you are displaying goods that were successful with both the press and the customers. I hope I was sorry, there's another answer about the openings, the 5 openings that we can envisage. This is a great well, of course, these openings are not just in U. S, all over the world. So 3 to 5 stores in the Southeast Asia and all over the world. The 4, 5 that we were saying, 4, 5 openings, it could be one could be an opening, a new opening, another could be an expansion or an extension of an existing boutique. Great. Thank you very much. The next question is from Paola Carboni with Equita. Good evening. Paola, good evening. Two questions on 2 initiatives. 1 is the Made to Measure that has already is already started. So can you share with us how this business initiative is doing? And what's your expectations are for the future? And then the kids line, Of course, it's still in its infancy. And in this case too, however, what kind of expectations can we have? And To what extent do you think it will impact profitability in 2018 2019? Thank you. Well, as far as the made to measure suits are concerned, things are going really well. But you see, we are trying to also renew even the words of the so called made to measure suit because the problem is that made to measure sounds old. Because if I'm an affluent man and I trade with oil, I want to have a made to measure suit, but I also want a young tailor telling me what is best for me. So when I walk into the shop, I want to be met by a well dressed young tailor telling me buy pinstripe because that's the top of the fashion. Then kids line, that's the natural evolution of the brand. It is fascinating also in terms of style. But we started working on it last year. We are now showcasing some collections in June with Pitti, so we start with the next spring summer. Over the years, we expect healthy growth. Well, they say that the incidence of kit line could be 3%, 4% once it is fully operational at run rate. Well, we can say that it helps the brand somehow because the young 35 year olds, the couple that shop in a luxury store, they also want to shop for their children. They want to shop for something special for their children. My father bought me a coat where he spent half of his wage. It is the feeling of parents toward children. So we're very happy with this new project too. So sorry, if I ask a follow-up question. So children the kids line will be sold in the same boutiques. Yes. For example, if you have a 400 square meters boutique, 27 to 30 square meters will be devoted to the kids line between men's wear and women's wear. Usually, this is the idea. Thank you. Mr. Cocinelli, no questions for the time being. Thank you. Thank you very much. Whatever you need, we are available for any further questions. We started yesterday with the SpringSummer Collection 2020. Goodbye.