Good evening, Chorus 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 Ciarapica, CFO, and Pietro Arnaboldi, Head of Investor Relations. In order to receive help from an operator during the conference call, press star followed by zero. I'd like to give the floor to Brunello Cucinelli, please.
Thank you very much. Here we are, welcome, ladies and gentlemen. As usual, all my esteemed investors, analysts, and journalists, for us, this is a very important call. Do you know why?
First of all, because it celebrates 40 years of our business, the seven years since the listing on the stock exchange, which took place in 2012, April. I have to say that at least for me, it was really a memorable day, for everybody, for that matter. I still hold in my memory the beautiful picture with the three generations, the caption was, "Today we are listing human dignity," we are still very touched and moved by the caption. It is a very important moment to take stock of what we have been doing together for us, for mankind, 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 am fond of, that is the eternal vision of creation.
You should also bear in mind that I'm 65 years of age, it is an important age. What about our call? I will be telling you the results of our 40th financial statements, then the CFO, Moreno Ciarapica, will drill down to details, I'll take the floor again to give you good visibility on 2019 and the plans we have for the next 10 years, 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. Net revenues, EUR 553 million, +8.1% at current exchange rate, +10.7% at constant exchange rates, vis-a-vis EUR 511.7 last year. EBITDA, EUR 95.1 million, +8.8%. Net profit adjusted, EUR 46 million, +9.4%.
There was a significant increase in the sales in international markets, 8.8%, also in the Italian market we reported growth by 4.2%, we're always happy with that because we are Italian. How did Europe perform? +8.5%, North America +3.9%. Actually, it was all eaten away by the exchange rate, 7%. Greater China, 28.6%. Once again, it is not a really sizable amount for us. Rest of the world, 10.6%. We delivered growth in all distribution channels. Retail, 6.3%. Wholesale monobrand, 19% and 24%. Wholesale multi-brand, 9.1% sales plus. CapEx, EUR 45 million. A further rise vis-a-vis EUR 35.7 million of the past year. Because we want to try and maintain the very high image we still have in the physical and online world.
million of 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 convened for the 29th of April, the distribution of a dividend equal of EUR 0.30 per share, amounting to a payout ratio of 40.2%. 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 really a highlight for our company.
As for 2019, considering the excellent performance of sales in the first months of the year, the extraordinary results of our order collection, that is basically finished for fall/winter. 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 first year of a new decade, 2019-2028, 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 the 7th, 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 apply the new IFRS 15 accounting principle, which came into force as of January the 1st, 2018.
Revenues, as Brunello already mentioned, reached EUR 553 million, 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 95.1 million, with a healthy improvement of margins by 20 basis points from 17.0%-17.2%. 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 amortization increased their weight and moved up from 4.4%-4.7% against the important investments we performed over the last few years. Net financial charges decreased to EUR 4.2 million from EUR 5.3 million 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 hedging, which are temporary by nature as they depend on the Forex at the end of the period.
As you can see on the bottom right of slide 10, the adjusted net income, excluding the tax benefits arising from the so-called patent box. The net income amounted to EUR 46 million, +9.4% vis-à-vis EUR 42.1 million at 31st December 2017, with a tax rate of 29.5% vis-à-vis 29.2% 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 31st December 2018 amounted to EUR 51 million, including tax for EUR 5 million of tax benefit for patent box in 2018, vis-à-vis EUR 52.5 million last year, 2017.
In 2017, accounted for the sum of the tax benefits of the first three years, 2015, 2016, and 2017, amounting to EUR 10.4 million in total. I'd like to remind you that 2019 will be the last year where we'll be enjoying the tax benefit for the patent box, and we think that 2019 will be in line with 2018. Let's now move to slides 11 and 12 and drill down on the performance of first margin operating costs in the EBITDA. The incidence of the first margin moved from 65.8% to 65.9%, with an absolute value increase of EUR 27.1 million, thanks to the positive impact of performance like-for-like, 3.5% as of 31st 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 7.8% or EUR 19.5 million.
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 channel. Personnel cost rose from EUR 89.1 million, with an incidence of 17.3%, to EUR 98.3 million, incidence 17.7%. This increase arises from the need to staff the new DOS stores, two boutique openings, and four conversions in 2018.
It is also to do with some extension of existing shops, new spaces directly managed in concession within 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 3.6 million, up from EUR 28.7 million, with an incidence of 5.6%, to EUR 32.3 million, incidence 5.8%. 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 2019, 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 71.1 million vis-à-vis EUR 67.2 million 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. Including other credits and debts, the net working capital amounted to EUR 129.5 vis-a-vis EUR 127 last year, increased by EUR 2.5 million, with an incidence on sales decreasing from 24%-23.4%. As to the trade working capital, we can say the increase amounted to 10.6% or EUR 14 million for a total of EUR 146 million with an incidence on net revenues that went up from 25.9%-26.5%. The incidence on the inventories decreased from 29.8% to 29.3% with an increase of EUR 9.1 million, mainly linked to the selected opening of direct stores, conversions, extensions, and new spaces within luxury department stores that are directly managed. 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 45.2 million to EUR 61.4 million with relevant incidence moving from 8.1%-11.1%. It has to do with the relative incidence of wholesale multi-brand sales from 40.6%-41%, so a rise here. Wholesale mono-brand sales from 4.9%-5.5%. An important development of retail sales in luxury mall and the corresponding payment terms, 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, vis-a-vis the previous inclusions, conditions which implied an advance when the order was defined.
Trade payables increased from EUR 65.3 million to EUR 76.6 million, a natural growth that has to do with the development of the business, whereby the payment terms stayed the same, new initiatives were developed, important investments were performed in communication excessively. They accelerate in the last part of the year. Other credits and debts, negative for EUR 17.2 million vis-a-vis EUR 5.6 million in 2017 due to the fair value of the derivatives to hedge for the Forex risk. Let's now move on to slide 14. Let's talk about investments. EUR 45 million in 2018, in a further rise vis-a-vis EUR 35.7 million in 2017 within the multi-year plan to maintain the brand and the company as contemporary as possible over the long term.
CapEx. Commercial CapEx, EUR 30.7 million, mainly for extension and opening of shops, among which we'd like to point out the new Monte Carlo boutique that opened in July, together with the expansion and revamping of showrooms and larger selling surfaces in department stores. Investments in production, logistics, and IT digital amounted to EUR 14.3 million. They support both the digital development and the IT infrastructure for EUR 9.2 million, the consistent renewal of production and logistics for EUR 5.1 million. On June 5th, 2018, we acquired a minority stake in the Russian subsidiary for an amount of EUR 6.5 million. 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. As a consequence, they impact the Net Financial Position that you can see in slide 15.
Net Financial Position, EUR 14.5 million, slightly decreasing vis-a-vis the EUR 15.7 million as of December 31st, 2017. Considering the important ongoing investments and the payment of EUR 18.5 million 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 the possibility to keep investing in an important way to develop our company. With investments between 7% and 8% of revenues. We are envisaging a further increase of the payout ratio, which, following the increase in 2018, i.e., 40.2% vis-a-vis 35.9% in 2017, we would intend to rise it to 45% in 2019, and 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. 2018, we called it a splendid year, 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 take stock of the company since its listing in 2012. First, why did we go public? Back then we had EUR 270 million revenues, EUR 45 million debt, and a net equity of 50% of revenues, more or less. To tell you the truth, we did not go public because we had too much debt. You might wonder why we did go public. We decided to list our company because we wanted to be more international, to open up to the world. Truth be told, we wanted to more easily attract managers because we live in a small hamlet.
Actually it is no longer a problem to live far away from the city because of the Internet. We went public because we wanted to engage in an ongoing discussion with you analysts and investors. If we are willing and able to listen, although if we are successful, we tend not to, that's what usually happens, you feel unique, you feel a genius, and 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. We listed our company because, I had and still have two daughters. 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. 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, we were discussing precisely this. I think that a listed company can survive a few centuries. We went public in 2012, we were the only company to go public that year in Milan. seven years down the road, we say this from the bottom of our hearts, we are very, very happy with the choice we made. We have a very positive feedback, as far as the stock exchange is concerned. Whoever asks for a piece of advice, we always say, "Do it. You should do it."
You should give the market healthy expectations if you want your business to survive forever, because that was our objective, obviously. In the last seven years, we had pleasant results. We doubled our sales, nearly EUR 550 million, with an average growth rate of 11%. Something I'd like to point out is in over the seven years, the Forex differential was 0.2, so it was really negligible. We have achieved a good balance between a fair profit and What is this fair profit, you might wonder? Well, I think that many of you are familiar with my idea. You see, for new generations, this is an important topic to find the balance between profit and giving back. Whenever we meet, I keep saying, "Would you purchase something from a company that makes a preposterous profit?" I don't think so.
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. Maybe this is a duty not just for politics, but also for manufacturing industry. We were commenting on a statement by a very wise peasant who said, "You need 100 kilos of wheat to just have a haircut." He said, "If to harvest 100 kilos of wheat, you need one year." I think that this splendid statement should set us thinking. That said. We think that this will be one of the key topics for the coming future. Net equity on sales, just over 50%. I'd like to say to you investors that the price of the share was EUR 7.75 in 2012, then EUR 30 at the end of 2018.
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." When I turned 60, I established a British style irreversible trust, whereby I said that the corporate governance is still firmly in my hands until I'm alive. When I die, and hopefully it won't happen very soon, we have the eternal almighty ruler that he does pull the ropes.
Anyway, on the day of my death, my two daughters, who own 50% each, they will be helped and supported by three wise men. They have already been identified. They all work in the company, 48 years of age, and they will be their guardians, which means that the company has no chance of getting stuck. This has always been my fear, my dread, that the company may get stuck. 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. What about today? Who are we? Just a few figures. 1,800 employees, 66% women and 34 men. The average age, 38 years. Important thing, there is no wage distinction or gap between men and women employees.
We have one single headquarters in Solomeo, one single brand, the Brunello Cucinelli brand, and made in Italy only. 60%-62% manufactured in Umbria. 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. For items, it's 60/40 because the price for womenswear is slightly higher. We have 100 DOS and 30 franchisees. We are positioned at the top of the true luxury pyramid. We believe in craftsmanship, quality, and exclusivity in distribution. What I'd like to say is that I have always claimed that the product is what really matters, the core of the company. Sustainability, that is also an important topic. We spoke 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, or all of our ideals, was to live and work respecting the human being. You see, all that we say is not certified by third parties nowadays. From the very first year, from year one, 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. My friends, what about the next 10 years? I am 65. All my managers are 44.
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 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, youthful, fascinating, charming. 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, we have the two young co-CEOs.
As I'm 65, I'm flanked by these two young gentlemen, Riccardo Stefanelli, 38 years of age. He has been with us for 13 years. He was 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 product full-time. She lives and works in Solomeo. We have Luca Lisandroni, 41 years old, from Luxottica, a company I hold very high. An outsider, so to speak, to the family. He's been with us for three years. Someone from the family, someone from outside the family, Riccardo 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. We are fit, I would say. What about the future development in about a year or so? What would happen to these two Co-CEOs? I will be an Executive Chairman and Creative Director. Especially in the past 10 years, I drew inspiration from the great Lagerfeld, Mr. Lagerfeld, who passed away a few weeks ago. When in the last part of his life, he basically devoted himself, 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 product. The two young CEOs, Riccardo and Luca. Luca 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 Solomeo, and he mainly deals with the product, the factory, and the finance. I really like to highlight the fact that it's been now a year that these two gentlemen are working, are 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. To conclude, I'd like to say two 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, and we work for the company.
We are a listed company, yes, I'd like to show you this attachment, strong attachment of my family to the company itself. 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 it to be a wish for the coming years. Listen to these words. I was moved and touched, I said to all investors, "If you are looking for a company whereby you want profits to be made to the detriment of mankind, do not join us. If you are looking, if you are searching, seeking a company with staggering growth without respecting craftsmanship, quality, and exclusivity of the product, look elsewhere. This is not the right company for you. You should not join.
If you're looking for a company that is pursuing healthy profit, maybe ordinary profit, and definitely not an exaggerated profit, 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 immensely. Here we are.
Chorus Call operator speaking. We will now start the Q&A session. Whoever wants to ask a question, please press star followed by one on the keypad. To leave the waiting list, press star followed by two. Please ask your question by speaking clearly into the microphone. Whoever wants to ask a question, please press star followed by one now. The first question from Alberto D'Agnano, Goldman Sachs.
Good evening, Brunello, Moreno, Pietro, Riccardo.
Yes, we're all here.
Thank you for the long-term information you provided. My questions are the following: Brunello, do you have any ideas of what your company will 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? As to 2019 profit growth, can we still expect profit to grow more than revenues? Always bearing in mind the fair profit. How much room is there for a further improvement of profitability? 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 large one, but still, why this decrease? In terms of supply chain, if the demand for your product 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, it's EUR 500 million revenues. 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 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.
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 not be an issue nowadays. 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 three, four stores a year. It depends on, of course, the location that you find. Of course, we try and open in important locations. 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 youthful, collections inside the stores. We need to have fresh and young capsule collections every two 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. Being contemporary is what matters to us. The values are always the same, and of course, what you call a growth reduction, 8%. Today, we do not carry any debt, truth be told. Although my dad keeps saying that debt works on a 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%. The idea is that we want to still be here in 30, 40 years' time. The inspiration is always the same.
Hermès, Chanel, these are my mentors. These large brands, 15 x 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 Ho.
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%-4% in terms of like-for-like? Also, if you could confirm the net openings, DOS openings for next year. Is it still going to be between three and five? 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? 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? 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. We start the sales at the very last. In the U.S., I think we start eighth, ninth December for women and 26th of December for men. 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 sixth or seventh of January, every shop starts sales with its price, that is 30%-40% of the full season. Nothing is going to change in this policy.
As far as the like-for-like is concerned, what I say is that a brand without a 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 ellesse. It was top number one ski wear company, and my friend is the owner. It still exists. It was back in 1982. In 1884, 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?" I said, "My great master, Leonardo, it's the logo, that's your problem." That's the way it is. It is a market thing. 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 menswear and womenswear. We're very happy with the order intake and collection. We have 50% of our sales in the multi-brand channel and 50% mono brand. 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. Sorry, there's another answer about the openings, the five openings that we can envisage. Of course, these openings are not just in U.S. They are all over the world.
Three to five stores in the Southeast Asia and all over the world. The four, five that we were saying, four or five openings, 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.
I'd like to remind you that if you want to ask a question, you can press star followed by one on your keypad. The next question is from Paola Carboni with EQUITA.
Good evening.
Oh, Paola, good evening.
Two questions on two initiatives. One is the made-to-measure that has already started. Can you share with us how this business initiative is doing, and what your expectations are for the future? 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 and 2019? Thank you. As far as the made-to-measure suits are concerned, things are going really well. 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. 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. 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." Kids line, that's the natural evolution of the brand.
It is fascinating also in terms of style. We started working on it last year. We are now showcasing some collections in June with Pitti, we start with the next spring/summer. Over the years, we expect a healthy growth. They say that the incidence of kids line could be 3%, 4% once it is fully operational at run rate. 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. We're very happy with this new project, too.
Sorry, a follow-up question. 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 menswear and womenswear. Usually, this is the idea.
Thank you.
For any further question, press star followed by one on your keypad. Mr. Cucinelli, 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 spring/summer collection 2020. Goodbye.
Chorus Call operator speaking. The conference call is finished. You can disconnect your phones. Thank you.