Earnings Call: Q1 2018

May 8, 2018

Good evening. Chorus Call operator speaking. Welcome to the presentation of the 1st Q 2018 results of Brunello Cucinelli Group. I'd like to remind you that all participants are in listen only mode. Following the presentation, the initial presentation, there will be an opportunity for Q and A by the Financial Markets. Speakers will be Mr. Brunello Cucinelli, CEO President and CEO of the company Moreno Charapica, CFO and Pietro Arnabaldi, Head of Investor Relations. In order to receive help from an operator during the conference call, please press star followed by 0. Now I'd like to give the floor to Brunello Cucinelli. The floor is yours. Good evening and welcome. Before we start this call, which somehow is a light and very intense at the same time, I'd like to really thank you for the esteem and high regard you always hold us in. Thank you very much. So we would like to schedule it as follows. I'd like to dwell on the main highlights, then the CFO, Moreno Charapica, will drill down a bit more, give you some more color. Then I'll resume the floor and give you quite a good visibility on 2018. Then just an overview on 2019 2020. And then we will be talking about markets, products and also about the very important and fascinating world of the web. We have the whole staff here. We have Luca and Ricardo, the 2 young co CEOs. We have Dario, the young junior CFO and then Francesco, who is the CEO of the Internet. Although, jokingly, I always say that I'm the super CEO of the Internet because I have to say that this Internet with each passing day, it becomes increasingly fascinating. So seriously speaking, before we start, we would like to convey to you our positive feelings. In particular my positive feelings vis a vis the construction of the new Italian government, which is about to happen in the next couple of days because we are a serious nation that is really honestly on the way up. We are a true manufacturing nation. So I think that Italy, well, I have to say you should really quite happily invest in our country because you will not be disappointed. And I think this is quite a good claim for Italy. But I'm really, really pleased because the fact that we do not have a government in place, well, it's not a good thing. Well, it's true that I'll be turn 65 soon, and this will be the 65th government of Italy. But you see having a government is always best. So I'll now read out the figures It's €148,300,000 net revenues, plus 9 plus 1 current exchange rate, 12.2 constant exchange rates visavis EUR 136,000,000 last year 2017. Then there is an increase of sales in all international markets amounting to EUR 10,200,000,000 both in the domestic markets growing by 4.4%. Then revenues increasing in all geographies, Italy plus 4.4 percent Rest of Europe 14.9 percent plus North America, plus 2.2%, but it is a high single digit increase at constant exchange rate. Greater China, 31.2 percent, rest of the world, 5.3 percent. As usual, we keep repeating the same thing. We grow pretty staggeringly in China, but the baseline is very low. So that's why we that's such a growth. Then there is growth in all distribution channels, retail 9.8 percent, mono brand wholesale 12.9 percent and very important, multi brand wholesale 7.9 So this is how I describe the quarter. We are very, very satisfied with our business in the 1st month of the year. And considering the current sellout rates of the 2018 springsummer collection, the excellent sales campaign of the 2018 fallwinter collection and the high quality of sales, we can confirm our expectations for double digit growth in both revenues and profit next year. A most heartfelt thank you to all our employees who, with their work, help us fulfill our longed for desire to work and live in the utmost respect for human privacy. Privacy protects our intimacy. We need a fair amount of privacy in order to strike a balance between public and private life and to promote our well-being. I decided to hint at human privacy and I'd like to dwell a bit more on this later on because this call will not be too long. So I'd now like to give the floor to Moreno, the CFO. They will give you some further detail, and then I'll resume the floor. Thank you, Brunello, and good evening, ladies and gentlemen. I would now like to drill down on the developments related to the application of the new IFRS 15 account in principle. The principle has been applied by the Brunello Cucinelli Group since January 1, 2018, the date on which it entered into force using the full prospective application method. Slide number 3 basically shows the reclassification of results of the Q1 last year and then they are compared to the results of the Q1 2018. In detail, the application of IFRS 15 has entailed a new accounting standard for some types of contracts, namely those in our case concerning the sales in multi brand locations operated under the concession formula in the department luxury department stores, 6 shops in shops in Canada and 15 in Japan. Pursuant to this principle in these geographies, the group sells its products through department stores that from the accounting point of view act as agents charging the group for the service provided, I. E, the rent of spaces. Up until 31 December 2017, the revenues from the sales generated by these contracts were accounted for on the balance sheet net of the costs. The application of IFRS 15 has brought about a different accounting as revenues from sales are reported growth and subsequently the services rendered by the department stores are shown separately among the operating costs. Following the reclassification, the revenues of the Q1 2018 moved from EUR 134,100,000 to EUR106,000,000. Let's now move on to Slide number 8 and analyze the impact of the application of this principle on the full year and on the revenues of 2017. That, I'd like to remind you, amounted to EUR 503,600,000. The new so this value will now go up to EUR 511,700,000 with an increase of EUR 8,100,000. The cost of rent accounted for in the SG and A will increase with the very same value, thus leaving unchanged the absolute value of EBITDA amounted to EUR 87.5 million. The percentage margin EBITDA of 2017 slightly changes, but that's the same absolute value EBITDA compared with the revenues base that is higher following the accounting change. For the same reason, the expected percentage margins EBITDA 2018 changed subsequently slightly, but not the absolute value ones. To conclude, the application of the accounting principle does not impact growth rates expected for 2018 as we have normalized and adjusted the 2017 value as a reference base and it does not impact the absolute value of EBITDA and estimated profit. As far as the currency developments are concerned, I would like to highlight the negative effect of exchange rates of EUR 2,100,000 in the Q1 2018, reporting a growth at current exchange of 9.1% and 12.2% at constant exchange rates. Change in ForEx developments may see basically impact performance in the U. S. And the rest of the world, both growing high single digits at constant exchange rates. I'd like to remind you once again our currency hedging activity enabling us to maintain in 2018 healthy levels of income and profits even when Forex is volatile. Currency hedging policy has always had as its purpose that of neutralizing ForEx fluctuation on the absolute value of EBITDA. For this reason, when price list of collections are defined, estimated revenues are hedged net of costs in foreign currency. So there is a share of revenues, which is more or less the same as the estimated cost in foreign currency that is not hedged for and it is subject to a ForEx fluctuation. The ForEx impact is mainly linked to this part of the revenues. This choice is in line with the objective to maintain the absolute value of EBITDA unchanged because the impact of ForEx on the unhedged revenue share is offset by the same impact of currencies on costs. Thank you very much for your attention. I'll give the floor back to Brunello. So first of all, I'd like to give you a pretty good visibility on 2018 since 4 months have already elapsed and the result was pretty good. The product displayed in stores is very tasteful, is very young and we think it is very, very important. The fall winter orders performed very well and I'd like to say that the performance of deliveries production of the winter collection is perfectly in line with the plan. Deliveries are always very, very important in our industry. So what we are particularly pleased with is the fact that for fallwinter in our stores, we will be exhibiting and displaying items and garments that received a positive feedback from multi brands and press alike. Now I would like to give a brief overview of the large important topics of the March conference call. So we envisage double digit revenues growth this year and considering the excellent quality of sales, EBITDA should be slightly more than proportional. Then net financial position close to 0, and this is also very important. And another important thing that Moreno mentioned is the fact that we set and fix exchange rates because we want to have an industrial profit. This is the case when we started 40 years ago in Germany with a very strong Deutsche Bank. Every 6 months, we could have had important more appealing profit, but we wanted to set exchange rate in order to only have industrial profit. So considering the sound solidity of this industry, dividend will go up from 35% to 40% of profit next year. As far as 2019 2020 is concerned, plans, investments, expectations, I would like to confirm everything that we said in the March conference call. To that, we'd just like to add the following. We envisage that the dividend for the next 2 years 2019 and 2020 should be should stabilize around 45 and the 2nd year around 50. And that 50% might could represent a fair balance visavis the equity of the company and the cash of the company. So I'd now like to really highlight the topics that we discussed in March. So the value of a young, youthful contemporary product, the fact that we have fresh goods in the boutiques every 3 months through capsule collections, this is very important. It's very important to have young people in our teams both for the products and managers. Managers are around 40 in our company, products 36, 37 for men and 39 for women. And also salespeople, sales assistants in stores are important, especially for men's wear. They must be young, chic and they must have this Italian heritage and style of dressing well. Visual merchandising, and we always mention it, must always be very appealing and enticing and especially for menswear because for womenswear, it's easy. 1 year, you wear a short skirt, a pencil skirt, long skirt and everything changes, whereas for menswear, tiny details make the difference. You see, I have the impression that menswear needs innovation. And by innovation, we mean just tiny slight changes that make your look contemporary. But these changes basically entail changing and combining colors properly, choosing the proper length of the blazer between 73, 75, just tiny details, just a couple of centimeters, but they do make the difference. Honestly speaking, we think that for our company, the future for our menswear is bright. Another important thing is exclusivity. We keep hammering on this because and then I'd like to tell you what happened about a month ago in China. Actually, I want to tell you now there were about 100 young people, 36, 37 on average. And if you and if you had hidden their faces, you would have thought there were European American, though there were Chinese. What we were impressed the most by, I was talking to Luca and Ricardo, is that the Board Director said, in China, these well off gentlemen and ladies, they're looking they are on the lookout for special goods. So what does it mean special guide items? It means that you would nearly feel the desire to have everything tailor made for you. Another important topic is the safeguard of our brand. We have always tried to look after it in the physical world, but we have do it on the web too. And as far as the online world is concerned, the physical management of the boutique is going very well. The online boutique is going very well. We like to take a craftsman like care of it and we're very happy with the choice that we made back then. As far as openings are concerned, we confirm 3 to 5 new stores a year on average. In this case, this year, we have already had Dubai Mall and Las Vegas yesterday. We will have an important extension in Monte Carlo with an exceptional fantastic, but it was a bargain. No, it's not true. Monte Carlo is really very expensive. And then in August, we'll be opening in Beijing in the China Wall, the famous mall. So these are openings for the year. Now I'd like to speak to spend 5 minutes and talk about this important, important topic that we call human privacy. We discussed this when we met in person too. This idea that we have always driven for. We have always tried to behave in a special way with our customers, a very graceful way, trying to respect people, trying as much as possible not to be intrusive and not to hassle them, especially with the people we only meet bump into once in a while. Honestly speaking, I think that it is just a right to enjoy human privacy. Privacy protects our intimacy. We need a fair amount of privacy that it creates some sort of balance between public and private life because they're both necessary. I think that true luxury nowadays will be to lead a life that is unbeknownst to our smartphone, that is our travel mate. So just an example, last week, a very important client of us placed a good order, dollars 93,000 sent the money. And then the day after, they said, I'm sorry, we have some family issues. I have to leave. And the answer was hopefully the creation might rescue you, might help you. So this should be the way with which we approach these people. Because if you hassle me, I'm convinced that I will stop buying your brand. I have to say, as I said, I'm 65. And 40 years ago, it all started. And you know how it all started. I started reading some words by Theodore Hewitt and some of you might know that he was a great marketing man. And in this book, Marketing Imagination, he said that customers are gods. Now of course, there is a difference between talking and doing, but we keep thinking that customers should be our gods. So I wanted to tell you that we have always supported the very same thing. If you hassle me, if you intrude upon my privacy, I will stop coming and shopping at your brand. We see we are all very busy. We carry this disease inside Seoul with this underground background noise, IT noise, and we keep looking for serenity, peace and silence. So this is the great topic in these years, at least for our company. A few days ago, Marc Benioff, esteemed CEO of Salesforce came looking for us. And with this company, we enjoy a great relationship both from the business point of view and the human point of view. And he wanted to invite me for the 2nd year in a row to that fascinating meeting they organize in San Francisco. This year, it will be held in September, Dreamforce. And last year, as you know, we spoke on the stage of the Hyabas theater of a great topic, technology and humanism, how to mix and match them. And it was a fascinating venue. And this year, we want to keep talking about these very hot topics of human privacy. And in the November conference call, I hope I have a chance to tell you about this appointment, although it takes a long, long time to go there. It takes a day and a half to go there, and it will happen immediately after the Milan Fashion Show. But it is a great opportunity for reflections for pondering on things. So I wanted to really devote spend some time of our conference call on this because you should know that we are really, really focusing on this special relationship with our customers and our potential customers. So at the end of the day, as usual, dear analysts, journalists, investors, I would like to thank you all immensely. But we would like to also convey our positive feeling towards the coming world, both in terms of our company and our hope is that this company can survive for a few centuries. Thank you very much. We are here for any questions you might have, but we really were keen on talking to you about this. Thank you. Carusco, operator speaking. We will now start the Q and A session. First question from the Italian call, Paola Carboni, Equita. Good evening, Brunello. Good evening, ladies and gentlemen. I have a question on something that came up at the very beginning concerning the idea of having a fresh goods in the boutiques every 3 months with capsule collections, which is a pretty common trend in the industry. But I don't think we ever mentioned it in the past. So I was wondering whether you can spend a few more words on this on how this will be implemented and also on the supply chain, how it will respond to this need? Thank you. Well, we have always done this since when we started our business with 40 years ago. We would always design some small capital collections in cashmere for Germany, where we and now it's the same thing for this market now where we basically sell cashmere 12 months a year because there's a cold climate there. So about 30 years ago, we decided with our subcontractors, we decided while the company never closes for holidays and they never closed either. So there is some sort of shift for taking the summer holidays because if everybody closed in August for 20 days, there would be many, many issues in our industry because it is an important month. So we got this organization in place and it has been there for many, many years. So every 3 months, we design a capsule collection to refresh the window. So every 2, 3 months, you always have fresh windows, new products, but it's nothing new there. It's not that we have pushed it harder recently, Paola. This is very important. So this has always been the case. We deliver winter at the end of May. So the beginning of June, you can already say, especially the Germans at the end of May, they already have their basically winter windows usually for Pentacost. Yes, it is a pretty limited collection. But if you go to the store, you see 5 new mannequins, 5 new styles and you can change the color, the style. So maybe you can step into the store twice a season. So the first time you step into a store, the first question is always what's new? So this has always been a way to behave, so to speak. So we have the 2 major collections, 2 pre collections and then the capsule collections. Okay. Thank you. Thank you. Next question by Francesca Di Pasquantonio, Deutsche Bank. Good evening, everybody, and good evening, Brunello. Good evening, Francescina. Here we are. I have 2 small questions. The first one has to do with your approach to pricing, whether following the currency volatility, you thought it advisable to change your pricing policy and what kind of price rises you are implementing? Is it in line with the past or maybe different? And the second question is whether you can tell us something more about new products that you might present, BT? Yes, very interesting. As far as prices are concerned, we do never change anything during the season. So we set the exchange rates on 10, 15 June, we go to PT Walmart, the main recollection comes out, we set the exchange rates and then when it will be sold around from December 1. From then on, no price change. This has always been in our corporate culture that we think is quite graceful and correct. So as far as any anticipation of products, you see we like the collections that we are going to pity with. Hopefully, Francesca, they will be appreciated. But especially for menswear, and I was saying before, you see, I regret the fact that they say the menswear is struggling. It is not true. The fact is that we men, we all have 20 suits, 20 blazers. And if we want to buy something new, we really want to be fascinated. And to do that, I need to have young sales assistants, well dresses assistants in the stores that shows me the blazer or the double pleated trousers. You see this is what makes the difference. And I really wanted to show this to you and to draw your attention to this. For visual merchandising, this is important too. Otherwise, it is difficult to sell. And then men, what do men do? Men tend to mix and match. They wear maybe last season's blazer with the new this season's trousers. So for menswear, we do have a huge opportunities. I should not be saying this, but we are seen as a contemporary, innovative and young in for menswear. We are a reference brand, not a fashion oriented brand. So we are very hopeful for the future, confident about the future. But we need young people, Francesca, young people working on the product. And when you work with 30, 40 year old staff, then it's always different. A follow-up question on this. Am I wrong or boutiques are always well, womenswear product tends to prevail. There's more selling surface dedicated to womenswear in terms of well, as you know, in terms of items, 40 men and 60 women in terms of value, 67 women because the average price is higher and 33 men. That's the ratio. Whereas in boutiques, the display is 6535. That's right. It's always been the case. Then of course, there are some markets where menswear is stronger and might go up to 45%. But there's a difference. Menswear works very well in shopping malls. So then we have to say that what is shown basically matches the sales. But then of course, in the warehouse, there's a lot of selection. So there is a lot of selection of menswear in the warehouse. But there's a lot of possibility for menswear because men need to be contemporary. I know that you women do it too, but which 50 year old man wouldn't like to look 45 millennials forever? Well, yes, this is very important. So we see fashion represents just a small business, generally speaking. And what prevails is the European, the Italian style men that needs to be fresh. Yesterday, I went to an important meeting with young people and I was wearing jeans, but at the same time, I was wearing a tie and a double breasted blazer. So I was wearing jeans but with a tie because I'm a 65 year old man. But at the same time I don't want to look 65. I'd like to look younger. And then you become more chic. So in the company, we did something very important. We have set up visual merchandising schools for menswear so that everybody can really understand the taste. It's difficult to explain, but then you can see it at Pitti. You see we have no professional models at Pitti, just our staff is there. And if you see the staff well dressed there, we want to show is the Italian style. I don't wear any handbags about my pochette, my pocket square can make the difference. It's my accessory. For menswear, 60 percent of the items are the garments are bought by wives and spouses. But you know how many women call us and say, I want my husband to look younger. I know it is sounds funny, but this is a serious thing. And we have many, so to speak, advisers for taste in our company. You are a billionaire. You go to a party on a Saturday night and you wear a suit that makes you look instead of 50, 60. And whereas women tend to be more trendy. But you see for us men, it is very important to wear the in season blazer. But I don't want to be boring. What I mean by that is that it is not a question of price for menswear because the thing is that every morning when we go out, we want to be fully groomed and you need to look fresh in the morning, in the evening all the time. Thank you, Francisco. These are really the remarks that are helpful to us. I'm pleased. Thank you. Question from Mariana Horn Berenberg. Hello, good afternoon. This is Mariana Horn from Berenberg. I have two questions, please. The first one is you could give us some more color on what you have been seeing in Europe, especially from tourism consumption, although I know that you're not as indexed as some of your competitors. But it seems that you have been you have seen a very strong performance in the region. So if you could share with us what you have seen. And then the second question is and I know you don't disclose profits quarterly anymore, but if you could give us an indication of your expectations for profits either for the full year or for H1? Thank you. Marianne, thank you. Let's start from the last of the two questions. As far as profits are concerned, as we wrote in the quote, the quality of the sales of the 1st 4 months is very, very good. So we are confident and happy with our profitability. So we expect a very interesting year. So this is what we wanted to say. As far as the Europe is concerned, well, I think that Europe is brimming with tourists. But what happens in Europe is that we are now selling the product to local consumers. This is the trend. Because in Europe, the world, you see it looks better. So the consumption is back for menswear, for womenswear. So I see a good mood around. Yesterday, the question was do you believe in Europe or don't you in the recent past? Whereas I'm a strong supporter of this. You see, after I came back from China, I said, well, these esteemed Chinese, they want to come to Europe. They want to buy European products, French champagne, German car, Italian furniture. Europe I think is has a golden century ahead, but we have to make special handicrafted goods. And in order to do that, we need people who know how to work, how to use their hands. They're very skilled with their hands. We have to make unique products. And I keep saying the same. My neighbor, years ago, his wife forced him to go to Paris every 2 weeks to shop at Chanel Hermes. And you know why? Because she wanted to sport the Paris Chanel bag. You see shopping in Milan or Rome is not the same as buying or shopping in your home country. This has always been the case. It is a fascinating trend for me that I'm 65. If I want to buy a cask of champagne, you see it's better to buy it in Paris than here. So the confidence in Europe. But I'm always talking about the high end of products, exclusive products and that are not too well distributed in on the web because I have this idea that the web massifies. So everybody is looking for exclusive tailor made products and price is not an issue. So I'm very, very confident for Europe. Thank you. Next question from the conference call in Italian, Giuseppe Marcella, BNP Paribas. Good evening. Good evening, Brunello. I'd like to draw inspiration from the change in the accounting principles. We can't can you speak up to Zepe? We can't really hear you. Is it better now? Yes. I'd like to draw inspiration from the change in the accounting principles to ask a question on the distribution. I think that the presence of monobrand stores is 0 in the travel retail channel. I'd like to know whether you think you want whether you want to change the approach in the future? Since there were no openings in the Q1 because the number of DOS stores is unchanged and 9% store is a very healthy growth, much more than what we expected. So I don't know why there should be this growth. If I understood properly, so you want us to tell you what we think of Travel Retail? Yes, I think that today, you have a very limited presence. Well, Giuseppe, I want to tell you something. First of all, you see airports, at least for us, it is not easy for us to see an airport the airport as a luxury environment. And then we specialize in apparel. So in airports, you usually buy things without a size, maybe you buy a pen, a bag, not something that is tied to a size. And then I've always I've grown up with this idea that whatever you have at the airport, you see it's not really exclusive luxury. It is a chance that we have obviously, but as things stand, we would like to not think about it now because airports is not really the kind of distribution we're looking for. Okay, thank you. Next question from the Italian conference call, Alberto Dagniano, Goldman Sachs. Good evening, Brunello, and good evening to the whole team. I have a couple of questions on China. The first one, now that you are still growing and you have been in the region for quite a few years. Have you learned something different compared to the customer needs? Do customers have a different taste than Europeans? For example, Chinese customers on average are younger, so maybe you would change and suit make your offer more suitable to the region when you want to grow more there and to adjust your offering? And then China, your growth strategy, does it would you keep on doing wholesale with local partners or now that you are more familiar with the market, are also thinking of opening more local stores? And then just a brief comment on the increase of the payout, if you can repeat the long term target and what drove us to revise it upwards. Yes, I'll start from the dividend policy, the last question. You see, we thought that since the company is sufficiently capitalized, also drawing inspiration from the companies we use as a benchmark with a high esteem in respect, we imagine that reaching 50% fixed every year in a couple of years would be just fair. So the idea is not that of reaching 60%, 70% or 80%. I think it is a fair balance between capitalization and dividend policy. As far as China is concerned, you see, I want to talk to you about the great value between wholesale and retail. Now we have 25 wholesale accounts, very high quality in China. And I'm pretty convinced that over the next 5 to 10 years in China, there will be 500 beautiful wholesale locations. Because if you are a Chinese shopper and if you shop online, nobody knows about it. Whereas and we if you are talking if you're talking about the no logo garment. If you are a wealthy Chinese, you want people to know that you shopped in the beautiful store in Shanghai, you walk out of the store and you have your carrier bag with Shanghai, then you will have the driver come pulls up with a Mercedes. And the this is an example that is true to everybody. I bought a watch for my daughter in Perugia, And then Pietro went to the very same store and the shop owner said, you see Brunello bought the very same watch for his daughter. So the people need to know that the transaction happened. And so this is very interesting. And then the most trades man trade oriented population in the world, that is China, will develop some further multi brand stores. Another important topic that is pretty important has to do with taste. In the dinner party that we had, there were about 100 people, 12 of us. And I can guarantee, Alberto, this was in China, that if we had hit our face, you wouldn't be able to tell which one was Chinese or not. You see there's a lot of information and they are all fascinated by these taste. They don't say and I remember, Americans, 25 years ago, they would come to the store and they wanted very wide straight trousers. And we said to them, no, I'm sorry, we don't do that. We can't we don't know how to do it that. And some clients were angry, but the idea was we didn't want to sell very wide legged trousers. And now they want to dress the same as we dress. They want us to organize the visual merchandise in this way. That's why it is important to mention the schools that we were talking about before, especially for menswear because they are fascinated by this Italian way of dressing, a special blazer, the right length for trousers. So for taste, they're fascinated by us. For the multi brands, we still have fifty-fifty of our revenues, multi brand and mono brand. Something I haven't told you is now that we are entering this part of the world, this is 13% of our revenues. In the next 10 years, we might definitely go up, but with an Italian taste without distorting our collection. Maybe you see a sizes change, but this happens already in Japan. But for taste, it is them. They want us not to change anything. And I've always thought that you need to really never change your mind. You must provide them with different weights. So for example, with according to the climate. But when we came back to China, we were fascinated because they have changed virtually overnight. And this is good news for Europe because they're fascinated by our way of life. Let's carry on this way. What I'm saying is, let's invest in skilled hands making special products because I mean, because I think we won't have any difficulty in selling them. Difficulty will be making them because they're not interested whether the blazer costs $6,000 or $7,000 They want it to show that it has a taste, that it is handmade. And 5 years ago, nobody published or posted anything now, whereas it happens and because of the online world. I don't know if I answered your question. Yes, it was very clear. Thank you. Well, you should know that there's another question. I thought it was the end. The next question from Flavio Chirida, Jefferies. Mr. Chieda, you have the floor. Good afternoon. I am a young and cool husband because I have a couple blazers of yours. So last week, I had a chat with the person in charge of the largest multi brand in the UK. And without mentioning any names, we were talking about brands that work and brands that don't. And he mentioned 3 or 4 names of brands that do not work and 3 are Italian and a couple of them are your direct competitors. But the objection he was saying was that that's so old, There is no evolution. They don't know how the market is moving. So my question is, since you have relationship or high level relationship with the multi brands, have you noticed that you are being offered larger spaces because some Italian famous brands have stopped selling and so you are offered to their spaces? So it is a fascinating question because that's precisely what we were talking about menswear before. So first of all, last night, I watched the Milan game. But besides that, of course, besides the joke, this is the problem with menswear that I was mentioning before. Meaning, when we say that menswear is struggling, it's not true. The only difficulty is in the taste. And I'm very, very happy that we are seen as a young company from the taste point of view. Then I'm very happy that many companies are somehow copying us or trying to replicate us because we copied the rough floor in 25 years ago in terms of visual merchandising. So menswear needs to be fresher. And you see these names are Italian because menswear are Italian. The revenues of menswear is Italian. The best companies for menswear are Italian. Of course, we don't mean fashion oriented, but it's not easy because the tiny details that count. That's what I said before. You might have 10 blazers in your wardrobe. And if you are 50 in the morning, you want to wear a blazer that makes you look 40. Alberto was saying before that Chinese customers are young. Yes, but now we have young Americans, young Germans. And for menswear, there is this trend to wanting to look younger. And for women's wear, you have 1,000 possibilities to look fresh, whereas for men's wear, it is more difficult. You must look chic, not ridiculous. And you must with the very same outfit must be must last from the morning to the evening. And how can you be shaken refined? You must we must work on this on a daily basis, but this can offer us great possibilities. Yes, thank you very much and congratulations. Thank you. There are no further questions at the moment, Mr. Cucinelli. Very well. So I'd like to thank you all very much. As usual, I'd like to say that I devote 70% of my time to products. So thank you very much. Whatever you need, we are available. Thank you for your esteem. Thank you.