Ladies and gentlemen, thank you for standing by, and welcome to the Kering 2019 third quarter revenue results call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question and answer session. I need to remind you this conference is being recorded today. Now I would like to hand the conference over to your speaker today, Mr. Jean-Marc Duplaix, Chief Financial Officer. Please go ahead, sir.
Good evening to all of you. We are pleased to review with you Kering sales for the third quarter of 2019. A housekeeping note. Moncler has its earnings call immediately after ours, so we will keep this call to one hour. On slide four, total reported revenue was up 14.2% to EUR 3.9 billion, and 11.6% comparable, implying an FX tailwind of around 2.5 percentage points. There was no change in scope. Three elements are worth highlighting here. First, the increase in revenue was fueled by all our reporting segments. Gucci did account for over half of the growth in euro terms, but Saint Laurent, Bottega Veneta, our other houses, and Kering Eyewear all contributed to our good overall performance. Second, in Q3, we achieved balanced growth across our portfolio.
These two factors underscore the virtue of Kering's multi-brand model, the desirability of our brands, and the quality of the execution by our teams. Third, our trajectory from Q2 into Q3 shows a steady pace of consolidation on top of very high comps. All this was achieved in an environment that, as you know, has been subject to quite a lot of disturbance. Turning to our luxury houses on slide five. All together, they posted sound growth of over 11% comparable. Revenue came close to EUR 3.8 billion. The impact from currency fluctuations provided more than two percentage point support, with reported growth closer to 14%. Retail, which represented 76% of revenue, was up 12% comparable. By region, Asia Pacific achieved the best growth despite heavy disruption in Hong Kong, down more than 35% in the quarter.
The weight of Hong Kong in our Q3 retail sales was less than 4%, compared to roughly 6.5% in full year 2018. Mainland China and Korea posted high-growth rates, either in line with Q2 or slightly above. This is driven by strong domestic consumption, more repatriation, and some redirection of purchases. Western Europe and Japan both grew 12%, roughly consistent with Q2. In Western Europe, Italy and the U.K. were in evidence, while in France, our brands had more contrasted showings depending on the relative mix of locals versus tourists in their respective clienteles. In Japan, locals drove the growth and brought forward some purchases in anticipation of VAT hikes in the last two weeks of September. North America was up single digit, with contrasted market conditions compounding a high comp base exceeding 30% in both Q3 2018 and 2017. Overall, tourism was a drag in the region.
Conversely, traveling North American clients were particularly dynamic at all of our brands, notably in Western Europe. More broadly, for our three main brands, all nationalities grew in the quarter. The sole exception was Middle Eastern customers, as in H1. Once again, the Chinese cluster stood out and the repatriation of spending continued, with domestic purchases accounting for half of their worldwide spend. Our brand e-commerce grew a solid 20%, and wholesale advanced 9%. The trend in royalties from eyewear and beauty was also sustained. As you know, creativity of our houses is core. All the spring summer fashion shows held in late September, early October, were widely acclaimed. Gucci, Bottega Veneta, YSL, and Balenciaga all ranked high in the various top 10 lists. They also demonstrated their ability to subtly open new chapters in their creative proposition and brand narrative.
At group level, and in each of our brands, we continue to develop our growth platforms from online CRM and AI capabilities to logistic footprint and capacity. Finally, as regards our retail network, we had 1,345 directly operated stores at the end of September. Let's turn to Gucci on slide six. Gucci delivered on its ambitions and posted very sound double-digit growth, up close to 11% comparable. Retail and wholesale rose 11 and 10% respectively, and royalties were up more than 30%. By region, the performances are broadly similar to the trend I just mentioned. Gucci is implementing its strategy with determination. In line with the roadmap you all know well, its brand desirability is strong and fueled healthy growth in key product categories. The design and merchandising teams are constantly innovating to maximize the efficiency of the offer across categories.
They inject pure newness into the lineup, while at the same time enlivening the strong carryover base. Regarding distribution, growth is driven by continuing progress in retail metrics. First and foremost, conversion rates, as well as ongoing rollout of the new stock concept and effective customer engagement tools and campaigns. In addition, a steady flow of investments in marketing and communications initiatives are instrumental in further elevating brand experience. Moving to slide seven, Yves Saint Laurent delivered another solid quarter with comparable revenue up nearly 11%. Retail was up 11%. The brand is somewhat penalized in Western Europe by its over-indexation to France and in Asia-Pacific by its relative under-penetration in mainland China. In wholesale, Saint Laurent grew a sound 8%. Saint Laurent enjoys large untapped potential. Its brand equity is very distinctive and carefully nurtured through spectacular fashion shows, iconic products, and silhouettes.
When it comes to product categories, the brand also has a significant headroom, especially in ready-to-wear and shoes. As I hinted on my comments by region, its network expansion is still ongoing with opportunities to rebalance its country mix, increase its penetration and visibility in key markets and in travel retail. Recent openings in mainland China and Italy are important milestones in this direction. On slide eight, you see that Bottega Veneta's momentum is building up. Revenue was up 7% comparable, driven by retail up 8%. We are pleased with the progress of the brand and the great success of the new product introductions for women in handbags, shoes, and ready-to-wear that are more than offsetting the downtrend of the previous collections. The response from both existing and new customers is very enthusiastic, especially with local clienteles in Western Europe and North America.
On the flip side, the brand is impacted in Asia-Pacific by its exposure to Hong Kong and to some extent, by the gradual ramp-up of new products and the adaptation of Bottega Veneta's production setup. The two fashion show under Daniel Lee's creative direction amplified the initial success of the more fashion-centric approach. Feedback is extremely positive and reinforces our confidence. Under its new CEO, Leo Rongone, the brand is investing to strengthen its teams, integrate new skills and capabilities, and is accelerating its marketing and communications investments. Action plans are also in place to speed up production and ensure sufficient new product inventory levels, a process that is likely to take another couple months. Let's look at our other houses on slide nine. All together, they delivered solid double-digit growth with a particularly strong retail up sharply in every single region.
In soft luxury, both Balenciaga and Alexander McQueen had very strong quarters across the board. The Balenciaga fashion show, particularly well-received, marked a new stage in the house's evolution with a strong emphasis on tailoring. Promising reception of recently launched handbags highlights the potential of the leather goods category for Balenciaga. Both houses are demonstrating their ability to expand beyond their initial comfort zone, supported by a determined push into retail and greater control over their wholesale distribution. In hard luxury, Boucheron had a good quarter in jewelry and high jewelry with a strong retail performance boosted by Japan in September. The Pomellato brand also continued to do well, notably in Europe. In watches, once again, the performance was constructed in a generally tight market, and Audemars Piguet had some very encouraging breakthroughs, thanks notably to the success of its recent product launches.
A word on Kering Eyewear, which accounts for the bulk of revenues from corporate and other on slide 10. Consolidated revenue was up about 30%, with solid double-digit growth in all channels and all geographies. Our largest brands continued to deliver outstanding performances, while Balenciaga and Montblanc, launched more recently, are proving highly successful. To conclude, as we've noted on slide 11, we are pleased with the performance of our houses in the quarter and confident in delivering another solid year. The desirability of our brands is undiminished, constantly nurtured through creativity in all directions and relentless attention to meeting the expectations of our customers. We are particularly satisfied with the response from existing and new customers to the relaunch of Bottega Veneta. We expect the house to gradually return to the status it deserves within our ensemble of brands.
We are investing systematically and significantly in all our houses, starting with Gucci, to activate the full growth potential of the group. We are doing this with an eye to maximizing the return on our spending, methodically allocating resources across houses and within each one to the projects with the greatest brand-building impact over the long term. The world around us is not getting easier to make sense of and to forecast. We have the right tools in place to monitor our environment and the right action plans ready to respond swiftly to changes wherever they come from. This being said, our growth is healthy, it is consistent with our strategy to build our houses and the group for the long term, and we are confident in our continuing progress. With Claire, I'm ready to take your questions.
Thank you. Ladies and gentlemen, we will now begin the question and answer session. As a reminder, if you wish to ask a question, please press star and one on your telephone keypad and wait for your name to be announced. If you wish to cancel your request, please press the hash key. Once again, please press star and one to ask a question. We will now take our first question. It comes from the line of Antoine Belge from HSBC. Please go ahead.
It's Antoine at HSBC. Three question. I think Gucci showed stabilization in several region. One, where the growth is negative is the U.S. I think you mentioned that it's only in September that you were able to do marketing again, et cetera. Could you maybe comment a little bit on the progress there, and if you're confident that you could maybe return to positive growth in the first quarter? Second question relates to Hong Kong. I think you mentioned sales down 35% in Q3. I guess July was not that bad and then probably September, more negative than the 35%, and it seems that Golden Week in Hong Kong has been very weak. Could you comment also there and are there any action that you could take?
Finally, on Bottega, when purely looking at the numbers, it seems that it's really Europe and the U.S. that have picked up on the new Bottega products. Is this the case or is it more that actually there is demand or attraction in Asia, but because of the exposure to Hong Kong, actually it's not a question of the different consumer reception, but more the fact, the impact of Hong Kong.
Good evening, Antoine. Thank you for your questions. You mentioned a stabilization. Let's say that what we see is a consolidation of the growth in many regions. It's true that we see a stabilization of the traffic, which was expected, and that the reason why we have put the emphasis on all the KPI or all the metrics regarding retail, and that we saw an improvement of many retail KPIs. As regards more specifically to the U.S., it's true that, besides all the comments we already made in H1 about the macro environment, which has not improved definitely in the U.S., with the drive of tourism and consumer sentiment, which is deteriorating. Let's say that after two years of massive growth, it's true that we have a situation in the U.S. for Gucci where there is here a decrease of traffic, but an improvement of the retail metrics.
This improvement is not enough, of course, to offset the decline of traffic. It's true that we have started some initiative. We have resumed some initiative at the time of the back to school, especially, for example, with the windows of Saks on the Fifth Avenue. We had also store events, to promote personalized engagement around newness. We had some more communication activities. Of course, we have more diversity engagement. This was what was scheduled. Of course, we can expect that it should rather bear fruits in the coming months. At the end of the day, in the U.S., compared to Q2, Q3 was more or less in line with Q2, with no further deterioration, but not any improvement. I'd say that the main patterns of consumption we had described for the U.S. in Q2 were still the same.
Just maybe a point which is important to mention, just to conclude on that question on the U.S., and it's very important to us, is that overall with the American cluster, Gucci is up in terms of sales. If we consider the American cluster with a slight improvement even compared to Q2. You know that U.S. tourism has been particularly strong in Europe in Q3, and Gucci has benefited from this positive impact. Overall, it's positive with the U.S. cluster, even if it's not the most dynamic one, of course. In Hong Kong, just to comment, to elaborate a little bit on your question. I would not say that July was not too bad. It started to deteriorate. The end of June was already more complicated. July was negative, and it's true that there was a massive deterioration, especially in August, in September.
What we can say overall is that there was probably some time or lag before a repatriation of some purchases to other destinations, so that there was more offset of the lost sales in Hong Kong in September. August overall was not the best month of the quarter. What we can say is that the Golden Week has been not strong at all in Hong Kong, definitely. Of course, Hong Kong is particularly impacted with the lack of Chinese buyers, but also with the local clientele. There is a decline, even if we saw some shifts of consumption to other regions, and especially Europe from Hongkongese. Overall, let's say that the trends are still negative so far in Hong Kong. Regarding your question on Bottega Veneta, definitely, I think the new styles resonated very well with the local customers of the mature countries, so U.S. and in Europe.
The Japanese clientele, which is an important cluster for Bottega Veneta, is also growing, but more modestly. You know that this is generally a clientele which is more conservative, and we saw that at the time of change of aesthetic at Bottega Veneta. The Chinese cluster at the time of the change at Gucci, sorry, the Chinese cluster is, for the time being, lagging a little bit behind. Still up on the domestic market, but of course, Bottega Veneta is penalized by the situation in Hong Kong, because Hong Kong was a very strong market for Bottega Veneta. Overall, I think it's really what we were targeting. It was to start with the ready-to-wear part with the shoes also category.
It's true that we have launched some very sophisticated bags, which are resonating well with all the clienteles, but first and foremost with the clientele of the mature country. I think that it's really what we had to do in order to rejuvenate the brand, and maybe we will have the occasion to discuss about this. The profile of the customers has changed. We have been able to attract existing clients, but which is also very important for us to attract new clients and younger clients.
Thank you very much. Just to make sure that I understood, you expect that progressively, whatever the situation in Hong Kong, there would be a bit more repatriation or let's say, ability to recoup losses in Hong Kong elsewhere after a bit of a lag?
I think that what I said, trying to clarify my answer is that August probably was the weakest month because there was not at that time such a massive repatriation or shift to other regions. September was better in that sense. Overall at the end of Q3, we cannot say that 100% of the sales which have been lost in Hong Kong have been recouped elsewhere. I think that we have also adapted the replenishment process and the supply chain in order to be able to deliver the other regions and to reallocate some products that were initially intended to be sent to Hong Kong to other regions. We believe clearly that there is a rapid repatriation, which is obvious when you consider that you have half of the purchases by the Chinese clients which are made on the domestic market.
Thank you.
Thank you. We will now take our next question. It comes from the line of Thomas Chauvet from Citi. Please go ahead.
Good evening, Jean-Marc and Claire. I have a few questions on Gucci exclusively. The first one on sales outlook. Very good set of numbers, Q3. It feels that you're talking about a stabilization in trend. Would you be able to give us a flavor of your expectations for the fourth quarter? I think you did that about a year ago. Chinese spend is good. You have easier comp, anniversary of the yellow vest, a step up of marketing in the U.S. Should we expect a more stable trends from here, i.e., potentially double-digit growth at Gucci in the fourth quarter as the new normal? On the margin side, secondly, I know it's a sales call, but I want to come back to what you said at half year about the next year and the year after.
Can you confirm that you are still expecting about 150 basis points gain at the EBIT margin level for Gucci and the other brands from the repatriation of the Swiss-based logistics center into Italy? This was, I think, because of EU free trade agreements. Could you just recap those markets that will benefit from those free trade agreement? I think there was Korea and a few other EM. That would be useful. Just a quick word on, thirdly, on beauty and the Gucci makeup launch. Are you satisfied about the first few months in terms of sell-out, if you're seeing the data in terms of the product range, the quality of the doors? Is your relationship with Coty improving on the overall beauty business? I'm thinking the fragrance part in particular.
Is it a business that you could consider taking over at some point when the license agreement expires? Thank you.
Thank you, Thomas, for your questions. Next time we will organize no more a sales call, but more budget or forecast call so that we can answer all your questions about the EBIT margin for next year and 2021. Trying to answer to your question, and in fact, I won't answer, basically, because what we say is that, and that's very important to us. I think that the Gucci teams have worked very hard to deliver the trajectory in terms of sales and in terms of profitability that had been presented by Marco Bizzarri during the Capital Markets Day in June 2018. In fact, we continue, and this is objective to deliver. We know that the environment is more complicated.
We know that we had a weakness in the U.S., overall, we consider that we are in line with our growth ambition going forward, also basically starting with the FY 2019. As mentioned previously during our H1 call, I think that high single-digit growth for H2 is something that is largely achievable, there is no reason to make any changes to this ambition. I won't comment further on that ambition, which is super clear, we won't deviate from that ambition. I will make the same comment for next year in terms of ambition of sales. I think you have to stick to the presentation made by Marco. As regards to margin, let's clarify a little bit.
What we had mentioned during the H1 call is that we should benefit from some savings or some, let's say, reduction of tariffs due to the transfer of already some logistic activity. Not all, but we have started to move some flows to Italy in order to benefit from free trade agreements. That should mitigate part of the increase of the tax rate that we had mentioned. We had said at that time that it would offset half in the long run, not already next year, but in the long run, it should offset half of the tax average rate increase. It was not a comment about the EBIT margin.
You can imagine that, and I was probably one of the first ones to mention that in this industry, that to increase the EBIT margin was more challenging today in this environment where we are struggling to get and protect market share. We have still the ambition concerning the growth of the top line to increase the EBIT margin. Once again, we are, let's say, quite comfortable with the trajectory we had shared with you in June 2018, and that we have the occasions to comment on since then. I will stick to this ambition of improving the profitability of the brand. Now, regarding the beauty license.
It's true that we had very interesting developments recently. I think that the most recent launches have been quite successful at Gucci, especially with the new fragrance, Mémoire d'une Odeur, which was really a very successful launch that was amplified by some very interesting activities on social media. We had typically a very strong and interesting activity on that, I think on Instagram Beauty, where we have gained very rapidly a very significant number of followers. It's very encouraging. Now we are just at the beginning of this relaunch of this segment, of this activity. Now we have to contemplate in the long run how this development will be sustained, if Coty will be able to be successful with the animation of these new fragrances. Also with the animation of the other existing fragrances.
The lipstick has been a success, definitely, with very significant of units already sold. We saw that the market share of Gucci on the market was increasing. That's very positive, definitely. I think it's very early to comment on. Let's see in the coming months how it will continue to develop. I think it was interesting to see that the combination of the investments we made with new people in the teams, plus the work done by Coty start to bear fruit.
When does the licensing agreement expire?
Marc, as Claire you know, we never comment on any expiry date.
I know. Thank you. I tried.
Thank you.
Good evening.
Bye-bye.
Thank you. Your next question is from the line of Mélanie Flouquet from JP Morgan. Please go ahead.
Yes, good evening. Thank you for taking my questions. The first one would be on APAC. Could you maybe share with us, I know the comps were pretty similar on a one-year basis, but they were fairly complicated on a multi-year basis in APAC. I was wondering, clearly Hong Kong was a very big negative impact. What are the markets that actually compensated this? Did you see an acceleration more specifically in mainland China? What did the mainland Chinese cluster actually do for you in quarter three compared to the previous quarters? That's my first question. The second is on byproducts. Would you be able to share with us whether there were some standout products within the Gucci performance this quarter, please? My third question is on Saint Laurent. It was penalized by a lower exposure in mainland China.
Is this something that you foresee you will address in the coming quarters, that you will seek to accelerate the expansion in Mainland China more actively given the background of Hong Kong persisting? Thank you.
Thank you, Mélanie, for your questions. Yes, I think that if we look at APAC, my answer will be on all the luxury houses, and if we look at retail, it's true that in Q3, if you look at the different indicators, but two years stack growth, three years stack growth, in a way, Q3 has been very consistent with Q2, but with some, let's say, changes in terms of destinations. It's true that what we saw is that there was a massive repatriation, as we said, in mainland China, which grew very strongly, especially on a very high comp base, because Q3 '18 had been particularly strong in mainland China compared to Q2 '18. It's true that we have reached, not a peak, but a very high level of purchases made on the domestic market.
50% overall for the whole portfolio of brand is clearly something we were not used to. If we look at the other countries in the region, definitely Korea has been particularly dynamic. Still thanks to local clientele, but also, of course, benefiting from the repatriation of Chinese purchases, especially in the duty-free channel, because of course, the price gap is very favorable in Korea. Singapore has benefited a little bit also, as Australia. Macau was finally not too bad, especially at the end of Q3. The beginning of the quarter was not good in Macau, and at the end of the quarter, it has improved. Overall, there was clearly some countries which have benefited from this repatriation. These are the countries that I mentioned, otherwise, in the region, trends were okay or fairly okay, but with no evidence of repatriation.
If I consider Japan, clearly, Japan has not benefited from this shift, probably because, of course, of the price gap. If we look at the Chinese cluster, it's still up, massively up. Of course, it's very difficult to analyze, considering also the comp base we have and what we have mentioned about what is underlying in your question on Saint Laurent. Overall, it's very positive. Once again, it's quite well-balanced across the different tiers in terms of city. Even if it's true that the anniversary of the Chinese revolution may have slightly impacted the traffic in Beijing at the end of Q3, especially at the beginning of Q4. With a marginal impact at the end of the day. Your second question was about the product categories. I think that all key categories at Gucci grew quite well.
It was particularly strong with the leather goods, of course. The handbag category is continuously posting very solid results. Clearly the iconic pillars have confirmed their success and are key drivers of the growth, but we have also some very successful launch, and I think the performance of newness is also very positive. I think that also small leather goods and luggage performance is strong. You may remember that this, we're talking about categories, which were maybe a little bit longer to revamp and to change. They are benefiting from that. Shoes and ready-to-wear are posting robust trends, but normalizing on a very strong comparison base over more than two years, especially in Western Europe and in the U.S. These categories are probably a little bit more penalized by the situation in the U.S.
What is more interesting is that this category is driven by a strong appreciation of both carryovers and novelties from the season. That's quite encouraging to see that the performance is well-balanced between newness and carryover. When it comes to all the other categories, which are the traffic drivers, they are performing extremely well. Your last question was about Saint Laurent. Saint Laurent. Yes. It's a very fair point. Saint Laurent came in China or penetrated the Chinese market later compared to Gucci or even to Bottega Veneta. It's a brand which awareness in China is quite strong, but probably not comparable to the level of brand awareness and reputation that the brand had in Europe or in Japan, of course, in Korea or in America. That at the beginning, 10 years ago, it was probably more difficult to get the best locations.
Now we are catching up, so that we have been able to open the first three flagship stores for Saint Laurent in the country very recently, beginning of 2019. Clearly it's one of the region where we will continue to invest. You can imagine that the plan now is not to accelerate in Hong Kong, and there is no, let's say, a plan of opening stores or refurbishing stores. I think that we have the right size of network, and even we can consider what we will do in terms of network or at least in terms of renegotiations of rent. In China, clearly, we have some opportunities in front of us, and among the openings we have planned for Saint Laurent, China was one of the regions where we had a significant amount of openings. Thank you.
Thank you. Your next question comes from the line of Thierry Cota from Societe Generale. Please go ahead.
Yes, good evening. Thank you for taking my questions. Actually, I'd like to stay on Saint Laurent from two angles. First, on the retail growth number, the 11%. Could you give us an idea of the breakdown? How much was space? How much was like-for-like, Hans, and maybe a mix and price, because I'm wondering if volume on a like-for-like basis has gone down a lot, if not to zero or lower. Secondly, you did mention the weakness in terms of geography. I was wondering if there were some comments also to be made from a product viewpoint and maybe some issues to address on some of the product categories, so if you could elaborate on that. Maybe on a different point, on Hong Kong, if we could get some granularity, some differentiation on what happened in Q3, this minus 35%.
If you could give us an idea whether between product categories or locals versus tourists or wholesale versus retail, or even between brands, if there were some interesting or relevant differentiations to be made or if everything was pretty uniform. Thank you.
Thank you, Thierry. As regards Saint Laurent, I think the answer is quite simple because it's exactly, in a way, what had been presented by Francesca Bellettini, the CEO, in June 2017. Meaning that there would be a point where the sales density would reach a point in the existing network when the contribution of the space would probably become higher than the like-for-like growth, which is exactly the case now, where we are able still to increase the sales in the existing footprint. It's true that there is a contribution of store opening, which is completely needed, considering the comment I made about China and some other regions where we have untapped potential for the brand. Definitely, when it comes to the like-for-like growth, and it's very connected to your next question about the categories.
It's true that, as we already mentioned also, Saint Laurent is particularly strong historically in ready-to-wear and shoes because this is part of the DNA of the brand. When we look at the recent growth of the brand, it has been clearly driven by the success of the leather goods collections. We need to amplify the development of the ready-to-wear and the shoe categories. There was some work done in terms of collections, but also in terms of price architecture to be sure that we are addressing a broader scope of clients, a broader base of clients, with, as a result, not a decrease of the prices, but more because of the price architecture, a change on the price mix. That at the end of the day, in terms of average selling price, there was some impact.
Overall, what we saw in Q3 was an improvement in terms of the volume sold in ready-to-wear and shoes, which is exactly where we were targeting, but not translating directly into the same % of increase of sales because of this rebalancing on this price architecture. To conclude on Saint Laurent, both for the retail trends and for the split by categories. In fact, Saint Laurent is just executing the plan, which is now to continue to invest in new markets, open new stores where clearly the brand is underdeveloped, but also working on the category so that we have a development which is more balanced across categories. Clearly, we have room for improvement in some categories.
I can tell you that, maybe you will have had a look at the recent fashion show, and I think it's going very clearly in the very right direction.
Okay. Sorry. Pardon. Now we're going to say
That's right.
Thank you. What you're implying is that the average, the ASP, is actually potentially in some categories falling or being readjusted to get to a pricing that you think could continue to boost volumes. Is that what you're implying?
No, what I say is that there was a need to be more balanced in terms of price, and just to be sure that we can address all the different types of clientele. I remember you also that, for example, in shoes, there was no offer in the sneaker category. The objective is not to increase that category because it's not necessarily coherent with the DNA or the style of the brand. There is room to have a sneaker offer, which tend to be very successful, both in the stores and online. As a result, in terms of average selling price, it's down. It's not just to push the volumes. It's just because we want just to be more global as a brand, and we need to engage with different profiles of clientele.
Okay.
Thierry, coming to your first question about Hong Kong, I think there's nothing very specific, to be honest, to mention. I think Jean-Marc gave you the Q3 sales decline in Hong Kong. All the brands have been more or less in the same ballpark. I would say between -30% and -40%, more or less. Of course, depending on the brand, their exposure to tourists is slightly different, but it can be, I would say, 70%-80% depending on the brand's positioning. Of course, the bulk of the decline comes from the tourist part. For the Hong Kong resident, all the brands have negative, but to a much lesser extent. They're also seeing negative growth, much more moderate than what we post with tourists. There's nothing specific to call out about any specific product category or whatever.
Okay, great. Thank you so much.
Thank you, Thierry.
Okay.
Thank you. Your next question comes from the line of Rogério Fujimori from RBC Capital Markets. Please go ahead. Hello, Rogério. Your line is open. Please ask your question.
Yes. Hi, good evening, Jean-Marc and Claire. Thanks for taking my questions. I have three. The first one is about Gucci retention rates. I was just wondering if you could share with us any color on roughly how much of the growth for Gucci is coming from new customers, how much from existing customers, and how this compares to what you've seen in recent years in terms of contribution from new versus existing customers. Just trying to spot if there has been any change in trend. The second question is about an update on e-commerce growth for Gucci globally and in the U.S. in particular, update on your progress in Asia and preparations to internalize YNAP operations in a few months' time. Still expecting neutral earnings impact next year. My third question is about the next seven store openings for Gucci between June and September.
Was this mostly selective buybacks, and should we expect a similar number of net openings in Q4? Thank you.
What is noticeable for Gucci in terms of KPIs is that what has improved massively is the conversion rate. I think that we had, in the past few years, a lot of traffic in the stores, but not necessarily of people who were buying. Though there was more curiosity sometimes about the brand. What is important is that today, and it was also the purpose of putting in place a lot of tools and levers to capitalize on the existing clientele base, was to work now about clienteling and also engage in a better way with the people entering the stores. The conversion rate has increased. The average ticket is also up, the units per ticket, and also the cross-selling. When it comes to retention, I think that it's very mixed depending on the regions.
There are some regions where, of course, the retention rate slightly declined, but overall, it's quite stable. There are some regions where we are making some progress. Also, if we consider certain cohorts of clients, you may see some stabilization. We have reached, I think, a quite normative level also in terms of retention. It's not a KPI where we expect also now massive increase, because we are at the level we were expecting for a brand of this size and also considering the positioning of Gucci, which is probably with a more fashion component compared to some other brands with, let's say, more stable base of clients. I think we are at the right level. Overall, nothing to mention specific on the retention rate. Also because, as it was the case for the overall trends, it's a far more contrasted situation across the board.
Overall, let's say that it was satisfactory in terms of retention. E-commerce grew double digits for Gucci in the third quarter. It was slightly above 20%. It was a very strong growth in almost all regions. In Europe was very strong. China, of course, China developed very rapidly. We are very happy with the progress made in China. That, not on a year-to-date basis, but just for the quarter, let's say that China, in terms of size, was number 2. On a year-to-date basis, it's number 3 in terms of online business, just behind the U.K. It's clear that in the U.S., the situation was more challenging, and I think that generally speaking, the online business is a good proxy of the business that you can make in the stores.
That's normal that considering the situation of the U.S., and also basically because, again, the comp base is very high. The online business of Gucci grew very massively in the past few years, that in the U.S., let's say that the traffic was still up online, but with a lower conversion globally speaking online. Just your question on YNAP, is not concerning, of course, Gucci. We are talking about the other brands. I think that there is nothing to add compared to what has been already explained, and especially during the digital capital markets day. We are on par with the plan, and the teams are working hard to be ready. I think that's the right moment now to internalize that business, which is developing very well with the brands.
I was mentioning the fact that online is a good indication of the evolution of the offline sales. That's interesting to see that Bottega Veneta is very strong online, with a very strong rebound of the business online. There is more or less a doubling of the activity online for Bottega Veneta. That's even more important now to internalize the business, but nothing to say about the timing and the impact on the P&L, which has been already described during the Capital Markets Day.
When it comes to the stores opening at Gucci, Rogério, I think it's a healthy mix of what we've said. In Q3, for example, we opened the haute jewelry in Place Vendôme. There was a big flagship opening really in Shanghai because we were waiting for quite a long time to move to Plaza 66. Now it's done. It doesn't mean that at the same time, the same quarter, we have closed the other store we had in Shanghai just in front of it. You might have a little bit of, I would say, phasing impact. I think there were two or three opening in travel retail in some new airports, which is really in line with the strategy at Gucci. A healthy mix.
You also have to have in mind that since we are now on this building approach, the net can be slightly different, because if you close two corners in a building but you still have one, it's not captured exactly the same way as it used to be when we were counting on a directly operated store approach, the previous approach. You should also keep that in mind, but we can elaborate after the call if you wish.
Thank you very much. Very helpful.
Okay. Since we are running a little bit out of time, Irina, we are going to take a last question.
One question.
Yeah. Last question.
One.
Yeah.
Thank you. Your last question will be from the line of Omar Saad from Evercore ISI. Please go ahead.
Thanks for taking my question. One clarification and then I have a couple questions. Did you guys say that your business with the North American consumer globally turned positive in the third quarter? Was that the message when you were talking about the U.S. on a global basis?
Yeah. It was already positive in Q2, and it's still positive, and it slightly improved compared to Q2. Yes.
Got it. Okay. Thank you. I just wanted to ask as a follow-up to the Capital Markets Day. Obviously, at that meeting, you spent a lot of time talking about your digital and technological capabilities. Are there any updates on some of the key initiatives you talked about there, whether it's the app for the consumer or the salesperson app or the AI machine learning, where you really see those benefits starting to trickle into different parts of your business?
Okay. I will try to answer in a very short way because I want to leave the floor to our friends of Moncler. I think that what we can say that we continue to roll out the Luce solution, which is the app for the sales associates across the board, so across all the brands, and we have expanded the geographic coverage. We have more stores now where we have sales associates equipped with the application. It clearly does help in the improvement of the retail KPI. It's very instrumental. As regard artificial intelligence, we will start to implement further some prediction models for replenishment and allocation, starting with the new collections of the next season. It's very gradual. When it was more a pilot or a test, now it will be based on real data and real deliveries. That's another important stage.
I mentioned Yoox Net-a-Porter, but clearly here, there is an acceleration of the initiative because we need to be ready on time. As regard all the implementation of different solutions, we are working to be ready on time also for all the ACP solution and all the solutions to be plugged on SAP. I think that what we can say is that there was no, let's say, impressive milestones achieved, but at least we continue to roll out the different solutions. I think really that the results achieved by our brands, and especially Gucci, is really the outcome of the initiatives that we have implemented for a few years as regards clienteling and tools to be provided to our sales associates. Now, we are just on time. Thank you all for being on the call today, and thank you for your questions.
I know, unfortunately, that there were a lot of questions, and we were not able to answer to all the questions in the pipeline. We are really sorry we couldn't answer all of them. I wish you a very nice evening. I know it's going to be a busy one for many of you, so we made sure we finished on time. If you have some other questions, of course, please call Claire on the team.
Ladies and gentlemen, this does conclude your conference for today. Thank you very much for participating. You may now all disconnect.