Is it? Yes. Hello again. I hope you enjoyed the food more than Jean-Marc and I could, because we had to answer questions, and I barely could eat, but Jean-Marc couldn't eat at all. He's very nervous when he doesn't eat. Okay. We are going to elaborate on Kering Eyewear, which we created ex nihilo. This creation is another illustration of Kering's imagination, creativity, and boldness, as we turned the established licensing model on its head. With the traditional licensing model, we left a lot of value on the table, but that was not even the worst part of it. This former licensing model was also an obstacle to brand alignment and also to brand coherence. Knowing that this product category is particularly key for some customers, the aspirational ones.
That's why we sought a new approach that would close this gap, and we are on our way, you will see that, to success. We were able to see the value of this new paradigm and act on it rapidly and effectively. In fact, what I'm particularly proud of is that we did not let anybody distract from our root. We were not afraid by all the challenges and obstructions. Roberto and the team here were very brave into facing those challenges. Indeed, there were many doubters at the start. No longer. I don't know why. You will see. In fact, this initiative is, in my view, completely revolutionizing this industry. From day one, we brought to the party the resources to make the project get off, the licenses and negotiation with former license holders, and the support functions, as well as the access to talent.
Above all, we dare say that we brought to Kering Eyewear and to the team Kering credibility and Kering's name. This is what Kering did, and those guys, Roberto, the team here and all over the world, did the rest with our continued support. They are the right persons for this transformation, and we are very proud and very confident in our success. Now, prior to giving the floor to Roberto, I will give the floor to Jean-Marc, who will address you for some warning comments, then Roberto and the team. Thank you.
Thank you. No, Jean-François, it's not about warning comments. It's just about some organization details. I know that some of you have to leave quite early to take a plane. Just to give you an indication, the presentation of Roberto should last between one hour and one hour and 10 minutes. It will depend on how Roberto is today, because it can be two hours or three hours. I would be grateful if you have to leave before, so that you can do it discreetly, because we'll have a Q&A session. If you want to leave just after the presentation of Roberto, you can, of course.
Otherwise, if you want to stay a little bit during the Q&A session, please, when you leave, do it discreetly so that the other can ask the question and we have the time, and also, yes, we can answer comprehensively to all the questions. Thank you for respecting this. Thank you. I pass the floor now to Roberto.
Thank you.
Yes, this is on.
Thank you very much, Jean-François, to your kind introduction, to the continuous support. Jean- Marc, thank you. I am very pleased and honored and proud to be here in front of you to take you through quickly what we have done in a little bit longer period of 3 years from the start of Kering Eyewear. Before doing that, I would like to introduce my team. I'm lucky enough to have the most representative part of the team here with me. I'm here with Anna Zurlo, who is our CFO, Roberto Risi, who is our Chief Operating Officer. Again, I had the opportunity to have Omar Hagi, who is Head of Centralized Channels, Simone Benetazzo, Head of Marketing and Go-to Market, and finally, last but not least, Davide Righetto, who is Head of APAC.
Now, I'll try to take you through our story, and I'll start by saying that most of you
Must have asked themselves, why did you do this? What is the strategic rationale for Kering, for François-Henri Pinault, Jean-François Palus, the senior management team of Kering, to decide to do an adventure like this? There are three main reasons. This is a big market, this is a relevant category, and it is very profitable. Let's start with the market for a second. I think that you know that eyewear is a big market. It is above EUR 100 billion retail. It is supposed to be growing steadily, substantially, supposed to be above EUR 130 billion in 2020. Of course, Kering Eyewear, within the eyewear marketplace, in the segment of the market, which is frames and sunglasses, which is about EUR 40 billion. Within frames and sunglasses, we are focused on premium frames or sunglasses, which is about EUR 30 billion retail value, EUR 13 billion at wholesale.
If we go a little bit deeper into that, within those EUR 13 billion wholesale, as you know, we are an wholesaler, so we do not have any retail presence as in Kering Eyewear. Our focus is on the high-end, which is still very relevant, EUR 3 billion, and we are playing in a quite crowded and competitive arena. In about three years, we have been able to become very relevant, second to Luxottica only thanks to the portfolio of brands that Kering has given us from the very beginning. Now, I said before, this is a relevant category for luxury brand. Why is that? It is aspirational. It is the category which has the highest conversion rate into other product categories. Of course, it does attract new customers, new final consumer for the other brands, and it is affordable.
Not only that, this is, and you know it better than I do, a profitable business. The typical standard P&L structure of the eyewear industry is as follows, 60% gross margin, and when we go down to EBIT, is in the region of 10%, 11%. A profitable business. With that in mind, François-Henri Pinault, the senior management team of Kering said, "Okay, this is something that is interesting for us, so let's discuss it." It was clear that we wanted to do something different. We did not want to do just another eyewear company. We wanted to do the first luxury company in eyewear. I remember discussing with François-Henri, he told me, "Roberto, I have three issues with the licensing business model. The first issue that I have is on product. I would like the product to be closer to each brand DNA.
The second issue I have is with quality. For us, at Kering, the goal is to stay true to our final consumer, and I think that here things can be done much better than currently what we do with our licensee, because if you buy a pair of Gucci sunglasses for EUR 350, then the quality has to be perfect. The third issue I have," he told me, "is with distribution. While I travel a lot for business, for pleasure," he told me, "Roberto, honestly, I see our products in places where I don't want to see the product. Can you do it?" It took me a few seconds to say, this is a dream becoming true, because I had a team of people which is expert in the category. They have huge experience.
Our dream would be to work for a luxury group and to make a difference and to do something completely new. Off we went and we started to do a feasibility study, but we had clear in mind our mission. Our mission was to become the world leader in luxury high-end eyewear, making sure that we were giving the opportunity to our brands to empower their imagination in fully exploiting the opportunity in this very important category. Of course, you see it here, we had a very well-balanced portfolio of brands. We're going to be adding Balenciaga starting January next year, January 2019. With this portfolio of brand, we felt in a position that we could deliver on what François-Henri Pinault was asking us to do. November 2013, three people together with myself, they are here in this room, we started to do a feasibility study.
In that feasibility study, I wanted to take you through very briefly, please be patient. I have few videos where I show you the milestones of our journey up until the end of last year. This is where it all started from. The point here was, if we wanted to do something different in eyewear, we needed to have the eye of the tiger. That was pretty clear. This is where we're based. This is the beautiful villa where our headquarter is. Of course, I remember going to see Jean-François and explaining to him that this was an opportunity. The villa was completely abandoned. It was supposed to be for weddings and stuff.
We approached the owners, and we said, "We could do something nice." To Jean-François' point before, when they heard that we were Kering, they said, "Okay, we understand." We started to negotiate, and we got a good price precisely for the reason that we are backed by Kering. What happened was that, in January, we were already 30 people with a very important expertise from the industry. As I always say, 600 years of experience because these 30 people had, on average, 20 years of experience each. That put us in a position to be able, in six months, to officially launch Kering Eyewear in Venice, June 30th, 2014 2015, sorry, at Palazzo Grassi. Again, the strong support of our shareholder, and this is what we did.
Our signature is our imagination. This means we constantly look ahead and adapt ourselves in order to stay at the forefront of a fast-changing environment. The launch of Kering Eyewear perfectly reflects this philosophy. Kering Eyewear is the most imaginative form of value creation for our group and for our stakeholders, and I know it will be successful. We are ready to be the game changer of the luxury eyewear industry.
Thank you, Jean-François, because back then, and it was June 2015, you said you knew it was going to be successful. We felt strongly your support. At that point, we launched eight brands into the market. Our customers were very supportive. They all liked the different approach we had. They really enjoyed what we were doing. They were really satisfied with the product offering that we went into the market, and that gave us, and you will see later, already the possibility to start making revenues immediately. All of that was in preparation of the big launch of Gucci. As you know, Gucci is the category killer within the eyewear industry. Off we went, and this is what Gucci did for us to support us on the launch of Gucci, October 2016.
As you've seen, Marco and team, Alessandro and team embraced immediately this project, and they were extremely supportive. They did all of this to make us in a position to have a very successful launch of Gucci Eyewear. From October to December 2016, last quarter of 2016, we were able to get enough orders to cover the first half of 2017 in terms of revenues. We said, "We did it well. Why don't we do it again with Cartier October 2017?" In the meantime, we had reached this agreement with Richemont. Most of you know and cover and probably are invested into Richemont. Richemont really liked what we were doing. They felt in a position to entrust us to give one of the most important categories for Cartier, very relevant in the industry already, to Kering Eyewear because of the way we were executing on our brands.
This is what we did in Paris at Petit Palais for Cartier. The first point was, let's do it. The second point, let's do it differently. Luxury company in the eyewear industry, we wanted to do it through an innovative business model. We were not starting from an easy position because, as you know, this is quite a complex category. Why is it so complex? First of all, the product. The product is not an easy product to make. Many components, many things that needs to be done in order to get to the completion of the product. A number of producer getting involved. Long lead time of production, a fragmented distribution, seven channels that needed to be covered properly, and luxury as a niche. We said we wanted to have a luxury approach all the way through. Luxury in the product means uncompromised quality.
Luxury in production means to have only the best manufacturers to cover the best clients, certainly to get the teams together to work in different perspective with an integrated approach. If we look at the different components of the value chain, we thought if we want to be innovative coming from a background where we had this relationship, licensee-licensor, we need, first of all, to make our brands happy. In order to make our brands happy, we needed to have a different approach in getting to the market and particularly to the brand of the boutiques with the product.
I still remember my meeting in Paris with Francesca Bellettini telling me, "Roberto, super happy you came on board, super supportive of the project, but please make sure that the approach is an approach where we get eyewear together with the other category when we are in store with the collections." In order to do that, design needed to be at the center stage of everything that we were doing. Marketing and communication, certainly supply chain and operations and sales and distribution were all going around the design. To be innovative, we needed to have multiple people working as a team in different directions. First, we were able to get Alessandro to give us an office in Rome to get very close to them, to their creative team. Our team doing Gucci Eyewear is basically inside the house, and they work very closely with Alessandro.
Same goes for Anthony Vaccarello. We have people in Paris working every day with Anthony and the team there. We established a team of designer in London to stay close to the U.K. brands, Alexander McQueen, Stella McCartney, Christopher Kane. It was paramount to have a design team to do Asian fitting in order to be able to get out with the proper style for that market. Last but not least, we wanted to have in-house prototyping CAD/CAM facilities.
Off we went, through those efforts, we are able now today to have a 360-degree, fully integrated process, which starts with the market needs, marketing brand management, the declination of those needs in order to be able to get out with the correct collections in terms of size and depth, inspiration, creativity, and finally, being able to implement what is at the center of our activities. In terms of lead time, it was key to shorten the lead time to production. We're now down to 10 weeks, we are the only company that, in eyewear, that is able to get to the market with the collections together with the other product categories for the brands. We changed the model. Instead of having the typical three collection which are usually in the eyewear industry, we do spring/summer, we do fall/winter.
spring/summer, when our brands, they do cruise in spring/summer. We do fall/winter when they do pre-fall and fall/winter. We have a specific effort for the fashion show. I'm sure you've seen what Alessandro and Gucci put together in Arles last week. 90 exit on the runway, 87 of them had frames or sunglasses. If you didn't have the opportunity to see it, please take a look. That allow us to be in the market with what we need. In other words, we are able to develop specific product for specific market needs, which is very important. We do that in such a way where we develop, for example, optical collection for U.S. consumer. We translate Asian styles into international styles, particularly Korean styles, if we see that they're very successful.
We do dedicated collection for travel retail, very importantly, this is where design gets us to. I wanted to show you for Bottega Veneta. Design is what we've seen. Supply chain. Most of you must have asked the question: How can these guys possibly do it without having manufacturing facilities? This is what we really wanted to do to be innovative. We have had previous experience, factories, issues with capacity utilization, cost, overheads, fixed costs and all of that. The point for us was, what we want to invest is into product. In order to invest to product, we wanted to have the maximum possible flexibility. The key word for our supply chain is flexibility.
Not owning the manufacturing gives us the flexibility to invest into the product to make sure that we get into the market with a product which is, in terms of creativity, boundary-free, which gives us the possibility to exploit all the potential in terms of innovation, product development that we get proposed, which gives us the possibility to align lead time. I remember it was around Christmas 2013 when we were doing the feasibility study. I must have seen 80 factories in the Cadore region. These guys, they were waiting for something like this to happen. For them, it was a dream to come true because they had a lot of capacity, they'd done a lot of investment, they had machineries, and they didn't have enough to do. Why? Because the big companies in the recent years were externalizing production to Asia.
They said, "Guys, we do anything for you, product, price, quality. We're here to do this for you. If you do this project, please consider us at your service." The result of that is that we have a very selected, super qualitative network of 42 suppliers. Italy is the main manufacturing hub, as you can imagine. Which indeed does represent 65% of our production facilities. In terms of where we are located in Italy, clearly in the Veneto region, which is the historical district of eyewear, particularly Valdobbiadene and Cadore region. Again, what we can get from that is craftmanship, manufacturing expertise, quality and innovation, of course, reaction to our needs, flexibility again, and reduced investment in fixed asset. Take a look again, Bottega Veneta, what these guys are able to do for us.
Believe me, to reproduce intrecciato in a pair of frames is not easy at all. This guy was not an actor, he's one guy that actually does the stuff for us. To complete the manufacturing footprint, as you know, we enter into a strategic product partnership agreement with Safilo, which is an agreement where we have set volumes decreasing over the years. At the beginning, it was a little bit difficult in terms of quality and service. A little bit of delays in deliveries, but working together with a huge effort on both sides, things have improved substantially, so we are satisfied with the agreement. We are satisfied with what we're doing. We want to be very dramatic.
Our point is, as long as we do well, three things, quality, price, service, and price, we're happy to keep working with Safilo, and this is going to be, in the future, an important partnership for us. We were lucky enough, through the partnership with Richemont, to get MCL, Manufacture Cartier Lunettes, is a state-of-the-art facility, 45 minutes from Paris to Sucy-en-Brie, and they speak under the control of Jean-François, Jean-Mark, and Claire, but we're happy to invite you to see it. As I said, I've seen many factories. I've never seen anything like this. To be honest, I think that it is certainly the best, the cleanest, the best-organized factory I have seen in eyewear. The machinery, the galvanic treatment, cabin, I mean, I've never seen it.
Of course, we need to do things to try to improve the performance of the factory, and for sure, we need to make it possible where we will have possibly better, higher saturation. We need to get efficiencies, but our point is that we want to make MCL best in class metal production facility in all of the eyewear industry, and I think we will be able to make it. Now, in terms of marketing and communication, as you probably have already seen from the video that I show you on Gucci, our point here is that we went from external partners to colleagues. This is the part of our brands where people know what is going to happen in the future, the product that will be launched, the campaign that will be done.
When you are licensee, licensor, you don't have access to this information, correctly so, because you're an external partner, so people will not tell you really transparently what they think they're going to be doing because then you work for other brands and all of that stuff, so they're not so sure. Here, we're colleagues. As Jemarme always says, "The success of Kering Eyewear is based on the genuine cooperation," he always tell us that and to the CEO of the brands, "between the brands and Kering Eyewear." We're able, through the fact that we are colleagues, to have a fully integrated approach, completely aligned with our brands. Now, that allows us to have everything around what we want to develop in terms of marketing and communication with our brands. We start from the product, and around the product, we build the communication.
Within communication, we go into digital, clearly, capitalizing on the skills and the capabilities of our brands. We go and execute in-store visibility, and we do PR and events based on their guidelines. Of course, we get a lot of support so that in all touchpoints with the final consumer, we are completely aligned. This also is entailing Kering Eyewear to have a tailor-made approach to the market and to the customers, because we're able to put together, based on customer needs, custom-made trade marketing tools, dedicated campaign, go and work with celebrities, be in all of the digital activation that the brands have. In one word, we are together. In terms of distribution, the way we then go to market, also here, we wanted to be innovative.
The old business model was agent, commission, you go out, you sell as much as possible, you get as much of a high commission as possible. We didn't want to do any of that. Sorry, we were not in that business. We decided to have brand ambassador, which were representing the values of the brands, were aligned with the image of the brand, and we were in control of the distribution. What we did was we put together a lean structure, which was able to get to the point where we wanted to be, particularly in terms of quality of the doors. The quality of the doors that we cover needs, has, must be aligned with the values of the brands that we sell.
The selection of the retailer that we have is done through an in-depth questionnaire, which has objective criteria, and they have to do with the position of the store, the brands they carry, the service they offer to the customer when they sell the product, the after-sale service. It is done in such a way where we're able to establish the criteria, and we're able to decide the customers that will be able to work with us. Of course, those agreements also imply a minimum order quantity. In terms of distribution, what we did was, we were very clear from the very beginning, we needed to do a full segmentation of the market. We decided that we wanted to approach the market based on the segmentation with different product, trade marketing tools, and advertising campaign.
What I mean by that is that, and the case of Gucci is very relevant, selected distribution and qualitative distribution to make sure that the guys that were in the segment supreme were getting products that the guy that are in the best doors within the segment of glam were not getting. Fashion show collection, they can only get it if they are part of the supreme segment of the market, as well as the in-store activation, as well as trade marketing material. The guys that have Gucci and they are in glam, they will never get made-in-Japan Gucci. They will never get all titanium. This gives us the possibility to have a differentiated approach after having segmented the market, take into consideration the quality of the doors. Price positioning.
This is a little bit of the same in the sense that thanks to the portfolio of brands that we have, which is very well-balanced, we are able to cover all segments. We start with Puma at around EUR 100 retail, and we go up to Cartier above EUR 650. In terms of the team that we have on field, we have a very lean organizational structure. We have direct subsidiaries, and then, of course, the direct subsidiaries are leveraging on the presence of Kering Group around the world. We have a highly selected network of distributors that are helping us to reach those places where we are not directly involved. We have a strong focus from the very beginning on centralized channels. What are the centralized channels for us?
The centralized channels for us, this is also the reason why Omar is here with us, are those channels where we can extrapolate synergies with our brands for their other categories. Department stores. If we go to Harrods, of course, Gucci, Saint Laurent, Alexander McQueen are very important for Harrods. We get there with our products in a different position. Department stores, I was saying travel retail, when we go and talk to these guys, Dufry, DFS, again, we extrapolate synergies as well as multi-brand fashion stores. In centralized channels, we have the brand boutique, which are key and it was evident from the beginning that we could have improved the performance. International key account, which are relevant to our category, like Luxottica or GrandVision.
In terms of new channel, we prefer to have an approach where expertise counts more than geography. For example, in e-commerce, we have a central team that covers e-commerce through the biggest partnership that we have at [Garbled], Mytheresa, MatchesFashion. What we have been able to put together, we have clearly a fully dedicated team, as I said before, we have a unique and dedicated approach for each of the brands that we represent. We are able to deliver best-in-class service in terms of our presence in the market, and particularly when we talk about the brand boutique, as we were never able to do before, we are able to be in store together with, as I said a few times already, the other categories.
Not only with dedicated product to the boutique, with dedicated focus on the material that we have, with a dedicated team, original expert that look after training of the salespeople, look after optimization of the space, optimization of the production. A huge effort in trying to extrapolate as many synergies as possible on our brand boutique. This is the way we thought we could have done it. Innovative in all the part of the value chain. We talk a little bit briefly about the key achievement. Let's start with sales. Sales in 2017, three years from start, from 0 to EUR 352 million, which contributed in terms of consolidated revenues to the group for EUR 272 million, taking out royalties and intercompany.
We were able to get a profitability in the region of about 5%. We launched seven collections, more than 3,000 styles, which translate into 14,000 SKUs. Last year, we added 500 people to our company with no disruption for the business. People is the key asset that we have. As I always say, our real luxury is that we built this company from zero. We were able to select the people we wanted to work with, each and every one of them. Talking about people, this is the picture. This is the ramp-up that we had. We were, at the end of 2015, about 198 people. End of last year, we were about 1,000 people. Most of our team is women, 60%, international, and average age is 36 years. What do we look in the people that we hire?
First of all, entrepreneurial spirit. Second, resilience. As I always say, this is not for everybody. We work 24/7. We need people that are fully committed to the project, they believe into the project, and they want to make it to change the history of the eyewear industry. Of course, skill and competencies. If we go and take a look at the progression of the revenues, as I said, thanks to the successful launch, we were able to generate a little bit of revenues in the first year, EUR 74 million in the second year, and EUR 352 million on last year. We cover more than 100 countries, 20 through the 10 direct subsidiaries that we had at the end of 2017, and the rest through distributors. We have, in the field, more than 200 brand ambassador.
If we look a little bit at the split of our revenues by area, centralized channel is the most important part of our revenues. We said from the very beginning, we wanted to be focused there. EMEA is about 25% of our revenues with Americas, which include Canada and North America together. It's about 20% of the revenues. In Asia Pacific, 15% of our revenues. Looking at the split of the revenue, 3Os, you might be familiar with the definition, so optician, ophthalmologist, optometrist, is the bulk of our business, above 50%. Global Travel Retail, International Key Account, again, people like Luxottica, GrandVision, Fielmann, those guys are, together with the boutique, DOS, and department stores, are about 35% of our revenues. If we look at the category, 70% of our revenues are in sunglasses, and 30% are in optical frames.
If we look at gender, the majority of our final consumer are women. Unisex, which include men and women and gender-fluid, are very important as well. Men represent 30% of our business. If we look at the result of the internalization versus the previous business model in licensing, you can see that it doesn't really matter the brand, but all in all, the performance is much better than before. If you take Bottega Veneta, +200%. If you take Stella McCartney, +350%, or Saint Laurent, +250%. Gucci, first year with the internalized model compared to the previous year under the licensing model, +15% on a number which is, as you can imagine, extremely relevant. In terms of achievement based on the different parts of the value chain, let's start with design and product development.
As you can see here, our offering has increased substantially as we grew the brand and as we grow our presence in the market. Spring-summer 2018, 650 styles. Fall-winter 2018, 450 styles. If we move on into supply chain and operations, volumes increased substantially in terms of production. Acetate is still the most important material that we use. In terms of what we have implemented for marketing and communication, I like to give you an example of a 360-degree project that we did with Cartier, where the eyewear presence is in all of the brand communication platforms. Be it Instagram, Facebook, Twitter, and this allow us also to implement a number of extra outdoor activities. Take a look at what they did. Grazie, Romeo.
In terms of where we are in the market, we have end of 2017, 13,000 customers, and we cover a total of 30,000 doors. We have, as I said, what we are working on is additional direct subsidiaries in the world. We finished 2017 with 10 direct subsidiaries. We now have 13 direct subsidiaries, and of course, we have a strong presence in department stores, and we have been able to develop specific project for specific customers. Gucci Hero for travel retail, the project with Zhi Tao for Saint Laurent in Asia, and the special collection for Boucheron in the Middle East. In terms of luxury approach, as I said from the very beginning, this is not another eyewear company. This is a luxury company within a luxury group in the eyewear category.
The approach has to be consistent all the way through and specifically on the way we go to the market. Amazing venues, impeccable execution, and of course, obsession for details. I want to take a quick look of the way we go to MIDO, which is the most important fair in the industry in Milan. I remember when we discussed with Jean-François about a different approach to go to MIDO, to be honest with you, was mainly because we had a slim P&L, we wanted to try to maximize.
The request of the MIDO organization was huge, and we said, "Let's do it differently." Mr. Marcolin, the chairman of MIDO, came to see us, and he said, "Guys, we want you at MIDO." Again, that price position, it always made us a little bit sad, we said, "Let's go for the full approach." As you might have seen, some brand new people are following us, we're very proud of the choice we made. In terms of sales, also here, the reason why I've asked Davide and Omar to be here is that they do represent best practices. In APAC, through product marketing approach and go-to-market strategy, we are really making it different from before. In terms of product, we have styles and product fully dedicated to the Asian market. They do represent more than 80% of our revenues, they're very successful.
In terms of marketing approach, we are able, in coordination with our brands, to have brand ambassadors that are typical to the Asian market, Ni Ni for Gucci, Huang Zitao for Saint Laurent, of course, we are present in all the different communication tools of the brands. Very importantly, as Davide, if you have question later, can explain to you, we are able to have a tailor-made approach to customers. I don't know if you're familiar with Hong Kong. I see some of you coming from Asia. Puyi in Hong Kong is one of our best client. We were able to do dedicated windows, dedicated collection.
When we went to discuss with Alexander McQueen the possibility to do a collection, Alexander McQueen for Puyi, they were immediately listening to us because they know who Puyi is, and they appreciate the fact that in order to make it successful, we need to work together. Same goes for Omar and decentralized channels because there, thanks to the strong effort in terms, again, of product marketing and go-to-market, we have been able to become the leader in eyewear in particularly the travel retail, where, again, we were able to put together product dedicated to certain customers. Avant-première for certain customer. You probably have been traveling here through planes in the airports. At the moment, there is a full campaign on a special product that we did for Gucci, which is being very successful, and it was developed for the travel retail environment only.
Of course, we did a huge Cartier domination in the Middle East. We did a big project for Gucci Hero, for other environment, we do exclusive agreements with the biggest players and also, very important, we do cooperative planning in order to maximize the sell-out. We want to talk to you a little bit about our ambition. Sales. We want to get to a level of sales which is above 750 million EUR. Of course, as you can imagine, we're here to make money, so we need to improve profitability, and the goal is to get to a profitability for Kering Eyewear above 10%. In order to get to this point, clearly, we need to strengthen and expand our core business. In order to strengthen and expand our core business, first of all, we need to have a tighter control of the value chain overall.
Second, we need to consolidate our worldwide presence in those markets where at the moment we're not direct, we are through distributors, we want to be there directly. We need to enhance the distribution in new channels, particularly in those channels that are becoming more and more successful, e-commerce, namely. We want to improve our product offering, we know that we can do that. Something very important, sustainability and innovation. As you know, sustainability is a core value of Kering Group, it is also a core value of Kering Eyewear. That is one area in which we will need to keep improving and progressing. As I was saying, improving of the product offering and finally improving of the profitability. Let's go into a little more details on how we're thinking about these possibilities of future growth.
Let's start with the fact that we have decided to have a fully integrated, automated logistics center. This will be completely up and running from January 2019. It will represent for us end-to-end control of logistics and distribution. It will be extremely efficient to compare to the externalization model, to outsource model. It will be certainly in line with Kering Eyewear quality standards. Not only that, it will give us the flexibility to serve best the needs of our customers. The point here is that we're going to be able to have smart automation in order to overall improve our operations. In terms of presence in the market, we cover directly the most important places, countries, markets in the world already. There is certainly room to improve and to have a better performance, particularly, I would say, in Southeast Asia and in the Middle East.
With the group of brands that we have for different reasons, we think that we want to further expand our distribution footprint going direct in those areas. If we look at digital, this is very important. We do realize that this is going to be becoming even more relevant in the future. We already work very well with some of the biggest players. We develop for them specific capsule collections, special colors, avant-première, and this is what I wanted to show you, we think that we have a huge opportunity there, specifically and particularly in China. Why? Because China is huge, and if we want to get to tier 3 and tier 4 cities, this is the way to do it. That's the reason why we did this partnership with JD.com.
I don't need to tell you who JD.com is, certainly they reach more than 290 million, and this is what we did with JD.com. We wanted to show you the way it actually looks. You can see that this is very qualitative. We only recently started, March 12, very successfully already, more than 650,000 unique visitors, and we sell more than 300 units a week. Again, for those of you that have access to JD.com, I see some of you coming from Asia, this is the way our online store looks. JD is the only authorized distributor online of Kering Eyewear products. The other thing that we wanted to expand is our shop in shop. We developed a store concept. Let me be very clear, there is no intention to go retail here.
We will keep remain a wholesale company, for the best client, we are proposing this concept for store in store. As you can see, it's very qualitative. It's different from anything else that you've probably seen, because it's not a crowded place with many brands, many sunglasses, many frames. This is a way to give importance to each of the styles and of the brands. Again, under the control of Jean-François, Jean-Marc, and Claire, if you happen to be in Milan, you're invited to our offices in Milan, and you can see in real this concept store that we have developed for our customers. In terms of sustainability, as I said before, our core value for the group and for Kering Eyewear, you might have seen, we have developed a partnership with Bio-on.
The goal of that is that we want to be able to develop an acetate, which is 100% sustainable. We are investing into this research and development effort, and we want to come up with something tangible for our company and for our industry. Of course, we're working with our suppliers in order to reduce the environmental impact and also with our employees, so that into their day-to-day activities, sustainability is in the DNA of what they do every day. Categories. We think we have potential in prescription frames. The market is about 50/50. At the moment, we do 70% sunglasses. We want to focus. We want to be able to get there with our brands. We think that the market is there. The market is waiting for us.
Of course, we are doing many things, but this is a focus that we want to have, and we're going to be able to certainly get an additional market share in prescription frames. Gender. Gender fluid is becoming more and more important for our brands. Being fully aligned means to be able to exploit further this opportunity, and this is precisely what we want to do. We have potential to do more unisex and to expand into that segment of the market. We will be adding Balenciaga, as mentioned before, at the beginning of 2019. Again, timing is everything in life, we are launching Balenciaga in a moment where the brand is super hot and has an extremely good momentum. We have developed a collection which is precisely in line with Balenciaga brand DNA.
I'm really curious to see what you think when you will see it in the stores. Profitability. As I said before, the keywords here are scalability, which is the most important one, and efficiency. What I mean by that is that we need to exploit the full revenue potential that we have, capitalizing on the current structure. Two, we need to make sure that we optimize the supply chain, be it the agreement with Safilo, MCL, the supply chain overall, in order to be able to be more efficient and to get to our ambition of having an EBIT above 10%. This is what I wanted to say. One last thing. I said before that we started from a position where this was a very consolidated and somehow sleeping industry, and this is the way we saw it from the very beginning.
Thank you very much for your patience, and we're here now for Q&A. Before I get to that, I wanted to say a special thanks to the team that has been working here. Particularly to Federica, head of trade marketing, and to Celeste, Benedetta, and Massimo that have helped us to put together all of this for you. I hope you enjoy. Thank you very much.
Erik Olsson, CIO of Industrial Equity Partners. What's your plans for Gucci post-2020 when the agreement expires?
Roberto, do you want to answer?
Yes.
The agreement with Safilo, the supply agreement.
Basically, as Roberto already mentioned, we consider Safilo a good industrial partner. We are discussing with them the condition to continue the agreement, provided that they will be top-notch in the three elements that we value in the supply chain, which meaning timely delivery, undiscussable quality, and competitive price.
Luca Solca from Exane BNP Paribas. Thank you, Roberto. I was wondering, what kind of implications do you see on the business mid and long term from the proposed merger of Luxottica and Essilor, and what areas is that potentially going to impact your business? Maybe a second question, more financial. When do you anticipate that the Kering Eyewear activity, which is growing so strongly, is going to be above the return on invested capital hurdle rate of the group? Thank you.
Okay, maybe I take the first one. I think that the merger between Essilor and Luxottica makes a lot of sense. We work extremely well with Luxottica. As I said, Luca, it is one of our best customers within key accounts. We have our brands represented in the best quality point of sales that they own around the world, and we are very happy with the relationship. I think that in terms of relationship with distribution, nothing will change. Essilor, we work well with them as well because they are one of our suppliers of lenses. Not only that, but they distribute some of our products in certain areas. They put together a specific sales force for Puma, for example, in Iberia, Spain and Portugal are covered by a sales force of Essilor.
Not only that, in places where we are not direct, like in the Philippines, our brands are distributed by Essilor. Once again, given that the brands that we have have very little competition with what Luxottica has, I don't think it will be an issue. If anything, the company will become stronger, and therefore, we have good relationship with both. We think that we will benefit and enjoy some additional value from the merge between the two. I give it to probably Jean-Marc or Anna for the second part of the question.
Maybe it's at group level that we should answer. Thank you, Roberto, for passing me the floor. Just to remind the situation, we paid EUR 90 million to Safilo. We had some compensation to Cartier, but at the same time, Cartier contributed also. In fact, after that, you see that it's not so much capital-intensive, but it's more a question of financing the inventories. Considering the expectations that have been shown by, or the emissions shown by Roberto, which are on a standalone basis. The above 10% EBIT margin is at Kering Eyewear level, so you should add also the royalties earned by the brand to have a full picture of the situation. You can imagine that with more than 10% of EBIT margin on EUR 750 million of sales, the payback is quite rapid.
You know that we have decided to depreciate the indemnification to Safilo over three, four years. We can assume that after this period of depreciation, considering the capital employed, that should be quite limited. The return on capital employed should be on par with our expectations and in line with the average of the group or even above.
Thank you very much. I just forgot to ask, the net working capital requirement of this activity as a % of sales, is that possible to know?
We don't disclose the exact % on total sales, we can say that due to the fact that we are still increasing a lot on our top line, the requirement in terms of working capital is still mainly receivable and inventory, due to the fact that we are a wholesale business.
Maybe what we can add there is that the customers really appreciated the different approach. We were used, in our past life, to be in a situation where we had less control of customers in terms of payment terms and all of that, as well as on the other side, suppliers. I think we've done a strong improvement on both, thanks to the different approach.
Yes. Hi. Antoine Belge from HSBC. Three questions. Honestly, I don't really get the calculation that was made by Jean-Marc, because it's the profitability at group level that counts. 10% is not really impressive compared to what you would have got from a licensor, which is usually you've got the royalty, but also the contribution from advertising. Considering everything you're investing, I think it will take a while for that to get some decent returns. In other words, will it work only if you can get other brands from other groups than Kering? From a quality standpoint, I think you mentioned that from a product standpoint, you could have your own designer, but I'm sure that Luxottica would have been happy for you to have your own designer collaborating with them. Same in terms of distribution.
Usually, it's the brand that sets up the number of point of sales. I'm a bit surprised that it's so revolutionary.
Sorry, Antoine, maybe I was not clear enough because when I said 10%, it's after the payment of royalties to the brand. If you compare now the contribution of the eyewear activity as a whole, if you add the total sales in stores plus the wholesale sales and you combine the above 10% of Kering Eyewear plus the royalties in the brand, we are above 20% and almost at 25%, if we consider more specifically Gucci. 25% of EBIT margin, I think it's quite relevant, and I'm not sure that we would have got this profitability in the previous model, or I'm sure it was not the case. Just to clarify totally, above 10%, and you know that Roberto is quite cautious when he say above 10%. It's after payment of the royalties to the brand.
It means that you need to combine the P&L of the brand plus the P&L of Kering Eyewear. Sorry if I was not clear.
Yeah. Again, if I may add, we've been in this market, as I said, 600 years or 20 years each. There is no contract in the previous business model that gets to this level. It is actually all addition of value, if that makes sense to you. I hope it's clear. Second question was if we're thinking to get brands from other brands. No. The answer is that we want to stay true to what we said, which is that we're going to be doing the brands of our shareholders. We have received a number of requests. I always discuss them with Jean-François and François-Henri. Again, we want to be nice to everybody, but we want to do the brands of our shareholders. That's it. Third, I think probably I wasn't clear enough.
It's interesting that you say there is nothing innovative on the way you approach the market because at the end of the day, the brands are deciding the doors. It's actually not true. We have been doing this in a different position, being licensee of licensor. You know, trust me, if you give me your brand and I use it and I pay royalties, you're not going to decide the doors I'm going to be in because I need to make money. It is a discussion. There is some guidelines, but it is completely different. Being internalized means that because of the fact that we work together, we want to be fully consistent with the brand image. If I am a licensee, I need to try to get to the minimum royalty guarantee that I give to you.
Therefore, I need to sell as many glasses as possible to get the money to pay what I promise you. Here, I don't have this problem. The problem I have here is that I need to have the right distribution based on what the brand wants me to do. This is a completely different approach. It's very much focused on preserving brand equity for each of the brands that we work with. Does that make sense? Does it clarify? Okay.
Thank you. Flavio Cereda from Jefferies. Just three quick questions. Firstly, on notice, 14,000 SKUs, it's quite a lot. I noticed that in terms of the number of styles, the last four winters contracted a bit. I was wondering in terms of complexity, what level are you comfortable managing? Secondly, if I can go back on the issue of Safilo, I'm afraid. If, when Safilo is no longer going to be able to deliver the product, how flexible are you in terms of replacing them without impairing your ability to deliver the product? What do you actually manufacture in China? Because I noticed you said manufactures in China. Lastly, in order to go to 50/50 more or less sun prescription, obviously prescription requires rather more complex distribution. Are you in a position to do that now in terms of the client base that you work with?
Is it just a question of fine-tuning production? Is there more that you need to do to get there? Thank you.
Okay. Maybe I start from the last one. In order to get there, we need to fully exploit the potential of the current customer base and to expand customer base in certain markets. For example, in the U.S., where the market other than department stores or multi-brand stores is mostly prescription frames. As you know, these stores are not in the street, they are on the second level, and they have doctors that suggest to you what to do. They do the visit. They propose you. We need to further expand our customer base and to improve productivity in the customers that we serve already. In terms of the rest, production and all of that is not an issue at all. I don't think that is complicated. As you can imagine, we've done all of this in three years.
We focused on what was the focus also of our brands, which are much more into sunglasses, in terms of image, communication, and all of that. The frames are a medical device somehow. It takes a little bit of time to get the brands there, but we have the full support, and little by little, we're going to be able to get to 55/45, I would say. That's the idea, compared to now. The second question was what happen if Safilo doesn't deliver, right? If Safilo has problems to deliver. Again, maybe you want to take this and also complexity in terms of number of.
Maybe I would take the.
styles and SKUs, yeah.
The rest of the questions. With regards to Safilo, as I explained before, there is the willingness to continue cooperating. That said, clearly, in case this scenario will not be feasible, we don't see any risk of capacity shortage. We are working with 42 different supplier across the world. There is capacity in Italy available to replace Safilo. As you may know, the STPA with Safilo is stating decreasing volumes. The most critical years are over with 2018. We have 2019 and 2020 with decreasing volumes commitment with Safilo. This is to say we are already arranging some partial substitution of Safilo volumes. That said, we are working, and this is the strategy to keep our flexibility, which we believe strongly is a really added value, to serve better our customer, being flexible in the time to market. We are developing a network of suppliers.
With the most, I would say, important, we will work in a very deep partnership. That means reserving capacity, which will enable us not to have any shortage when and if Safilo will decide or will not be able anymore to provide the decreasing volume that we are counting on so far. When we come to China, as was shown by Roberto in the presentation today, China represents 5% of our purchase volumes. Mainly, it's Puma and MCQ, and mainly is injection. It's this technology, the injection frames. As far as the brands are concerned, it's the entry-level brands, Puma and MCQ. When we come to the complexity, you were mentioning the 14,000 SKUs. Clearly, this is a feature of our business to be complex. We believe that the number of SKU will be basically coming from the maturity of each brands. We are coming there.
At the beginning, we were growing fast the number of SKU. Of course, with Balenciaga, we will add something on top. For some brands, we are already at the maturity level, meaning that a certain number of new SKU will come in and a certain number of SKU, basically the slow mover, will go out of collection. We shouldn't see in the next years dramatically increasing number of SKUs. There would be more a substitution of SKUs, the slow moving with the new collections, except for the new brands where we have to build the maturity on the market.
Yes. Mélanie Flouquet at J.P. Morgan. I have three questions, please. I wondered, from an eyewear total market perspective, whether you could share with us whether trading up is still going on or whether we're starting to see disruption from the Warby Parker, whether we are actually seeing trading down in this industry. I apologize because I'm not an expert in eyewear. Number two is, on the P&L structure I was quite surprised by how high other G&A are, 19%-20% of sales. I was wondering whether there is some leverage that we could get out of that, and whether your 10% target is actually pretty low given that the industry is, in reality, overspending on this specific line by quite some distance on other industries from what I can gather. My third question is on Gucci. The growth in 2017 undershot the growth of Gucci brand.
Clearly, this was a year of transition. I imagine you changed some of the points of sales. There was quite a lot of work. Can you now converge in growth rate or beat the growth rate of the Gucci brand standalone in Gucci Eyewear? Thank you.
Okay. Sorry. The first question was on these new players in the arena, if they're challenging our business model, right? The luxury.
[Inaudible]
Sorry.
[Inaudible]
Yeah. Absolutely. I think, first of all, nothing to apologize. I hope that we gave you a little bit of sense of the eyewear industry, so thank you for asking the question. Warby Parker specifically is a very successful company. They have done very well. They have disrupted a little bit the industry, but they have, with all due respect, very little to do with luxury. As you know, their business model is to go for bestsellers, produce them in China, send five to the final consumer, and then make them try, and then you can send back all of them or you keep one. They do a huge work, very successful on service. It's a different perspective, it's for a different consumer target, is not where we play.
Being connected with our brands in terms of style, in terms of what we propose to the market, we will never be into a situation to get towards those sort of potential competitors. As I said before, we do realize the importance of e-commerce. Maybe Davide, do you want to spend a few words, given that you've done the agreement with JD.com, very successful.
Well, when it comes to e-commerce, for us, it's clearly a very important segment or a channel because it's growing fast. We approach it in two different ways. We use e-tailers such as Net-a-Porter, for example, or Mytheresa. There we have the same approach that we have with customers such as Puyi, for example, capsule collection, avant-premiere, et cetera. In a market like China, which is today the first e-commerce market in the world, we go direct, meaning that our retail base does not allow us to cover China in its entirety. We cover barely tier 1 and tiers 2 cities. We decided to use JD platform, but we manage directly the flagship store, to cover the rest of China. It went above our expectation. I'll just give you a couple of indicators.
We already serve on a regular basis, bear in mind, we only started 2 months ago. All of the 31 provinces in China, all of them are covered already. We sell to all of the 31 provinces every week. In the past 4 weeks, we covered tier 3, 4, and even 5 cities. Tier 5 cities in China, I've never been to one of those, and trust me, I live in APAC for 7 years now. Because there is customer demand, there is consumer demand that we cannot satisfy through the normal channels. I don't have a single point of sales in a tier 5 city, right? Basically, we're seeing business develop there that is above our expectation, and we see that as a huge opportunity for growth in the future.
Of course, this has nothing to do with the Warby Parker model, as Roberto was saying, because they play a different game, actually. They don't even play in China, to be honest, right now, but they play a different game to what I'm telling you now. We use the e-commerce to reach consumers that otherwise we would find very difficult to reach.
Anna, do you want to go G&A?
Concerning the other G&A line of the P&L, maybe it's a little bit misleading the way we call it, but in reality, in that line, we are considering our total personal cost, because in sales force, you have only people on the field. Maybe it's a little bit misleading the way we call it at the end.
Okay.
Gucci.
Yeah.
With reference to Gucci, of course, that brand is our strongest brand in 2017. What we can say is that if we consider Gucci, Saint Laurent, Bottega Veneta, Puma, which are the pillars brand in our portfolio, the total amount of sales related to that brand is 70%. Of course, this percentage will decrease in 2018 due to the fact that we have Cartier, so also the weight of Gucci will be lower in 2018.
Did we answer the question, Mélanie?
Yeah. Take the back question.
Hi. Lara Pezzini, Capital World Investors. I was wondering whether you could just share with us what is the behavior among millennials in terms of replacement cycle in prescription, but also in sun. You target the millennials more than others. I wonder whether you could share that. Thank you.
Yeah. Do you want to take that? Yeah
Yeah. Sorry, I'm the alpha guy. Actually, millennials in China were, for us, a huge surprise, because Gucci got a lot of traction on millennials in China. Are really looking forward to get Balenciaga too. What's happening is that they have completely different trend. That's why we do dedicated campaigns in Asia with local celebrities, local Asia design product for Asia. What is happening is that these are customers that, they don't buy just a pair of sunglasses a year. That's the point. The shopping shop that Roberto was showing you is in Beijing. We're in Sanlitun, one of the hip neighborhood in Beijing. The average ticket is not one. That's a millennial area, right? People come in and buy, I think we were at 1.4 last time we checked. More than one pair at a time.
Which is completely different from what I was used to. That you go inside, you buy your one pair of sunglasses. Now we have people coming in and buying two. The average goes up. I think this is happening a lot to other categories right now in the luxury industry. You may have your customers buying two pair of Triple S. For sure we know one guy that is doing that. In that perspective, going back to the cycle that you are mentioning, is pretty disruptive compared to what we were used to. That frames, you buy a pair every two and a half years. Not happening anymore. A Chinese millennial, which is 70% of my sale, will not keep the same frame on his face for two and a half years, I can guarantee you this. They're difficult to track because they change fast.
They're into something, then they can change their mind. If you get to them successfully, then it's a very interesting market. This is why for Saint Laurent we use Huang Zitao, which is a millennial. He's a millennial, he's a rapper, and we use him as a celebrity to promote the brand. Just to give you an idea, once we introduced that, sales in China tripled for the brand, okay? You get that segment right, it's going to be happy days. Right now, this is how it works for our business as well.
Yeah. The same applies to the rest of the world, because the thing is that this is an affordable product that gets you into the brand. We're lucky because it goes into your face. In those social networks, as you know, most of the pictures talk about your face, the way you look, but from here up and not from here down. I got a question and they told me, "Who's going to give to those millennials the money to buy a pair of EUR 350 sunglasses or EUR 500 or EUR 600?" The answer is the same people that are giving them the money to buy Triple S or Speed. You have it there. We're very lucky that we're working on this category, which is enjoying a lot of success with millennials.
Okay. Thank you, Roberto. Thank you to the team. I also want to express my gratitude to everyone at Gucci, Kering Eyewear, and also Kering, who worked tirelessly in the past two or three weeks to make this day possible. Also, very big thank you to Claire, to the Kering Investor Relations team, to Bernard also. Of course, they will continue to be available for questions you might still have after this day, of a very insightful day. Thank you to you, for your interest in Kering, Gucci and Kering Eyewear. Your support is a very significant part of our journey. Also a part of our support to our transformation. We are deemed to become the purest and fastest growing luxury group in the world, and we will show that to you in the near future. Now, it's the end of this day.
Safe travels back home, and we'll talk to you on the 26th of July. Thank you.
Thank you.