Good morning. I'm delighted to welcome you to the presentation about 2016 results. First of all, I'm delighted to be able to hold this presentation for the first time here in Kering's new headquarters. We moved into last summer. We're right in the heart of Paris in a neighborhood which has always been associated with artistic and cultural creation.
As you can see around you, the simple beauty of the former Laennec hospital is a perfect setting for this new stage in our history that we undertook last year. Our development accelerated throughout the year 2016, as can be seen by our results, particularly in the 4th quarter. The figures above all validate our strategy. In an environment that remains troubled, we've achieved good performance in most of our Maisons and even exceptional for some of them, in particular, Gucci and Saint Laurent. We are very proud of what we've accomplished, but this is only the beginning.
But above all, let me thank our 40,000 employees throughout the world for these very handsome results. To speak about them today, we have Jean Marc, our CFO, And then I will set forth our strategy and our ambitions. And finally, Jean Francois will speak about the implementation of our strategy at the group level and at the level of each brand, after which, of course, we will have a question and answer session. Let me give the floor to Jean Marc for our 2016 results.
Good morning, ladies and gentlemen. To begin with, I'd like first to review the main group performance indicators of 2016. The results I'll be presenting to you are very good and confirm that we successfully managed throughout the year the priorities we set our sights on and that we explained to you last year. The first indicator I would like to comment on is revenue, standing at €12,400,000,000 which is up by almost 7% in reported data, negative currency effects to the tune of €100,000,000 weighing almost entirely on Puma. Regarding scope effects, they're not highly significant and they mainly have to do with the sale of electric by Volcom toward the beginning of the year.
Organic growth, like for like, ForEx and Scope, stands at over 8%. That's the group's best performance since 2012. Now the footprint hasn't changed much from 1 year to the next. Revenue remains well balanced among the various regions. Western Europe and Asia Pacific, representing, respectively, 31% 26% of revenues, booked growth in excess of 10% like for like, whereas North America and Japan contributing to the 22% and 10% of the total saw more moderate growth and sometimes flat growth.
Now some brief comments regarding results, generation of cash flow and net debt. Recurring operating income, €1,89,000,000 up substantially 15% compared to 2015. In absolute terms, this is a record for the group. Operating margin reaching 15.2%, which is up by 100 basis points compared to 2015. Standing at €1,190,000,000 operational free cash flow has almost doubled compared to 2015.
It's true, it had been hit by the negative effect of currency hedges. So we can say that we're doing much better than our ambition of going beyond €1,000,000,000 in free cash flow. And as announced in Oralia, we use this cash to reduce our net debt, which goes down by more than €300,000,000 reaching under €4,400,000,000 which is a gearing of 1.9x EBITDA. Now I'd like to talk about revenue trends. As you know, one of our priorities has been to boost organic growth of our businesses.
Group wide, we booked a strong increase in growth in the second half. Growth was double digit in Qs 34. Now we have to point out that our luxury and sport and lifestyle businesses both contributed to the performance. Regarding luxury, annual growth is in the neighborhood of 8%, H2 up more than 11%. Also, spread to the second two quarters in spite of the fact that the base effect was more demanding in Q4.
Now let's talk about Sport and Lifestyle, a very uniform performance throughout the year, annual growth staying at 9%, Puma grew by 10%. Now revenue growth took place and net recurring operating income grew even faster by 15%. We saw an increase from contributions by Luxury and Sport and Lifestyle, lifestyle respectively 13% 30%. Operational profitability improves, therefore. And I'd like to let you look at the bottom of the page here.
You can see details regarding changes brand by brand, and I'll come back to these specifics in just a moment. Now let's look at our business activities in greater detail. Luxury revenue is up by almost 8% reported and like for like. Currency effects are almost neutral and there's no scope change. So at this level of growth, we're fairly substantially outperforming the industry.
Business was buoyant throughout the year, thanks to great sales momentum in our stores, growing by 10% for the year, especially buoyant trends in Western Europe and Asia Pacific. Also, we saw quick development of online sales up by 22%. To talk about wholesale, these are up 2% for the fiscal period. Q4 saw these trends grow. Our own retailing up by 18%, also under the impetus of Western Europe and Asia Pacific, both of them growing by 24%.
We see double digit growth in North America, and Japan is stabilizing. In the last quarter, wholesale dipped slightly due to some shifts in deliveries. All in all, Q4 luxury sees sustained growth on an order of 11%. I want to dwell on the regions and talk the specifics here. You already know the underlying trends for all the regions.
Western Europe contending with a high comparison and also the knock on effects of the attacks in 20 16 and effects on tourism. All in all, good performance in the U. K, of course, but also Italy, Germany and Spain, whereas in France, business stabilized toward the end of the year. Now one of the highlights of 2016 is a large scale repositioning of Chinese purchases toward their domestic market as well as neighboring countries such as South Korea, Macau, to a lesser degree, Hong Kong, starting in the last quarter. Trends in Asia Pacific, therefore, improved throughout 2016 and improvement speeded up further in the second half.
On the other hand, Chinese customers slowed their purchasing in Japan, particularly after the uptick in the yen. Lastly, with both the strong dollar and presidential elections, that didn't lead to very positive conditions for the industry in North America. And here as well, our brands performed in differing ways, but all in all, growth in our own retail network. That's the backdrop. Analyzing performance by nationality is therefore very important.
For the full year, for 3 main brands, all in all, Chinese customer base is up and that increase sped up substantially in Q4 where there was growth of the Chinese customer base in order of 20%. Now, of course, we're seeing Mainland China purchases where all of our brands are growing in the last quarter. But in addition to that, we're seeing throughout Europe and Asia and even in the Americas growth in purchases by our Chinese customers. Now on a couple of points, I mentioned that all nationalities except for the Japanese clients were growing in the last quarter as was the case for the full year as well in all of our brands throughout our scope. Let's talk about recurring operating income in Luxury, up 13%, standing at €1,900,000,000 This improvement is a significant improvement.
It's in line with our expectations, and it was very much boosted in the second half with a strong uptick in Gucci, continued strong performance by Saint Laurent, limited decline of other brands, whereas Bottega Veneta in the second half of the year continued a similar trend as its trend in the first half. Operating profitability reaching 22.9%, up 120 basis points, including 190 basis points in the second half. Capital expenditure, €381,000,000 slightly down, representing 4.5 percent of revenue. This confirms the fact that we're carefully focusing on organic growth and consolidating our network of existing stores. Now I'd like to briefly comment on the main figures of our luxury brands.
Now of course, you have additional information in the appendices to this presentation. I'd begin by talking about Gucci revenue, €4,400,000,000 We can say this is comparable growth of almost 13% and Q4 sped up even further reaching 21% growth. This is exceptional performance, which shows that the reinvention of the mark was entirely successful. Own retailing up 15% for the year and even 28% growth in the last quarter, boosted by very strong performance both in Europe and Asia Pacific but equally in North America and to a lesser degree in Japan. Japan sees a resumption of growth, thanks to remarkable initiatives taken, remarkable jobs done by the Gucci teams to really convert Chinese Japanese consumers to the new aesthetics of the brand.
In the last quarter, we've seen growth in all product categories. At the same time, we also know that Gucci put an end to in store discounting. Progressions of full price sales, therefore, are even more significant and have been achieved at a constant number of stores vis a vis last year. The decision was to drastically review the markdown policy. The reason for this is even more than for financial considerations, it's due to the belief that consistency and depth of Alessandro Michele's collections are so substantial, this lengthens product lifestyle and really pushes the collections toward the future.
In addition to that, we're focused on digital and we've been rewarded for that. Online sales have seen double digit growth throughout the year as well as the quarter. Wholesale is up 6% for the year, now a stable number of partners. And in Q4, the base of comparison was more difficult. In that last quarter, a slight dip in wholesale.
The reason is the current revamp of the watches offering and also postponement of the Quasiere delivery 2017. To some degree, the delivery postponement has dated lack of availability of similar products due to the success encountered by these new collections. The drop in wholesale is, therefore, temporary. Recurring operating income up 22% reaching €1,260,000,000 which is an operating margin of 28.7 percent for the full year, an improvement of 220 basis points, including over 300 basis points just in the second half. This improvement to some degree is boosted as opposed to last year by the fact there wasn't any negative impact of currency hedges.
However, most importantly, this shows the leverage effect of growth on operating income when we see this at a constant store number. We did some increases in OpEx to support the rollout of various initiatives, and Jean Francois will be talking to you about these later. We've carefully controlled and allocated operational expenditure. And once again, this shows that we are giving priority to organic growth with 86 stores that have a new concept as of the end of the year. Total number of stores is down by 5 units for the full year.
Bottega Veneta had a difficult 2016, hard hit by changes in tourism trends compared to 2015. For the full year, own retail is down, especially in Western Europe, Japan and the United States. And we've seen a relocating of demand in Asia Pacific, which hasn't fully offset the drop in tourist purchases by Chinese customers. We can say that Pate de Veneta sees growth in Mainland China and Korea, but there's still a feeling a negative impact of the downturn in Hong Kong. In the last quarter, there's a slight improvement to the trend, mainly in Western Europe.
Tourism flows improving somewhat toward the end of the year and a good recovery in business achieved with local customers. Wholesale, significantly down for the full year and in the last quarter, the brand continues to strengthen its exclusive positioning to try to contain any markdowns among some of the retailers. All in all, revenue for 2016, €1,170,000,000 which is down 9% like for like. Taking into account the negative leverage effect and also continued investments to continue redeploying the brand, recurring operating income is down just above €300,000,000 which means the margin continues to be very good, standing at 25.3%. Let's talk about Saint Laurent.
2016, yet again, was an exceptional year. The brand sees growth above 20% for the 6th straight year, going beyond €1,200,000,000 in revenue. Growth was buoyant throughout the year, especially in our store retails, retailing, where it was up more than 30%, double digit growth in all regions and all product categories. This is a reflection of the ongoing success of collections and novelties. Wholesale growth, 12% for the full year, some delays in delivery in the year, which led to a slight drop in Q4.
Anthony Vaccorella's first collection was extremely well received, demonstrated by the level of orders, started to be delivered in 2017. So we see a convergence of both retail and wholesale calendars aligning them under the brand's new advertising campaign. As expected, operating profits up significantly by over 60%, reaching €269,000,000 The margin is up by 4 70 basis points. For the first time going beyond the threshold of 20%, even quite substantially so reaching 22%. Now regarding other luxury brands, the year was a contrast as expected.
And we can say that revenue is €1,700,000,000 Not many differences between retail and wholesale, but there are big differences between market segments. Couture and leather brands grew 4%, that's good performance. Impinging on negative because of difficulties by Brioni, but driven by Stella McCarthy and Alexander McQueen and the step up in Balenciaga. Our Joy of Brands consolidated activities in 2016, Boucheron was hit in Q4 by a strong base effect. Regarding watches brands, they had to contend with difficult to deteriorated market Contribution by our 3 main brands is up.
Contribution by our 3 main brands is up but does not offset pressure weighing on Brioni's results as well as the watches brands. Above Brioni's results, we have to emphasize that in-depth work has been done on all of these brands, continued in 20 16. We're talking about their reorganization, structure of their collections, as well as wholesale and retail. Regarding Ulysse Nardin and Gillette Perigot, their participation in the Geneva Watch show and feedback from customers in making the choices we did and launching initiatives we did. Now let's talk about sport and lifestyle activities.
I emphasize especially Puma's performance. In 2016, Puma confirmed its trajectory of growth in revenue. Results, their results were reported yesterday. So I'll go through this quickly. PIMA booked growth in its sales like for like 10% for the year, 7% in reported figures.
They repositioned their offering, and that's really bearing fruit as demonstrated by the 13% growth for the most important category, which is footwear and also very good performance in textile. Trends are good in all distribution channels, beginning with wholesale with extremely positive feedback from all the partners. Retail trends and online sales are also looking very good. Lastly, all regions are contributing to this good momentum. Regarding Volcom, I'd say in a nutshell, performance continues to be weighed on by deteriorated situation of retailers in the U.
S, whereas the brand's own retailing is growing. Recurring operating income and business margin growing by, respectively, 30 percent and 60 basis points. 2016 confirms Puma's good momentum, and its profitability reaches a positive inflection. Puma reaching its annual target, stability of gross margin and very good control of operating expenditure make it possible to have a leverage effect. All in all, Sport and Lifestyle activities achieved revenue of €3,900,000,000 for the year, operating result of €123,000,000 Now some brief comments on other elements from net income.
Other nonrecurring income and expenses representing a net expense of approximately €500,000,000 This includes an impairment of assets, loss of value €297,000,000 booked for the brands and goodwill of Brioni and Ulysse Nardin. Also here, we're including industrial and sales reorganization costs as well as the negative contribution of carrying eyewear during the startup phase. This is approximately €98,000,000 including €60,000,000 in operating losses and €30,000,000 due to the compensation paid to Safilo. The remaining amount of that compensation is capitalized and will be depreciated starting in 2017 for less than 5 years. Net financial expenses reaching €202,000,000 down by around 20% compared to 2016.
On the one hand, the net cost of debt, all in all, has remained stable at €128,000,000 Average level of debt, of course, has gone down, but the average rate for financing has gone up slightly due to the reduction in commercial paper finance spend increase in bonds. But this has meant we've secured long term financing at a low interest rate. Furthermore, other financial expenses are down by €47,000,000 This is because we didn't renew see renewal of losses on forex hedges in 2015, which were considered to be inefficient. Tax expense, €296,000,000 slightly down compared to 2015. The effective tax rate, which is to say tax divided by pretax earnings, 25.1%.
This rate goes down substantially compared to 2015, where it was 32%. I'd remind you, the effective taxation of taxation rate of 2015 was hit by some nondeductible expenses plus some negative effects due to ForEx hedges. Current tax, which excludes nonrecurring, is 20.5% in 2016. All in all, net income group share €814,000,000 which is up 17%. Net income group share from continuing operations excluding non recurring items reaching €1,280,000,000 up 26%.
Now I suggest that we look at operational free cash flow, I already alluded to it briefly, reaching almost €1,200,000,000 significantly up compared to 2015. And to remind you, again, 2015 was hard hit by some cash outlays due to currency hedges. In 2016, our operational free cash flow almost doubled, and we can analyze this as follows: cash flow up by 18%, around €300,000,000 the change which correlates with the improvement in earnings. And plus, WCR gone down by €135,000,000 compared to €215,000,000 tax outlay slightly down operational expenditure down by €61,000,000 which means down 9% in OpEx. Now to talk about our net financial situation.
Just around €4,400,000,000 in 2016, which is down by €300,000,000 Now net debt over EBITDA ratio goes down below the threshold of 2x, I. E, reaching 1.9x. This reduction in debt is in compliance with one of our financial targets. I'd remind you to maintain net debt within a range of 1 to 2x our EBITDA. In the appendix, you can find more detailed information on our financial structure and balance sheet.
My last point, I'll talk to you about our dividend. For 2016, the Board of Directors, which met yesterday, were proposed to the AGM on 27 April to pay a dividend of €4.60 per share, up 15% compared to 2015. I'd remind you that it's very important to us to make sure we keep a balanced payout over time, taking into account our recurring income and our free cash flow. An interim dividend of €1,500,000 has already been paid that was 18 January 2017. If the AGM accepts, the remaining amount €3.10 will be paid on the 5th May 2017.
Thank you for your attention. And I'd now like to give the floor to Francois Henri.
Thank you, Jean Marc. As you know, the luxury sector is in the throes of evolution and this was confirmed last year. We were prepared for that change. Our performance is due to the fact that we anticipated on that environment and we used it in order to outperform our competitors. The luxury sector is enjoying worldwide growth and it will continue to benefit from favorable demographics as well as the emergence of new categories of consumers.
But we cannot, if we are to continue to enjoy growth, count mainly on new attracting new territories or strengthening our shops because customers' patterns, consumption patterns are changing completely. They have a wealth of information, and they can prepare for their decisions and compare the different offerings before they come into the shops. Before, in fact, about a third of our customers will visit us online, on our sites, on other sites and on the social networks before they even set foot in a boutique. But especially the millennials, which are the heart of our future growth, which already represent around half of the sales for Gucci and Saint Laurent are constantly connected and are constantly looking for meaning, which greatly influences their buying decisions. In this environment, the established brands as well as the younger ones, if they benefit from a support from a big group, give them an obvious competitive edge.
Vertical integration and the mastery of distribution are major assets for them, and they are high barriers to the arrival of newcomers. But historical roots and a critical size are not sufficient in a context where growth is more moderate than before. To achieve our objectives, we have to grow faster than our markets, that is to say we have to gain market shares. So the question is how can a luxury brand or luxury house gain market shares? My conception of luxury is intimately linked to the ability of our products to elicit desire and above our beyond our products, the ability of our Maison to get people to dream, to express the authenticity and sincerity of their values and the stories that they tell.
The desirability of our products is due to their strong creative content, which strengthened year and which bring together continuity innovation and creative quality. That's what we are convinced that a strong creative and authentic content will help us to set ourselves off from our competitors and to gain market shares. That's why we put creation at the heart of everything we do year after year. The choice of the creators that we've made these last few years illustrate our approach as well as its audacity. We prefer creators whose personalities, creative talent embody the codes of their Maison, creators who can decipher their environment and who anticipate on the ongoing changes and to win over new generations by helping them discover unknown territories that they cannot experience anywhere else.
That's why I ask our creators to consider each collection to be a new chapter in the same great story, which will already contain the harbingers of the coming season. That will increase the longevity in the categories that have always been rather short lived, like the ready to wear. That longevity will make it possible to mask the creative risk because the collections are not just isolated creations. Some designers, in fact, constantly change the concepts and sharing the one creators whose creative horizon goes well beyond a single season. And that choice also presents the advantage of enhancing the life cycle of our products in the eyes of our customers.
Finally, in addition to the longevity of our creations, I give special attention to the coherence of the creative concepts embodied in the different categories of products. We use the ready to wear category as a way of expressing the creativity of our Maison and also as a vector of dreams by the images, which generates a strong desirability for accessories and handbags, which represent the greatest share of our sales and our profits. Thanks to this approach, Alessandro Michele transformed Gucci whilst remaining profoundly faithful to the very soul of that magnificent Maison. That's the case for Ready to Wear, but also for the more permanent products, which Alessandro interpreted with his customary brilliance, we're doing it entirely coherent with his new collections with Saint Laurent. Although the first collections of Anthony Vaccaro were different from those that preceded him, nonetheless, they are part and parcel of a coherent stylistic framework.
And I'm convinced that the collections that I saw a few weeks ago in the Grand Palais in our showroom, which in fact gave rise to a handsome number of orders, that those collections will continue to fuel the growth of Saint Laurent. And Balenciaga, whilst hoping that would be a creative or whilst trying to instill in a new creative direction, we wanted to vigorously affirm the DNA of Balenciaga and strengthen its historic nature. Dana Gavasan Gavasalia has been successful. In fact, the collections play with the DNA and make that very modern. The last two showrooms of the autumn winter season 2017 that were held here completely convinced our buyers.
You've understood that we have a modern vision of luxury based on a creative content, strong creative content and codes that will be that will last over time. Tomorrow's luxury cannot simply be based on heritage and creative or artisanal excellence with marketing varnish. There must be creativity, but creativity is not good enough. The implementation must be exceptional. That's where the alliance between a creator and a CEO or a general accretive and a managerial team will deliver that vision to our customers, and that's what's really essential.
I devote great attention to the profile of the CIOs of our different brands to make sure that they're well adapted to the development of their Maisons. And that's why we had to change some of our managerial teams. The match between the brand and the creator and the manager is one of my main responsibilities. That's something I look after day by day, not just when hiring new people. With my monthly meetings with each CEO, I've created special sessions brand by brand, meaning they're the creator, CEO, communications director in order to discuss with the experts of the group the image strategies of each Maison.
These are major events where we can take a look at what we're doing better, understand the way our brands are perceived throughout the world and to bring forth new ideas. 1 of the major elements of the image development in our brands is the online strategy, which is not just a matter of e commerce and which Jean Francois will speak to you about. Communication in online images of our brands are making a growing contribution to their brand equity. We've all seen how Gujhnee uses digital technology to support its new image. All of our brands to differing degrees will be strengthening their online communication.
Just to give you an example, this year, Balenciaga should triple the budget dedicated to digital technology, digital communication. So I'm convinced that our model, which places a creative content at the very heart of the evolution of our Maisons, will reduce our dependence on market trends as we've seen with Saint Laurent and Gucci. In order to roll out our conception of luxury, we've developed a strategy based on 4 pillars, which I set forth last year. As that strategy isn't there to change in any substantial way year by year. Let me just briefly remind you of what I said.
In 2016, in particular, we've seen how relevant our multi brand model is, thanks to which we can get the entire potential from the entire luxury market. The complementarity of our Maisons helps us to offset the long term impact the short term impacts. And that's why we can carry out the work necessary in order to put Bottega Veneta back on the road to sustainable progress. Organic growth, that is to say the increase of our sales in comparable stores, is our priority in a world in which demand is going is rising more slowly. As Jean Marc showed you, the productivity of our networks, particularly in Gucci and Saint Laurent went up in a major way in 2016.
But it's still well below its full potential. So we are continuing the work this year. The organic growth of our brands will also be amplified by the growing role of e commerce in a veritable omni channel approach. We are continuing our effort on our 3rd strategic pillar that is the creation of value at the scale of the group Increased efficiency in our integration are, to a great extent, responsible for the improvement of ROI and the generation of free cash flow that Kering delivered last year. Above and beyond our economic performance, we are keen on protecting the future of our industry and the communities in which we participate.
Last month, we announced our corporate and our societal rather and environmental objectives for 2025. Our will to innovate means that today we can be well ahead of our competitors, and we want to go even further and to share with them the progress that we make. In that framework, I'm working closely with all of our brands managers in order to integrate sustainable development to all our activities to mainstream it. That's one of the essential principles of our group culture that makes it possible for us to create strong bonds with new generations of employees and of customers. As I said, the image of our Maisons and the desirability of our products are our most precious assets.
We have no dearth of opportunities to further expand them And we have detailed group plans and plans for each brand in order to ensure this is their profitable growth. I'm not going to go into the detail of our strategic plans brand by brand. Joao Frassal will present a progress report on Gucci and Bottega Veneta. That said, taking account of the maturity and the specific situations of each of our Maisons, we have 5 major priorities for 2017 and the coming years. For Gucci and Saint Laurent, whose growth was spectacular last year, the point is to continue to further restore productivity at Gucci and Saint Laurent and operational efficiency.
Those missiles are setting up in new markets as in the case of Saint Laurent in Canada. And I'm convinced of the ability of Gucci and Saint Laurent to grow their sales and their profits. But data then it is a strong brand, which now has to bring the development up a notch. Their priority is to redeploy and to enlarge its customer base, both geographically and demographically speaking. It has an exceptional brand image.
It has exceptional know how and creativity, and its redeployment is already well underway. When it comes to Balenciaga, Stella McCartney and Alexander McQueen, those are extremely dynamic Maisons. They are passionately creative and whose sales and profitability potential is still far from having been achieved. The whole strength of our model is that we can help them to grow each of these brands at a rate that's better adapted to their long term prospects without skipping any stages. And that's what we're doing.
With our jewelry brands, we have a very rare organic growth potential, we would like to accelerate. For Bouffron, the biggest jewelers on the Place Vendome and which will celebrate its 160 anniversary next year. We have an ambitious growth plan for the next 3 years. Boucheron will strengthen its iconic collections and the creation of old bijouetries items and will develop new tools of communication in order to enhance its international notoriety. Bonnolato is doing very well, And we have major ambitions.
And of course, the development plan is in place to support that Maisons growth. Finally, Viomi and our Watch France have had to deal with sudden changes in their markets, either the decrease in the Russian customers, customer base, the appreciation of the Swiss franc or the anti corruption laws in China, which meant that certain watch dealers became overstocked. But we had to adapt to these new market conditions and set up new action plans in order to make a possible future growth in order to make a future growth possible. To support these brands, we would like to strengthen their expertise. Let me just mention 3 areas.
In order to continue to grow, we have to attract talents and grow the talents we have. Entrepreneurial audacity is really what sets us off, and we're doing our utmost to encourage it and to manage it. It's in that perspective that we've strengthened our human resources department, thanks to Beatrice Lazard, who joined us last year. We also would like to vet risk the communication of our brands by enhancing our expertise and giving them additional resources, group resources. With the arrival of Valerie, the back of the room, Valerie DuPont, our brands have found a really top notch representative.
Finally, to maximize the efficiency of our operational processes, we created a group operations department managed by Jean Philippe Bailly, who joined us last April. Now before I hand it over to Jean Francois, I would like to emphasize an essential element for our group, that is its agility, its ability to change and to call itself into question or to improve its performance. Thanks to those qualities, I am confident that our plans will be a success. Francois, you have it.
Thank you, Francois Henri. Good morning to everyone. Francois Henri just talked to you about the group's brands and business, and I'll tell you how we're going to be implementing these plans from an operational point of view. To that end, I'll be using 4 highly representative examples, I. E, continuation of Gucci's reinvention, Batya Veneta's return to growth, acceleration of the omni channel experience and realization of the Caring Eyewear project.
After that, I'll tell you how our strategy of value creation actually leads to financial ambitions. Now credit where credit's due. Let's begin by talking about Gucci. In 2015, Gucci recreated the dream, and the dream was actually realized in 2016. In 2017, this will become a sustainable reality and a really strong sustainable growth driver.
The unprecedented speed and efficiency of Gucci's reinvention are a true textbook case. Alessandro Michele's creativity and Marco Bizarro's talent really created tremendous energy throughout the organization and caused true upheaval in the corporate culture, making more fleet footed, more receptive, more innovative and better performing. The very good 2016 results are the initial effects of execution of the strategy, which we outlined for you in June. First of all, the creative transition is almost complete. Over 85% of products have been repositioned in almost all key categories.
The new creative line is a crystal clear success evidenced by the double digit growth in all product categories in Q4 equally. The number of models and options has been reduced by around 30% for the springsummer 2016 collection, and that's now the level stable. We've adjusted price segments both in entry price points and luxury. In leather goods, Alessandro has put together a very robust base of carryovers making up half of the category sales now. In addition, the new store concept was rolled out to a large portion of the network.
Even the stores that just had partial remodeling saw their traffic improve. Lastly, our program of retail excellence was rolled out gradually. It had an immediate effect, especially in our flagship stores, among other innovative initiatives. They now have a do it yourself service, I. E, our customers can really go with their own creativity, and that makes them feel even closer to the brand.
Due to this, revenue per square meter has increased by 15% on average, 1.5%,
percent, but
up by more than 35% at Perris Royal and Montaigne, up by 50%, 50% in Montaigne Ballonie and Beverly Hills and doubled in Bond Street. Several of you may have visited the Bond Street location in June. In addition, we gave new momentum to the house's communication. Now we're very much in sync with our day, touching a broader audience and having a positive impact on store traffic worldwide. For instance, we launched unique initiatives in the social networks and in the stores to attract the millennials, such as GucciGram and 24 hour ace on Instagram and Snapshot Gucci Ghost with Trouble Andrew, the New York artist and then 23 Stories and 100 Ways to Wear Gucci are just some examples.
The results were immediate. In Q4, sales to millennials jumped by more than 70%, seven-zero, making about half of the brand's revenue. Now after making that point, we say that Gucci still has tremendous potential for further growth. I would say the positive momentum of the brand is continuing, and we can say it's speeding up. Alejandro Miqueler has confirmed he is one of the most influential artistic directors of the decade and we've now very well aligned collections, communication and the house's image.
We'll continue supporting this through the tremendous continuity and consistency of the collections every single season. In addition, the in store productivity grew very strongly last year and will continue growing this year even just because by more carefully analyzing things by region, country, store and by category or product subcategory. We know there are various areas where we could improve even further. We've got the base for growth now. It's well established, and we're going to make up for any delays.
That's the core of the 2020 plan being implemented in each region. Lastly, we're adjusting our production and logistic capacities to keep pace with ever increasing customer demand. So 2017 is going to see many developments for Gucci. I can say that as of February 22, the Unified Men's and Women's Fashion Show is going to be presented at the first time at Gucci's new headquarters in Milan. We're going to finalize the categories repositioning for those categories that haven't been repositioned yet.
Perfumes, makeup, jewelry, watches and eyeglasses are going to also be aligned on the brand's codes to benefit from the great momentum, image and distribution. I mentioned the first perfume signed by Alessandro Michele is going to come out this year. Furthermore, this year, we're going to continue our spending on communication, bringing the digital portion to 35% of overall communication spend, also open our e commerce site, gucci.com in China. Lastly, we're going to pay a special effort on Japan, where momentum was down last year. Gucci has been highly responsive, adapting product assortment location by location, tailoring it to location, also targeting younger customers, particularly through communication that are more in sync with local luxury reality.
So we're reiterating our belief that Gucci's renewed agility and the many initiatives underway are going to continue extending and building on the wonderful and favorable momentum of these last couple of years. Let's talk about Vatica Veneta now, which we intend to bring on track for sound and sustainable growth. This extraordinary house for quite some time saw the biggest, most powerful growth and created value for the entire group. In 2005 to 2015, its average revenue growth was 23% per year and recurring operating income increasing 39% per year. Even today, its return on capital employed is the highest of all of our brands.
Bottega Veneta went over $1,000,000,000 in revenue in 2013. Around 18 months ago, the house reached flat growth, worsened by strong volatility in tourism flows from China. You know that Asia by far is its biggest market. Not only does the region represent 40% of its sales versus 30% for all of our luxury businesses, Furthermore, the brand is very sought after by Asian clients worldwide. Right away, we did an in-depth analysis of the reasons the trend had turned around.
Through the analysis, we're able to better understand certain weak points of the house and also understand opportunities and most importantly, realize that its brand equity based on strong values of non ostentation in luxury and products of absolute quality is a very strong brand equity and very much in line with expectations of luxury customers. We've been using this period of consolidation to strengthen the strong points of the brand and to very clearly work to improve where improvement was required. Claus Dietrich Lars, the new CEO, has been in position for 4 months and I'd like to share with you some areas that we are working on. Pottega Veneta is a highly exclusive brand. We're going to reiterate this positioning, which sometimes suffered in the past, especially when it comes to external retailers.
For instance, we're maintaining our price position. Its validity was reconfirmed by the fact that our most exclusive items sell well. We're enhancing perception of the brand, particularly through a store remodeling. Now we can say, henceforth, several flagships have been remoted for the new concept, such as Plaza 66 in Shanghai, Wynn Palace in Macau and Rodeo Drive in Beverly Hills. You can see here a picture of this.
And these are really brightening up the image of the brand. And I would encourage you to go to these flagship stores to see this for yourselves. Also, opening the new flagship on Madison Avenue, New York is going to be a real anchor for making inroads in the U. S. Market where the brand is still underrepresented.
Another central point in our program will be to renew our product offering, particularly rebalancing the mix between permanent collection and novelties. So we're going to be continuing seasonal changes to historical lines, leather goods and so forth that are very successful among our traditional customer base. At the same time, we'll strengthen the link with the shoe collection and ready to wear. Also, we're going to reinvent intericiato, introducing new shapes, new functions, finishings and modernizing the long standing lines. Furthermore, we'll be broadening the non braided leather line, emphasizing our craftsmanship know how.
We're developing exclusive models for certain markets, meeting local customer expectations. We'll also be making limited editions. Currently, the main challenge for BotteVeneta is to attract new customers. We can say the brand has a tremendously loyal existing customer base but is no longer able to substantially to commit enough to start a new relationship with their customers. We're revamping the communication team.
Their number one task will be to address the brand promise, tell the beautiful story of the house, modernize its Arab expression, and then review the architecture of its communication, of course, very much focusing on digital communication. In addition, we're strengthening the CRM and client tools that I'll be talking to in just a moment. So you'll have understood revitalizing Batya Veneta is an in-depth long term endeavor, but we have all the resources we need to do so. Starting with the Croisiere 2017 collection, we can see substantial improvement in sales trends since November, and this was further confirmed in January. 2017, therefore, should be a year of stabilization and consolidation for Bottega Veneta.
Now after this progress report on 2 of our missiles, I would like to speak about 2 cross cutting projects. I will begin with the omni channel experience. In an ever more competitive environment, success of luxury brands depends more and more on our ability to propose an exceptional experience coherent throughout all of our distribution channels and to keep up a special and direct relation with our customers. That's why last year, we created a new position, marketing and customer relations manager, and we gave that position to Carlo Baretta. He's in charge of developing a general global customer culture for our brands and for our group and also to accelerate the omnichannel approach in our group.
In the heart of this omnichannel project is the development of our e commerce sites. In this field, Gucci is widely acknowledged as being one of the very best players in the luxury sector and most of our fashion and handbag brands enjoying remarkable results. So in 2016, Yand's sales online sales of our luxury brands went up 22% with 75% growth for Saint Laurent and nearly 20% for Balenciaga and Gucci, for instance. In fact, Gucci and Stella McCartney are now considered champions. Last year, those Maisons achieved around 10% of their total U.
S. Sales online. On other markets, such as Great Britain and Germany, levels should swiftly rise and be comparable. Last year, there was a strong growth in our traffic on our sites and other performance indicators for conversion, returns, etcetera, also went up. That good performance shows the improvement of our customer experience on the site's functionality and ergonomics.
And they also are a result of the consolidation of the 2 competitive advantages that our sites have. That is to say, first of all, their depth, their breadth, the exclusivity and the renewal of the offerings as well as the omni channel services. That's why our brands are fully committed to providing these omni channel services and have stepped up their efforts in 2016. Several services are already available on most of our sites: reservation, delivery or return, access to exclusive products, verification of availability in shops, etcetera. For example, delivery in shops represents for Stella McCartney 10% of the Great Britain orders.
In 2017, we will spread these services while launching pilot projects in certain more advanced fields. In order to reap the benefits of the omnichannel approach and to customize the dialogue with our customers, we're intensifying our relational marketing approach. Also, to bring together the points of sale, websites and relational marketing. We're setting up a new approach to customer service in order to redirect all of the customers' requests to specialized internal teams. Bottega Venet has already set up its own in house teams.
Gucci and Sano will begin to do that this year, whereas the other brands have joined in order to start that up in 2017 as well. We're convinced that our systematic omnichannel approach will greatly and swiftly enhance the attractivity of our brands, respond to the new expectations of our customers, improve their satisfaction and their fidelity. Let me now say a few words about carrying eyewear. First of all, we think that the validity of our strategy has been confirmed, not just by the success of its launching, who is a fruit we will now be reaping, but also by the recent changes in the sector. Our growth perspectives are considerable in a world market, which is continuing to enjoy double digit growth in the luxury segment.
Our innovative in house or in sourced management method allows us to capture all the growth potential of our brands in the eyewear category. It gives us total control over the value chain, reinforces the integrity and the coherence of our brands and increases their visibility in their market penetration. We're also very satisfied because in a very short space of time, Kering Iowa has managed the commercial activation of 12 group brands, including Gucci, whose launching was very successful. Therefore, since June 2015, Kering Eyewear has designed and developed 5 collections in perfect symbiosis with the brands. With 1900 styles, 8,500 references, the assortments are richer and meet the customers' expectations all the better.
The production has been given to 20 partners, mainly in Italy and Japan. Logistics is insured by 3 regions, such as Italy, United States and China, where the customer service is completely in sourced. Distribution covers more than 85 countries, 20 markets are directly served by Kering I where the others are dealt with by a very selective network of distributors. This setup allows for good capillarity while respecting our requirements when it comes to the positioning and the visibility of our brands. The major customers, the own shops, our brand shops as well as travel retail are dealt with by a central team in Padova.
In addition to these competitive advantages, carrying our allows for perfect alignment with the interests of our brands. The coordination of our timetables make it possible to expose new models during fashion shows and to benefit, therefore, from positive communication halo. The close cooperation between creative teams, products and merchandising teams means that our design and the materials are more pertinent and there's increased coherence between collections and prices. Moreover, the communication strategies are better aligned, more efficient and help us draw on many sorts of synergies. Last but not least, let me say that the 2016 results are well beyond our expectations and therefore confirm the validity of our economic model.
Sales were higher than what they were in the license model, but they have been at this already nearly tripled its revenue where Cernavon instead of McCartney have more than doubled it. Launching of Gucci was a success and the order book at the end of 2016 was well above what was planned for. The gross margin is good and the cost of installation and operation are in line with our forecast. Therefore, the achievements in 2016 and the prospects of 2017, where we're expecting revenue before elimination of the intergroup flows of around €340,000,000 will strengthen our conviction that the economic equation of Kering Iowa will be very profitable for the group in terms of operational result and free cash flow. To conclude, just a few words on our financial ambitions.
Once again, this year, we will give priority to the organic growth of our luxury brands. We would like to have a growth rate that's well above the average for the industry. This will be basically due to comparable shops. The growth of our network will be achieved at the same pace since 2016 with an increase with a significant expansion only for Saint Laurent, Saint McCartney, Pompilato and Bouchon. Their sports and lifestyle pool will also enjoy a handsome growth.
In 2017, we will consolidate the growth of our operational margin operating margin, thanks basically to Gucci, San Juan and Puma. Our budgets were put together with discipline in order to contain the growth in overheads. Thanks to our requirements, thanks to our demandingness and our efforts, we will deliver a sustained level of free cash flow generation. We continue to keep working capital requirements under control, particularly the inventories, and we will maintain our efforts to select operational investment, whose increase will be contained despite a notable increase in Saint Laurent and in our jewelry brands. When it comes to the sport and lifestyle pool, its free cash flow will grow strongly in 2017.
The combination of improving the operating margin on the one hand and mastering our operational operating assets will help us to improve our ROE and to pursue the debt drawdown of the group, both in absolute value and in terms of the ratio of net debt over EBITDA. We will continue our policy of an attractive policy of remunerating our shareholders as is shown by the increase of the dividend proposed for this year? We have major assets. Our performance in 20 16 has borne that out. We have good assets and especially the right strategy.
We don't hesitate to take innovative initiatives, ones that create value. Our teams are top notch in the different measles and at the group level, we are determined to implement our strategy as perfectly. However, it is difficult in today's world to predict what will happen over the year. We can't think about geopolitical and macroeconomic uncertainties in this uncertain climate. Nonetheless, we are confident in our ability to outperform the market and to draw on all the levers we can.
We, of course, remain attentive to the different changes in our environment, and we will be agile whenever the circumstances are required. If you have any questions, now is the time. But before you ask your questions, your traditional few questions, please introduce yourself. State your name and whom you represent. Jean Claude from
Societe Generale. Two questions, if I might. First of all, after 20 16 performance, could you update your targets for medium term margin for the various luxury brands and Puma? 2nd point, with underlying tax rates good 20%, very low, what are the what's the outlook medium term taxation? What are the possible impacts of changes in taxation in the United States, Switzerland and Italy?
As you know, for Gucci, we've given a medium term objective, which goes beyond 2017 above operating margin that is around 30%, which is perfectly so far we are on track and we are determined to achieve that goal. For the other luxury brands, we haven't set specific objectives. But as we've said, we're going to continue our growth next year and Peru is also going to present a noticeable increase in its margin as well, we told yesterday. When it comes to the tax rate, as you know, in 2016, we referred it to a rather historic rate of taxation for the group. In 2017, that rate should go up only slightly.
Now if we leave aside the U. S, which is sort of a third question, but if we leave that aside, obviously, the tax environment, the different reforms advocated by the OECD mean that in the long term, there will be gradual increases. But in the short term, we're not expecting any major increase. When it comes to the U. S.
Now, as you know, our brands are manufactured manufacture only in Europe. There's no local production in the U. S. So the measures that have been mentioned because these are measures, which for the time being have only been mentioned and the information that we're getting sometimes contradictory. Well, all this means that we would be penalized if these rumors panned out.
Now, you've made your own calculations, I'm sure, so have we. And for the time being, I think it would be premature, however, to share them with you until such a time as we have additional information, but certainty as to these measures announced. 20% of our revenue in the United States, our group revenue, if those measures were to be taken, there would be an impact, but I think it's too early to say.
Good morning. Anfon Vej from HSBC. Three questions. Mr. Pinot, you talked about consistency and depth of Gucci collections.
And I believe also one mentioned that 50% of revenue was with carryovers. Well, in all the lines by Arfuna Michele, the new lines, which ones do you think now are going to be carryovers? Gigi Moore and so forth, I imagine. But I just was wondering which ones you view will now be collections that we'll see for several years to come. And to what degree does this make you confident that you can go beyond the second half comparisons easily?
Then the second question, Bottega Veneta. I think in the last conference call, it was said that the brand might see organic growth that would be positive in the second half. Margins slightly diluted for the full year, though. Are these achievable goals? One last question, Puma, Yesterday, I asked this of Bjorn Gooden's
asking if
it was going to go back to team sports in the U. S. And would that not require some investments? I didn't get a specific answer on that one, so I'll take a stab at the question again today.
Thank you. Antoine and Acasti, really you mentioned the major lines is also a service carrier for line, but all of the handbag lines launched involve volumes such that they can carry over. So all of the launchings today are very significant. And so the figures are reached by Gucci means that they will become carryovers. Now Alessandra created a global creative universe.
He is expressing who is ready to wear in that universe. And that creates value for all of the elements that fit in with that creative universe. But that's 13% of Gucci's revenue ready to wear that is. So don't think that we are going to be reliant and to getting stent and ready to wear. That's a key category when it comes to our revenue.
But above all, it's key to our image. It's the expression of a very creative universe that encompasses all of our categories and which would lend continuity as it lends resilience to their brand and its ability to grow despite the adverse environment. In Bottega Veneta, we are, as we said, implementing a long term task. A short term objective is not a priority for us. Growth is possible this year, but it's not an imperative for us.
We're working really to recast the whole maze on to strengthen its pillars. That's going to take some time. It's going to last quite some time. You've also been told that we'll be investing in communication. Once again, the dilution of the margin is possible, but it's not a real problem.
What's important is to give the Maisons what it needs for the coming decade. As for Puma, when it comes to sports in the U. S, you can imagine it's a considerable investment when it comes to team sports. We have we benefit from very good dynamic in the U. S.
For Puma, but that's basically fueled by sport life, sport style. We have to find also a niche in sport performance. There are different ways of attacking that market. We're considering them, but this will be a medium term prospect.
Helen Brand from UBS. Hope you don't mind the English questions. So 3 from me. Firstly, on Gucci, 28% growth at retail in Q4. How much of that was mix and how much of that was volume?
And how are you thinking about the actual pricing environment for Gucci as we go into 'seventeen given we've got some perhaps capacity constraints as well? Secondly, 15% uplift in sales densities at Gucci is very impressive. We renovated, I guess, you renovated 86 stores. What was the sales density uplift that you saw in those renovations relative to the existing store estate? And how many renovations should we expect this year?
And finally, just on Saint Laurent, you mentioned and still an opportunity to improve sales densities at Saint Laurent going forward. Where are they today and where do you think the opportunity could be? I think we talked about a 20% margin at Saint Laurent. We're now in excess of that. What opportunity can we actually see over longer term for Saint Laurent?
I'll answer in French. I'm sorry. That's the way we do things here. Yes, we have had exceptional performance in retail for the Q4 for Gucci, 25%. We benefited from an obvious volume effect that is an increase in our sales, which is marked the value effect, you say, but the volume effect is what's most important, the mix effect too, because as Jean Francois said, 85% of the lines today the sales today rather was on Alexandros collection and that gained a place until the end of the year.
As you've noted, last year, we paid the first the second half and then the decision we took with Marco to give priority not to renovation but to the transformation of the carryover lines in the second half. So we invested a lot on product development and on inventory rather than on renovation in order to accelerate the brand's momentum and that worked beautifully. That's why the mix the new collections really grew a lot in the second half and in particularly Q4. So that's a volume rise and also rise due to the mix between the traditional collections and Alessandro's new collections. What was the second question?
Yes. When it comes to the shops, it's difficult to analyze the situation. As you know, we began renovating the shops where we enjoyed the most traffic, most frequentation. So those shops, given the power of our brands, that's where the traffic went up even more. It's obviously today productivity of the new shops went up much more than the productivity in the non renovated shops did, the shops that didn't have the visual tools that were set up for some of the non renovated shops.
But on the basis of the figures that we've seen, the new universe, once it's been set up in a shop, has an extremely positive effect on productivity. But we have to keep this in perspective. We have to see that we began with the most successful, most emblematic shops anyway. We will continue that renovation. The objective is to have around 150 shops with a new concept, either through complete renovation or through adaptation of the existing shop, 150, therefore, by the end of 2017.
There is 60 to 70 new shops in the year I mean, new shops worked on in the year. With Saint Laurent, we don't give you any details on the productivity of our brands in general. We Had a special focus on Gucci this year because of its growth potential. We indicated at the time that Saint Laurent had a productivity that on average was higher than Gucci's. Now why do you think there's still potential for Sanaham?
The productivity is unevenly spread. There are some shops that are extremely productive. And we think that today we have openings scheduled, but we also want to work on the collections sort of to improve the productivity in shops that underperformed the best with respect to the best shops. That's where we really have room for improvement.
Thank you. It's John Guy from MainFirst. Three questions, please. Maybe just staying with Gucci and the sales density question. During the summer last year, you talked around increasing or improving the sales densities by 50% over the medium term.
I think given the strength that we've seen so far in 2016 and especially within some of the flagship stores, surely there is upside risk to that 50% midterm target. And I think Jean Marc just going to your comment around having done some of the largest stores so far. When you get into the 200 to 2 50 square meter stores, surely the productivity should improve even faster. So maybe you can comment on that 50% midterm target. Then I guess thinking about free cash flow and CapEx, you've done a pretty decent job, I think, keeping your CapEx under control.
You've highlighted certain targeted elements around CapEx in digital and certain brands. What can we expect as a percentage of sales in CapEx over the next 2 to 3 years? And I guess first one, really one question for you on Puma. Puma continues to demonstrate its momentum and turnaround. Should we need or continue to model Puma numbers from 20 18 onwards?
Or do you think 2017 is the year where we see a disposal? Thank you.
So this was the English Connor.
Gucci's productivity, objective the growth objective is 50% in the medium term plus was a realistic objective. Some thought that it was over ambitious, but we thought that it was realistic. And I think that with growth this year, we're on the right road. We've shown that we can deliver on our promises, both for the group and for the different brands. I won't go any further into that.
I think that there's still a lot of room for progress with Gucci. You said that it's more difficult to compare things. The basis for comparison are more difficult there, but we will maintain for the time being our 50% growth. Let's forget that, that work involves a store network, a very extensive network with Gucci. And in that network, there will be stores where it will be more difficult to achieve the productivity targets, but I think that the dynamic is well underway and we haven't changed our objective.
When it comes to CapEx and thank you for your comments on the work done this year, That was one of our ambitions to control to keep CapEx under control. The group has, in general, been very good when it comes to CapEx when compared with revenue, but we wanted to become even better. At the group level, we've had CapEx of 4.9 percent of revenue. And that way, we've kept it under the level of 5 percent, the level we set ourselves. So therefore, the objective for the coming years will be to keep under that threshold in relative value because we do have investment needs.
So Francois said that the digital communication is really key to the group, and we decided to devote substantial amounts to that. At the same time, we have to consolidate our network. But we have brands that have specific opportunities, Laurent, Balenciaga, McCartney. We have a lot of ambitions, therefore. We think that growth, the growth of Bouchefon will also rely on opening new stores.
But we think that, at the end of the day, we will be below the threshold of 5% of revenue. That's the work of the group to make the right choices between the different brands. When it comes to Puma, Jean Francois showed you the 2016 performance of Puma. There's still this recovery plan for Puma in order to bring Puma, when it comes to profitability, back to the industry standards for the sportswear industry and lifestyle, we're far from that objective. There will be a substantial increase in our profits in 2017.
Nevertheless, we'll be far from having achieved that goal. So we keep this priority in mind. We want to continue to promote PUMUS recovery in terms of activity, in terms of profitability. Nonetheless, we are basically a luxury group with some sports and lifestyle activities.
Hello, Natixis. Two questions. First of all, Gucci and Bottega Veneta. It's the Italian government is setting up some tax breaks for brands and patents. Could you give us some information in terms of the amounts that you might benefit from at Gucci and Bottega, thanks to the new tax system in Italy.
2nd question. Next Gucci fragrance that you announced this morning. Could you give us information as to its positioning and how it's going to be sold, the new fragrance?
Just around taxes. The Italian taxes system, well, we speak often about the patent box with mechanisms that are quite different from what we have in France with the, but its general underlying philosophy is pretty much the same. There has to be a certain number of activities or initiatives taken in order to benefit from that Patent Box initiative. Our brands don't necessarily have the proper activities to have massive recourse to that. Vohnee, which has manufacturing industrial activities annually with innovation research and development.
Therefore, it could be eligible. For Gucci, Gucci is also in that situation. So those are the 2 brands that we've identified as being able to benefit. But even if they are eligible, that would have a significant impact on the overall group tax rate. These are marginal operations, which don't really change anything when it comes to the overall taxation.
And if it's the new perfumes, that would be an important event for Gucci. For around 2 years now, we've been suffering from the fact that the merger between Procter and Gamble and Coty took some time. Procter had license for the little green cheese perfumes. So there are no launchings under the new creative universe by Alessandro. So the perfumes, there should be a perfect coherence with respect to Alessandro's universe, both in terms of the products themselves and also the communication, that would be the 1st major launching.
The ambitions are very high. We suffer from relative effect over the last 2 years. So we're expecting market improvement. Thanks to the dynamism of the Cotis teams and the launching of the CotisNOW perfume that should take place in the second half.
Two questions. Firstly, on Saint Laurent. I see you've got a meeting from target margin of around 25 percent growth on the order of 100 basis points per annum. 20 16 was an exception. Question, this growth of 100 basis points in spite of CapEx this year, will is it still on the agenda for 2017?
Second question, Kering Eyewear. Could you please be more specific on what you're going to be spending in 2017?
That's a perfectly realistic objective. Saint Laurent, as you know, has a perfume license. It's very effective. I think this morning spoke about that in length. It's one of the best licenses today.
We announced a figure of $1,000,000,000 and in fact, it was gone beyond 1,000,000,000 If you look at Saint Laurent's position in the university of fashion, the potential is still very substantial. So we can improve things, thanks to the sales density, which there's sales density, which is still potential for, there's a network of 250, more than 250 stores and the net figure is growing and the license that will continue to grow. So if you bring all that together, the objective is perfectly realistic. Let me give you a brief response. We had a positive we'll have positive EBITDA as early as 2017.
Zuzana from Brandenburg. I have three questions, please. First of all, Gucci. So you mentioned the decision to end markdowns in stores in Q4. I was wondering whether right now you may decide maybe to cut down some of your exposure to outlets.
Secondly, on the online business and your relationship with YNAP. So you're mentioning a lot of focus on digital, also the very strong performance you had of your relaunch Gucci website. So I was just wondering, does it mean you may at some point decide maybe to take other brands online operations in house? And finally, I think as of the Q3 results, you've mentioned some of the new initiatives you are still planning for Gucci, basically to flag the fact that it's just the beginning of the retail initiatives. I think what was mentioned were potentially some customer loyalty programs.
So I was wondering if you could maybe share some details of what new we could see in terms of the retail business for Gucci this year.
When it comes to ending discounted sales or markdowns in stores, there are 2 justifications for that. First, the full price sales have improved, so therefore there are fewer markdowns. And also, the products will be transferred to the outlets, that will a few months 3 to 6 months later. The effects, therefore, will be shifted to the virtually end of the season? 2nd question, relations with Nuxnet.
I'm not sure that I understood your question. The good she doesn't work with Yitzmet, a part of it on its website. It has its own website. So it's only the other brands, the luxury brands that work with books. We're very satisfied with that partnership, particularly the technological progress that YOOX has brought to its platform.
And so as early as this year, we will benefit from technological developments or advances in our services. As of this year, we will begin to in source the customer service to provide it all in house. This is something that we want to do in order for our customer service to really improve for our proximity with our customers to really improve. The CRM, we have a really big project involving Gucci, not just Gucci. And there are, in fact, 3 phases.
First of all, data collection, we like to improve data collection in stores and to make it that single pleasant for the customers. Also, from a technical point of view, to deal with databases, to purge them, to harmonize them, etcetera. There's another stage which is to use the data in two basic respects. 1st of all, for analytical purposes, big data, as it's called, We want a capacity to analyze the use this data in a scientific way. And the second area is campaigning to use that data for drug marketing campaigns for the brands.
And the 3rd stage is back to the stores. We give the sales associates and then the store directors tools to help them manage their customer relations in a very operational way. They're going to have tools for recognizing their customers, to recognize them, their sizes to it's a real cockpit for the real dashboard for the sales people and for the store directors. Those are the 3 stages that we've already begun. Some brands are more in advance than others, but we're going to have an approach such that we'll bring all of the different brands up to the same standard.
Thank you very much. Three questions, if I may. The first one is about the brands that are struggling. You made important write off on Brioni, on the watch brands. How long can you be patient considering your target on return on invested capital?
When you can consider a divestiture from brands that are struggling as in the past you've done with Sergio Rossi? The second one is about the dividend. Dividend is one of the priority. Can you give us an idea of what is your target of increasing the dividend over time? Last but not the least is about your organization.
In the last year, Kering really reinforces central structure and with great result we have seen in this business. Going forward, what do you expect, Mr. Pinot? A further reinforcement of a central structure with more activities and competencies managed at group level? Or you think to keep the current organization of the group?
To answer your question on the brands that are facing different problems, particularly Briony. When we buy a brand, we'll first evolve. There's a lot of preparatory work, diagnosis, and we have to reorganize and restructure the brand once we bought it. What I'm always struck by I mean, I've asked this question regarding Saint Laurent in 2006 and you've seen the results. So what's important is to build something very solid that will withstand the time.
And we are going to 16 of the buoyant. I'm fully committed to that, but we have to look at, first of all, the most the elements that need the most structural change. For example, Pliny needed its industrial tool to be really reorganized. Nothing had been done for over 10 years. We did that.
We did that in time when the Russian customers Bliony had gone away. That didn't help us, but we've built something solid. We had some problems with creativity. We're now working on creativity, and we'll soon have announcements to make, but I have no concerns over those 3 brands in particular and our ability to relaunch them. Our Our group portfolio strategy is such that we can accomplish that.
You've seen there are some problems which didn't prevent us from achieving very good results overall. They will always have brands where we will invest more, where we will have difficulties. It's up to us
to
deliver results, results that attempt to mount to our ambitions. When it comes to the dividend, as we've said, we're going to have a completely coherent policy with what we've done up to now, but it's to keep a rate that's coherent around 50%. Since we will improve our net results and our free cash flow, we will also improve, we will increase our dividend to the same extent. When it comes to the structure, the group structure, this transformation to make Yealink an integrated luxury group, most of the major functions have already been structured. The profile of these functions has been established.
So that was recently we had basically corporate communications about a year ago. And then we decided to also endow ourselves with a brand communication competence to support the small brands or to challenge the major markets on their communication strategy. That's what Valerie is doing. That's why we hired her. So we've structured in all the major functions, human resources, communication, etcetera.
This is we created the division of Industrial Operations. Up until then, they were pulled in with the services. So he created this division and he more recently created a customer marketing division in a group in order to improve our customer market. Taking the group level, we had lagged a bit behind.
So all in all, at the end
of 2016, all of the group functions for our brands are there and ready to go. Over the coming years, I wouldn't expect any major structural changes or functional changes in addition to what's already been done.
We'll take one last question from Leopold. Hello. One single question. The recent recovery we saw in the sector was mainly due to the recovery in China. You talked about plus 1% in Q4.
Do you see any differences in this recovery compared to previous years in terms of consumption patterns, attitudes, digital or what have you to try to better understand exactly what your view of this improvement is and what you think about the rest of the world as well, since the 20% might not be sustainable forever.
There was recovery, thanks to China, Chinese customers, but not just them. It's also recovering in the U. S. At the end of the year. Early in 2017, Gucci enjoyed a recovery in the Japanese market.
So there's a situation with copper, but external events, whether it was an election year in the U. S. We've always noted when it comes to local customers, those are difficult years. In the U. S, the dollar rose too, which had an impact on tourism.
So we have every reason to believe, all that speaking, of course, that the American activity will continue to improve as it did in November December in January 2017. Activity in Europe, particularly in Britain, due to the problems with the pound sterling, that's something that's continuing. There's been a resumption of tourism to Europe led by the Chinese. There's been a recovery in visits by all nationalities to Europe, and particularly to France. December, there was a 21% increase in tourism in France.
And we're also seeing, particularly for Sala, all of it to Russian customers in other markets except for the Russian market itself. Now when it comes to the Chinese customers, there was a growth in mainland China, there's major growth. This is a demographic phenomenon because the middle classes are becoming richer and richer. There is also a repatriation of the consumption of electric products to Mainland China. Korea also benefited from that as well as Mainland China.
In Hong Kong, I think that we've perhaps hit the bottom of the curve, but now we're having positive signs in Q4 from Hong Kong. So the general context is improving. There's major areas of uncertainty, but all in all, if we assume a stable environment, which you can't always assume, all the other areas are improving. Thank you for your questions and thank you for the interest you've shown in our group. We will review all year long to share our quarterly performances, and I wish you a very pleasant day.