Bonjour à tous.
Good morning. I'm delighted to welcome you to the presentation of our 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 fourth quarter. The figures, above all, validate our strategy.
In an environment that remains troubled, we've achieved good performance in most of our Maison 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. 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. Finally, Jean-François 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 EUR 12.4 billion, which is up by almost 7% in reported data. Negative currency effects to the tune of EUR 100 million 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 one year to the next. Revenue remains well-balanced among the various regions. Western Europe and Asia Pacific, representing respectively 31% and 26% of revenues, booked growth in excess of 10% like-for-like, whereas North America and Japan, contributing to the tune of 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, EUR 1.89 billion, 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 EUR 1.19 billion, operational free cash flow has almost doubled compared to 2015. It's true, it had been hit by the negative effect of currency hedges. We can say that we're doing much better than our ambition of going beyond EUR 1 billion in free cash flow. As announced, inter alia, we use this cash to reduce our net debt, which goes down by more than EUR 300 million, reaching under EUR 4.4 billion, which is a gearing of 1.9 x EBITDA. 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 Q3 and Q4.
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. Let's talk about sport and lifestyle. A very uniform performance throughout the year. Annual growth staying at 9%. Puma grew by 10%. 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, respectively 13% and 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. 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. 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. 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. 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 the order of 11%. I won't 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 2016 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.
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, and to a lesser degree, Hong Kong, starting in the last quarter. Trends in Asia Pacific therefore improved throughout 2016, and improvements 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. 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 three 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 the order of 20%. Of course, we're seeing Mainland China purchases where all of our brands are growing in the last quarter. In addition to that, we're seeing throughout Europe and Asia and even in the Americas, growth in purchases by our Chinese customers. 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 and luxury, up 13%, standing at EUR 1.9 billion.
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, EUR 381 million, slightly down, representing 4.5% 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 begin by talking about Gucci revenue, EUR 4.4 billion. We can say this is comparable growth of almost 13%. 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 some very strong performance both in Europe and in 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 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-à-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 life cycle 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's up 6% for the year, now a stable number of partners. 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 a postponement of the Croisière delivery 2017. To some degree, the delivery postponements is due to lack of availability of certain products due to the success encountered by these new collections. The drop in wholesale is therefore temporary. Recurring operating income up 22%, reaching EUR 1.26 billion, which is an operating margin of 28.7% 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. Jean-François will be talking to you about these later. We've carefully controlled and allocated operational expenditure. 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 five 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 Bottega Veneta sees growth in Mainland China and Korea, but is still 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 flow is 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, EUR 1.17 billion, 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 EUR 300 million, 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 EUR 1.2 billion in revenue. Growth was buoyant throughout the year, especially in our own store retailing, where it was up more than 13%. 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 deliveries in the year, which led to a slight drop in Q4.
Anthony Vaccarello's first collection was extremely well-received, demonstrated by the level of orders, started to be delivered in 2017. 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 EUR 269 million. The margin is up by 4 to 70 basis points. For the first time, going beyond the threshold of 20%, even quite substantially so, reaching 22%. Regarding other luxury brands, the year was a contrast as expected, and we can say that revenue is EUR 1.7 billion. Not many differences between retail and wholesale, but there are big differences between market segments. Couture and leather brands grow 4%.
That's good performance, impinging on negative because of difficulties by Brioni, but driven by Stella McCartney and Alexander McQueen and a step up in Balenciaga. Our jewelry brands consolidated activities in 2016. Boucheron was hit in Q4 by a strong base effect. Regarding watches brands, they had to contend with difficult, deteriorated market conditions this year as well. Recurring operating income reaching EUR 114 million, slightly down. Contribution by our three main brands is up, does not offset pressure weighing on Brioni's results as well as the watches brands. Beyond these results, we have to emphasize that in-depth work has been done on all of these brands. Continued in 2016, we're talking about their reorganization, structure of their collections, as well as wholesale and retail.
Regarding Ulysse Nardin and Girard-Perregaux, their participation in the Geneva Watch Show and feedback from customers after the Timbo Watch Show have very much told us that we were right in making the choices we did and launching the 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 and revenue. The results were reported yesterday, so I'll go through these quickly. Puma booked a 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 say in a nutshell, performance continues to be weighed on by a 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% and 60 basis points. 2016 confirms Puma's good momentum. Its profitability reaches a positive inflection. Puma reaching its annual target, stability of gross margin, and very good control of OpEx make it possible to have a leverage effect. All in all, sport and lifestyle activities achieved revenue of EUR 3.9 billion for the year, operating result of EUR 123 million. Now, some brief comments on other elements, from net income.
Other non-recurring income and expenses representing a net expense of approximately EUR 500 million. This includes an impairment of assets, loss of value, EUR 297 million booked for the brands and goodwill of Brioni and Ulysse Nardin. Here we're including industrial and sales reorganization costs, as well as the negative contribution of Kering Eyewear during the startup phase. This is approximately EUR 98 million, including EUR 60 million in operating losses and EUR 30 million 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 five years. Net financial expenses reaching EUR 202 million, down by around 20% compared to 2016. On the one hand, the net cost of debt, all in all, has remained stable at EUR 128 million.
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 financed by an increase in bonds. This has meant we have secured long-term financing at a low interest rate. Furthermore, other financial expenses are down by EUR 47 million. This is because we didn't see a renewal of losses on Forex hedges in 2015, which were considered to be inefficient. Tax expense, EUR 296 million, slightly down compared to 2015. The effective tax rate, which is to say tax divided by pre-tax earnings, 25.1%. This rate goes down substantially compared to 2015, where it was 32%.
I'd remind you, the effective taxation rate of 2015 was hit by some nondeductible expenses, plus some negative effects due to Forex hedges. Current tax, which excludes non-occurrings, is 20.5% in 2016. All in all, net income group share EUR 814 million, which is up 17%. Net income group share from continuing operations excluding non-recurring items reaching EUR 1.28 billion, up 26%. I suggest that we look at operational free cash flow. I already alluded to it briefly. Reaching almost EUR 1.2 billion, significantly up compared to 2015. I remind you, again, 2015 was hard hit by some cash outlays due to currency hedges.
In 2016, our free operational free cash flow almost doubled, and we can analyze this as follows. Cash flow, up by 18%, around EUR 300 million. A change which correlates with the improvement in earnings. Plus, WCR, gone down by EUR 135 million compared to 2015. Tax outlay slightly down. Operational expenditure down by EUR 61 million, which means down 9% in OpEx. To talk about our net financial situation. Just around EUR 4.4 billion in 2016, which is down by EUR 300 million. Net debt over EBITDA ratio goes down below the threshold of 2 x, i.e., reaching 1.9 x.
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 1x to 2 x 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, will propose to the AGM on 27 April to pay a dividend of EUR 4.60 per share, up 15% compared to 2015. I 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 EUR 1.50 has already been paid. That was 18 January 2017.
If the AGM accepts, the remaining amount, EUR 3.10, will be paid on the fifth of May 2017. Thank you for your attention, and I'd now like to give the floor to François-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. 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. We cannot, if we are to continue to enjoy growth, count mainly on conquering new territories or strengthening our shops because our 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. Especially the millennials, which are at 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 the 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 the newcomers.
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. The question is, how can a luxury brand, a luxury house, gain market shares? Well, my conception of luxury is intimately linked to the ability of our products to elicit desire and 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 is strengthened year after year and which bring together continuity, innovation, and creative quality.
That's why 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've 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 can 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 always 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 master the creative risk because the collections are not just isolated creations. Some designers, in fact, constantly change their concepts, and it's surely why creators whose creative horizon goes well beyond a single season. 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 in order to make them entirely coherent with his new collections. With Saint Laurent, although the first collections of Anthony Vaccarello were different from those that preceded him, nonetheless, they are part and parcel of a coherent stylistic framework.
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. Balenciaga, whilst hoping there would be a creative or whilst trying to instill a new creative direction, we wanted to vigorously firm the DNA of Balenciaga and strengthen its historic nature. Gvasalia 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, a 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 a marketing varnish. There must be creativity, but creativity is not good enough. The implementation must be exceptional. That's why the alliance between a creator and a CEO or in general, a creative 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 CEOs 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 with a creator, CEO, a 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 to bring forth new ideas. One of the major elements of the image development in our brands is the online strategy, which is not just a matter of e-commerce, which Jean-François will speak to you about.
Communication and online images of our brands are making a growing contribution to their brand equity. You've all seen how Gucci 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 or digital communication. 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 four 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 Maison helps us to offset the short-term impacts. That's why we can carry out the work necessary in order to put Bottega Veneta back on the road to a 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 rising more slowly.
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. 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 omnichannel approach. Our increased efficiency and 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 frame, if I'm working closely with all of our brands managers in order to integrate sustainable development through 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 their profitable growth. I'm not going to go into the detail of our strategic plans brand by brand. Jean-François 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 five major priorities for 2017 and the coming years. For Gucci and Saint Laurent, whose growth was spectacular last year, their point is to continue and to further restore productivity at Gucci and Saint Laurent and operational efficiency.
Those Maisons 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. Bottega Veneta 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, which we would like to accelerate. For Boucheron, the biggest jewelers on the Place Vendôme which will celebrate its 160th anniversary next year, we have an ambitious growth plan for the next three years. Boucheron will strengthen its iconic collections and the creation of Haute Bijouterie items, and will develop new tools of communication in order to enhance its international notoriety. Pomellato is doing very well, and we have major ambitions, and of course, a development plan is in place to support that Maison's growth.
Finally, Brioni and our watch brands have had to deal with sudden changes in their markets, either the decreasing of 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. Well, we had to adapt to these new market conditions and set up new action plans in order to make a future growth possible. To support these brands, we would like to strengthen their expertise. Let me just mention three 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 Béatrice Lazat, who joined us last year. We also would like to buttress the communication of our brands by enhancing our expertise and giving them additional resources, group resources. With the arrival of Valérie at the back of the room, Valérie Duport, 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. Before I hand it over to Jean-François, 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 in order to improve its performance. Thanks to those qualities, I am confident that our plans will be a success. Thank you.
Jean-François, you have it.
Thank you, François-Henri. Good morning to everyone. François-Henri just talked to you about the group's brands and business, I'll tell you how we're gonna be implementing these plans from an operational point of view. To that end, I'll be using four highly representative examples, a continuation of Gucci's reinvention, Bottega Veneta's return to growth, acceleration of the omnichannel experience and realization of the Kering Eyewear project. After that, I'll tell you how our strategy of value creation actually leads to financial ambitions. Credit where credit's due, let's begin by talking about Gucci. In 2015, Gucci recreated the dream. 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 Bizzarri's talent really created tremendous energy throughout the organization and caused true upheaval in the corporate culture, making it 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 Spring/Summer 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, one five, but up by more than 35% at Palais-Royal and Montenapoleone, up by 55%, fifty-five zero percent in Montenapoleone 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. 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 stores to attract the millennials, such as GucciGram and #24HourAce on Instagram and Snapchat. GucciGhost with Trouble Andrew, the New York artist, 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%, making about half of the brand's revenue. 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. Alessandro Michele 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. 2017 is going to see many developments for Gucci. I can say that as of February 22nd, 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 gonna finalize the category's 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 the local luxury reality. 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 Bottega 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 creative 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 EUR 1 billion 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 Lahrs, the new CEO, has been in position for four months, and I'd like to share with you some areas that we are working on. Bottega 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. We can say henceforth, several flagships have been remodeled 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. 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. 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.
We're going to be continuing seasonal changes for 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 Intrecciato, 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 Bottega Veneta 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 new customers. We're revamping the communication team.
Their number 1 task will be to address the brand promise, tell the beautiful story of the house, modernize its area of expression, and we'll 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 you in just a moment. You'll have understood, revitalizing Bottega Veneta is an in-depth, long-term endeavor, but we have all the resources we need to do so. Starting with the Croisière 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.
After this progress report on two of our Maisons, I would like to speak about two cross-cutting projects. Let's begin with the omnichannel 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 of marketing and customer relations manager, and we gave that position to Carlo Beretta. 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 are enjoying remarkable results. In 2016, the 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, the 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, et cetera, 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 two 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 omnichannel services. That's why our brands are fully committed to providing these omnichannel services and have stepped up their efforts in 2016. Several services are already available on most of our sites: reservation, delivery or re-return, access to exclusive products, the verification of availability in shops, et cetera. 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. 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 Veneta has already set up its own in-house teams. Gucci and Saint Laurent will begin to do that this year, whereas the other brands have joined in order to start that up in 2017 as well.
We are convinced that our systematic omni-channel 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 Kering Eyewear. First of all, we think that the validity of our strategy has been confirmed, not just by the success of its launching, whose 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 insourced 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 and their market penetration. We're also very satisfied because in a very short space of time, Kering Eyewear has managed the commercial activation of 12 group brands, including Gucci, whose launching was very successful. Since June 2015, Kering Eyewear has designed and developed five collections in perfect symbiosis with the brands. With 1,900 styles and 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 ensured by three regional centers in Italy, U.S. and China, whereas the customer service is completely insourced. Distribution covers more than 85 countries.
20 markets are directly served by Kering Eyewear. 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, our brand owner shops as well as travel retail are dealt with by a central team in Padova. In addition to these competitive advantages, Kering Eyewear allows for perfect alignment with the interests of our brands. The coordination of timetables make it possible to expose new models during fashion shows and to benefit therefore from a 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. Bottega Veneta has already nearly tripled its revenue, whereas Saint Laurent and Stella 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 of 2016 and the prospects of 2017, where we're expecting revenue before elimination of the intragroup flows of around EUR 340 million, will strengthen our conviction that the economic equation of Kering will be very profitable for the group in terms of operational results 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 comparables shops. The growth of our network will be achieved at the same pace as in 2016, with a significant expansion only for Saint Laurent, Stella McCartney, Pomellato, and Boucheron.
The sports and lifestyle pool will also enjoy handsome growth. In 2017, we will consolidate the growth of our operating margin, thanks basically to Gucci, Saint Laurent, and Puma. Our budgets were put together with discipline in order to contain 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 will 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 sports 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. Thank you. This have, that we have major assets. Our performance in 2016 has borne that out. We have good assets and especially the right strategy. We won't hesitate to take innovative initiatives, ones that create value. Our teams are top-notch. In the different Maisons 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 ignore the 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, will remain attentive to the different changes in our environment, and we will be agile in whenever the circumstances so require. If you have any questions, now is the time. Before you ask your questions, your traditional three questions, please introduce yourself. State your name and who you represent.
Quatre.
Bonjour. Thierry Cota, Societe Generale. From Societe Generale, two questions, if I might. First of all, after 2016 performance, could you update your targets for medium-term margin for the various luxury brands and Puma? Second point, with underlying tax rate, which is a good 20%, very low, what's the outlook medium-term taxation? What are the possible impacts of changes in taxation in the U.S., Switzerland, and Italy? Thank you.
As you know, for Gucci, we've given a medium-term objective which goes beyond 2017 of our 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. As we've all said, we're going to continue our growth in next year, and Puma is also going to present a noticeable increase in its margin as well, which we were told yesterday. When it comes to the tax rate, as you know, in 2016, we reverted to a rather historic rate of taxation for the group. In 2017, that rate should go up only slightly.
Now if we, 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 only in Europe. There's no local production in the U.S. 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 is 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. Have we?
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 or certainty as to these measures announced. With 20% of our revenue in the U.S., our group revenue, if those measures were to be taken, there would be an impact, I think it's too early to say.
Antoine.
Good morning. Antoine Belge from HSBC. Three questions. Mr. Pinault, you talked about consistency and depth of Gucci collections. I believe also one mentioned that 50% of revenue was with carryovers. In all the lines by Alessandro Michele, the new lines, which ones do you think now are going to be carryovers? GG Marmont 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. To what degree does this make you confident that you can go beyond the second half comparisons easily? A 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. Margin slightly diluted for the full year, though. Are these achievable goals?
One last question now. Puma. Yesterday, I asked this of Bjørn Gulden just asking if he 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. When it comes to Gucci, you, well, you mentioned the major lines. There was also Sylvie, the carryover line, all of the handbag lines launched, you know, of volumes such that they would become carryovers. All of the launchings today are very, are very significant. The figures reached by Gucci means that they will become carryovers. Alessandro created a global creative universe. He's expressing through his ready-to-wear that universe. That creates value for all of the elements that fit in with that creative universe. That's 13% of Gucci's revenue, ready-to-wear that is. Don't think that we are going to be reliant in to getting spent on ready-to-wear. That's a key category when it comes to our revenue.
Above all, it's key to our image. It's the expression of that creative universe that encompasses all of our categories and which would lends continuity. It lends resilience to the brand and its ability to grow despite the adverse environment. In Bottega Veneta, we are, as we said, implementing a long-term task. The 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 Maison, 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 will 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 Maison 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 benefit from a very good dynamic in the U.S. for Puma, but that's basically fueled by sport life, sport style. We have to find also our niche in sport performance. There are different ways of attacking that market. We're considering them, but this will be a medium-term prospect.
Hi, Helen Brand from UBS. Hope you don't mind the English questions. Three from me. Firstly, on Gucci, 28% growth at retail in Q4. How much of that was mix, and how much of that was volume? How are you thinking about the actual pricing environment for Gucci as we go into 2017, given we've got some, perhaps, capacity constraints as well? Secondly, 15% uplift in sales densities at Gucci is very impressive. You renovated 86 stores. What was the sales density uplift that you saw in those renovations relative to the existing store estate? How many renovations should we expect this year? Finally, just on Saint Laurent, you mentioned 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. You know, 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 fourth quarter for Gucci, 25%. We benefited from an obvious volume effect, that is an increase in our sales, which was marked. The value effect is there, but the volume effect is what's most important. The mix effect, too, because as Jean-François said, 85% of the lines today Well, the sales today, rather, with on Alessandro's collection, and that gained pace until the end of the year. As you've noted, last year between the first and the second halves 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.
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. That's a volume rise and also a 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, the most frequentation. Those shops, given the power of our brands, that's where the traffic went up even more.
It's obviously today, productivity in the new shops went up much more than the productivity in the non-renovated shops did, or the shops that didn't have the visual tools that were set up for some of the non-renovated shops. 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. 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. That 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. Why do we think there's still potential for Saint Laurent? The productivity is unevenly spread. There's some shops that are extremely productive. We think that today, we have openings scheduled, but we also want to work on the collections in order to improve the productivity in shops that underperformed 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. 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. Jean-Marc, just going to your comment around having done some of the larger stores so far, when you get into the 200-250 sq m stores, surely the productivity should improve even faster. Maybe you can comment on that 50% midterm target.
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 2-3 years? I guess for François-Henri, one question for you on Puma. You know, Puma continues to demonstrate its momentum and turnaround. Should we need or continue to model Puma numbers from 2018 onwards, or do you think 2017 is the year where we see a disposal? Thank you.
Thank you. This was the English corner. Hello. Gucci's productivity. The objective, the growth objective of 50% in the medium term for us was a realistic objective. Some thought that it was overambitious, 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 in, 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.
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, thank you for your comments on the work done this year. That was one of our ambitions, to keep CapEx under control. The group has in general been very good when it comes to CapEx when compared with revenue, but we want it to become even better. At the group level, we've had CapEx of 4.9% of revenue, that way we've kept it under the level of 5%, the level we set ourselves. Therefore, the objective for the coming years will be to keep under that threshold in relative value, because we do have investment needs.
Jean-François said that the digital communication is really key to the group, and we've decided to devote substantial amounts to that. At the same time, we have to consolidate our network. We have brands that have specific opportunities, Saint Laurent, Balenciaga, McCartney. We have a lot of ambitions therefore. We think that growth, the growth of Boucheron will also rely on opening new stores. We think that at the end of the day, we will be below the threshold of 5%, 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-François 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. Nonetheless, we will be far from having achieved that goal. We keep this priority in mind. We want to continue to promote Puma's recovery in terms of its activity, in terms of profitability. Nevertheless, we are basically a luxury group with some sports and lifestyle activities.
Merci. Bonjour, Celine.
Hello, it takes us two questions. First of all, on Gucci and Bottega Veneta. Italy, 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? Second 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 about taxes. The Italian tax system, well, we speak often of the patent box. There's mechanisms that are quite different from what we have in France with the Crédit d'Impôt Recherche, but its general underlying philosophy is pretty much the same. There have 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. Brioni, which has manufacturing industrial activities in Italy with innovation, research, and development. It, therefore, could be eligible. For Gucci is also in that situation. Those are the two brands that we've identified as being able to benefit. Even if they are eligible, that won't 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. When it comes to the new perfumes, that will be an important event for Gucci. For around two years now, we've been suffering from the fact that the merger between Procter & Gamble and Coty took some time. Procter had a license for the Gucci's perfumes, there are no launchings under the new creative universe by Alessandro. The perfumes, they should be in perfect coherence with respect to Alessandro's universe, both in terms of the products themselves and also the communication. That would be the first major launching. The ambitions are very high.
We suffered from royalties effect over the last two years, so we're expecting market improvement thanks to the dynamism of the Coty's teams and the launching of Gucci's new perfume that should take place in the 2nd half.
Bonjour. Hermine de Bentzmann.
Good morning, Raymond James. Two questions. Firstly, on Saint Laurent. I see you've got a meeting from target margin of around 25% growth on the order of 100 basis points per annum. 2016 was an exception. Question, this growth of 100 basis points in spite of CapEx this year, is still on the agenda for 2017? Second question, Kering Eyewear, could you please be more specific on what you're gonna be spending in 2017? Thank you.
For Saint Laurent, that's a perfectly realistic objective. Saint Laurent, as you know, has a perfume license. It's very effective. L'Oréal , I think this morning, spoke about that at length. It's one of their best licenses today. We announced a figure of EUR 1 billion, it was gone beyond EUR 1 billion. If you look at Saint Laurent's position in the universe of the fashion, the potential is still very substantial. We can improve things thanks to the site density, sales density, which is there's still potential for. There's a network of 250, more than 250 stores, and that figure is growing, and the license that will continue to grow. If you bring all that together, the objective is perfectly realistic.
When it comes to Kering Eyewear, I'm gonna give you a brief response. We'll have a positive EBITDA as early as 2017.
Hello, Susanna from Berenberg. I have three questions, please. First of all, on Gucci, 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. You're mentioning a lot of focus on digital, also the very strong performance you had of your relaunched Gucci website. I was just wondering, does it mean you may at some point decide maybe to take other brands online operations in-house? 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. 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. Thank you.
When it comes to ending discounted sales or markdowns in stores, there are two justifications for that. First of all, the full price sales have improved, so there are further fewer markdowns, and also the products will be transferred to the outlets. That will a few months, three to six months later. The effects, therefore, will be shifted to the virtually end of the season. Second question, the relations with YOOX Net. I'm not sure that I understood your question, but Gucci doesn't work with YOOX Net. They run its website. It has its own website. It's only the other brands, the other luxury brands that work with YOOX. We're very satisfied with that partnership, particularly the technological progress that YOOX has brought to its platform.
As early as this year, we will benefit from the technological developments or advances in our services. As of this year, we will begin to insource 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. One more thing. The CRM. We have a really big project involving Gucci, not just Gucci. There are in fact three phases. First of all, data collection. We want to improve data collection in stores and to make it, let's say, more pleasant for the customers. Also from a technical point of view, to deal with databases, to purge them, to harmonize them, et cetera.
There's another stage, which is to use the data in two basic respects. First of all, for analytical purposes, big data, as it's called. We want a capacity to analyze, use this data in a scientific way. The second area is campaigning, to use that data for direct marketing campaigns for the brands. The third stage is back to the stores. We give the sales associates and the store directors tools to help them manage their customer relations in a very operational way. They're gonna have tools for recognizing their customers, to recognize them, their sizes. It's a real cockpit for the real dashboard for the sales people and for the store directors. Those are the three stages then. We've already begun.
Some brands are more advanced 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 an 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 divest from brands that are struggling, as in the past you've done with Sergio Rossi? The second one is about dividend. Dividend is one of the priorities. Can you give us an idea of what is your target of increasing the dividend over time? Last but not least is about your organization. In the last year, Kering really reinforced its central structure and with great results we have seen in this business. Going forward, what do you expect, Mr. Pinault?
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? Thank you.
To answer your question on the brands that are facing different problems, particularly Brioni. When we buy a brand, well, first of all, there's a lot of preparatory work, diagnosis, and often, we have to reorganize and restructure the brand once we've bought it. What I'm always struck by, I mean, I've asked this question during Saint Laurent in 2006, you've seen the results. What's important is to build something very solid that will withstand the time. We are going to sustain with Brioni. I'm fully committed to that. We have to look at, first of all, the elements that need the most structural change. For example, Brioni needed its industrial tools to be really reorganized. Nothing had been done for over 10 years. We did that.
We did it at a time when the Russian customers, Brioni had gone away. That didn't help us, but we built something solid. We had some problems with creativity. We're now working on creativity, and we'll soon have announcements to make. I have no concerns over those three brands in particular and our ability to relaunch them. Our group portfolio strategy is such that we can accomplish that. You've seen there's some problems which didn't prevent us from achieving very good results overall. There will always have brands where we will invest more, where we will have difficulties. It's up to us to deliver results that are tantamount to our ambitions. When it comes to the dividend, as we've said, we will do what we said.
We're going to have a completely coherent policy with what we've done up to now. That is 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 with an increase our dividend to the same extent. When it comes to the structure, the group structure and this transformation to make Kering an integrated luxury group, most of the major functions have already been structured. The profile of these functions has been established. There was, recently, we got 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 Valérie is doing.
That's why we hired her. We've structured a number of major functions, human resources, communication, et cetera. We created the division of Industrial Operations. Up till then, they were pooled in with the services. We created this division, and we more recently created a Customer Marketing Division in the group in order to improve our customer marketing. At the group level, we had lagged a bit behind. 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 20% 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 re-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. There's also a recovery in the U.S. at the end of the year. In early 2017, Gucci enjoyed a recovery in the Japanese market. There's a situation, and if you with comparable external events. Well, there 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 U.S. dollar rose too, which had an impact on tourism. We have every reason to believe that all else being equal, of course, that the American activity will continue to improve as it did in November and December and 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 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. We're also seeing, particularly for Saint Laurent, a return of Russian customers in all the markets except for the Russian market itself. When it comes to the Chinese customers, there was growth in mainland China. There's major growth. This is for a demographic phenomenon as the middle classes are becoming richer and richer. There's also a repatriation of the consumption of luxury 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.
We're now having positive signs in Q4 from Hong Kong. The general context is improving. There's major areas of uncertainty. All in all, if we assume a stable environment, which you can't always assume, all the other areas are improving. Thank you. Thank you for your questions, and thank you for the interest you've shown in our group. We will be with you all year long to share our quarterly performances, and I wish you a very pleasant day.