Good day, ladies and gentlemen, and welcome to the Kering 2016 third quarter revenue conference call. For your information, today's call is being recorded. At this time, I would like to turn the call over to Jean-Marc Duplaix, Chief Financial Officer. Please go ahead.
Good evening to all of you, welcome to this call to review Kering's sales in the third quarter. Slide three provides a group summary. In the quarter, consolidated sales were up 10% as reported and even higher comparable to nearly EUR 3.2 billion. This marks a sharp sequential acceleration and is the highly satisfactory result of our focus and work on organic growth drivers. This quarter, the difference between comparable and reported growth rates is not significant, FX being almost neutral at group level. In luxury, it is slightly positive but remained a headwind by around two percentage points in sport and lifestyle. The scope of consolidation was unchanged, apart from the non-material impact of the sale of Electric in Q1. At group level, it is worth noting that we achieved double-digit growth across all geographies except Japan.
Asia Pacific confirmed its strong dynamic, driven by the clear trend of repatriation of luxury purchases among Chinese buyers. The double-digit growth in group revenue was supported both by luxury and sport and lifestyle activities. Luxury posted an impressive 11% comparable increase. This is a notable outperformance. It is directly attributable to the focus of all our brands on product innovation, retail excellence, and all-around customer experience. The comparable growth in sport and lifestyle was 9%, in line with the first half trend, and PUMA posted another double-digit performance in Q3. On slide four, more insights on our luxury activities, where we delivered our best quarterly comparable growth rate in three years. This achievement was driven primarily by a sharp acceleration at Gucci as well as at YSL, while sales at Bottega Veneta and other brands were in line with Q2.
Retail, up 14%, one four, was a key growth driver, with double-digit increases in all regions except Japan, where the comp base was high and the strength of the currency deterred tourist purchases. In other mature markets, we either returned to clear positive performance, as in North America, or amplified established growth trends, as in Western Europe. Momentum in the U.K., driven by the weakness of the British pound, more than offset softer tourism in France. APAC was up 24%, helped by the growing trend among Chinese customers to repatriate their spending. As a whole, and for nearly all our brands, mainland China grew double digits. Macau showed better trends, and the situation in Hong Kong remained contrasted. In the rest of Asia, with the occasional exception of Taiwan, double-digit growth was also the norm.
Online revenues of our luxury activities rose 50%, underscoring our brands' competitive strengths in e-commerce and the benefits of relevant, seamless customer propositions. Our houses are successfully demonstrating their ability to adapt and perform in a changing environment. They combine all the key levers to capture spending and gain market share, creative and product momentum to nurture brand attractiveness, retail excellence to engage with customers and enhance top productivity, healthy geographic footprint, and a good balance between local and tourist clientele. Our directly operated network comprised 1,289 stores at the end of September, a net increase of 25 units year-to-date, mainly driven by continued development of our other brands, while for the three largest brands, the combined store count was virtually unchanged. Let's turn to Gucci on slide five.
Gucci posted an absolutely outstanding performance this quarter ahead of the industry, with comparable revenue up 17%. Retail was up 19%, driven by like-for-like. The impressive retail growth stems from the sharp acceleration in full price sales across all key categories and regions, with the exception here, too, of Japan. By product category, shoes and ready-to-wear intensified their momentum, once again driven by women's collections, now joined by acceleration in men's as well. This is, as we expected, Gucci making great progress in transitioning its offer, launching newness, and working in depth on merchandising and segmentation to engage with all customers. Leather goods grew double digit in Q3, driven by rapidly increasing sales of handbags. The new generation of carryovers, notably the Dionysus and Sylvie lines, are delivering strong results.
Newness is also doing very well, notably Gucci Signature, GG Marmont, and recently launched handbags in the Dionysus family. By region, retail was up 22% in Western Europe, with all countries positive. Spending by locals was up in Italy, Germany, the U.K., and France, representing a solid foundation to anchor the long-term appreciation of the new creative momentum. Gucci also performed strongly with tourists and was up with all key clusters. North America confirmed the acceleration we saw in June when the fall-winter collection hit the shelf. The 22% growth in the region is driven by the local clientele, with particular success in attracting younger customers. It also benefited from refurbishment and enhanced visual tools in sub-flagship stores. In Japan, the currency environment and a more cautious attitude of local consumers towards the new offer penalized the performance.
Gucci is fine-tuning its proposition and developing targeted communication events and special exhibitions to expand its following, such as Gucci 4 Rooms. In Asia Pacific, the acceleration is driven by strong performances across markets, starting with Mainland China, where locals are fully embracing Gucci's new creative vision. Macau, Korea, Australia, Singapore, and even Hong Kong were up. Total wholesale grew 9%, sustained by the increase in orders per door, especially from U.S. department stores. We are very satisfied with Gucci's performance, also highly confident in its ability to continue gaining market share as the foundations we are building are solid. Collection after collection, the response is enthusiastic. Alessandro Michele's creativity, aesthetic, and vision blend intimately with Gucci's brand values.
They are increasingly influencing the industry, and at the same time, the brand is becoming a constant feature in the lives of a broadening customer base, existing as well as new clients, especially millennials. Establishing a durable relationship implies that the brand addresses all touchpoints on which a consistent customer experience is built. Aside from the rollout of the new store concept and visual tool, Gucci launched many innovative initiatives this quarter, too many to list them all. It is worth mentioning the Gucci Garden collection, available online exclusively, or the collaboration with the artist Trouble Andrew around GucciGhost, the launch of the new gucci.com in Korea and Japan, and the special summer installation at Paris Galeries Lafayette. Moving to slide six, Bottega Veneta, down 11% comparable, was still impacted by unfavorable tourism patterns.
Sequentially, retail improved slightly but was dragged down in mature countries, and especially in Western Europe, by the brand's exposure to slowing travel flow. France had a weak performance that better trends in the U.K. and the overall improvement in spending by locals could not offset. In Japan, where Bottega Veneta generates nearly one-fifth of its retail revenue, the brand faced strong headwinds from fading Chinese tourism. The performance is positive in APAC, especially mainland China and Korea. Wholesale was down double digit as the brand moves ahead with its strategy to improve distribution, contain markdown, and reinforce its exclusive positioning. The ongoing revamp of the leather goods offer is now tangible, and the fall/winter 2016 collection included considerable newness. The Intrecciato category has been enriched with the introduction of new shapes, styles, and functions.
In seasonal variations, pieces encompassing new craftsmanship are proposed, including the boutis, bouquet, or mosaic techniques. In the high-end segment, the sweet spot for BV, the brand widened the offer to include additional designs, skins, and materials. The positive performance of shoes mentioned in past quarters, and in which the brand is investing to broaden its range, is confirmed. Bottega Veneta is rolling out new display tools and dedicated shoe areas in selected stores. We were very encouraged by the highly positive reception given the spring/summer 2017 collection, presented late September in Milan, and marking the brand's 50th anniversary. Bottega Veneta proactively adapts its retail footprint. In the quarter, we replaced the women-only store at Shanghai's Plaza 66 by a flagship, where the brand now displays its broader offer. Bottega Veneta also closed one of its Hong Kong locations during the quarter.
As you know, the brand rolled out a host of valuable initiatives in past months. Going forward, the further acceleration of Bottega Veneta's redeployment will come under the responsibility of Claus-Dietrich Lahrs, who has taken over as CEO earlier this month. On slide seven, you see the quarter's highlights for Yves Saint Laurent. The house had another quarter of substantial growth across the board, exceeding its already outstanding performances in the first two quarters. Total revenues were up 34%, with retail up in the same proportion. In each region, Japan included, retail posted double-digit growth. On a worldwide basis, online sales almost doubled in the quarter. Wholesale was up almost 40%, 4, 0, with an exceptionally high level of deliveries concentrated on the quarter. Saint Laurent achieved impressive double-digit increases across all product categories, starting with considerable growth in leather goods.
The permanent handbag collections, among which the Monogram Kate and College lines, as well as the Sac de Jour, are fueling the trend, while first deliveries of the Monogram Sunset newness almost sold out in the quarter. Higher sales of men's ready-to-wear are also noteworthy. Late in the quarter, Anthony Vaccarello presented his first show in Saint Laurent's future Paris headquarters. The reception by professionals of the spring/summer 2017 collection was excellent. Slide eight summarizes the revenue performance of our luxury division, Other Brands, which altogether were up over 2%. Retail sales were up a solid 7%, with positive growth in all regions apart from Japan, and with a sharp improvement in Asia Pacific. Wholesale revenues were flat. In soft luxury, Stella McCartney, Alexander McQueen, and Balenciaga all achieved revenue growth in the neighborhood of 10%.
Balenciaga's European retail sales were still impacted by the sharp decline in tourism in France, but the brand saw a strong pickup in North America on the back of Demna Gvasalia's new collection. Stella McCartney had a particularly solid quarter in wholesale with a sharp increase in shoes. At Alexander McQueen, growth was strong across all channels. At Brioni, retail held up fairly well, notably in North America, with made-to-measure garments performing strongly. Conversely, wholesale continued to suffer across regions. We are confident in the outcome of our approach to leverage Brioni's strong brand equity with many initiatives underway in retail, including a revised store concept. Turning to hard luxury, Boucheron and Pomellato both had solid double-digit performances with progress across all jewelry categories. Boucheron has a dynamic lineup of new pieces launched in the second half of the year.
Our watch businesses were again impacted by the difficult market environment, but we are encouraged by the response to efforts by both Ulysse Nardin and Girard-Perregaux to adapt to changing conditions with new product offers and fresh communication. With Slide nine, let's move on to our sport and lifestyle activities, which continued to deliver a solid revenue performance in the quarter. Comparable revenue was up 9%. In reported terms, growth was up 6%, the bulk of the difference coming from weaker emerging market currencies versus the euro. Puma will report its Q3 result on November the 10th. At the top-line level, the brand posted another excellent double-digit performance with sales up 11% comparable, on track with full-year guidance. Puma's revenue increase reflected the renewed heat of the brand and the success of several new product lines, in particular in footwear, which grew 17%, one seven, in the quarter.
The success of recently launched product comes on top of nice growth on both classics and performance categories. Apparel sales rose 10% in the quarter, driven by running and training in the Americas and Asia and team sport in Europe. By geography, all regions were well into positive territory in the quarter. Mature and emerging markets grew 9% and 14%, one four, respectively. Another strong showing was achieved in mainland China, where e-commerce sales were buoyant, driving the worldwide growth of this channel, along with good online sales in the U.S. and Western Europe. The quarter was marked by further extension of the IGNITE platform in running, by the launch of the evoTOUCH model in football, and of the second Fenty for Puma collection in September. Puma's women initiatives accelerated with the introduction of the new DO YOU campaign, featuring brand ambassador Cara Delevingne.
We are also particularly proud of the historic achievement by Puma's most emblematic ambassador, Usain Bolt, who completed an unprecedented triple-triple at the Rio Olympics this summer. Volcom revenue declined 8% comparable in the period due to the persisting difficulties of action sports retailers in North America. To conclude with slide 10, I want to stress that Kering delivered an excellent quarter. This achievement reinforces our strong belief that we have the right strategy over the long term, and that our execution is particularly effective in the current context. It also boosts our confidence in returning to growth the brands that don't perform quite at the level of our expectations. We are building the group and continuing to invest in its constituents with a view towards durable, sustainable sales and profit performance.
To do so, we are strengthening the foundations of each brand and diversifying the sources of their development. At each brand, we strive to build the right balance between local and tourist, the optimal mix of distribution channels, and the best approach to expand their legitimate claims over new categories and new clientele segments. The group steering of our multi-brand model is key in successfully implementing our strategy, and in doing so with the utmost financial and management discipline. Regardless of developments in a complex environment We are fully satisfied with where we stand and highly confident in our direction and our ability to outperform our market. We are now ready to take your questions.
Thank you. Ladies and gentlemen, if you wish to ask a question at this point, please press star one on your telephone keypad. Please ensure that the mute function on your phone is switched off to allow your signal to reach our equipment. If you find that your question has been answered, you may remove yourself from the queue by pressing star two. Once again, ladies and gentlemen, please press star one to ask your question. We will pause for just a moment to allow everyone to signal. Our first question comes from Thomas Chauvet with Citi. Please go ahead.
Good evening, Jean-Marc. Thanks for taking my question. I have three. The first one on Gucci. I still need to digest the very strong performance in Q3. I think it's maybe not the most interesting point, but rather, as you are in the budgeting process, I suppose, can you share with us how you think about the growth for next year? You'll need to anniversary a very exceptional year of revival, what progress you've made also in the sales productivity improvement agenda, and some of the medium-term margin targets you highlighted earlier in June. I'm interested more in the next 12, 18 months for the Gucci brand. I still need to look in more details at the Q3 numbers of Gucci. They look very strong.
Secondly, on PUMA, could you give us an update on your shareholding, whether your 86% stake is unchanged as of September, and how you think about the group structure in 2017, please. Finally, about the management structure, I was looking at your various changes in management over the last couple of years, and I saw you changed about 10 CEOs and I think four or five designers out of your 14 core luxury brands in the last couple of years. That's quite an impressive wind of change. I was wondering why is that, and whether Mr. Pinault was putting a lot of pressure on the teams, whether this reflects new ambitions for the group, and how is the corporate culture of Kering evolving with these big changes. I think there's been a couple of changes recently with Balenciaga and Bottega Veneta again.
I'm interested more in the big picture here. Thank you very much.
Thank you, Thomas, for your three questions. Starting with the performance of Gucci going forward, let's say that you know perfectly that last year during the Q4 2015, we start to see an improvement in retail sales and also in wholesale. You remember that the performance was positive, we will start to have a tougher comp base. Let's say that current trading is very encouraging so far, that we believe that we are confident that the trajectory that has been announced and presented by Marco, we will stick to the trajectory. We remain very positive about the perspective for the brand for next year. Let's say that we stay on what we said about the trajectory. For sure, as I said during my pitch, these figures boost our confidence that we can deliver this trajectory.
Regarding the sales density, we clearly saw an acceleration in sales per square meter rate across the network and in all regions, let's say, with material improvement in store in the key city stores. In fact, the network underwent very little changes. The top-line increase we see is mainly achieved on the like-for-like basis with an increase of the store productivity. Principally based also on the traffic, also on the product mix, the increase of the conversion rate, the increase of the average ticket. Coming back to the question on PUMA, there is no change of the shareholding on PUMA. You can assume that, as we already stated, we are working to turn around PUMA, to make this turnaround a success. You see that the figures also here show that we are on a good path. I won't elaborate further on that.
The plan for 2017 is to continue to deliver a very solid performance. We are very confident that we will have a very positive operational leverage next year, so that we will improve significantly the EBIT margin for PUMA next year. I'm not surprised by your question about the changes we have announced in the past years, whether it be on the CEO role or on the designer position. I think that you know that we have brands with different stages of maturity. We have to adapt to the development of these brands, the challenges they face, and we try to be as reactive as possible to be in a position to tackle the challenges we are facing. I think here we have, in the past months, a combination of announcements, but I would comment just on the most recent one.
Don't forget that Isabelle Guichot was CEO for now nine years, which is quite a long period. I think that's a normal life of a group. You know also that since we have ended and finalized the transformation of the group, end of 2014, beginning of 2015, we have more grip on the brands, on the operations, and that's normal that we put some pressure to have the results the brand deserves to have concerning the quality of the asset, concerning the quality of the brand equity. I think that we just try to put the right conditions to deliver growth, and sustainable growth, and sustainable profitability.
Thank you. Our next question come from John Guy with MainFirst. Please go ahead.
Yes, sir. Thanks, Jean-Marc. About three questions from me as well, please. If I could start with Gucci, could you talk about the performance of Gucci within modernized and unmodernized stores, and what the uplift was that you've seen within the modernized stores? Could you also give us an indication as to how much additional growth the leather goods category added to the quarter? I think you mentioned that you've seen a very sharp like-for-like increase, but also seen a very sharp increase as well in the price mix. Interested around that dynamic, please. With regards to Bottega, you mentioned that there was additional newness running through the line.
Could you maybe give us an indication as to what percentage increase you've seen in terms of product newness during the quarter, and what we can expect over the course of the next couple of quarters to ensure, I guess, margins are at least protected at around 25% and can grow from that platform? On Saint Laurent, given the sharper-than-expected growth, will we see Saint Laurent's EBIT margins reach around a 25% level this year? Can that threshold, do you think, be surpassed in the future? Thanks very much.
Thank you, John, for your four questions. Let's start with the one related to the store concept and the modernized store. I think here, what we already said or what we had evoked during the H1 call was that because of the success of the new collections, of the new styles, and the desirability of the brand, in fact, there is an increase of the store productivity, which is probably so far above expectations. We know that going forward, there will be also some various effects, various levers to boost the productivity, among which the new store concept. Clearly, we have reconsidered the saving in terms of refurbishment, even if we have already this year, 25 stores under the new concept on top of or in addition to the 34 we had already done last year, with clearly an uplift.
The bulk of the uplift today is clearly driven by the attractiveness of the brand, the success of the new collections. The reason why we reconsider a little bit the saving, also the split between pure refurbishment and also the introduction of new visual tools that are already a lever to increase significantly the productivity. We have around 30 stores with this new display in H1. This was the figure at the end of H1, and now we are already at 60 stores. If you combine the new store concept plus the new visual tools, you see that we have already, in terms of % of the network, a quite vast coverage with a direct impact on the productivity. It does make for me the link with the categories.
As I said, I think that the very good reception of the new collections clearly does explain the performance of the brand and the increase of the productivity in the stores. In leather goods, we say that we had a double-digit growth for the category. It's a very high double-digit growth for the handbags more specifically, where we have the bulk of the introduction. We have already six of the seven best-selling lines are handbags coming from the Alessandro Michele collection. There is only one remaining of the old collection. We see an acceleration of the sale of handbags in all regions with all clusters. That's very positive. As you know, we have not completely finalized the revamping of the offer in the other subcategories, so travel and lifestyle and small leather goods, in which the growth was not at the same level.
It means that there is still additional potential for growth in leather goods. I want to elaborate, if you don't mind, on the sum total, on the contribution of newness to increase of sales at BV. What we can say is that it's clear that the sales in Q3 were driven mainly by men's and women's early Fall 2016 collection, while Fall/Winter 2016 collection has been available in the stores towards the last part of the quarter. This collection received extremely good feedback since the arrival, and have attracted clearly clients to the stores. Globally, we can say that leather goods are showing encouraging trends gradually. I would like to stress that sequentially, we saw rather an improvement in the retail sales at BV, clearly driven by the introduction of newness.
The figures for BV have been dragged down clearly by the shrinkage we made in terms of wholesale distribution. We have an improvement in our store, clearly driven by the new offer, be it in the fully leather products, also with some new seasonal items that we have progressively introduced. I would like to mention also the very good performance in the precious or high price segment, which is a demonstration that in that category, there is still a strong legitimacy of the brand and still a very strong attractiveness of the brand in that segment. Overall, let's say that the newness has contributed to the improvement of the performance. It's also why we have a double-digit growth in Korea or in Mainland China, clearly driven by the new offer, it's not clearly sufficient to offset the weakness of the old carry-over lines.
Now coming back to your question on Saint Laurent. I think that I will stick to the comments I made in the previous quarter, saying that we had an improvement during H1 of the profitability, we had mentioned during the H1 call that the seasonality was not exactly the same, that we can expect additional improvement in H2 in terms of EBIT margin. We are confident that we can deliver more than 20% in terms of EBIT margin, surely not to the point you mentioned at 25%.
That's great. Jean-Marc, with the six out of seven bags that are the bestsellers within Alexander McQueen, is it the Soho or Bamboo that's left? Which one is it? Do you know?
The remaining line that will be sooner or later discontinued is the Soho. You know that we have a new offer coming, hitting the shelf progressively that should substitute the Soho going forward.
That's great. Thank you very much indeed.
Thank you, John.
Our next question come from Zuzanna Pusz with Berenberg. Please go ahead.
Good afternoon, everyone. I just have three questions, if I may. First of all, would you mind commenting on the face of the Chinese consumers globally? Secondly, on pricing, I think we see some significant FX moves recently, the Japanese yen or the British pound. Just wondering, have you made any changes to your pricing architecture? Do you have anything in plans? Finally, on PUMA, would you mind just briefly commenting on the performance in the quarter and the two channels, retail versus wholesale? Have there been any significant deliveries or anything that could have impacted the quarter? Thank you very much.
Regarding the Chinese cluster. The Chinese cluster is up in the quarter, for the three main brands cumulated. Also on a standalone basis for Gucci and YSL that achieved strong growth with this nationality in APAC, including Macao indeed, where the trend of spending repatriation clearly amplified. Both Gucci and Saint Laurent were also positive in Europe with the Chinese. For sure, for BV, the weight of tourism in Europe and its further decline could not be offset by the growth experienced in Mainland China. I remind again that BV was very positive, double-digit growth in Mainland China without any changes of its retail network. Which is a strong contribution. Globally, the Chinese cluster is overall positive. For the brands which have a higher exposure to Europe, of course, the cluster may be flat or negative.
That may be the case if we comment the other brands. It could be the case, for example, for Balenciaga, which has a great exposure to the French market, saved partly by the fact that Balenciaga has a quite good penetration also with the local customers. Overall, we are very positive with the Chinese cluster, which is strongly up with our two main or most dynamic brands, Gucci and Saint Laurent. Regarding the architecture of pricing, there have been some adjustments among the brands with some reduction of prices on some selected items in Japan in order to have a realignment of the prices. If I take the example of Gucci, for example, let's say that we are around 30% of gap now with Europe after a reduction of price around 8% on some pieces of the fall/winter 2016 collections. That was the main price adjustment.
There were some other adjustments in some countries, targeting some products in Guam, for example, in the U.S. a little bit as well. Now we consider, of course, some price adjustments in the U.K. It's rather in October that we've decided to adjust the prices in the U.K. concerning the situation of the price gap between Europe and the U.K. However, still, the prices in the U.K. should remain slightly below the prices in eurozone to keep the attractiveness of the U.K. Now, regarding PUMA, the development of the sales have been very consistent between the two channels. You know that in the retail, we are rather concentrating our efforts on the distribution in emerging markets where the performances were very satisfactory, let's say, in retail and in wholesale across the board, across the regions, and across the main accounts.
The development has been very well-balanced between regions and main accounts. It's a very satisfactory as well development of PUMA during the quarter.
Thank you. Our next question come from Luca Solca with Exane BNP Paribas. Please go ahead.
Thank you very much. There's a very stark difference in the organic performance of Gucci and Bottega Veneta, almost 28 percentage points. That's very clearly, and you mentioned that, a very different brand momentum here. You're also stressing the different nationality set up of these two brands and the impact of tourist flows hitting Bottega Veneta more than Gucci. I wonder if you could give us a quantified assessment or roughly quantified assessment of how much of this 28 percentage points is caused by the different nationality set ups and the dependence on tourism. Always on Bottega Veneta, and looking at management changes that you recently implemented, I wonder if you consider the current senior management team to your satisfaction and established, and what timeframe you expect for Bottega Veneta to go back to organic growth in the foreseeable future.
Also, thirdly, to finish off on Gucci and its brilliant recovery, you had sounded in the past somewhat cautious as far as operating margin recovery was concerned, pointing to a step-by-step recovery. I wonder if this significant beat and sharp acceleration could allow us to be more positive on that front.
Your first question, Luca, I understand your question, but it will be obviously very difficult to answer. What we can say is that at Gucci, what is very positive is the very good penetration and reception of the brand with the local customers. It was clearly the target or one of the objective of the strategy implemented by the new management at Gucci was to be less dependent on the tourism flows by putting or stating clearly Gucci as a fashion authority in all regions with all type of customers. The reason why during the Q3 it has been confirmed that sales grew in a quite even manner between tourists and local clientele, so that we have, at the end of the day, considering the dynamic of the brand in some regions, reduced the weight of tourists among the sales.
Without providing you with figures, let's say that we have reduced the weight of tourism in the total sales. It will take more time for BV to penetrate better the local customers and to be less dependent on Asian customers. That's the objective, but you know perfectly that it will take time. It will require some investments. So far what we did was to fix the more critical issues on BV, and it will make the transition with my second point. Let's say that we have tried to fix as fast as possible the most critical issues by keeping this very loyal customer base, which is Asian, where we could have them as a client. Let's say in Mainland China, in some countries like U.K., like Korea, like Singapore. It's true that we have not reduced, so far, the percentage of tourists among the sales.
The reason why we take more time, and it just clearly explain the difference of performance between the brand. Of course, in Europe, despite the decrease of tourism flows, principally in France and some other countries, the dynamic with the local customers at Gucci or even Saint Laurent, explain the performance. It's not the case at BV, where we have a very nice growth with local customers, but starting from a very low share. Just now to comment on BV. As you know, and I won't come back to the reasons why we have the situation at BV, you know this perfectly. Under the management of Carlo Beretta, as I said, some actions and initiatives aiming at fixing the most critical issues have been launched, and start to pay off in a way.
I will mention the quality of the visit with the distribution in order to be more exclusive, the revamping of the offer with the launch of some newness, investment in the shoe category, all the events around the 50th anniversary, and I hope you see how positive was the reception for the show. It's true that we need to work more in-depth on the brand in order first to ensure a better alignment between the brand platform, the communication, the product offer, and the distribution, especially in the retail network. We need to accelerate, to speed up this work of better alignment. There is clearly an issue with the execution there. After years of rapid growth, and maybe it's part of the answer to your question, BV structure has to evolve and to become more agile.
We have probably add some layers to address the very rapid growth of the brand. Now we need to be more agile. It means that we need to have the right organization and processes to come back to positive growth and to execute properly the strategy. Clearly, one of the first objective of Claus-Dietrich Lahrs will be to identify how we can be more agile, exactly the way it had been done by Marco Bizzarri when he joined Gucci and had decided to simplify the organization, to streamline the organization, to have more grip with the regions, to put in place more indicators or more efficient indicators, just to find the right trade-off between autonomy and direction by the corporate.
It's exactly what is the roadmap of Claus-Dietrich Lahrs, and of course, he will make a review of the management of the brand to be sure that we have the right people to execute this strategy. Now, I understand your question also about the profitability of Gucci, considering the pace of growth of the top line. We mentioned end of July that the same magnitude of margin increase was to be expected in H2 as the one passed in H1. I remind you that it was +80 basis points. It was probably cautious, or you call it whatever you want, a conservative approach, meaning that H2 margins at Gucci could improve slightly more. It's true. Probably, let's say around 150 basis points for the H2. We have some good operating leverage, that's sure.
As we said, we have also to reinvest in the brand for the long term to be able to sustain a very healthy performance. We will do so. Again, answering to the first question of Thomas Chauvet, I was mentioning the need to, and our ambition and our confidence to deliver the trajectory that had been presented by Marco, and we stick again to that objective.
Thank you very much indeed.
Thank you, Luca.
Our next question come from Erik Karlsson with Bodenholm Capital. Please go ahead.
Thanks so much for taking my question, and superb performance. When you visit the Gucci stores and talk to your colleagues, you get the impression the Dionysus bag is doing phenomenally well. Do you think it has the potential to become a new evergreen?
We are working to have not only the Dionysus becoming an evergreen product. That's the reason why keeping or managing very accurately and very cautiously the number of SKUs, we have been able to launch several lines, among which the Dionysus is performing very well. We are also very encouraged by the performance of the new lines that have been introduced. It's clear that one of the objective of the merchandising team and of the creative team is to animate the Dionysus line with new version to create a family of Dionysus products, some with logo, some with plain leather, so that we have the whole range of products in the Dionysus line with different price points. Clearly, it's true that we are building solid foundations with this line.
Again, I think that the teams at Gucci are doing a great job to also launch some other bags that have the potential to become evergreen products.
Very encouraging. Thanks very much.
Thank you. We'll now move to Antoine Belge with HSBC. Please go ahead.
Hi, it's Antoine Belge at HSBC. Three question, if I may. First of all, regarding Gucci, is it possible to have the share of handbags sold in Q3, designed by Alessandro? I think it was around 50% in Q2. What also do you expect it to be in Q4? Second question relates to Saint Laurent, obviously very, very strong numbers. Was there anything special in the quarter that you would highlight to explain the superior growth? I think you mentioned the new collection by Anthony Vaccarello being presented. What has been the feedback? I remember that during the last transition from one designer to another, there was a bit of a disruption. Do you expect such a disruption, or do you think that it'd be a smoother transition?
Finally, on Bottega Veneta, I'd like to know if you think that 2017 will be another sort of a transition year or that sales on margins can increase in that year.
Thank you, Antoine, for your three questions. We won't provide any details regarding the share of new collections between the different categories. What we can say, to be very transparent with you, is that the share of sales from Alessandro Michele's collection has further increased as a whole in Q3, rising above 80% on average. We expect this percentage to further grow in Q4 2016, for sure, probably not to reach 100%, because as you perfectly know, there is still room for transitioning some categories. The journey is not over in terms of transition, so there is still potential to grow in some other categories. The substitution won't be over at the end of the year, but we will be probably shortly above 80% for the Q4. Saint Laurent delivered a very solid performance and very consistent between retail and wholesale.
There is nothing specific explaining the outstanding performance of Saint Laurent except the quality of the work done by the team, and by the merchandising team, by the retail team at Saint Laurent, to ensure a smooth transition, for sure. I would just mention the fact that we have concentrated some deliveries in wholesale in Q3. You're probably remind that in Q2, wholesale was good, but maybe slightly below what you could expect. There was a concentration of the deliveries in Q3. Let's say also that we may have some switch to Q1 2017. You mentioned the transition between Pilati and Slimane, and we had already the case. In order to have a very smooth and efficient launch of the new collection, completely aligned with the communication campaigns and so on. We may have some switch of deliveries in Q1 2017.
Otherwise, we cannot afford, as we did at the previous transition, to have a tough transition. The brand is far bigger. All the processes, all the organization, all the way we manage the brand, is designed just to make this transition as smooth as possible. We are very confident that we will have a very smooth transition. Concerning the BV performance to be expected for 2017. You can imagine that although the comp base is getting easier in Q4 as soon as this year, and it will be even far easier in 2017, it's more than cautious to assume that BV will not resume growth as soon as year end, and we can expect some growth for next year. But it will be very progressive. It will be a ramp-up, probably more during second half of 2017. What is the consequence in terms of profitability?
I think that because of the investments we need to make to recover at Gucci, at BV, sorry, we can expect that there will be some slight dilution in the EBIT margin in 2017, but with a small improvement or small increase of the top line.
Okay. Maybe just a clarifier, coming back to Gucci, on your slide seven, you said that number six. Actually, it's number five. You said that the growth was driven by carryovers on newness. When you mean carryovers, do you mean the sort of new carryover or the carryover from the former designer?
First, I confirm it's on slide five. Second, I confirm also that we are talking about the carryover deriving from the new collections of Alessandro Michele, not from the carryover of the past collections. Clearly, for example, the Dionysus that has become progressively a carryover.
Okay. On the four names that you mentioned, Dionysus, Sylvie, GG, Marmont, and Gucci Signature, do you already consider the four of them being carryover or only Dionysus?
Dionysus has more than one year. Again, I think that we work to animate these different lines. We don't consider all of them as carryovers. Again, it's a family of products. In that family, you have some carryover SKU, some other are not. I think the main carryover are among the Dionysus collection.
Thank you very much.
Thank you.
We will now take a question from Helen Brand with UBS. Please go ahead.
Hi, good evening. I've got three questions. I'll try and be quite brief. Firstly, just on handbags. Mix has clearly been a pretty strong driver this year. The investor day back in June, I think Marco mentioned bolstering out the entry-level offer as well. Is this still the plan, or has that already been done? I guess just to follow up on the evergreen or the carryover versus the newness. Into 2017, how much newness should we expect in the handbag offer compared to today? I think the target was, 60-40 between evergreen and newness over the medium term. Would that also be the case in 2017? Secondly, just on the online performance at Gucci, it was up 50%. Can you talk a little bit around which regions, what particularly drove that performance?
How does that strong performance make you feel about the partnership with YOOX for the other brands? Finally, just a bigger picture question on Bottega Veneta. How much flexibility does Claus-Dietrich Lahrs have in terms of dictating new strategy here? Or should we expect him to be executing still the strategy laid out at the investor day in 2014? Thanks very much.
You know, Helen, that we try to have a very well-balanced development and growth among all the different price points in the handbags category. We have made introduction with different versions in order precisely to touch the different price points. On average, we have rather an increase of the average selling price due to the mix, but she is not specifically material. The objective was rather to have the right offer in all price segments, to rebalance the offer in order to be relevant in every categories of prices. It's exactly what has been done. I think that we are very happy with the execution of the strategy to that respect at Gucci, and I think the offer is very well-balanced in handbag.
Again, I think the question is more about animating the different lines, to create still attractiveness and to bring back the customers to the stores to drive traffic. I think it's a question of animation and also to have more and more, let's say, classical version, because the challenge for the brand, as you know, will be also to have a fashion offer, but also a more classical offer to capture all types, and all profiles of clients. Regarding the breakdown between newness and carryover, I won't elaborate too much on that. Given we have almost fully transitioned to the new brand aesthetics, and consequently rebuilt the carryover offer for most categories with the fall-winter collection, the split between carryover and newness sales has rebalanced towards the normalized split, let's say, with carryover weighing more than newness.
Going forward, it should be normally the rule, and we will keep more or less the same split. The objective is at least to keep the same split in terms of sales. Regarding the performance between regions, you can see on Your question was on e-commerce more specifically, or?
Yes, specifically on the online performance.
Okay.
On e-commerce.
In fact, you know that we have rolled out progressively the new platform, for Gucci. Because the question was about Gucci. We have rolled out the new platform of Gucci in some other countries more recently. Now we have the most recent countries covered were Korea and Japan. The growth was, again, very well-balanced between regions. E-commerce revenue increased by 57% in constant currency, with high double-digit growth in all regions. Again, each time we roll out the platform, we see an immediate impact in terms of growth of traffic and conversion. What is noticeable probably is the acceleration also of the sales deriving from mobile, so smartphone and tablet, because we are at a very strong level in terms of growth.
I think that all the functionalities that we propose with the new site are spot on regarding this specific offer or this media smartphone and tablet. I won't elaborate on your question on YOOX again. I think that it's not the purpose of this call. You know that we continue to work to develop the online business of our other brands with very satisfactory results so far, so it's not the right timing to discuss that point. Regarding BV, I think that I partly answered to that question previously. First of all, there is a question of execution. Execution will be key, and I think that the profile of Claus-Dietrich Lahrs is clearly the good one to be very disciplined in terms of execution and strategy, to be very determined.
Of course, going forward, Claus-Dietrich Lahrs will make his own diagnosis regarding the situation and will propose probably some adjustments in terms of execution and in terms of strategy. The roadmap I mentioned before is the one you should consider short-term and mid-term.
Thank you very much.
Our next question come from Mario Ortelli with Bernstein. Please go ahead.
Good evening. The first one is on Gucci about the refurbishment. Considering the good success of the light refurbishment that you are doing in stores, are you changing the target of refurbishment of store for 2017? The second question is about pricing. Can you give us an idea of by region which price changes made Gucci in Q3, and if you are expecting any other price change at the end of the year? The last one is about watches. Your brand performed particularly bad if I see the third quarter result. Can you give an idea of how much the market of watches is difficult, if there is still de stocking of wholesalers, or the problem was more specific of your offering of Girard-Perregaux with Ulysse Nardin? Thank you.
Just a point after Mario, we will have time just to take a final question, just to mention to the operator. Mario, regarding the refurbishment of Gucci stores, we will not change our plans. I think that there is a need anyway going forward to add the new concept in the full network. I think that we already mentioned that beyond the question of the store productivity, there is a question of alignment of the store concept and the aesthetic of the brand. We need to continue to execute it as we planned. I think at the time of the presentation by Marco of the plan, there was already some arbitrations between the investments to make in inventories, in light refurbishment, in visual tools. There is no change regarding the plans that had been presented by Marco Bizzarri. About the pricing, we mentioned the adjustments made in Japan.
I mentioned also the decision to adjust some prices in October in the U.K. Just to remind, at the end of September, not taking into account the recent adjustment in the U.K., the prices difference were about around 20% U.S. against Europe, around 30% Japan against Europe, around 35 for China against Europe, and in Hong Kong, it was about 25. As I said before, U.K., after the price increase, should remain in average, because again, it is very difficult to It is an average always, but should remain in average slightly below the eurozone. I am not in the best position to help you read across about the watch industry. I think that we believe that the market is still very difficult, that you have still very high inventories within the distribution channels, especially still in Asia.
In fact, to be very comprehensive on my comments on the other luxury brands, we have a very good performance, as we mentioned, at Stella McCartney, at Alexander McQueen and Balenciaga. Very solid performance as well in jewelry. We have the drag of Brioni, and you know exactly where we are at Brioni, and we are working to improve the situation. The drag is not only due to the watches brands. Let us say that we are very encouraged by the good reception of some new lines with more accessible price, because with the steel case at Girard-Perregaux. We have also redesigned the offer at Ulysse Nardin with a new communication. The situation is not very specific with our brands.
I think that, of course, we have less leverage than some other groups regarding the distribution, but we have probably less exposure to Asia compared to some other brands. All in all, I don't think that there is a big difference between our brands and the market.
Sorry, Jean-Marc, if I may, a clarification of Gucci pricing. Are you expecting or did you make any price change in second half of 2016 of the pricing of Gucci in Europe, America, and Asia-Pacific, excluding Japan?
No, I think that so far there is no plan to increase or to decrease the prices in the regions. I mentioned the adjustments we made in the U.K. In short term, there is no plan to change the prices. Again, I think that there is a very accurate, very precise work done by the merchandising on the pricing architecture, with all the seasonal items and the seasonal introduction and the new collections. We are very happy with the work done in terms of pricing, and we don't plan so far to have additional adjustments.
Thank you very much, Jean-Marc.
Thank you. Last question.
Our last question today comes from Melanie Flouquet with JPMorgan. Please go ahead.
Does that mean I only have one question? My questions will be, what makes you confident that Gucci turnaround is sustainable, please? Could you maybe lay out some categories or some projects you are still working on that will provide the sustainability to this turnaround, which has been very impressive and faster than expected over a short period of time? I think everybody is wondering. My second question, sorry, I will bear another one, is Boucheron and Pomellato. I am surprised at that so strongly in this quarter, given the high exposure to France and Japan, in particular for Boucheron. Sorry. I was wondering whether you could explain a bit to us what you are seeing and whether jewelry as a category do you feel has accelerated. Thank you very much.
Thank you, Melanie. Yeah, I think that we have a plan for Gucci, and we have executed part of the plan, and we are not at the end of the plan. We have, for example, regarding the retail excellence, implemented already some tools to improve the stock productivity, to engage better with the clients. The rollout is not over, so we are continuing to implement some tools to train our sales associates. We will also develop some new tools to continue or to improve clienteling, because we have started by fixing the basics, but we have more to do. I could mention the loyalty programs and the client retention tool that we are developing, and that will be also progressively rolled out. That is about retail excellence. We mentioned the stock concept that will be rolled out as well.
In merchandising, as we said, we have still room for growth because of the categories that have not been revisited. I mentioned the work done in terms of animating the successful collections. You remember that we had reduced the number of SKUs in order to concentrate the efforts to relaunch the brand. Now we will probably broaden the offer, and we will have a deeper offer also by SKU in order to engage with all types of clients. We have been very strong at gaining new clients and especially the millennials, where we have improved our market share with the millennials. We have still work to do also to keep or attract older clients. All the work is done in that way. Again, I think that I want just to say that we have all these levers at our disposal.
We are working on this, I think that the trajectory that has been presented by Marco, we'll stick to that. We have improved the productivity, but not yet to the targets we have for the brand. I think that we have still progress to make, and the journey is clearly not over in that transformation. Regarding Boucheron and Pomellato, you're right to mention that it may be counterintuitive to see our jewelry brands to improve like this. I think, of course, the fact that there are some territories where our brands are not yet exposed, clearly does help us, because I think that we can penetrate new markets. Here, there is clearly a potential for growth. I think that we had a very nice offer in terms of jewelry and high jewelry at Boucheron.
Despite the situation in France, you know very well, and that you have rightfully mentioned that has impacted, by the way, the performance, I think that we had a very nice offer so that we have been able to sell quite nicely both in the U.K., but also in Japan. In Japan, we have not exposure with the Chinese clients. We have a very strong customer base in Japan for Boucheron. Concerning Pomellato, you know the exposure of the brand to Italy. In fact, in Italy, as we mentioned before, also for the soft luxury brand, we have not so much suffered from loss of tourism in Italy. Also here we have a very strong local clientele base.
I think that thanks to the penetration of these brands with local clientele in different regions, I think that we have been able to deliver this solid performance. I must say that I'm very confident that we can grow further these brands, and we will continue to invest in these brands because they are clearly, and they demonstrate this, they have the potential to grow further. Thank you very much for your attention and for your interest in Kering. I hope we provided you with a better understanding of group's recent performances, and notably the solid foundations of Gucci's brand renovation. We are, as you can assume, very pleased with our top-line achievements and look for what will be all-important coming months. I know that we were not, unfortunately, able to answer all the questions in the queue.
I invite you, of course, to contact Claire on the IR team for any additional questions you may have after this call, and we will see you in February.
Ladies and gentlemen, that will conclude today's presentation. Thank you for your participation. You may now disconnect.