Welcome to the 2016 first quarter sales conference call. Today's conference is being recorded. At this time, I'd like to turn the conference over to Mr. Jean-Marc Duplaix, Group Chief Financial Officer. Please go ahead, sir. Your line is open.
Review of sales in the first quarter. Starting with slide three, you have the summary of our performance. Consolidated sales were up nearly 3% as reported, up a solid 4% comparable to a total of more than EUR 2.7 billion. In a challenging environment you know, this performance is a testimony to our focus on driving organic growth. It is a result of the in-depth work we are doing to consistently ensure the best alignment between the value proposition of our brands and market trends in their respective segments. I will start with a quick comment on the difference between our comparable and reported growth rates in the quarter, which is entirely due to FX. We had no change in the scope of consolidation, with the exception of the Electric brand, which was sold during the quarter but is not material.
You can see that for our luxury division, the FX impact turned almost neutral. In sport and lifestyle, FX became a headwind due to Puma's exposure to certain emerging currencies, notably in Latin America and Russia, that have strongly depreciated against the euro. In comparable terms now, luxury activities achieved 2.6% revenue growth, a commendable performance in this environment. Sales of the sport and lifestyle division were up 7%, with Puma confirming its sustained growth trajectory. Some comments about luxury on Slide 4, where you can observe that growth was consistent and steady in both retail and wholesale, up 3%. Focusing on retail by regions, Western Europe and, to a lesser extent, Japan, were still the key drivers, up 10% and 5% respectively, though, in both markets, tourism flows were somewhat weaker. Asia Pacific was stable, still penalized by Hong Kong and Macau.
Conversely, across all brands, we experienced encouraging growth in mainland China. In North America, trends reflect the strong U.S. dollar. It's worth noting that some purchases relocated to Latin America, which proved a strong performer during the quarter. As regards royalties, as this topic is primarily related to Gucci, I'll touch upon it in a minute. Regarding our directly operated network for the division as a whole, we had, at the end of the quarter, 1,259 stores, a net decrease of five units since December. Let's now turn to Gucci on Slide 5. Gucci posted comparable revenue growth of 3%, with retail up 3% and wholesale up 10%. By region, retail was up a strong 20% in Western Europe. In Italy, France, Germany and the U.K., notably, local customers responded very positively to Alessandro Michele's Cruise and Spring/Summer collections.
In Europe, Gucci also benefited from steady demand from tourists across all key clusters. In Japan, where the brand is making rapid progress in reaching a new and younger base of local clients, the relative slowdown is in part attributable to less dynamic tourism flows. In the Americas, the new collections resonate especially well with our customers, and we achieved higher performances in those stores where the weight of shoes and ready-to-wear is significant. The U.S. did suffer from the strength of the dollar, among other factors. This was partly offset by customer purchases back in their home country. In Asia Pacific, Hong Kong and Macau continued to negatively impact the quarter, while we are encouraged by the growth achieved in mainland China. For their part, Australia, Singapore, Malaysia and Korea had very positive trends in the quarter. A few comments now by product categories.
In ready-to-wear and shoes, newness, which represents an important share of each collection, posted strong growth. In handbags, the new styles and lines such as Dionysus, Padlock, Marmont, and Sylvie are delivering great results. As you know, we are still in the transition phase when it comes to leather goods, where the weight of carryover is more significant and where the progressive ramp-up of newness will enable Gucci to refresh the base and gradually replace underperforming lines. Overall, Alessandro Michele's collections represented on average approximately 50% of Q1 revenues, with some discrepancies across categories. For the second quarter in a row, wholesale is positive, up 10%, confirming the industry enthusiasm for the brand's new creative vision. Together, revenue from retail and wholesale was up about 4%. Looking exclusively at Gucci's core categories of ready-to-wear, leather goods, and shoes, growth even exceeded 5%.
Royalties were lower this quarter, reflecting the transitions underway at our two major licenses as well as the timing of launches. We expect this situation to gradually normalize in the coming quarters. You will find some examples on slide seven of exciting new developments at Gucci, including collaborations with department stores such as Bergdorf Goodman in New York and some visuals of new collections. The fall/winter fashion shows presented during the quarter were once again acclaimed, clearly reinforcing the house's creative hallmark. After receiving a similar accolade from the British Fashion Council last November, the Council of Fashion Designers of America announced that Alessandro Michele will receive its International Award in June. A total of 13 additional stores were either opened or refurbished under the new concept with very favorable impact.
At the same time, you can see that the number of DOS has decreased by a net three in the quarter. Finally, Gucci's completely redesigned and re-platformed website, introduced in North America at the end of last year, was launched in EMEA and Australia mid-March and will continue to be rolled out through 2016. Moving to slide seven, Bottega Veneta faced strong headwinds in Q1. Revenues were down 8% as current tourism flows penalize retail performance. You know that the brand is the most exposed in our portfolio to Asia and to Chinese customers. In Western Europe, North America, and Japan, tourism flows were impacted by either security concerns or exchange rates. Bottega Veneta mitigated this impact thanks to positive growth in mainland China and the rest of Asia. The brand was still dragged down by Hong Kong and Macau.
To recapture more of this clientele locally, the brand adapted the pricing of key carryovers at the end of the quarter to narrow the gap with other regions. In this tighter environment for the brand, our action plans aimed at diversifying and rebalancing the product range and footprint are yielding positive signals. Looking at the clientele, there is healthy demand coming from European local customers who still have to grow in the base but are responding well to the new products and styles. Regarding merchandising, the shoes category in which the brand is investing to broaden its range, posted a good performance in the quarter. In leather goods, the new styles are also performing very well, allowing the brand to rejuvenate its offer and raise the share of newness so as to reach a better balance between carryover and new items.
Third, during the quarter, the Bottega Veneta directly operated store network contracted with five net closings, of which four in emerging markets, illustrating our active adaptation of our retail footprint. You will find some examples of this progress on slide eight. Newly introduced shapes and functions such as the Olimpia crossbody bag, the bucket, and Monaco bags represent a growing part of the business in addition to iconic products presented with new craftsmanship, embedding key elements of Bottega Veneta's DNA. The Olimpia bag, which was introduced in the early fall 2015 collection, is one of the best-selling styles. In the shoes category, the wider range of products in women's is driving performance in casual and flats in particular. New introductions in other segments are planned in the coming months. On slide nine, you will find a recap of Saint Laurent sales, which showed continued outstanding momentum.
Once again, the brand demonstrated volume growth up 27% comparable. Retail was up an impressive 31%, and wholesale advanced 18%, 18%, comparable. Performances remained excellent across all regions and product categories, reflecting the success of both permanent styles and the spring-summer collection. The brand announced in early April the name of its new creative director, Anthony Vaccarello, who will present his first collection for spring-summer 2017 next October. The succession was well prepared. The brand enjoys strong foundations and successful teams, and we are highly confident as we open this new chapter in Saint Laurent's history. Moving on to slide 10, revenue from other luxury brands was down 3% comparable. Aside from some continuing divergence between soft and hard luxury, some of our brands in both segments, namely Balenciaga and Boucheron, share a stronger retail exposure to the French market, which, as you know, was weaker during the quarter.
In this context, retail was stable while wholesale was down 4%, primarily due to watches. Our soft luxury brands were up, driven by retail with strong performances at Stella McCartney and Alexander McQueen. At Balenciaga, the first collection of Demna Gvasalia, which will hit the stores in early H2, was extremely well-received. At Brioni, we are making progress with the reorganization of production capacity as the brand still faces top-line headwinds with some key customer clusters. The appointment of Justin O'Shea as new creative director was announced. It will allow the brand to strengthen its positioning. In hard luxury, the quarter once again showed contrasted situations across categories with jewelry outperforming even though Boucheron coped with a high comparison base. In watches, the performance suffered heavily from market conditions, but the refocusing of the product offer and communications at both Ulysse Nardin and Girard-Perregaux is welcome and appreciated by retailers.
The feedback from Baselworld 2016 a few weeks ago confirms that we are heading in the right direction. Let me now review the quarter at Puma and in our sport and lifestyle businesses on slide 11. Comparable revenue was up 7% in the quarter. This growth being adjusted of Electric's contribution. In reported terms, growth was 2.6%, the bulk of the difference coming from weaker emerging country currencies versus the EUR and the rest from scope. Puma had a strong start to the year with comparable sales up 8%, showing once again a successful delivery on its action initiatives. Revenue was positive across all categories led by footwear with comparable sales were up 10%. In running and training, the Ignite platform was further expanded in the quarter with two new launches.
In women, we continue to see good momentum, both in sell-in and sell-out, fostered by the very successful collaboration with Rihanna. All key regions registered similarly positive performances in the quarter. Sales growth was especially noteworthy in Asia-Pacific, driven by China. The strengthening of Western Europe started in the fourth quarter of last year was confirmed in Q1. Trends were also good in North America for the Puma brand. A word of conclusion. First of all, it is important to stress once again the power of our multi-brand model, which enabled us to deliver this solid top-line performance in a context that has proved challenging for all industry players. As we told you in February at the time of our full-year results, we are as determined as ever in executing our long-term strategy.
Our absolute focus is on organic growth, notably through improved store productivity and on tightening even more our financial discipline across the group. As you have seen, the active management of our store network resulted in net store closings in the quarter, and we are maintaining tight control of our operating expenses as well as capital expenditures at all brands as well as at group level. Taking all that into account, and despite the environment, we remain confident in our strategy and in our short-term prospects. Claire and I are now ready to take your questions.
Certainly. Thank you. If you'd like to ask a question at this time, please press the star or asterisk key, followed by the digit 1 on your telephone. Please ensure that the mute function on your telephone is switched off to allow your signal to reach our equipment. If you find that your question has already been answered, you may remove yourself from the queue by pressing star two. Again, please press star one to ask a question. We'll pause just for a moment to allow everyone to signal. We'll now take our first question from Antoine Belge of HSBC. Please go ahead. Your line is open.
Yes, good evening. It's Antoine Belge at HSBC. Three questions, please. First of all, with regards to the market environment in Europe, there's a big contrast between Gucci, up 20%, and Bottega, down 17%. Especially with regards to tourism, it seems that your comments are not the same for the two brands. Could you be a bit more specific to explain this big delta? Especially maybe, it seems that especially since mid-March, we've seen a further slowing in tourism from abroad. What's your outlook also for the second quarter there, where there is a strong basis of comparison in terms of tourism? The second question is relating to Asia. Could you maybe comment a little bit, especially on Mainland China, sequentially, what you've seen for your main brands?
Do you expect some kind of impact due to an increase in import taxes for people who are traveling abroad and coming back to China, as it seems there is increased control at the border. Finally, obviously Gucci had a very volatile performance in 2015 with, especially just looking at retail. Leaving wholesale aside, you did +3% in this first quarter versus -4% last year. The basis of comparison is 10% in the second quarter. Should we already factor in that sales cannot be positive for retail in Q2 at Gucci? Do you think that the basis of comparison is not that relevant? Thank you.
Thank you, Antoine, for your six questions because you have two questions in each. First of all, concerning the market environment and what you ask about tourism, I think it's worth reminding the high exposure overall across the regions of Bottega Veneta to tourists, which is far higher than Gucci. Gucci, Balenciaga, Saint Laurent, have generally a higher exposure to local clients. It's true that especially for Gucci, the new collections have resonated very well with the local clientele across the region and especially in Europe. The growth in Europe is particularly driven by the local purchases, when it was still up with the tourist, but with a slowdown compared to the last quarter, to Q4. For Bottega Veneta, the trends were very positive in Europe with local clients.
It's true that because of the price point of Bottega Veneta, probably, the brand has more suffered from the decrease of tourism flows and especially from the Chinese tourists, which were more particularly impacted. I think also that Bottega Veneta is penalized by its exposure to the Asian clients. The basis of Gucci in terms of tourism is broadened, with Middle Eastern and South American and American. It does explain why there is such a difference between the two brands. Concerning the tourism flows, it's of course very difficult to predict. You have seen, like me, the recent figures of Global Blue. We had said that we were expecting that the impact of the tourist attacks in Paris would be rather during Q1 and not at the end of 2015. I think that's been unfortunately confirmed.
We will see, but I think that what is important for us, we have seen rather an acceleration of the trends at Gucci and some improvement also at Bottega Veneta during the second half of March. We see still some very encouraging signs with a mix of positive signals with local clients and tourism. Let's see what will be the evolution. What is important also, as you will have noticed, is the redirection of the Chinese tourists on the local market, with quite a significant improvement across almost all the brands of the group, and especially the three major ones, which are all positive in Mainland China. More specifically concerning Mainland China and your question about the recent measures, you're right to say that China is implementing some changes to its regulation.
Far, none of them have an impact on the shipping of goods into China by luxury companies, by our brands for physical distribution. The changes apply either to private individuals buying online for delivery in China or to individuals buying goods abroad and bringing them back into China. It should especially deter Daigou and all the parallel imports, and finally may contribute to rebalance the consumption domestically. It's clearly too early to go to what will be the impact. We see that rather positively because it should help the business in Mainland China. Finally, concerning your point or your question about the volatility of Gucci you had noticed in Q2 last year or more globally in 2015, I think that you know perfectly that 2015 was a transition year.
We cannot, of course, modelize the evolution of the business in 2016 based on what we saw in 2015. As I said before, we had very positive figures in March and with an acceleration rather in March and beginning of April at Gucci. We are quite confident that regarding retail, we have obviously positive trends. Even if, of course, you're right to mention it, the comparison basis will be tougher, especially, let's say, during June, where we had some very positive impact of the discount period in Asia and in the U.S. As I said in my previous pitch, also we have quite also good figures. We expect good figures concerning the orders we have already in the books.
All in all, I think that we should have maybe a more balanced or breakdown of the sales between Q1 and Q2 that should be more balanced than initially expected.
Thank you very much.
Thank you. We'll now take our next question from Thomas Chauvet of Citi. Please go ahead. Your line is open.
Good evening, Jean-Marc, Claire. I have three questions, please. The first one on Japan, and that's valid for Gucci and Bottega Veneta, can you explain these very weak numbers? I know the JPY is getting stronger, and you seem to suggest that tourist flows are softer. Chinese tourist flows into Japan were up 60% year-on-year in Q1. I know it's moderating, but it's still very strong. Can you perhaps talk about local versus tourist demand? Are you still seeing tourists, but the conversion is poor because they do the price arbitrage, and it turns out to be on a stronger JPY, less advantageous. Secondly, on Gucci, I would like to know how you are exposed with Michele's collection in the first quarter and maybe in the next few quarters by product category. I think you give a percentage of penetration of 50%.
How do you see that evolving across the various categories in coming quarters, and what was it in Q1? Thirdly, I know you've made a budget including some efforts on productivity, including some efforts on control on OpEx this year. In light of the probably weaker than expected start to the year, and perhaps these are broader industry headwinds that you have to face, are you taking already, as of end of April, some specific action to try to protect in both H1 and the full year the profitability? Thank you.
Thank you, Thomas. Regarding Japan, it is true that we saw a quite significant slowdown in terms of growth of tourism flows. The appreciation or the revaluation of the currency had an impact, but rather during March, not at the beginning of the year. At the beginning of the year, there were probably less traffic globally. Finally, January and February, less traffic, March, less traffic because of the evolution of the currency. All in all, even if the tourist cluster is still up in Japan for Gucci and for BV, it is not sufficient to reach the growth we had posted in the past quarters. I think considering the price gap, we have still probably some issue with the local clientele for Bottega Veneta, still suffering from the rather high price point and especially the exposure to carryover lines.
For Gucci, I think we are in a transition phase. We are gaining a younger clientele. I think that the clientele in Japan was more conservative when it comes to Gucci brand. I think that we have not benefited from the same boost as in the past from the local clientele. We expect that it should normalize. Again, we see very positive signs for Gucci brand currently in Japan with the local customers. We should see a gradual improvement that should help the business. It is true that, again, we have seen rather a redirection of Chinese tourists to some other destinations or to Mainland China. As stressed before, we had conversely some very good figures in Korea, Singapore, and Malaysia, but probably less in Japan, and there was probably some price arbitration.
Concerning the Michele collection, I think it is important to remind and to confirm that the new products are performing well across categories. Even better month after month. As you know, you are reminded that the overall environment for the industry has not really improved in Q1 compared to Q4. It has not helped, of course, the performance of the carryover lines that have not yet been replaced. What is sure is that the trends at the end of the quarter have accelerated, because also we have this ongoing transition, which is not equal according to the categories of products. It is almost done in terms of transition in shoes and ready-to-wear, where we are close to 90% of substitution, but we are lower for the moment in the handbag category.
You can imagine that we won't provide you any detailed figures of growth category by category. Again, when we look at the cluster of the new collections, it is overall very positive. The share of newness should, of course, continue to increase. We should be more than 50%, of course, during Q2, closer to two-third of the revenues. Let's comment on the budget process. I appreciate that you mentioned the global environment, because I think that the performance of the group is very solid when you consider the global environment. It is true that we have a performance probably below expectations at Bottega Veneta. If you combine Bottega Veneta and Saint Laurent, which have now the same size, you see that on average, it is a very solid performance again. For sure, however, there is a very difficult environment.
In the budget process, we have always a sort of plan B to anticipate any deterioration of the business. We are working now with the brands to implement, if needed, the plan B. Obviously, we have not to consider this with Gucci, which is totally on track with the plan. In fact, the performance of Gucci is totally aligned with our expectations. Regarding Saint Laurent, you see that the performance is very solid again. We will consider some additional actions to protect the EBIT. We will consider additional actions to monitor the CapEx and eventually to close some doors. Of course, we are ready because we have this plan B to cut some additional OpEx, again, to protect the EBIT. We will continue to review continuously our store network in order to close underperforming stores.
Just if I may, a quick follow-up, Jean-Marc Duplaix. When you're talking about Gucci improving at the end of Q1 and in April, are you talking about total Gucci retail sales, or are you just talking about Michele's collection? That's a comment on total Gucci, right?
It's a comment about the total business of Gucci overall in the retail network.
Thank you.
Thank you. We'll now take our next question from John Guy of Mainfirst. Please go ahead. Your line is open.
Yes, good afternoon, Jean-Marc and Claire. Thanks very much for taking my questions. Just the first one with regards to Gucci for Hong Kong, Macau versus mainland China. At retail, could you give us a little bit more color in terms of the rate of decline in Hong Kong and Macau versus a more resilient performance in mainland China, please? Also, with regards to Bottega, you talked about pricing adaptation and change. How much did you effectively harmonize prices for Bottega during the first quarter? What did that effectively contribute to the organic decline? With regards to watches and jewelry, I know you said that wholesale was down 4%, but could you give us, I think jewelry, for example, in Q4 was up 11%. Appreciate that that's probably slowed given the higher DOS impact that, for example, Boucheron has in the French market.
Could you give us some color in terms of how the jewelry business performs by brand and as a group during the first quarter? Thanks very much.
Thank you, John, for your questions. It's true that to make it simple and to make it short, we have not seen any improvement in Hong Kong and Macau. Macau has deteriorated to a lesser extent compared to Hong Kong, but overall, it's quite consistent with the very negative trends we had posted during Q4. Conversely, as I said before, trends are positive for all the brands in mainland China. Let's say that I won't give you any precise figures, but it's overall +7% on that division. Considering the weight of Gucci, you can imagine that there is a quite substantial contribution of Gucci in that figure. Among this, let's say that we continue to see the same trend as we had during last quarter, meaning an improvement in Tier 1 cities. A very solid improvement, I must say.
Some stabilization in Tier 2 cities, in some cities, an improvement as well. Tier 3 cities are still suffering. I think it's also the result of the work done in terms of rationalization of the store footprint. That's the reason why we will continue to review this regularly in order to maximize the performance in the region. All in all, still very contrasted situation. Hong Kong and Macau still deteriorating, improvement in mainland China. What I say for Gucci is, I think, something which is shared by the other brands overall. Coming to BV and the price adjustments. It's true that during the quarter, Bottega Veneta released new prices on some selected items. Mainly carryovers, because this was the segment in which we had not adjusted the price. Keeping a very significant gap between Asia and Europe.
We have released new prices for Hong Kong, China, and Macau. Changes took place, let's say, during the second half of March, globally. This prices adjustment brought a decrease of retail prices by approximately 10%-13%, depending on the country. Of course, as this price adjustment occurred during the last part of the quarter, it's probably too early to give you any details on the impact of those changes. The rationale of this decision was very simple. It was to reduce the spread and bring it back, the spread, which was already applied for newness to something more normative. For us, it's very instrumental to recapture more of the clientele locally on both carryover and newness, because as we have already commented, newness segment is performing quite well at BV. That's mainly where we have adjusted prices at BV.
We will comment further during Q2 what will be the impact on the business of BV in the region. Regarding the split or the trends in jewelry and watches. Our jewelry brands have been growing in Q1, but on less than in Q4. You know that the distribution of our jewelry brand is principally through retail channel. We have mentioned that Boucheron has been affected by a decrease of traffic, and it's clearly due to the terrorist attacks in Paris last November. Of course, Boucheron has the highest exposure to the French market because also many foreigners coming to Paris to buy Boucheron products. All in all, watches clearly have suffered once again from the market conditions, easily suffered from the market condition. It's true that at the same time, we have streamlined the offer.
We have also decided to have less products. This rationalization of the offer of the merchandising was really key in our two brands, Ulysse Nardin and Gianfranco Ferré. I think it's a good time for us to continue to work on these two brands to have more synergies. We have a lot of initiatives in terms of distribution, in terms of supply chain for these two brands. We have also worked on the communication, and you will see in the coming months, new advertising campaigns on these two brands. The bulk of the decline for this segment is really due to watches.
Jean-Marc, thank you very much indeed. That's really helpful. Maybe just, sorry, just really two very brief follow-ups. Just one on Gucci licenses and others. That's roughly 2.5% of Gucci sales, clearly down over 30%. That's effectively due to the transition that you have at the moment with Safilo and eyewear moving in-house and also the Coty transition. Can we just expect that's more of a technical impact at the moment and will effectively resolve itself once those changes have been made? On my calculations, just when you were talking about the 10%-13% price decline within Bottega across Hong Kong, China, and Macau, that looks to me like it could be roughly a 200 basis point impact on the organic. Does that seem about right?
Yeah. Concerning the royalties at Gucci, you're totally right. Royalties at Gucci cover two different product categories. Eyewear on one side, as you know, and which, as you know, we will internalize the license of Kering Eyewear on the 1st of January 2017. Procter & Gamble on the other side. There is clearly a transition, a transfer period between Procter & Gamble and Coty. You have flagged the two main licenses. Of course, we expect the royalties trend to be probably still down in the next quarter because of the transition, but gradually to a lesser extent. Because there was also a phasing in terms of launches of some products at P&G.
I think that the figure for the Q1 is not representative of what we can expect for the full year, even if we don't believe that we should see an increase of royalty revenues this year. As it's really a transition year for our two main licenses. Regarding your comments on BV, I think that I won't elaborate on that. It's a Q1 revenues conference call. Let's say that we had mentioned in the past that we should see a benefit in terms of comparison with 2015 due to the hedging which won't have a negative effect this year. We had said that we would expect some dilution on constant currency basis because of all the initiatives we have in Bottega Veneta. For me, this price adjustment was part of the bulk of initiatives we have at Bottega Veneta to rebalance the business and to recover.
I don't expect anything negative compared to what we had in mind and what we had planned.
Thank you very much. That's very helpful.
Thank you. We'll now take our next question from Helen Brand of UBS. Please go ahead.
Hi, good evening, Jean-Marc. A couple of questions from me. Firstly, on Gucci, can you just talk us through what the trend was with the whole Chinese cluster in the quarter and the U.S. cluster, and how that compared to Q4, and perhaps the exit rate there, given your conversations about that improving. Secondly, just on Bottega Veneta, it looks like you did it mid-March time in terms of the price adjustment in China. We have had probably over a month in terms of that price cut going through. Can you talk about whether you've seen any associated pickup in volumes, particularly in Hong Kong, perhaps also again in mainland China since you did that price cut? Perhaps you could talk to the Chinese cluster for BV within that retail number down 10%.
How much was the Chinese cluster, and have you seen that improve since the price cut? Then finally, if I may, just coming back to Gucci, and the comments around the % of newness across the categories. Within the leather business, can you just talk to what the % of newness is within the leather business now? What % are you actually targeting for newness, and when will we get there within the leather category?
Helen, thank you for your questions. Unfortunately, you have asked a lot of questions on which it will be difficult for me to provide any answers because you have very detailed questions. We don't comment generally the split of sales by cluster, even by products. Regarding BV and the price adjustment, as I said, it was implemented during the second half of March, rather at the end of March, for one of the countries I mentioned. It's really too early, and it would be foolish to provide you any color on the evolution of the business. We will see rather over the Q2 how the business will evolve. The only one comment I will make is about the American cluster. Globally, what we can say is that overall, the sales to American customers were up during the quarter for many of our brands, and also for Gucci.
Again, with a lot of volatility and with a very peculiar situation, as you know, in the U.S. due to quite uncertain environment.
Just in terms of the leather goods, do you think there was an inkling in terms of the % of the newness and where you're targeting that to get to?
As we said, we were expecting to have around almost 100% of our sales or at least our offer at the end of the year with new collection. It implies that almost all the different categories will have been revisited concerning that we have more or less done the transition in shoes and ready-to-wear and that we expect, and it's figures that we have already communicated, that in Q2 we should be around two-third of the sales with new collections. You can imagine that the transition is ongoing and that it will be a progressive ramp-up until the end of the year.
Okay. Thank you very much.
Thank you, Helen.
Thank you. We'll take our next question now from Mario Ortelli of Bernstein. Please go ahead, your line is open.
Good afternoon, Jean-Marc and Claire. The first question is about the performance of Gucci in Western Europe. You mentioned, Jean-Marc, that was particularly good because the domestic clientele was more focused on buying the new product of Alessandro Michele. An explanation of this good performance could have been done also because you made more change of store format in Europe in comparison to the other geographies. If I may, on the store format, what is the advantage in sales per square meter that is giving to Gucci in comparison to the previous store format? Now you have got already a rollout of many stores, so probably you have got some data. The second thing is always about stores. We have seen a first quarter with three net closure for Gucci and five net closure from Bottega Veneta.
Can you give us an estimate of what will be the net openings for Gucci and BV at the end of the year? What the brand are targeting? Thank you.
Thank you, Mario, for your questions. Once again, very detailed questions with request of very precise figures. A few comments, however, regarding the trends in Europe for Gucci with local clientele. Before talking about the store concept, it's important to remind also that in the sales to European clients, there is a more balanced breakdown between the different categories. Of course, the success of ready-to-wear and shoes has helped the performance of Gucci with local clients when, of course, the Asian customers prefer to focus first on accessories and leather goods, where the transition is still ongoing. This is probably one of the explanation with a lot of also more fashion-forward customers in Europe. It's true, so that among the refurbishment and the new openings with the new concept, there was not a priority given to Europe.
It's a fact that we have some major stores which have been refurbished. It has clearly helped the business as we had the occasion to say about Monte Napoleone store, with probably before talking about figures, general environment, which is more positive, both for the sales associates and the customers, which is more friendly, more welcoming. Of course, I can confirm that we have a higher productivity today in our stores with the new format. Of course, you can imagine that I won't provide you any more color about the improvements, and I won't provide you any figures.
Maybe Mario, I will answer on the store network. I think nothing new there. For Gucci, we already mentioned that it's a consolidation phase, globally the store count should not move that much during the year. For BV, it's about the same story. It's a year clearly of consolidation. There will be some openings and some closings, and that was already the case in Q1. Of course, not in the same geographies, but globally, the store count should not move a lot.
Can you give us an idea of the opening and closures in which geographies are mainly focused? If there is a geography with more closure and another one with more openings, for Gucci and BV for this year.
Well, BV, it's quite clear that the closing will be more skewed towards Asia-Pacific, that's for sure, and with more openings in Europe and in the U.S. For Gucci, it's going to be more probably, I would say, more balanced. We are not in a subject of rebalancing anything for Gucci. It's more having the right location everywhere. That's less of a geographical issue.
Thank you.
Thank you. We'll now take our next question from Hermine de Bentzmann. Please go ahead. Your line is open.
Hi. Good evening. I have just a very quick question on Gucci. Can you precise the weight of carry-over product now in the handbag sales? You've mentioned several newness during the presentation. I was wondering which bag was the best performing currently. Thank you very much.
Thank you, Hermine. We don't provide, of course, any figures regarding the carry-over weight in the offer of Gucci. We have said at the time of the elevation process for the brand that we are quite happy with the balance between carry-over and newness. We were quite happy with the average selling price. It's still the case. The question was more to rejuvenate the carry-over line. We have introduced newness that will become carry-over because there are, in some cases, a sort of reinterpretation, reinventing of the carry-over lines in a fresher way with probably more quality in terms of production. We don't disclose these figures, but it's not for us a driver of the performance, and we are rather looking at the substitution of the carry-over lines with new carry-over.
Regarding the newness among the best performer, clearly, we have the Dionysus, which was introduced now a few months ago, let's say last summer or beginning of last summer. We see also very rapid development of the Padlock and also of the Sylvie, which is according to us, one of the next it bag for the brand.
Okay. Thank you.
Thank you.
I will take probably the last question now.
Certainly. Thank you. We take our next question from Julien Estager of Barclays. Please go ahead. Your line is open.
Yeah. Hi, good evening. Just I've got some questions on the implication of margins, if possible. Obviously, there has been some extreme volatility within Bottega Veneta. Can you do things that can actually sort of protect the margins if should the trading continue at this level? Also, when you take a look geographically, there have been some quite significant shifts. I just wondered if there are any implications for having more revenue coming out of mainland China and the sort of leverage against that, against losing sales in a higher fixed rent region within Europe, whether that would have implications for margin as well. Thank you.
Thank you, Julien, for your two questions. You can imagine, again, that I won't comment specifically on the evolution of the margin at BV. We knew that considering the trends we saw last year at Bottega Veneta, and the situation with the Asian clientele, which is not new to us, that we will have to take some decision in 2016, which are fully encompassed in the plan we had for BV and in the budget. Overall, I think that for the moment, despite the evolution of the sales during the first quarter, we are confident that we have all the actions in place.
First of all, to improve the situation gradually over the year, to protect as much as possible the EBIT margin, taking into consideration that we have been very transparent for now several months, about the fact that looking on a constant currency basis, we would expect a dilution of margin at BV. Concerning also the G&A impact, rather a form of stability. For the moment, we are working with the management in that direction. You're right to point out all this shift in terms of consumption, obviously it's very difficult to appreciate this impact. Of course, last year, because of the transfer of some sales to Europe, there was an impact on the gross margin, on the EBIT margin, but it was not the most material one. Finally, the geographical mix has always an impact.
It may be positive or negative, for us, it's not the driver of the main changes we may cope with in the EBIT margin. We have other factors that can impact more the margin, like of course the currencies, like the store expenses, all the communication expenses. All in all, geographical mix may have an impact. Of course, we prefer to see more business in China, it's for us, very positive to recapture the Chinese customers in their home country, where obviously you know that we have higher margin. At the same time, it's important to penetrate better the clientele across the regions, in Europe, in the U.S. All in all, the importance for us is to grow in a balanced way in all regions, it's exactly what we are doing.
Okay. Many thanks, have a good evening.
Thank you. Thank you all for your attention. We will talk again during the call for end of July for the presentation of H1 revenues and H1 figures. Thank you.
Thank you. That will conclude today's conference call. Thank you for your participation, ladies and gentlemen. You may now disconnect.