Good morning. Good morning and welcome to Kering's presentation of its 2014 full year results. You now know that 2014 was our 1st year as a group that was fully focused on luxury and sport and lifestyle. And as Jean Francois will be showing in the first section, we used this year to further boost our structures and our organization and also roll out many initiatives which support our strategy. After that, Jean Marc Du Pless, our Chief Financial Officer will share a detailed analysis with you to talk to you about our developments as well as the financials of 2014.
Then lastly, and before we field your questions, I'll be highlighting some of the main points of our strategy. And of course, I'll talk to you about the outlook for 2015. Let's begin. We'll be hearing now from Jean Francois. Good morning, ladies and gentlemen.
In 2014, Kering had good operational and financial performance. The group saw strong growth in revenues, up by 4.5% like for like. The group's EBITDA saw the same growth rate at comparable exchange rates. Last year, Kering had free operational cash flow that was strongly up compared to the previous financial period. And once and for all, we exited distribution activities.
Our net consolidated income grew strongly. Lastly, due to the exit from retail and acquisition of Julis Nardin, the ratio of debt to EBITDA is at reasonable level, the group's financial situation is sound and strong. We're continuing with our strategy and we've continued and we can say the overall backdrop to this, the context has been fairly gloomy. It's true the U. S.
Economy has confirmed its recovery, but the Japanese economy continues to be flat and Russia has gone into a strong recession. Growth has slowed in China and the Eurozone has seen deflationary pressures. In addition to this, currency fluctuations were especially strong. We saw things really turn around completely in the second half. And we can also say that interest rates have remained fairly low.
That's the overall environment. And in addition to this, there were disturbances due to some outside factors that you're very familiar with, for instance, in the Ukraine as well as Hong Kong. That's the situation. Kering's business model continues to provide for the group a resilient profile of growth that's both profitable and strong. We can say we've got, 1st of all, a good balance in terms of business segments.
Last year, Luxury was more dynamic in the first half. Sport and Lifestyle picked up quite a bit in the second half. Let's talk about specific brands. There's really great complementarity, good fit in terms of level of maturity as well as stages of development. For instance, Gucci provides us with true strength and resilience.
Bottega Veneta, Saint Laurent and Luxury Brands are major growth drivers. Now to talk about geography, overall footprint for Luxury Brands is particularly beneficial for two reasons. Firstly, this gives us a good balance in different regions of growth and different dynamic situations. Next, this also provides us with tremendous potential for growth. Bottega Veneta, for instance, only has 13% of sales in North America.
Saint Laurent, only 22% of its sales in Asia Pacific. I'd make the same point regarding the distribution of our product categories. If we talk about distribution channels, we've got a good balance in terms of proportions, overall proportions in overall business. For instance, just as an example, let me talk to you about the tremendous potential for expansion of our other luxury brands in our directly operated stores, which only make up 39% of their sales currently. We also see demonstration of this balance.
If you look at our overall growth momentum, we've seen strong growth in retail luxury sales 8% on like for like basis and 20% growth in e commerce luxury sales. This is the group's profile and very naturally this impacts our capital allocation making it possible for us to come up with sustainable and strong performance. There are challenges out there in an unstable economy And we can say that thanks to the strength I've outlined for you and which was very important to us in 2014, will continue to help us in 2015. And we know that there should be a positive impact of the macroeconomic situation in terms of luxury brands. Growth should be driven by the United States.
China should continue to have fairly high growth rates. The Chinese authorities are pragmatic and that may well boost consumption. Japan should recover from its recession, but not Russia. In all likelihood, the Eurozone will reap the benefits of several positive elements. It just see its competitiveness enhanced and consumption may be boosted.
Lastly, 2015 should see confirmation of the ongoing upswing in tourism. The currency situation all in all could be better considering that the overall global economy should hold up fairly well. Specifically, this will also help the competitiveness of our luxury brands. Our group's exposure to the Swiss franc is very low. The effect of currency fluctuations on our profits will be real mix in 2015.
Firstly, as currency stand currently, in all likelihood, we'll see a stronger currency effect in the first half than in the second half. In addition to that, in Luxury, under the combined effect of hedging and the currency conversion of foreign subsidiary financials, This should have a positive impact on revenues and EBIT, but drag on margin. At Puma, this could have a negative on results in several countries, mainly Euro area, Russia, Mexico that only make up under 30% of its activity. Kering's operational model is integrated, pragmatic and responsive based on 3 areas of action. The first area of action, Our creative teams work very hard to be always proposing value ever better and more relevant value to our clients.
We're highly active within the group and in each of its brands to really protect our intangible assets and build on them and enrich them. Everywhere we see imagination, creation, emotion and this plays a very important role and a central role in the way we approach our products, services and brand environment. Everyone is placing all their craftsmanship, their know how, their talent in the collections epitome of quality. We're also constantly working to adapt and improve the structure collections as well as their effectiveness. While these adjustments are designed to meet specific requirements of our customers in terms of functionality, trends, price scales and especially we want to grow the role of offerings that could well win over new generations of customers.
This effectiveness also has impact on our scheduling of presentations, production as well as deliveries and also has an impact on development costs. We're also endeavoring to develop product categories whose potential is still underused. Let me say that in all of our brands, there are product categories that were just launched recently. We see the success of these product segments and there's great potential for growth here. I would just mention a couple of examples, adding gifts at Gucci, men's products at Bottega Veneta, smaller items at Saint Laurent and another example accessories at Balenciaga.
Lastly, to really tease out all the potential of our brands in the area of eyewear, we're putting together a first, a real model that's our own, making us more caring to really keep the whole value chain of eyewear, so that we can really use this high margin area. For our luxury brands, eyewear are a highly strategic category, particularly due to their aspirational dimension. Eyewear is a tremendous market growing very strongly. We're one of the main players here and we very much believe we could do even more and even better because there's going to be even greater consistency. We'll be fully in charge of brand strategy, arrangement creation, product development and marketing, but also covering the supply chain as well as retail and wholesale distribution arrangements and therefore sales.
Gradually, we're going to be building on, consolidating and teasing out further value of Gucci's activities and amplifying the growth of some of our brands that are underexploit right now such as Pote Vanica, Saint Laurent, Alexander McQueen, Stella McCartney and Puma. We'll be rolling out Brioni collections and supporting electrics momentum. Henceforth, our brands are going to be benefiting not only from contribution of the greatest design talents for product development and marketing, but we'll also be reaping the benefits of full control of a network of outside suppliers and an optimized distribution network using all sales channels. After an initial ramp up covering 2015 2016 at reasonable cost, this activity should provide a positive contribution to operating income in this group starting in 2017. The second area of action has to do with our ongoing constant adaptation of our distribution arrangements, taking into account changes in demand.
1st of all, by broadening our overall footprint for our brands as need be depending on local maturity and development. For instance, we intend to boost Botte Veneta's penetration in key cities in the United States. As I've said to you for the time being, that company is not highly exposed to the United States. We'll also be boosting the presence of Saint Laurent in Asia Pacific. Next, we will be being we will really be focusing on stores that we operate ourselves, again, depending on degree of maturity of brands.
We're enhancing quality and visibility of our locations and therefore enhancing the overall attractiveness. We'll be opening new stores. This will mainly have to do with Saint Laurent and our new brands. We'll be remodeling points of sale and sometimes enlarging them. This will be the case often for Bottega Veneta.
And sometimes we will relocate and sometimes even shut some of the units that are lacking in performance. In addition to this work on real estate, we're making ongoing efforts to increase retail productivity, which means growing sales per square meter and optimizing operating costs in the stores. To do this, we do benchmarking of key performance indicators, we exchange ideas and information, compare notes and best practices and we have cross business projects that are very effective. Regarding wholesale, we are flexible and pragmatic. Selectively, we're consolidating this activity.
Firstly, by enhancing increasing our penetration in some of the department stores, once it makes sense, we also work through concessions. We're also further developing travel retail with an ad hoc strategy. We tailor our model depending on specific value offerings here. Lastly, we consider franchises on a case by case basis, sometimes taking back several points of sales in strategic countries or by opening up in new countries that are brand new to us. Digital business more than ever before is a priority for our group.
And our intention is to make it possible for our brands to turn their websites into showcases where people can really become immersed in their world. These will be platforms where they can better dialogue with their customers, get a better knowledge of who their customers are. And of course, this helps display what's available in stores to prepare a purchase. Online sales are growing rapidly for Gucci and the various brands supported by Elight, the joint company together with JOLUX. Growth potential here is substantial and we're convinced we can go even further.
For our
brands that are beginning in the Internet, this is a solution that's made it possible for them to really speed things up and get operational quickly. To talk about Gucci, all observers and specialists recognize that they are one of the top 2 or 3 brands in luxury that are most digitally advanced. Kering's increasing its efforts so that its brands can offer its customers a cross channel experience that meets expected quality of service requirements. To this end, the website is being managed as a service tool, an image tool and also relational marketing tool. The online store will become real extension and special access point to the actual brick and mortar stores.
In addition, we're significantly building our tools and our skills when it comes to managing customer relations, so we can improve the relevance and customization of the exchanges between our brands and their current and potential customers. The 3rd area of action is designed to make our operational processes perform ever better to make synergy really pan out, so that we've got a good balance between empowerment and integration of brands. Upstream quality control and securing certain key sources of supply require a targeted increase in the level of vertical integration and in-depth audit policies of our sourcing. Logistics for our Couture and Leather Goods brands have been centralized for a long time. We've also added Brioni to this successfully.
Equally, ready to wear prototyping is being supervised by a shared unit at Novara with truly exceptional know how. Furthermore, thanks to the integration of Ulysse Nardin, a watchmaking committee has been set up to really increase industrial synergy and purchasing synergy in timepieces. We've also got projects underway to modernize, harmonize and optimize our operational processes as well as our IT system. Specifically, we're working on the supply chain to improve the performance of our planning, open to buys, performance of reorder to have a positive impact on customer service, gross margin as well as inventory levels. Lastly, I talked to you about shared services by brands in Europe, Asia and in America.
They've reached cruising altitude. We've got shared services for media purchasing, cash, currencies, insurance property, indirect purchasing, accounting, payroll, legal as well as information services. We've made these efforts to improve our operational efficiency and this has already borne fruit. Gradually, we're reaping evermore benefits of all of this, and that will continue to be the case in upcoming months years. I'd like to thank you and give the floor to Jean Marc, who's going to talk to you about Kering's financial performance in 2014.
Good morning, ladies and gentlemen. Before presenting to you in greater detail revenue top the €10,000,000,000 mark. The increase reaches 4% on a reported basis and 4.5% on a like for like basis. Gross margin is up in the same proportions as revenue on a reported basis and the gross margin is therefore stable at 62.7%. The increase on a like for like basis is up.
Gross margin improving both in Luxury as well as Sport and Lifestyle at close on €2,000,000,000 EBITDA is slightly down on a reported basis, but up on a like for like basis. Operating income comes out at 1 point €66,000,000,000 up 3% at constant currencies. On a reported basis, it's down 5%. This dilution in relative value and absolute value results from the unfavorable combination of currencies and currency hedges over the year. Let's begin the review of our activities in 2014 with Luxury whose revenue is up 5% on the like for like basis.
On a reported basis, revenue is up 6% benefiting notably from the scope effect linked to POMILATO on the first half and the consolidation of Ulysse Nardin as of 1st November 2014. The effect is detailed on the graph. The currency impact is slightly negative on revenue for the year with however a very favorable impact of the order of 3 points in the last quarter. The performance of our luxury activity illustrates the robustness of the multi brand model of the group in a context where contrast across regional trends strengthened in the second half. So our luxury activities see a uniform increase of their sales throughout the year even showing a slight acceleration in Q4 at plus 4.3% on a like for like basis.
Revenue is buoyed by the very satisfactory momentum of the directly operated stores. This channel is up 8% on a like for like basis and now accounts for 69% of sales. Growth reaches even 9% in more mature countries whereas in emerging markets momentum remains positive, but more contrasted particularly in Asia Pacific. I'll return in a moment to the consolidated operating income of our activities in Luxury, Consequently, operating expenditure is down 14%. This trend reflects the investment choices both in phase with sector cycles, but also adapted to the varying maturity stages of our brands and the development priorities identified for each of those brands.
As indicated a moment ago, the currency impact on our operating income in Luxury in 2014 was significant and requires a specific focus. As you can see on the upper graph, the downturn of recurring operating income of our luxury activities is linked to the combined effect of currencies and currency hedges to the tune of 6% neutralizes all the growth achieved on a like for like basis. A year ago, I said that Kering's luxury activities had benefited in 2013 from a very favorable currency hedge impact on their profitability. Conversely 2014 suffered from an adverse comparison base because currency effects were overall less favorable in 2014 even negative in the second half. They were particularly unfavorable for Gucci and Bottega Veneta given the respective geographical exposure of these two brands.
For Gucci both EBIT as well as the operating margin are pretty flat on a like for like currency basis. For Vertigo Vittar, EBIT is up 17% on a like for like basis. Let's now review Gucci's performance. In 2014, revenue is very slightly down by 1% on a like fly basis. In Q4, sales were pretty much flat at minus 0.5% with an increase of 1% in the network of directly operated stores.
During the year, Gucci concentrated its efforts on its own distribution accounting 79% of revenue at the end of 2014, up 2% on the year. In this channel, mature countries that account for 55% of revenue record the strongest growth, over 4% on the year, buoyed by the dynamism of North America and Japan as well as by a rebound in Western Europe in Q4. Conversely, Gucci suffered from deteriorating market climate in Asia Pacific in the second half of the year with in particular declining revenues in Hong Kong, Macau or even Singapore both in Q3 as well as Q4. Sales to wholesalers for their part recorded a dip slightly higher than 10% over the year with an improvement quarter on quarter to end at minus 5% in Q4. This decline reflects our strategy for greater control over distribution as well as a reduction in quantities delivered for certain types of products in order to ensure overall brand's repositioning handbags, shoes, ready brand's repositioning handbags, shoes, ready to wear, silk categories overall account for 2 thirds of sales in the network of directly operated stores, up 5% on average on the year.
However, performance is negative in small leather goods, suitcases, categories where the reposition effort is underway. In 2014, the operating margin of Gucci is down 160 basis points as compared to the record level reached in 2013. As explained previously, this dip essentially reflects the negative impact on the due to currencies and currency hedges in the second half. Slower sales dynamism in Asia Pacific over the period accounts for a bigger drop in operating margin in the second half. Operating expenditure of Gucci were adapted operating expenditure of Gucci were adapted in 2014 overall down 13% on the year.
The pace of new store openings was reduced whereas priority was given to continued quality optimization of the network. The expansion phase is now behind us because with its 500 stores Gucci has a global footprint. CapEx is expected to remain stable in 2015 15 and the new teams in place in Gucci will focusing on the redesign of certain existing stores by visually evolving the concept whilst preserving its quality in terms of productivity. Bottega Veneta continued in a very satisfactory manner its development plan in 2014. The brand has posted a strong increase once again in revenue up 13% on a like for like basis, both directly owned sales, 80% of the revenue as well as sales to wholesalers up sharply.
Over and above the quarterly volatility, the end of the year was impacted by market conditions in Asia. The increase in Buttega Veneta is boosted by the rollout of a strategy of operational excellence, very consistent both in terms of developing collections and products, merchandising as well as the in store experience or advertising. By category, leather goods, which still represents the core of the brand offering, once again delivers a further year of double digit growth. And momentum is very satisfactory for categories such as men's and women's footwear. In 2014, the current operating margin of Budde Govaneta, 1 of the highest in the industry and operating income is up 8% on a reported basis in line with the growth trend defined by the brand for the midterm.
For its part, EBITDA is up more significantly reflecting the growing weight of amortization following the investments made these past few years. Still with an aim of strengthening its development, selectively its operating investments. The pace of openings was less sustained. 15 new stores distributed very evenly across mature and emerging markets. Let me remind you that the 2013 comparison base was high with the opening of the store in Milan and investments in the workshops and premises at Montebello.
Turning now to Saint Laurent which henceforth contributes significantly to the group's growth and results and let's pause for a moment on the brand's trajectory. Over 3 years, Saint Laurent has doubled its revenue. The contribution of the Couture activity to the group's operating income, which had reached breakeven in 2011 is now very positive. These few items testify to the success of the brand's repositioning. In 2014, we see that a new milestone was reached because the brand see its revenue top the €700,000,000 mark, up 27% on the year.
The performance is particularly remarkable in directly operated stores up 40% and accounts for 61% of sales. All regions and all product categories contribute to this growth. Leathers up 40% and ready to wear 34%. Recurring operating income has also reached a new level at over €100,000,000 up 37% on the year. Saint Laurent's operating margin reaches close to 15% buoyed by the virtuous momentum of gross margin, thanks to a change in the distribution mix, but also a considerable operating lever.
In 2014, operating expenditures of Saint Laurent were maintained at a high level having reached over 10% of revenue 2013. Margin continues to expand its network selectively 13 net store openings. Renovations to the new concept continued throughout the year. Let's now analyze the performance of the other luxury brands that face contrasted momentum across segments. Our leather and Couture brands saw a strong growth in their revenue of the order of 9%.
Balenciaga's revenue continues its net improvement which began in 2013 with double digit increase on the year accelerating at the end of the year. Both directly operated stores as well as sales to wholesalers contribute to the brand's performance. In leather goods, the newly launched products were very favorably received. Alexander McQueen also records a further fine increase in revenue with momentum there again was maintained at the end of it. Stella McCartney also continues very positive trends and see its operating margin increase.
Brioni for its part is holding up. The favorable trends of the directly operating stores reflects the investments undertaken over the past 2 years. However, short term, the significant decrease in Russian customers, number 1 for the brand in Western Europe, impacted performance. In watches and jewelry, trends were relatively volatile quarter on quarter. Boucheron delivering a year more than satisfactory.
Indeed, if Q2 and Q3 suffered from the effect of the increase in sales tax in Japan. Sales picked up well in Q4. Across the year performance is positive and Boucheron sees its operating margin increase. In the Groupe Pomellato, the trend is buoyed in particular by the success of new collections at Dodo. In watchmaking, sew wins activity remained under pressure in a market climate still marked by extreme caution of wholesalers more particularly at the end of the year.
The operating margin overall is in dilution because of a negative operating leverage, so wind and it results from a mix effect of our activity slightly unfavorable. This result is overall not one of the issues for 2015. Turning now to the performance of our sport and lifestyle activities that confirm their turnaround in the second half. I'll return briefly on Puma's results that were published yesterday in line with the action plans that were presented to you here. A year ago, Puma in 2014 returned to a more satisfactory momentum in revenue growth buoyed by the ramp up of marketing efforts in the second half coinciding with the launch of a footwear range in part renewed.
In the second half of the year, Puma sees its revenue up 6% with marked acceleration. The rebound is particularly notable for wholesales, which represent 79% of the activity. With the exception of Japan hurt by the weight of its golf activity, all major geographies recorded an increase in revenue. North America and Asia Pacific see their revenue grow most significantly. The trends thus far negative in Western Europe improved overall in the second half.
By category, momentum is once again sustained also sharply up 9%, whereas the footwear category accounting 43% of revenue records a net rebound in the second half. Trends also promising for our other sport and lifestyle brands with close on 5% growth on a like for like basis in the year. In a context that still remains difficult for certain, action sports players Volcom and Electric delivered a good year reflecting the benefits of in-depth reposition undertaken in 2013. Such momentum was amplified in the second half in particular at Volcom. Against this backdrop, the trend in the recurring operating income of our sport and lifestyle activity reflects in addition to the negative ForEx impact the impact of turnaround efforts of Puma.
Gross margin of Puma improves at the end of the year to end flat over 2013. Operating expenditure principally in marketing have increased sharply in line with the new sponsoring contracts and the global communication campaign forever fasted Whilst maintaining strong financial discipline, the brand resumed investments notably from modernizing its IT and logistics systems as well a few targeted openings of directly operated stores. A few words now on our financial results which reflect once again, but to a lesser proportion the 2030 end of the group's transformation. The other operating income and expenses constitute a net charge of €112,000,000 include asset impairments, one off restructuring costs, also the capital gains of real estate sale and financial costs are down by €13,000,000 over 2013 buoyed by an improvement in net financial debt. Even outstanding average net debt is slightly up in 2014.
The average cost of debt has significantly declined. This drop of course reflects a more favorable interest rate context, but also dynamic debt management with the one hand the reimbursement in the first half issues for a total of €700,000,000 with a coupon at 7.75%. And furthermore, bond issues of 7 10 years for a total of €800,000,000 with a coupon of €1,000,000,000 3.75 percent. Total tax rate increased because of the taxation on the capital gains of real estate 24% as you'll see at the annex. However, the current tax rate restated for 1 off items comes out at 18.3% as against 17.4% in 2013.
Net income of discontinued activities is a net charge of €479,000,000 over the year, very lower than that booked in 2013 for €25,000,000 The cost for the exercise essentially due to the exit cost of the remaining assets of Red Cat's including La Roedud. Net income of group's activities of continued activities excluding non current items comes out at €1,177,000,000 as against €1,231,000,000 Operating free cash flow the group maintained a high level close on €1,100,000,000 Free cash flow generation remained very solid even if flows linked to operational activities are down because of a slightly higher tax paid and an increase in working capital requirements linked to inventories. As we indicated, the group has maintained a CapEx level comparable to that of previous year at €551,000,000 against €530,000,000 in 2013, if we restate last year for the acquisition of a building in Tokyo. The group's cash flow benefit in 2014 from the sale of a building in New York. This CapEx level appears to us the right one to invest in 2015.
In the network of stores selectively transverse projects to sustain the growth of our brands stand to the rollout of new tools and IT systems to serve our ambition in CRM and online as Jean Francois mentioned. Just like to continue with a few comments concerning the net financial debt to the group as at 31 December, 20.40. Net debt stands at €4,400,000,000 That's 2.2 times EBITDA. The increase in net financial debt reflects the 2 major transactions of the year. That is the finalization of the sale of Redcat's retail assets and the disbursements in the first half for strengthening of the hard luxury brand portfolio with the acquisition of Uliss Nardin in the second half.
Excluding those two transactions, our net debt would have been at 1.6 EBITDA in the middle of the range of 1 to 2 times that we set and towards which we will gradually return thanks to cash flow generation from our activities. The group's financial structure remains extremely solid with equity accounting for close on 50% of total balance sheet and a debt to equity ratio below 40%. Kering has available cash of €1,000,000,000 The dynamic liquidity management is reflected in the debt profile that you see on the chart. The maturity time line has been smooth and average maturity lengthened and the group sought to ensure the diversification of its funding sources. Let me end by saying a word about the dividend for 2014.
The Board that met yesterday will be proposing to the shareholders meeting on the 23rd April next the payment of a dividend of €4 per share up close on 7%. This proposal reflects Kering's result to maintain balanced payout ratios both in respect to the group's recurring income as well as the level of available cash flow. It's a strong sign of confidence in the growth in our activities. Let me remind you that an interim dividend of €150 was already paid out on the 26th of January. Subject to the shareholders' meeting's approval, the balance of €2.50 will be up for payment on the 30th April 2015.
Thank you for your attention. And before handing back to Francois Henri Pinault to disrupt strategy and outlook, let's review with a few images our brands.
Kering's goal and operational performance as you've seen were good in 2014. Now I'd like to really talk to you about my beliefs. My belief that our group has the ability to continue sustainably its path of growth and enhanced profitability. So the first of my beliefs is that luxury and caring is a global leader here is a highly buoyant industry and this will continue to be the case in the long run. The luxury industry sees the appearance in emerging countries of a new category of consumers with very strong purchasing power, who ever more want to express themselves through what they're wearing.
In addition to this, we can say that in Europe and North America, the more traditional luxury markets are growing as well. Sustainable growth in the luxury industry, we're talking about a combination of positive demographic momentum as well as consumer patterns. In the long term, this twofold trend is going to continue, though we know there'll be ups and downs of the macroeconomic situation Jean Francois alluded to these a moment ago. More and more people feel that there's going to be a sort of normalization of growth rates in the luxury industry. The luxury market is less uniform than it may have been previously.
It flocks due to the appearance of new nationalities and new generations of consumers. This makes it our multi brand model all the more relevant to make it possible for us to capture all the diverse areas of customer demand and requirements. So it's a new environment and Kering has tremendous potential. We've demonstrated our ability to tap into that potential. To create value, Kering has put together a brand portfolio, which is mutually beneficial.
The brands have specific positionings in terms of product category, price positioning or style identity. We're seeking a good fit complementarity. That's guided us in the few acquisitions we made in recent years. Our priority continues to be, as I say, organic growth for each of our brands. All of our brands have a great deal of potential for development.
Time and time again, Kering has proven its ability to tap into that potential. As the brands have developed, we've then required them to continue improving their profitability profile. So Gucci, Bottega Veneta, Saint Laurent are global brands. The group provides resources for them to continue the development, each of them based on their own needs and requirements. I'll come back to Gucci in a few moments.
But before that, I'd like to specify for you that we're highly confident in Gucci's ability to resume normalized growth and reach its strategic target under the impetus of its new teams. Now let's talk about Bottega Veneta's exceptional development in recent years, which has made it possible for the brand to really epitomize a certain type of luxury, more intimate, more discrete type of luxury. It's got an excellent reputation, which is clearly established now. But the brand still has potential for development, quite tremendous potential. It's going to maintain its growth at a sustained pace, but cautious at a high level of profitability.
We saw an enthusiastic reception of Saint Laurent's collections. That led to tremendous commercial momentum and that momentum is going to continue. You saw the results. They've seen significant improvement. Operating margin at that brand is continuing to grow quickly reaching a level in line with its size as well as potential.
Our group has also demonstrated its ability to develop, to protect and enrich its other brands. Balenciaga, Alexander McQueen, Stella McCartney saw sustained growth in 2014. These beautiful brands, high personality brands will continue to see strong growth rates and their operating margin will see regular growth. Let's talk now about brands that came into our group more recently. We are laying the foundations for their growth path to speed up as well as their profitability.
Thanks to experience achieved to develop Bottega Veneta, to develop Saint Laurent and Balenciaga, we are able to tap into their tremendous potential. We know how to support them, to assist them and give them the wherewithal to have sustainable growth. To really move on our ambitions and increase the group's added value, we've changed Kering's management structures. So regarding luxury, to strengthen our expertise, we set up in 2014 a Couture Mancunery Couture Leather Goods division as well as a Watches and Jewelry division. This new organization increases our ability to really guide brand imagination and also management strictness, stringency.
So the role for the divisions will be to advise the management teams on strategic and operational considerations, but also to orchestrate implementation of best practices group wide, thereby further strengthening a culture of excellence of truly being demanding in everything we do. They'll equally be expected to identify and move on synergies that can create value. Washes and Jewelry managed by Abel Bensoucon. The Leather Goods and Couture division was led by Marco Bizzari until I gave him management of Gucci. I will be the interim manager of that division.
I'll keep Gucci under direct supervision due to the important strategic considerations of Gucci. Now, no doubt about Gucci at the same time is involved in work of those 2 divisions in couture and leather items as well as watches and jewelry. It's a new way of operating and it's already led to very tangible results. It's made us more responsive, closer to the ground, operational reality and helped us in further improving our strategic and budgetary planning tools. We're moving on to a new stage of development requiring extra new expertise, which is why we renewed management teams at some of our brands.
And this was an opportunity for us to strengthen some of our organizations, particularly in the area of essential expertise to improve organic growth, for instance, just talk about retail or supply chain. Lastly, I'm absolutely convinced that our group's exceptional character, its culture are true assets for our businesses to be successful. As you know, our group is a family group and that very much has an impact on its management methods and its special way of doing things. For over 50 years now, this has made for our success and we continue to make for our success. As a family group, we take the long term strategic view.
Above and beyond the fact we're a family group, caring is also the heir to a very strong heritage of entrepreneurial culture, value creation, being demanding, responsive, having good balance of risk taking and clearly understanding what the risks are all about. That is an impact on all of our managers at all of our brands. These are values that also help us protect our assets, I. E, our brands. We also benefit from this corporate culture, which leads to tremendous respect, paying careful attention to empowerment and creative autonomy.
We place our trust in our teams. We understand the specifics of each brand. This makes it possible for them to find their own unique way of doing things that makes them so desirable to their customers. The brands of our group are also helped, boosted by are being very demanding in terms of quality, the materials used, the craftsmanship approach, the stylistic excellence, principles of sound management that all underpin all these things underpin our sustained ongoing growth. So again, we take the long term view.
Therefore, our group is fully aware of its responsibility to its employees and to its environment. The business community must minimize the impact caused by business activities. But in addition, imagine come up with and actually roll out innovative solutions to create sustainable economic development. Our group is very attached to sustainable development. This comes from the belief that in responsibly doing business, you can create value.
You'll have understood we're highly confident in the long term outlook for Kering. But of course, we don't lose sight of short term considerations. Our operational priorities in 20 to really move into a new area for this brand. We appointed a new Chief Executive Officer, Marco Bizzari and a new Artistic Director, Alessandro Michele. These appointments were very well received by outside observers and by all the teams in the group.
As soon as it arrived, the management team really ushered Gucci into a new era of its development, a plan entailing 2 focuses. The first focus entails initiatives designed to revitalize the brand. It's got tremendous heritage and know how. That's a very firm foundation. Firstly, we are making an effort to renew our product offering designed to make it more contemporary, easier to understand with a very appealing and modern identity.
The second project has to do with brand communication. We want to be more consistent, more targeted with a message that's more readily understandable to our customers. Thirdly, we'll continue and increase our work on our stores' network. Large scale investments as earmarked in our strategy have been made to increase our store footprint in recent years. We've reached the ideal network size now.
We need to now consolidate, build on this and optimize our beautiful network and adapt it to case by case situations. As to the store concept, we intend to maintain the flexibility that we have And we will also in some of the major cities, as Jean Marc said, with a reasonable contained CapEx envelope, we will be adjusting things, visual aspects, decoration of stores, colors, lighting in the stores, making them more welcoming, better suited to new aspirations that we have, new artistic approach in the brands. Our second focus, here we intend to substantially step up programs that are already rolled out. Firstly, we're going to intensify programs to hire and train. Our target is to further enhance in store expertise.
Expertise of service more than ever before has to be a key part of Gucci's identity and its success. Furthermore, we'll continue improving operational processes and the way things are done at Gucci. This will entail, among other things, a quick redefinition of the role between headquarters and regions, so that there can be a clear focus on customer satisfaction and making sure it's possible to adapt quickly to market changes. Gucci's new managers and their creative teams and people in operations are already working on rolling out all these initiatives very practically. To talk about this from a collections point of view, they already went through the first milestones in mid January with 1st menswear collection and next year, next week, February 25, you'll see the presentation of the women's fallwinter collection.
This is a new impetus which should really reach its pinnacle with the cruise collection next June. Now we're expecting this new impetus to impact our figures, our financials as of the second half of this year. Of course, the first half will see the beginning stages of the change. Let's talk about Puma now. To further build on the good commercial trends and enhance profitability, the brand has set its sights on 5 operational priorities.
Firstly, we must confirm the increased attractiveness of this brand, especially among consumers that attach great importance to sports performance and also for women customers. The Forever Faster campaign as well as the partnership we recently signed with Rihanna are all part of this first priority. The second point will be to further strengthen the brand's ability to come up with innovative products. Puma, under a week ago, launched a brand new running shoe called Ignite, which you can see on the screen here. This is a highly innovative product.
So this again makes Puma credible and competitive in this highly competitive area high growth area, sorry. Thirdly, Puma will be strengthening the quality and selectiveness of its distribution network as it's already done with Foot Locker in the United States. The 4th focus will be further increasing the effectiveness of organizations and processes in Orillia by setting up an IT structure that's more competitive. Lastly, another subject here, we are going to work to lessen the negative impact of the dollar increase and changes in some other currencies such as the euro. From beyond the 2 operational priorities at Guccia and Puma, we're going to continue reaping the benefits of the tremendous potential of all the brands in our group.
This beginning of 2015 sees a lot of economic uncertainty. Addition to this, we're seeing major currency fluctuations. In itself, the drop in the euro is some good news. It should have a positive impact on our revenues and our operating income. But of course, in the short term, it will have it will be a drag on our profitability rate.
So these are economic monetary situations. We keep a careful eye on all of this and our responsiveness is going to be very fast. You'll see. We won't be making any acquisitions this year. We'll be focusing all of our efforts on internal growth, specifically organic growth, I.
E. Growth with stores like for like. But beyond these points, let me say that we are more than ever before convinced of the huge potential all of our brands have, taken individually, but also at the level of our group. Our group will provide them with the resources they need for the development and is very much in a position to do so. Therefore, we are very confident in the group's ability to ensure sustainable profitable growth, all the while in the shorter term focusing on generating cash flow for all of our brands.
Flow generation of course will be used to reduce our debt and continue with our policy to pay out an attractive dividend. Thank you for your attention. In just a couple of moments in the time it takes me to go back to the desk, in just a couple of moments, we'll be fielding your questions.
So for questions, I would ask you to wait for the microphone and limit your questions to 3 please.
Anne Brand from Barclays. My first question is just on Gucci. You said you were highly confident that you would return to normalized growth levels. Can you just confirm what you mean by normalized growth levels, particularly in the absence of significant store openings and what you see the drivers of those growth levels in terms of like for like going forward in terms of price mix and volume? My second question is just on the margin outlook for H1.
Obviously, we've seen comments around significant FX hedging negatives on the margin. Could you quantify what you expect those FX hedging negatives to be for Gucci, Bottega, maybe within the wider Luxury division? And then finally, just on Q4, can you confirm what Gucci's growth or decline actually in Asia was in Q4? Europe looked like it accelerated. Perhaps you could talk a little bit about domestic versus tourism spending there and maybe what the total Chinese consumer grew in Q4 when we put all of that together?
Thank you. It's a long question. I will answer the first point and I will let Jean Marc elaborate on the exchange rates and Q4. When I say normalized growth for a brand like Gucci, Gucci considering the size of Gucci and as I just mentioned, our strategy was to set up as soon as possible a worldwide network of stores as the brand wants to control more and more its own retail operations. This has been done.
We have a little bit more than 500 stores, which I consider being the ideal network in the most interesting market in the world. The luxury market, as far as I see it today, has a structural growth of it was 5% last year. It's probably something. So a brand like Gucci should be able to at least enjoy the same growth as the worldwide market of luxury. But by effect of excellence in execution, I was mentioning all the efforts that we're going to put in upgrading the store network, upgrading the level of excellence in stores.
We should be able to deliver a significant growth. This is what I mean by normalized.
So Francois Henri was gallant enough to start the his answer in English, but the rule is actually to speak French. So, I'm going to continue in French. So, just to present the I know it's complex and sensitive. You have to look at the hedging impact over time. So what happened in 2014?
There were also comparison effects with 2013 that was difficult. Why? Because we always hedge 12 months ahead of time. 2013, we benefited from a very positive hedge impact because we hedged at the 2012 rate, which protected us from the rise of the euro. In 2014, we were hedged on the average rate of 2013.
We see across the full year 2014, we had a spot rate that was close to the hedge rate. So we had a hedge effect that was slightly favorable and even negative in Q4, whereas it was very positive. It was very positive in 2013. That's where we have the comparison effect. It's on this gap that appeared.
Of course, obviously, if we say we're hedging for 12 months, I'm not going to give you the specific hedging rates, but the dollar versus the euro is about €1.30 over the year. We have a hedge which is broadly similar to that level. The yen will be also in proportions of the order of 100 and 40 in terms of hedging. You know what the spot rates are today. So the prime impact will be on the first half.
The second half is hedge more on rates that began to trend with a euro weakening. And as we indicated previously, we've begun an optional hedging policy, which will bear fruit in the final quarter. The first half will be impacted. And I won't give you the figure Helen of what the hedge might represent for the first half, but just the pure hedge effect was negative for instance the second half of twenty twenty four of the order of 50 basis points on profitability whereas it had been extremely profitable in 2013. 50 BPs on the second half twenty fourteen.
I'll let you calculate what the impact might be for the first half. Turning now to Gucci trends here again. We're not going to enter into levels of detail. Well, okay. Let me just recall is crucially important.
There I focused on the hedge just return here is that the currency trend is favorable in absolute terms for the group. Favorable in absolute terms, I know you're concerned of looking at the operating margin as a percentage that's where the impact. But in absolute terms, obviously, the weakening of the euro is good news for our business because we have a strong exposure to currencies that are linked to the dollar. As to Gucci, without returning to the details of the figures, what we can say is that trends were positive across regions broadly and negative in Asia Pacific in Q4. Paradoxically, we saw a kind of stabilization leveling of slightly more favorable trend in China, Continental China without being they were heavily impacted by events that occurred in Hong Kong and by Nokon Macau.
So Asia Pacific is the only region that comes out negative in Q4 for Gucci of the order of 4% negative. HSBC, 3 quick ones if I may. On the Gucci brand, you mentioned changes that were going to take place. I believe you've always been in favor of raising the brand. Would appear that it was perhaps a little that was a bit extreme notably the aspirational customers may be discarded.
When we look at what Vuitton has done on the monogram, what might your initiatives be in this regard? 2nd question also on Gucci. You mentioned Gucci stores. I understand the former was the name of Frida. There were about 50%, 60% of stores end of December under that format.
You plan to reach 50% by 2020. Are you going to challenge that format, call it, into question, will they just be adjustments on the look and feel, lighting, etcetera? Final question, more general. I think 3 years back, during the results presentation, you set out a 2020 vision that looked at a group where 60% of earnings would come from Luxury and 40% from other activities. You said no acquisitions.
Is this just
a vision that's postponed over time the time it takes for you to confirm the cogency of the Puma acquisition? Or realistically, do you think it's no longer on the cards? Thank you, Antoine, for those questions. Just to answer your question. In French yes.
Sorry, there are young ladies in the room who speak English. As regards the, upscaling strategy of the brand, I mean, as I said implicitly, there's no change in strategy. The brand, I mean, upscaling when we reach our size, absolutely vital to maintain, secure, even enhance the exclusivity of the company. That's in no way called into question. In execution, you're right.
There were a few hitches in execution, a few glitches. I mean, there was a kind of a confusion between logo and entry price. Elevation means enriching product categories and the important categories, the handbags by accentuating the offer on the high end, on the mid range and also the an entry level also rise. It had nothing to do with the logo. I mean, it's a question of price segmentation and products.
Need to say that last year on the collections, the high end and mid range handbags, there were very significant increase. So it is responding. There's very good work put in there. However, on the entry level, we left the price segments where we were 5 years ago. Let me recall the 5, 7 years back entry level in handbags €495 It was the Joy bag.
Our entry level price is around €450,000,000 It doesn't mean no logo. One of the key assets of our company is their signature. And when you're called Gucci, we have a great asset as do other brands, which is our double G. We have to work on it to also move it up market and that logo that represents the quality and the aspirational asset of the company. We're going to work on that to confer a far greater aspirational character to the entry level products in the broad grade categories and handbags.
I'm not saying we're going to lower the prices. But in the entry level segments, we need to be far more appealing, attractive and use this extraordinary asset that's our logo. So that's really what we're doing. That's what Marco is already working on with his teams. Turning now to stores.
As you pointed out, we have a concept underway, which is the Frida concept. It's a concept that was been worked for a number of years, as I said earlier, is a very flexible concept. So stores actually there are 2 items to stores. You need to separate. There's a part that contributes to the image of the which is the facade and the window and then you have the interior of the store that contributes to the environment merchandising excellence.
We're of course going to significantly improve indoors the inside and implicitly renovate all stores? Answer, no. We have a fine network we're going to improve. We've already done that. I mean, it's not new.
We've already begun improving the quality and the indoor environment of the store to showcase the products. I mean, there's something we can do with this concept without any difficulty. We're going to improve merchandising, visual merchandising. We're telling too much narrative in the store. We're going to focus on key components of our offering in major stores in certain big cities where there's a strong image impact and impact on traffic, we're going to work on the external aspects.
But once again, it will be done with a very reasonable CapEx figure. But we're fortunate in having a concept that allows us to do that to adapt to the new design team without having to start again from scratch as was the case with Yves Saint Laurent. The store concept on what we presented a few years back on 2020. You'll recall it was the 2020 ambition. Brand's potential.
I mean I haven't changed for you. Our brand potential, you've heard this said several times in my speech, is very important. Obviously, execution to translate that into figures is our responsibility must follow. But I maintain, I stand by what I say. In our portfolio, that's the way it's built.
We have organic growth potential across our brand without exception to reach the figures and ambitions set out. We're not yet in 2020. We haven't said our final word. Once again, it's not a budget. It's not a guidance.
It's a potential the approach of a potential related to the brand portfolio as it is today. It's longer in French, sorry.
It's John Guy from MainFirst. Three questions, please. First of all, just following on with regards to Gucci. It looked like the sales densities fell a mid single digit percentage in 20 14. And you mentioned that a weaker point within Gucci was the small leather goods area.
Now my understanding is that Alessandro Michele previously had been very much focused in the small leather goods category. So could you explain what's going change in terms of the repositioning within the SLG category, your attachment rates relative to say some of your peers which are relatively low? I'd be very interested in how you're going through that particular area. My second question is around the Eyewear internalization. And you talked about profitability, obviously, in 2017 as Gucci comes back in house.
Do you think that by 2020, revenues of in excess of CHF600,000,000 and an EBIT of around CHF120,000,000 would be a fair target to aim for in the midterm. And my final question on the other luxury brands. I think I asked this question last year. By 2015, could you achieve a 15% EBIT margin? And I had with some confidence, can answer that
Excuse me, can you please repeat the last one?
Yes, sure. So the other luxury brands, with regards to an EBIT margin target, I think I asked this question last year. Could you achieve an EBIT margin of around 15% by 2015? And I think that target was deemed achievable. Where do you think that you'll reach the EBIT margin target now for the other luxury brands?
Thank you.
I'll be answering in French. You're right. You're right. Sales per square meter that's one of the knock on effects. It's not a cause, but a knock on effect of positioning issues I talked about, specifically the success of the upscaling was offset really completely offset, you saw the Gucci figures, by a loss in volumes at entry level price points.
We haven't addressed that sufficiently. And this also answers your second question, Jean Marc or Jean Francois, I'm not sure which, said to you both categories. The 2 weakest categories last year were small leather items and luggage. Well, those are entry level items in terms of price point. And the company has worked very hard in upscaling products, as said to you, mid range and high end products upscaling, very interesting successes there.
Unfortunately, this ended up being done to the detriment of our ability to be constantly bringing in novelties at the entry level price points, especially small other goods and bags. And we can say that and the customers expect this, we can say that people are expecting novelties not just in ready to wear, but also in accessories every single season. So we can say that to some extent, we didn't focus enough on those particular products. We wanted to be absolutely certain though that the major categories such as handbags could be upscaled. And in the first level price points, we wanted to have other product categories that were in line with those segments, the smaller items and luggage items that were attractive.
Now it's true that is a weak point we've got today and we are addressing this. We've got extremely strong teams tackling all this. I'm absolutely confident in Gucci's ability to get back on track when it comes to those product categories. I'm not going to give you attachment rates, but we do have attachment rates, thicker than the brands, particular Veneta that are higher than at Gucci. And we know we can get there.
We can get there, thanks to the stores. We've also got huge potential for growth in the short term to improve the situation in the short term. Thanks to working in stores through attachment and cross selling one category to another. Let me let you answer on Eyewear. Yes, carrying Eyewear, 2020 for us will be a first stage in rolling out the project.
Yes, we could say. If you convert wholesale revenues into retail values, because as I said to you, a large proportion of our development will also take place through our stores. $600,000,000 $600,000,000 would be a reasonable figure for revenues, profitability, operating margin, 20% is also reasonable. And we realize to repeat, there'll be a mix here. You'll have royalties, our brands continue to receive plus the upstream margin generated through this activity because we'll be capturing the entire margin.
So yes, all in all, on the order of 20% and 20%. That would be the first stage we set our sights on. Now regarding operating margin for other luxury brands. In 2015, there'll be an improvement in culture and leather goods with a continuation in Balenciaga's good track that began in 2014. McCartney and McQueen will continue to see pretty high margins.
Brioni, Brioni is going to be correcting the sort of dip that they had in 2014. Same thing, Christopher Kane, which very quickly is reaching breakeven. Regarding watches and jewelry brands, we saved 1 in 2014, had tough times, a Sowind and now everything is on track to see substantial improvement in Sowind's results. Boucheron, that saw strong mechanical growth through its own profitability we'll see an increase. Its proportion of the group will see its rates go up.
Pomellato, same thing, particularly through the mix between PomaLatto and DoDo, there should be an improvement in operating margin. All in all, better margins in 2015 than in 2014. Hello, so Felix Doucet from Capital. I was just wondering for a full 2014, what was Gucci's performance in China and the more general in Asia and then in Europe? Let me repeat some of the main features for Gucci's performance full year.
Previously, I did give you performance in the last quarter. But as I said to you, in the year, we saw differing trends. So the brand held up really well, really developed quite well in Japan and the United States. There's a sort of mechanical effect that in Japan increased consumption throughout the year Gucci was boosted. On the other hand, in Europe, negative but for encouraging signs in the last quarter, a turnaround in Gucci sales in the last quarter and to come back to a point Helane raised, which I forgot to answer, I.
E. Also good rebound in terms of local customers, interesting to see. Brand repositioning today in Europe is having a really positive impact on local consumers, local customers. In the full year, things are very volatile in terms of tourism in Europe and a drop in Japanese tourists and Russian tourists, strong volatility from 1 month to the next regarding Chinese tourists, though all in all the trends are positive, particularly in December. On the other hand, in Asia, considering the importance of Q4 and Hong Kong Macau's importance for the brand, overall trend is slightly negative for Asia.
But as I did underscore, there's improvement, clear substantial improvement in the last quarter for Gucci in China, Mainland China, though to repeat, we continue to be cautious regarding changes in Mainland Chinese market.
Currency fluctuations create distortions across regions. What's your approach by region? Can we expect increases certain places? You mentioned normalized growth at Gucci. BV slightly weaker Q4, very reasonable, but what's the level of normalized growth for BV as you see it?
Is it above Gucci's? And third point, Jean Marc touched on this, Europe Q4 is the recovery that you mentioned? I mean, is it global that is not just Gucci, but the other brands? And is there a dichotomy between tourism and local demand? Jean Francois, go ahead.
So on price differentials, it's an issue that has assumed certain scale because recently currency fluctuations. So this is an issue we're addressing that we're treating both globally by adjusting pricing hoc basis to adjust on a number of collections, a number of countries, pricing adjustments. So these are of course competitive data. So I can't give you any details on that, but it's a key prominent topical issue. Just to respond to your question on Bottega Veneta, I didn't mention normalized growth.
I mentioned sustained Prudent to maintain high profitability. Sustained means the brand still has considerable potential. We continue to invest of course in BV. Two directions to make you understand the brand's potential today as compared to our peers, Kering outside, we're totally underweighted in the U. S.
The brand today is not very developed in the U. S. Real growth potential there. We're working at that. And the other direction, other focus here, the brand is still highly concentrated on its prime category, which is the bag and has considerable potential to extend the product categories.
Major progress into footwear Jean Francois men's category that developing strongly. So it's a brand that still has fine growth ahead. Can't say that Bottega will have normalized growth consistent with that of the market. It has higher ambitions than that. Luxury division.
True that Europe overall was positive for Luxury with an acceleration in Q4. All brands had very satisfactory results in Europe with the exception of Brioni mentioned given the exposure to Russian customers that's considerable for the brand, less so for other brands. So all brands delivered fine performance in Europe. Tourism once again as I pointed out tourist flows hurt by reduced Russian and Japanese visitors contingent more Japanese domestic sales, but growth in Japanese visitors very difficult to predict and Q2, Q3 levels less sustained. Q4 slightly more sustained in terms of Chinese tourism perhaps a causal link with currency fluctuations and pricing.
Local customers well received all our collections across our brands local customers that rebounded in Q4. A note of caution however it's the season of results and you probably heard from other players either in the luxury sector or more mass market. We see that in European consumers, a lot of volatility around the holiday periods. What's very positive is renewed appeal of our brands for local European customers. Hello from Reuters.
First question on Brioni. Could we have some more color on the brand's performance in 2014? Is it what's its operating margin profitability? And what the exposure of the brand to Russian customer? You have a percentage Russians, I mean, in Italy or elsewhere.
What percentage of the customer base do they account for on Brioni? 2nd question linked to Gucci. Can we expect a break in terms of style at Gucci? Or is it going to be kind of an extension? Because we see the kind of brakes work well.
I mean innovations work well. Is innovation is essential. Where are you going to inject innovation? Will it be in the bags and the ready to wear? Could you give us just a glimpse of the brief entrusted to the new management team?
Thanks. Thanks. So on Brioni, as you know, we don't give details on all the other on the brands. I mean, Brioni was acquired in 2012, working in putting the production facility, bringing it up to par that's key for the price point of Brioni. We have an expansion plan.
We have a new manager who's a leading professional for development in retail. So over and above the contextual items on Briony, I can't really say anymore. As to Gucci, change of design team, yes, I mean, it's a question of interpretation. I mean, there's no break, I mean, with the past. I mean, the company has a very powerful compelling heritage.
Question of interpretation you've seen. I mean, that's why we've given a freehand carte blanche to Alessandro for the menswear collection through the men's fashion show. Different artistic take. It's radically different, but it remains the interpretation of the Gucci code. So yes, interpretation by Alessandro will be very different.
You'll see it as of next week, but it remains extremely rooted in the legacy of the company. I mean Alexander's choice, he has a passion for the company that I've rarely seen in all the recruitments I've made in our various brands, someone who's attached, who has an in-depth intimate understanding and over and above the break that's always a winning proposition, the intimate understanding of the company is a necessary precondition for artistic renewal of a luxury house. We have the right person for that and you'll see that as of next week. Final question? Yes, a key and a follow-up question.
My key question, could you introduce yourself, please? You mentioned could you introduce yourself, please? Sorry, Pierre Maris Guerin. So you mentioned in your presentation the importance of innovation and renovation of production processes. And incidentally, you mentioned the craft smanship processes that you still use in luxury goods.
It would appear to me that today what's most important for innovation and production is the use of modern processes, notably software systems that can accelerate innovation product creation processes and then the achievement at lower cost. Is this a key factor for you? Where are you at in that respect as regards both luxury goods, leather goods as well as sports wear, sports apparel? Do you think there's a useful opportunity for productivity and growth? And follow-up question.
When we look at the names of your brands, we see that Gucci, Bottega Veneta, these are Italian names. Puma, I don't know, I mean, if it's a name of German origin, but there aren't that many French names. In other words, the French quality, French origin, is this a factor an interesting factor for you as it is for the Italians who are in Asia? Made in Italy sells well because that's also very appealing to customers. So in that respect, how do you manage that?
You're not in cognac or champagne, so you can't really refer to French roots, I mean, but for you that's erased. You can't use that ownership in your you mentioned the importance of tradition. Do you promote it as an Italian style product? Well, thanks for that question. Right.
As to processes indeed systems, IT processes to establish the link between design and manufacturing. And that's what happens at the product design prototyping stage. And by centralizing tools and systems, harmonizing processes allows us both to boost quality and product efficiency as well as time to market and costs, it really is at the heart of our concerns. We have many such projects underway, notably in terms of information systems. As to the French origin, I mean we're not we don't ostracize anyone.
We're very proud of our French roots. In fact, there are a number in fact, a considerable number of craftsmen, of artisans who work for our brands, be it in leather stores or workshops, manufacturing, our products. And we have workshops be it at Balenciaga, at Saint Laurent or Boucheron who ensure the design, product, development by drawing French know how. So that's consistent with our approach. Final question.
Mario, go on. You can sing it if you like. To a microphone please.
Just two quick questions. The first one is about the elevation of Gucci. You've got a compelling plan for 2015. When will we finish the elevation of Gucci? Can we think that in 20 16 you will achieve the results that you have got in plan?
The second point the second question is about acquisition. You mentioned no acquisitions in the shorter term. We all know that the interesting brands to buy in luxury are not many. And sometimes they come to the market. If something will arise interesting in 2015, we should think that Kering will not bid for having this unique asset?
Thank you.
As regards Gucci renovation, as I said, the teams are hard at work as we speak and we'll see the effects kicking in, in the second half of twenty fifteen. The first half of course impacted by the rollout of these action plans. We'll see results benefits as of the second half. We'll continue to work on these. These are of course long term initiatives, but results are already very tangible in Q2.
So it's not going to last 3 years before we reap the benefits. It's going to be visible fairly soon. Notably, the first full collection by Alessandro and by the new merchandising teams will be presented in June. It's the Croixier collection that reaches the stores in October already there. We have the collection that will be presented next week, which will reach stores end of July, early August, but only represents a part about 20% of the season because the pre collection has already been sold.
So we'll have tangible results. You'll see the store renovations will start this year, so things are going to go very fast. As to acquisitions, now I'm clear. No acquisitions. As I explained, we have a portfolio that we're building on the basis of very strict criteria.
Each brand has a very clear mission. We've reopened the portfolio after 10 years growth. The portfolio was built between 2000, 2002. 2000 and 2, 2011 we built our brands. We didn't buy.
I reopened in 2011 given market changes to see where we had points of weakness. We acquired Brioni. We acquired Pomerato. We acquired Ulysse Nardin in that setting Christopher Kane. I consider today that the portfolio is sufficiently strengthened for us now to focus last ingly on the organic growth of existing brands.
So if there's a fine brand, well, good luck to the person who buys it. I consider that I have a near ideal portfolio in terms of positioning on the various market segments that have growth potential, so no acquisitions. Thanks very much. Have a nice day.