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Good day and welcome to the Kering Q3 2011 Sales Conference Call. For your information, today's conference is being recorded. At this time, I'd like to turn the conference over to your host today, Mr. Jean-François Palus, Deputy CEO and CFO. Please go ahead.
Good afternoon and good evening to all of you. I am Jean-François Palus, Deputy CEO and CFO, and I'm pleased to welcome you to Kering's Third Quarter 2011 Sales Conference Call. I would like to spend the next few minutes adding a bit more detail to the statement we put out earlier this evening in Paris, and then I have plenty of time to answer your questions. As you can judge from our press release, or here on slide three of the presentation, we posted another strong performance this quarter. I want to remind you that we achieved this against creditors' comps in the third quarter of last year. The financial turmoil the world has been experiencing since this summer did not have any visible impact on either our luxury or our sport and lifestyle brands in the quarter.
Overall, our luxury brands posted growth of 25% in Q3, while revenues in sport and lifestyle were up 10%. Both of these numbers are ahead of the comparable growth rate we posted in the first six months of the year. Looking at our core luxury and sport and lifestyle business as a whole, all regions, all distribution channels, and all product categories contributed to our strong growth. Please note that Volcom, our newest sport and lifestyle brand, and Sowind Group, the parent of the Girard-Perregaux Haute Horlogerie brand, are fully consolidated since July 1. Both posted highly satisfactory performances this quarter. Our remaining retail brands, FNAC and Redcats, were impacted by sluggish consumer confidence in France and Western Europe. In this environment, these brands outperformed, and as a result, we achieved a 7% growth rate in total group sales in the quarter.
Let's now look at each of our brands, starting with Gucci on slide four. Gucci achieved another outstanding quarter with comparable sales up 21%. Sales growth was sustained in all product categories, regions, and distribution channels. The sales contribution from directly operated stores further increased in the quarter, accounting for three-fourths of the total. Retail sales were up another strong 22%. Sales to independent retailers grew nearly as fast as buyer enthusiasm for Gucci's Fall and Winter collection led to sharp increases for demand in fashion. Sales were up significantly in all regions. In Western Europe and particularly in North America, highlighting the brand's well-established appeal in our mature markets, both with local clientele and with visitors, sales growth was sustained. In Japan, confirming the recovery in this country, the increase in sales came just short of the double-digit mark.
Sales in emerging countries continued to grow at a persistent pace, particularly in China, where they were up more than 37%. As you know, we are celebrating the 90th anniversary of Gucci this year. During the quarter, festivities culminated with the late-September opening of the Gucci Museum in Florence. Together with the Forever Now Worldwide Campaign and a special 1921 collection, the museum reinforced the strong connection of the Gucci brand to its historical and geographical roots. All product categories were up significantly. Leather goods, the core of the brand, achieved another strong double-digit growth. The weight of carryovers and no-logo products grew further, confirming the rebalancing of the offer towards higher-end products. In late September, Gucci also reopened its renovated flagship store in Milan on Via Monte Napoleone.
Combining heritage and innovation, the store sports an LCD video wall display featuring life-size interactive images, making it one of the world's most technologically advanced retail environments. As of the end of the quarter, Gucci operated 365 DOFs, including 132 in emerging countries. Moving to slide five, Bottega Veneta hit a perfect score in Q3 with a rapid acceleration of the sales trends from previous quarters. Total comparable sales for the quarter were up 39%, driven by the return of Japan into positive territory, up a robust 5%, as well as strong double-digit growth in all other regions. Strong growth both in our stores and through third-party retailers was driven by the great success of the fall and winter 2011 collection. In every product category, Bottega Veneta posted double-digit growth. Sales of iconic products, either in traditional or in seasonal colors, continued to set the pace.
In addition to sustained demand for all product segments in the women's range, we also had outstanding performances in men's ready-to-wear and shoes, further reinforcing the brand's solid balance across categories, a key factor of success. Bottega Veneta's first women's fragrance, gradually introduced around the world since June, recorded very promising results in its first months. At September end, Bottega Veneta had 158 owned stores, including 55 in emerging countries. Here on slide six, we have the highlight for Yves Saint Laurent, whose achievements in the quarter were also absolutely stellar. The brand delivered strong sales growth both through our own stores and through independent retailers, thanks to the huge success of the fall and winter collections. Overall, sales were up over 35% in the quarter, with Western Europe, North America, and Asia-Pacific each yielding growth of more than 40%.
What this means is that Yves Saint Laurent executed flawlessly both in the new stores opened in emerging markets over the past quarters and in its more established bastions in mature countries. Growth was equally sustained across all major categories: over 40% in leather goods, driven by the carryover lines and the new Cabas Chyc introduced in pre-fall; over 15% in ready-to-wear; and a massive 70% increase in shoes, driven by strong demand for iconic products such as the Tribute, Tribtoo, or Palais Line. Yves Saint Laurent had 81 DOS at the end of September, including 25 in emerging countries. Altogether, our other luxury brands on slide seven boosted comparable revenues by 22% in the quarter. Not included in this comparison, sales of Girard-Perregaux, fully integrated for the first time, also posted double-digit growth.
The double-digit sales growth achieved by Balenciaga was once again strong, driven by the success of its fall and winter collection and the expansion of its store network. The other designer brands, Alexander McQueen and Stella McCartney, enjoyed very strong performances and were both up double- digits in all regions. Boucheron's quarter was boosted by an excellent performance in jewelry, with all other categories apart from watches also up in the period. Pomellato recorded good performances in directly operated stores, lifted by the new store concept inaugurated earlier this year in France. All in all, our luxury goods brand achieved another remarkable quarter. The pace of growth was impressive in all regions: over 20% in Western Europe, over 13% in North America and Asia-Pacific, including sales growth of 48% in China, and even in Japan, where we managed a robust 6% increase.
In the first nine months of the year, our luxury business group opened 83 directly operated stores for a grand total of 769 as of the end of September. If you turn to slide eight, you'll see that we posted another strong quarter with double-digit comparable sales growth, driven by all product segments. The increase in sales was significant across all regions, with the exception of North America, where we faced high comps, having posted sales growth of 18% in the third quarter last year. In Western Europe, Puma's comparable sales were up another 9% this quarter, driven by strong double-digit growth in Germany. While market conditions resulted in hesitant buying by retailers in much of the continent, and notably in Southern Europe, we had a good performance in Spain, where the subsidiary is now fully up and running.
Japan posted another double-digit growth, thanks to robust sales in the running and fitness segments. Finally, in emerging countries, Puma had particularly good performances in China, India, and Korea, and Latin America delivered a double-digit sales increase. All product categories contributed to Puma's sales increase, with particularly solid double-digit growth in apparel and accessories. By distribution channel, Puma's retail network is confirming its turnaround as we are pursuing our store refurbishment program to bolster retail productivity. Retail sales were up in North America, for example, and growth was solid throughout the wholesale channel. During the period, Puma entered several important new partnerships, which will elevate its visibility and growth prospects in the coming quarters. In Formula One, Puma announced a multi-year deal with the Mercedes JP Petronas team. A number of football stars have been signed on to support the global launch of the new Puma Power Cut shoes.
Finally, Puma won the competition to partner with Team Oracle for the next America's Cup. I shouldn't forget the boost Puma's image got from the strong showing of Jamaican athletes at the track and field world championships in Korea last month. Puma remains well on track to pass the EUR 3 billion mark this year and deliver a performance in line with its back of the attack business plan. On slide nine, for the first time, you can see Volcom's quarterly performance as part of PPR. Comparable sales were up 7% in the quarter, with strong growth in North America, which still accounts for over half of the total. We also saw growth at a more moderate pace in Western Europe, and Volcom also had a satisfactory performance in the Asia-Pacific region.
Worth mentioning is the excellent showing of Volcom's directly operated stores, which also benefited from the inclusion of the company's recently acquired outlet business. By product category, apparel, which is far and away the largest contributor to total revenues, grew 6%, while accessories experienced double-digit growth, demonstrating continued success of the Electric brand of eyewear and goggles. Many of the athletes sponsored by Volcom and Electric had strong competitive results during the summer season, adding to the visibility of the brands. We are happy with the rapid progress of the integration of Volcom within PPR, which is going as smoothly as we could imagine. Let's now take a brief look at our retailing activities, starting with FNAC on slide ten. FNAC faced tough market conditions again this quarter in all countries in which it is present, and under these circumstances, delivered a pretty resilient set of sales figures.
In France, the 6% drop in FNAC's sales reflects generally sluggish consumer demand. Despite more and more intense competition in home electronics, FNAC outperformed in this market. In editorial products, the absence of high-impact new releases, notably in music and gaming, impacted sales, while books were more resilient. The online channel once again bucked the trend, posting double-digit growth to account for over 12% of total revenues in France, with booming growth of technical product sales and a solid positive performance in editorial products as well. In French stores, sales growth in outstanding units partly offset lower revenues in city centers. Outside France, FNAC had generally resilient but contrasting performances. In Spain and Portugal, sales trends improved relative to previous quarters, and FNAC continued to gain market share in both countries in the quarter. FNAC's performance in other European markets was less impressive.
Online sales outside France jumped by more than 60% in the quarter, reflecting the more recent launch of the internet channel in our international markets. All told, including French and international activities, online revenues accounted for 11% of FNAC's total in the quarter. During the quarter, FNAC opened one new store in Madrid. In Q4, four FNAC stores are scheduled to open. As out-of-town stores continue to prove highly successful, two out of these four stores will be in this format. FNAC is actively implementing the five-year strategic plan it launched earlier this year through a host of initiatives aimed at adapting its network, positioning, and offering to new demand trends and demographics. Finally, on slide 11, you have the quarter highlights for Redcats. These no longer comprise the sales of Avenue in the U.S., now included under discontinued activities.
Compounding already difficult market conditions, Redcats' performance this quarter was impacted by exceptional circumstances. In France, the official sales period was moved forward a week this year, and this shift accounts for over half of the total drop in Redcats sales for the quarter. In addition, throughout Europe, the beginning of the fall and winter season was affected by unseasonably warm weather. Outside of France, Redcats enjoyed a solid performance in Scandinavia, while large-sized brands in the U.S. were quite resilient, with online sales up 7%. Higher sales from the Sportsman Guide didn't offset a drop in sales at the Golf Warehouse. The weight of online sales continued to increase, accounting for more than 63% of the total in the quarter. New international sites, specialized sites in France, the addition of innovative features, including virtual models and Facebook links, have all contributed to the sales momentum of the online channel.
Here on slide 12, we wanted to show you the performance realized this quarter in our core luxury and sports and lifestyle activities. Facing an increasingly demanding base of comparison, not only have we achieved strong overall growth, but we have done so consistently across all regions. We are particularly proud of the 16% growth rate we've succeeded in delivering in Europe and North America, mature markets that still account for well above half of our revenues. In Japan, our sales increase was also impressive, marking a sharp rebound from the aftermath of the catastrophic event in March. In the rest of Asia-Pacific and in our other emerging markets, growth once again was sustained in the quarter, and we continue to see no signs of a slowdown.
To conclude and before taking your questions, I would like to reaffirm our confidence in our strategic focus on luxury and lifestyle, in the strength of all our core brands, and in the long-term potential of their markets. In the shorter term, like most industry observers, we believe that luxury consumers will remain active during the upcoming holiday season in 2012 and beyond. We are also satisfied with the progress at Puma, which is delivering on its back-on-the-attack plan. This does not mean that we are not vigilant, and as you well know, we are flexible and will react rapidly and decisively if ever there were a need to do so. For the time being, we see no reason to change course. We remain focused on organic growth, fueled by continued investment in our brand's visibility, quality, and retail expansion. This sums up my introductory remarks. Operator.
Thank you, Mr. Palus. If you would like to ask a question at this time, please press the star or asterisk key followed by the digit one 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. I will pause for a moment to allow everyone to signal. We'll take our first question from Arielle Hussein from Société Générale. Please go ahead.
Good evening, Jean-François. Good evening, everyone. This is Aurélie Dumoutier from Société Générale. I have three questions, one on retail, one on luxury, and one on lifestyle. On retail, it is on FNAC. I realized that on fnac.com today, we can find a kettle, vacuum cleaner, toasters, and so on. I'm just wondering, what was the strategy behind such a range expansion? How do you think FNAC may create a competitive edge vis-à-vis other players such as Darty? Is it a strategic move to find more potential acquirers? That's my first question. On lifestyle, can you remind us, you now own 75% of Puma now. Can you remind us why you will not ask for the domination agreement offered by the Deutsche Börse? Finally, on luxury, it is on Gucci in Asia-Pacific that is growing 22%.
I'm a bit picky here, but as China is your biggest market and was up 37%, is it fair to assume that there was a slowdown in the other markets in Asia-Pacific? Thank you.
Okay. Good evening. Fnac.com, indeed, there's a branch expansion, not only on the web, but also in a few stores. This is the beginning of the new initiatives that have been launched within the FNAC 2015 business plan, which encompasses the launch of new product categories. The fact is that we will not directly compete against Darty or Conforama or the other ones, but we will find a special hedging positioning based on technology and, I would say, advanced innovation. Also, the fact is that this is particularly interesting for the marketplace where we have outside vendors. This is why we use this opportunity, which is an opportunity in the course of FNAC's business plan, which has nothing to do with our intention to dispose of these assets. Indeed, we have announced in August that we have more than 75% of Puma's stock.
We do not intend to pay for a domination agreement because it wouldn't bring us anything. This would be a wasting of money, and we will not do it. For Gucci, in APAC, there's a growth in China, as you said, and there's also, let me check. It's Singapore. It's Singapore where we had a decrease in turnover due to the closure of one store for refurbishment. Two stores for refurbishment. One in a mall, a shopping mall, and one freestanding.
Okay, thank you.
You're welcome.
We will take our next question from Antoine Belge from HSBC. Please go ahead.
Yeah. Good evening, Antoine Belge, HSBC. Three questions. First of all, on the U.S., Gucci had an excellent performance, even though the basis of comparison was becoming much more difficult. Can you maybe elaborate on this? I think there's been some conversion of corners at Saks into shop-in-shops. The second question is on Redcats and especially the disposal process. I think François-Henri Pinault commented that it would be delayed. Can you update us on this? Finally, you say that you are vigilant but not changing course. Does it mean that you have a plan B that you are contemplating at the moment but not implementing? Can you maybe comment on your attitude to cost given what I mean, how the macro evolution? Thank you.
Good evening, Antoine. Yes, we enjoyed a very good performance in the U.S. for the Gucci brand. In fact, it is true that we bought back some stores from some shopping shops from Saks, 17 actually. In fact, it is neutral because those shopping shops posted growth. As a matter of fact, the traffic in all our stores was very good. Tourism also brought in some new customers, and we had a very good, healthy momentum in average spending and so on and so forth. We are very satisfied with our performance for the Gucci brand in the U.S., not only in our stores but also on the internet and also for outside retailers. Again, like you said, despite tougher comps, we post very good growth in the U.S.
For Redcats, as we've said, we have postponed the auction process for the formal auction process that was initiated in this spring due to very difficult debt market conditions, as you all know. We are pursuing our discussions with a few potential investors that are very interested in this asset. We are on our way, like we said, to continue this process. About our vigilance, as you know, we are in the budgeting phase of our group. As always, like in every budget every year, we ask all our brands and business units to come up with a base case for the budget and with a scenario. This scenario encompasses some likely or not likely downturn in a few countries, i.e., mature markets. This scenario helps us decide to sequence the project that we have in terms of major expense programs or CapEx programs.
What we have, and again, like always, is the possibility to, throughout the year, if the revenues are not on par with budget or ahead of budget, we can postpone or cancel some programs that have been already identified during the budget phase.
Thank you very much.
You're welcome.
We will take our next question from Allegra Perry from Nomura. Please go ahead.
Yes. Good evening, everyone. Two questions from me, please. Firstly, within luxury, if you could please provide us with any early indications of the wholesale order book for Spring/Summer 2012, what you're seeing in terms of the ordering process there. Secondly, on China, perhaps just an update as far as what % of sales are now generated by the Chinese consumer, both onshore and offshore, as well as your plans in terms of store openings in that market. Thank you.
Okay. We have not yet finished the sales campaign for the Spring/Summer 2012 collection, but the early orders are very good. The momentum is still very solid in all our brands. What has been achieved is the cruise collection, and those orders too are very, very strong and solid. All geographies, particularly the U.S. For China, for Chinese customers, for the Gucci brand, we estimate that the Chinese customers from mainland China represent 1/3 of total sales. It was only 30% roughly last year. It's increasing. For Bottega Veneta, it's far less. It's something like 15% or 20%. Ditto for Yves Saint Laurent.
Thank you. Perhaps just a comment on the store opening plans in China?
Yes. We have opened six stores in the quarter in China, in the third quarter. We will open in the next quarter, in Q4, another 19 stores in Greater China.
Great, thank you very much.
You're welcome. Have fun.
We will take our next question from Warwick O'Keeffe from Deutsche Bank. Please go ahead.
Yeah. Good evening. Two questions, please. Firstly, could you just tell us what the structure impact was from Sowind during the quarter in the other brands' division? It looks like about 6%, but if you could just confirm that, please. Secondly, can you talk about what you've done or what you plan to do at Avenue now that it's discontinued? Can you just actually talk us through the mechanics of what's happening in that business? As a supplement, could you tell us what its losses were in H1? Thank you.
We do not release Sowind 's revenue. They have been extracted from the comparable growth figures that you have. The 7% that you have for the quarter is, I would say, adjusted for Sowind being consolidated since July 1. For Avenue, we are going to discontinue this company, which is, as you know, a company that is solely in stores in the U.S. for large-sized customers. This is something that we plan to achieve within the next few months. That's why we have discontinued this company. We do not release the individual EBIT figures for such business units.
Could you just be a bit more specific about what you mean by discontinue? Do you literally just mean close the stores, or do you mean try to reassign leases, etc.?
We have a series of solutions that we are considering now, and we may contemplate different solutions that all will lead to discontinuing avenues. You will know when we have finished.
Okay, thanks very much.
You're welcome.
We will take our next question from Louise Singlehurst from Morgan Stanley. Please go ahead.
Hi. Good afternoon. Just a couple of questions from me, please. Firstly, just in terms of Gucci, can you just remind us of the pricing growth that's gone through this year and if we should see a further benefit going into Christmas? Secondly, just going back to the comments regarding the very solid outlook for the Spring/Summer 2012 order, is there any color that you can give us in terms of the feedback from the wholesale accounts across the different territories, U.S. and Europe? Finally, just on Japan, obviously, a very good rebound in the quarter. Can you give us a sense in terms of what traffic is doing in stores and obviously the average price there? Thank you.
Gucci, what we have is that we benefit from the upgrading of our product offer, which generates a higher average selling price. Of course, this merchandising momentum comes with additional price increases, which we usually and generally do at each collection. The major part of this increase in average selling price comes from merchandising positioning, which translates the upgrading of the Gucci brand. For the orders, as I said already, the orders are good from wholesalers, from franchisees. They are very good in all product categories, all brands. They are particularly good in the women's fashion show with Bottega Veneta posting outstanding figures. It's all very satisfactory. For Japan, what we have is that we have an increase in traffic, and we have also a very good average spending. I would say more on the first tier of selling prices than in the higher-end selling prices. This is very effective.
We are, as you know, back in positive territory for nearly all of our brands, and this is very satisfactory.
Super. Thank you.
You're welcome.
Again, as a reminder, ladies and gentlemen, to ask a question, please press star one on your telephone keypad. We now have a question from Mélanie Flouquet from JP Morgan. Please go ahead.
Yes. Good evening. I have three questions. The first one is coming back to Asia-Pacific for the Gucci brand. Could you help us understand maybe a bit more what China, actually mainland China, represents out of the total? I know you mentioned the mainland Chinese being a third, but within Asia-Pacific, what is China itself? Also, what happened to Hong Kong in this period so we understand maybe a bit better the mismatch again between the 37% growth in China and 22% in Q3 , which is also a deterioration on the H1 trend? The second question is on the positive surprise for me. At least it's Europe, which is very, very strong for luxury and was more mixed for some of your competitors.
I was wondering whether you could share with us what you are seeing by markets in Europe and whether you are seeing like all this deterioration in Southern Europe or not? The last point is on Bottega Veneta, also a big positive surprise and acceleration. Whether you can share with us what you think has been the inflection to this acceleration. Thank you.
Okay. In Q3 for the Gucci brand, we have posted a 37% growth in mainland China, 29% in Hong Kong. Another mature market, which is Korea, is up 12%. Another market which is quite mature is Taiwan, which was up 4%. Singapore, as I mentioned, was down. For Europe, is it also for Gucci, for the Gucci brand?
Yes. In general, I think your European numbers in luxury were pretty strong, but yes, if you can comment on Gucci.
We enjoyed very good and healthy growth in France, in Italy, in the U.K.. I would say for Southern Europe, which are very, you know, these are very little markets for Gucci. Spain was up 12%. The other markets in Greece are very small. Portugal, we know also. Europe was very good.
Across the board, in other words.
And sorry?
Across the board, in other words, you didn't see mixed figures?
Yeah, it's good. We have in the major countries, it's all positive. Yeah, all positive. Okay?
Thank you.
For BV , again, there's a very good performance in Japan. Everything is outstanding, I would say.
Thank you.
You're welcome.
We will take our next question from Simon Irwin from Liberum Capital. Please go ahead.
Good afternoon, Jean-François. Three questions from me. Firstly, you just talk about the performance of watches at Gucci, the relaunch, and the effort you're putting in there. The second is, can you give us the shareholding in Puma at the moment? It was obviously over 75% in August. We're a couple of months on from there. You talked about apparel and particularly Redcats being soft through the quarter and the weather impact. Have you seen any sign that that's improved over the last month or so?
For the Gucci division, the watch business was up double digits, 13%. This was in the quarter, and also at the end of September, it's the same number. It accounts for 5% of the Gucci brand in total. For the shareholding in Puma, as you know, we have announced that we are above 75% in August. Now we have, I would say, we are a little bit above this 75%. The last question was?
It was about the apparel trends in Redcats.
Oh. The recent weekly figures for Redcats do not give me the split by product category. What I can tell is that the general trend for La Redoute and Redcats as a whole is less negative than it was in the third quarter. I don't have the figure for the apparel category. I can tell that the fall and winter collection has had a good start and is improving. I don't have the figure by product category.
Okay. Can I just follow up on Gucci in particular? Because a year ago, Patrizio was talking about doing putting less with more at Gucci and implying that he wasn't going to be kind of stepping up the pace of spend. I mean, obviously, your sales growth is fantastic. Has promotional spend and A&P generally been running behind sales growth? Are you effectively significantly leveraging costs in this current environment? Are you being quite aggressive in terms of the way that you push the business?
We have been normally aggressive on cost control, but knowing that marketing and communication expense is absolutely key to fuel the future of the brand. As a matter of fact, those expenses grew nearly as fast as the turnover.
Okay. That's very clear. Thank you very much.
We will take our next question from Tom Gadsby from Société Générale. Please go ahead.
Hi. Good evening. I have two questions. First is, would you expect any change to consensus following these figures? Secondly, just to revisit the order book, forgive my ignorance, but what proportion of the expected order book is still to come in? What stage are we at with that for Spring/Summer 2012, please?
I'm sorry, I didn't understand the second question.
Oh, the second question with regards to the order book, what stage are we at with regards to the proportion of orders that you would expect? I mean, are we pretty much full? Is there much more you expect to come in? What stage are we at when you finish?
Yes.
Close your business?
Depending on the brands, because the timing of the fashion show is different from one brand to another, they do not finish at the same time. I would say that we have still another week to be finished.
Okay, we're pretty much getting to the end of that, of taking orders, and then it's a case of shipping and fulfilling for next spring?
The shipping will begin in a few months. Now we are shipping, or yes, we are in the middle of shipping the cruise collection. The Spring/Summer 2012 collection will be shipped in 2012.
Sure. What I'm trying to get at is, do you expect many more orders to come in? Is the process now complete, or would you normally expect to take orders over the next few months still for Spring/Summer 2012?
The majority of the orders have been taken or will be taken in the next week. There will be reorders, and there will be also at-once business that will come on top of these orders as usual.
Okay. Perfect. Thank you. What about consensus?
The consensus is made by you guys and not by me. I don't know.
Okay. Thank you.
Again, as a reminder, ladies and gentlemen, to ask a question, please press star one on your telephone keypad. We'll take our next question from Mark Willon from Raymond James. Please go ahead.
Yeah. Good evening. I've got three questions, mostly focused on the luxury goods. The first one, Gucci, could you give us more flavor regarding the overall improvement in the mix in favor of the leather and no logo, maybe as a % of sales versus previous year?
This is something that we do not release as information. The fact is that, again, we continued to pursue this strategy, which aims at locally adapting our product range to the needs and the taste of the customers, and globally to increase the share of leather and decrease the share of logo. The percentage of each category, we do not release.
Okay. In H1 or Q1 sales comments, you clearly stated that within the luxury goods, half of the growth was coming from volume, and the other half was coming from mixed price impact. Do we have the same kind of trend and split over the third quarter?
No. It comes much more, I would say, 2/3 from quantities and 1/3 from price. Price, again, it's an average selling price. It's more about value than price.
It's mixed price if you understand?
Yes.
Okay. My last question is regarding the overall network on the dot. As far as I remember, during the H1 results presentation, you clearly stated that you're going to speed up the overall development of your store network, and this will be mostly geared toward the emerging market. The 19 stores opening you were mentioning in China for the whole luxury goods brand, this clearly takes into account this overall acceleration. Could you give us an idea of the number, I would say, prior to your decision to speed up the stores opening in this part of the world?
No, I don't know. I don't know because we decided to open those 19 stores. No, I can't. I don't have an answer to that.
Okay, thank you very much.
We'll take our next question from Thomas Chauvet from Citi. Please go ahead.
Good evening, Jean-François. Two questions. The first one's on retail. Have the revenue trends at Redcats and FNAC improved in October versus Q3? How should we think about profitability for these two businesses in the second half? Do you also expect an exceptional restructuring charge at FNAC in H2 for the implementation of the relaunch 2015 plan? That's on retail. Secondly, on Japan and Gucci Group, I understand there's a rebound in traffic and conversion post the earthquake. What would be for you or for Gucci Group, let's say, a normalized growth for Japan in the medium term? Is Japan also still your most profitable market for Gucci, or is it China? Thank you.
In October, at least for the first weeks of October, both for Redcats and FNAC, we have a kind of improvement in the sales figures. Yeah, it's a bit less negative. Of course, this is only the first weeks, so we need to be quite cautious. You know that to post the restructuring expense and provision in the accounts, you have to first announce the plan. We have not yet announced the plan. You will know when we have announced that we are posting extraordinary costs. Today, it's not the case. For Japan, of course, you may have seen the figures that were released by Bain and Altagamma and the other, I would say, experts in the luxury markets. They bank on a single-digit growth for Japan. I would say that a solid single-digit growth would be the normative growth for Japan and particularly for the Gucci Group.
As for the profitability of Japan and China, they are quite comparable now.
Thank you.
You're welcome.
As there are no further questions in the queue, I'd like to turn the call back over to Mr. Palus for any additional or closing remarks.
Thank you very much for your questions and for your interest in PPR . We are very pleased with the performance of all our brands so far this year and hopeful that the trend that propelled our luxury and sporting lifestyle businesses in the first 10 months will continue to support us through the end of the year and in 2012. We are also working very hard throughout the group to grow faster than our markets and to be in a position to respond rapidly to any opportunity or headwinds. We are looking forward to our full-year results in February, and I'm sure we will meet or talk with many of you in the meantime. Once again, thank you for your interest and have a good evening.