Good evening, ladies and gentlemen. It is a pleasure to welcome you here to this annual presentation of the group's performance in 2015. I believe you have received the documents. We've announced record performances, both in terms of revenue and profit from recurring operations and cash flows. An excellent performance, even though the context was, let's say, a contrasted picture. From a macroeconomic viewpoint, you have a number of positive factors. The fact that the euro came down, of course brought about an advantage for us as exporters. Of course, there were significant economic and geopolitical disruptions, especially in a number of emerging countries. Of course, the BRICS have lost some of their attraction. Some countries in South America are experiencing serious difficulties.
Likewise, Russia, with the drop in the price of oil, Russia is experiencing difficulties as well. China is slowing down as well. On top of that, and of course, I'm sure, unfortunately this will continue in 2016. There are geopolitical problems because of insecurity and stability in the Middle East, and of course, all the dramatic events in France, which brought about a reduction in tourism in this country. Nonetheless, the group as a whole did well, and all of its business areas are enjoying growth, both in terms of revenue and profits. Let's start with Wines and Spirits. Well, we didn't fully address the situation there. Well, the situation was good to begin with. Mr. Navarre need not worry. 2014 was a rougher patch because of de stocking in China.
The situation is being resolved as we speak. Of course, last year there was significant dynamic growth in the United States, especially for sales of Cognac. Hence, the excellent performance in Cognac. Champagne also has had significant growth with high numbers for Champagne. We will have to top up production if we are to keep up the performance. Regarding fashion and leather goods, of course, Louis Vuitton has done extremely well. This was another record year, double-digit growth, and indeed an absolute historic record in December. Louis Vuitton in December often generates more revenue than most of its competitors during the whole year.
Because of Louis Vuitton's dynamism, the new collections, inspired by Nicolas Ghesquière, our creator, whose fashion shows, of course, are very warmly received. All our products, not just fashion, of course, but also leather goods, which, as you may remember, are at the very origin of the brand and all variations on the monogram canvas and, indeed, all the derived products, the travel accessories. I mean, the headscarves were very successful as well. The jewelry line was also very well received by our customers as a whole. There are a number of new watches which have been doing extremely well. Much so indeed that, as of right now, we're out of stock for most models in many places.
There, we have also rearranged our retail stores. We have decided also to rearrange the stores themselves so that when our visitors come, they are well received. Rather than having more boutiques and more shops, we have embellished and enlarged some of the shops that in Avenue Montaigne in Paris or the shop in Los Angeles that opened in January. These two stores were, as I said, embellished, and we felt it was rather that than opening new shops. A number of brands did extremely well.
Fendi, a double-digit growth and many of its emblematic iconic lines, with the combination of that brand, Fendi, and the genius of Karl Lagerfeld meant that the creativity of that house, as it were, is renewed year on year, leaning on its Roman heritage. You can see a picture of the headquarters of Fendi, which was inaugurated last year. In Rome, there are a number of events taking place every year in Rome. Loro Piana also has attracted attention with the high quality of its products. Remarkable, magnificent cashmere that they make, but also other fashion houses have been doing quite well. Celine has enjoyed superb performances.
We have an iconic creator working for Celine. Not only can she produce highly desirable products and highly modern products, as sometimes creators produce things that are so modern that are not as popular. Here we have things that are very contemporary, very modern, and very much sought after by women. Likewise, shoes, I'm not going to go through the whole list of houses, but many of them have had a very exciting year. I think American brands are being revisited, as it were. I believe that they are looking to a promising future. Right now they are finding their marks, as it were. Now, regarding perfumes and cosmetics, of course, you had an outstanding success of the Dior brand.
You see a picture of Johnny Depp with Sauvage, the perfume, which has turned out to be a phenomenal success indeed, I think, the greatest success of all time for male perfumes. I think it's number 1 everywhere around the world. Of course, we are rolling it out in 2016 as well. That fragrance was created by Mr. Demachy, who comes from Dior, and so this was a major performance, but also the bottle itself is iconic. Of course, advertising has reached out to the entire world. This was the first time that you had Johnny Depp appearing on a perfume commercial. We have the J'adore by Dior, which is also growing.
Indeed, Chanel No. 5 was the benchmark, and it's become better than that, Miss Dior as well. You have J'adore and Miss Dior. Regarding makeup, Dior is the number one brand, not just for perfume, but also for makeup. They are number one worldwide in selective retailing. The other brands should also be mentioned here. The perfumes launched by Guerlain are doing well, the Orchidée Impériale. Benefit is another brand, smaller, but is also enjoying double-digit growth, 20%-30%, driven by all sorts of innovations, and sometimes it's the top of the market. Indeed, in England, Benefit is number one on the market. You have the two other brands. You have Make Up For Ever, Acqua di Parma, very dynamic, both of them.
We can't go through the whole list. This would take too much time here, but in any case, if you have specific questions, we'll take them after the general presentation. Let's take a look at watches and jewelry. Again, superb performance by Bulgari, again, driven by lines that were started 18 months ago, the Divas' Dream brand, the Divas' Dream line, the Serpenti line, which was Serpenti, I think, is part of the line, a historic line that was revisited recently. You have a number of watches that have come out, Bvlgari Bvlgari, Divas' Dream, Lucea. The brand is enjoying so much success that we have open new shops.
We have revisited the shop in London, based on the house in Rome. The Bulgari house is being beautifully run. TAG Heuer has refocused its business. Now Sir Jean-Claude Biver running it with great gusto. As you know, he refocused the business on its core business, so the sporting watches. This new watch called Carrera Heuer 01 is doing extremely well. He announced the Connected watch. I have one. It's great. It's great. I'm wearing it myself, but we can't make enough of them. We could make 100,000 a year and sell them all, but we simply haven't got the capacity for that.
Retailers who see this watch believe that it's the best on the market. I mean, I don't want to talk about competitors. Some of them are very picky, but it's interesting that there should be such a success, and there's a new model coming out in the spring. This is really looking good. Hublot now, as you know, is under Jean-Claude Biver as well. Hublot has continued its success on its emblematic models, Big Bang and Classic Fusion. Of course, Chaumet. Chaumet is the oldest jewelry house in the country. Indeed, it started before Napoleon, so that just takes us back some time. It has been in activity. It has set up shop, as it were, on Place Vendôme, and it's still flourishing.
That's so much for watches and jewelry. For selective retailing now, this is a more contrasting picture. I was referring earlier to geopolitical situations and currency effects. As you are, of course, seasoned observers, you know that when there are currency variations in those areas connected to China, Hong Kong, and Macau, the prices there or the variations have more effects, say, than in Tokyo. Unfortunately for DFS, it has most of its business precisely in Hong Kong. We had to adjust the business model. Well, DFS is also in Japan, but that meant there was slower sales in DFS, because there were fewer tourists who went to Japan than where the prices were more attractive.
The currency situation meant that the sales were down and profits were down as well. Well, it was still doing all right, but in terms of profits, this is the only business unit whose profits are down. Of course, these are highly compensated by the outstanding performances of Sephora, whose growth is again double-digit, whose profits are also excellent. We're looking at double digits profit. For the business, this is for the retailing business, this is most exciting. Sephora is doing well all over the world. It's a business model. Its distribution model is worldwide.
It's the only model that I know for the selective retailing business, which is actually worldwide, meaning that you can develop Sephora around the world on the same format. Now, because they are also online, this should speed up its development. The success is astounding in the U.S. Their online sales, you have to know that Sephora is the first cosmetics distribution company, retail company, in the U.S., and the first online as well. I think we will be, in fact, for the retailing business, the cosmetics business, we'll be ahead of the rest of the industry put together, not just online, but also the actual brick-and-mortar company. We're pretty sure of that.
Just of course, they have all sorts of innovative services, 48-hour delivery in the U.S., et cetera. Not to forget Le Bon Marché. You should also all take a visit Le Bon Marché. There's an exhibition going on right now by a Japanese artist called Ai Weiwei. In any case, I believe the for department store, it has enjoyed a 20% growth in revenue, which is pretty good for a department store. They have as many visitors now as they had during the Christmas period because they had this incredible exhibition. All French museums envy Le Bon Marché for having been able to put together this exhibition of Ai Weiwei's work.
By the way, in 2015, there is the Louis Vuitton Foundation, which has almost 1.5 million visitors. In 2015, over the year, we had more than one million visitors in 2015 alone. This, in summary, is what we've been doing in 2015, the performance of the group for the year passed. 2016 now, you're all familiar with the business outlook. We can certainly expect more of the same as in 2015. The European currency is likely to remain low vis-a-vis other currencies. I believe that the other phenomena that we mentioned, the fact that raw material commodities are coming down, will have an effect.
Unfortunately, uncontrollable geopolitical events, and especially the events here in France, certainly had a disastrous effect on the economy. Of course, we have every intention of remaining optimistic because if you look at the situation, well, you have to remain optimistic over the medium term. It's pretty difficult to make short-term forecasts. I believe that if you look at the medium term, and this is what we are after, we're not interested in immediate results. Of course, for our investors, if the stocks go down, this is a disaster. They are concerned about day-to-day developments. For us, we're concerned about the medium term.
What I was able to verify with a number of other people, over the next 20 years, we should remain, by and large, optimistic. The two drivers of the economy, namely China and the U.S., are going to keep driving the world economy. I mean, it's commonplace to say that, Chinese economy is slowing down. There's all sorts of gloom and doom talk about China, that observers tend to underestimate the fundamentals of China's economy. Indeed, if you look at revenue, last year, we did. Our revenue was stable in China. Indeed, we have more Chinese business. If you put together, Chinese customers buying inside China and outside China, sales are up. The fundamentals are good.
China's growth this year is estimated at 5% or 6%. I think most countries would be very happy with 5% or 6% growth. Consumption, household consumption is on the increase, which is of course good news. The Chinese government has been acting directly upon the economy in a number of countries. Well, I mean, and immediately in our countries, when a decision is made by government, it takes a while for decisions to take effect. Now, regarding running the stock exchange, it may have been a bit. Well, they may not have been well inspired. Some of the interventions of the government may not have been the best thing to do.
Other than that, we have things looking good. Over the next 40 years, I mean, at least that prognosis and, well, I mean, it's pretty high. Well, we'll see 20 years from now, but I think that over the next 20 years, you'll have 80% of the good years. We have 16 good years, and maybe there will be four bad years. Out of the four bad years, there will be two bad years and two very bad years there. I cannot tell you which these four bad years will be. I don't know whether this will be this year, next year, or in 10 years' time. One thing is almost for sure, that there will be another crisis. We don't know when it will happen.
I don't know if you've. There's a book written by an economist. I don't know if you hear in the audience, called, The Madness of Central Banks. Well, if you read that book, you'll see, you realize that sooner or later, a bubble will burst. A bubble caused by this, excess cash on the market, and that will probably, be nefarious for the economy. Let's get back, on track. There are good years ahead. There may be some challenging years as well, somewhere along the line. I think the bottom line of it all is that we have to be optimistic on the long run or medium term, and pessimistic on the short run.
In other words, prepare for the worst, be ready for the worst, you can only have a good or pleasant surprises. Regarding our company, we have a number of fine products being rolled out. Some of them are already online. We have injected new products. We have some iconic products also in the making. We have a number of attractive initiatives, travel accessories and a new perfume. That of course with Louis Vuitton is something new. Louis Vuitton, well, Louis Vuitton had started the year extremely well. Regarding perfumes and cosmetics, new ideas, new products, we you may have seen this.
There's a perfume for women, which is in a way, which is called Poison Girl, a reference to Poison. That has done quite well. There's a innovation not just in terms of perfumes, but also makeup and cosmetics. We have things looking up. We are also unleashing our emblematic lines in watches, in jewelry, Bvlgari. The London shop has started, and we are fairly confident that things will go according to plan. Sephora is continuing its worldwide development. Australia, by the way, is a place of growth. Of course, Australia is a long way away, but they are doing very well out there, down under.
DFS, no, there was this issue of fewer tourists coming to Hong Kong and Macau. There will be a shop in Venice, a boutique in Venice to be opened shortly. We're quite confident through 2016. The big values of the group, the creativity, the constant search for quality, and indeed this spirit of entrepreneurship, these are values that all our teams share and bring us together. They will enable us to continue to forge ahead of the luxury industry. I've been running this company for a number of years. When we find that, when the stuff is when we make the most headway.
When the performance is good, strangely enough, we find that our share price goes down. It's paradoxical, but there you have it. The spirit of entrepreneurship will bring with us the best, the best men and women. Indeed, all headhunters find it difficult to attract people with talent elsewhere than in our own company. Well, thank you very much. I will now give the floor to our CFO, Mr. Jean-Jacques Guiony.
Good evening. Some traditional financials on these very fine results that have just been presented. Let me begin with the most complicated slide in my presentation here. You have the quarterly development of sales. We'll look at three columns on the right. You see the nine months, if we just focus on the dark blue portion, organic. Nine months, 6% organic growth. At the end of the year, far right, we've still delivered 6% organic growth. Rounded off, that's 5% in Q4. You see a degree of consistency in organic growth full year. Lighter blue showing you the beneficial effect for once of currencies on our sales. You see that it remained positive throughout the year, which actually were to be noted, even it weakened in Q4.
7% currency impact on our sales, but in total, 10% for the full year. It's a record for the group, I believe, over the past 10, 15 years. All in all, 16% growth split, 6% organic growth and 10% currency impact. Split by region, you're familiar with it. Hasn't changed much. 28% for Europe, 27% for Asia, 26% for the U.S. U.S. up, that's logical because we have the underlying performance of the U.S. It's excellent since it's split by EUR. The strength of the dollar impacted favorably. Geography, starting with the U.S., delivered a fine performance full year, up 9%. A slight slowdown in Q4. Rather deceptive, notably for Wines and Spirits. We anticipated sales in September, so as to benefit from cash-in before the end of the year.
We had an excellent September, bad October. It's more smooth all in all, not such a sharp slowdown in Wines and Spirits. Donna Karan, as Mr. Arnault indicated, is being turned around and ended a number of secondary product lines no longer contributing sales and impacted Q4. You can see a fine performance in the U.S. Fine performance and fairly consistent in Japan, too. Not so easy in Asia. You see Asia's dipped 5%. Within 5%, China's flat, -1%. Korea picked up at the end of the year. Singapore positive. The two problem areas are, of course, Macau, Hong Kong experienced a sharp erosion in their competitiveness following currency impacts.
These difficult figures, we find the obverse side of that in Japan, because as was indicated, consumers who no longer go to Hong Kong and Macau travel to Japan also to Europe. Some of the Japanese numbers and European figures are due to the shift of those customers from one area to another. The four areas in total, there are three that are sharply up. By business unit, broadly uniform. We'll discuss the published organic growth, 6% average. Wines and Spirits, six. A good year for Wines and Spirits, an acceleration in Q2. More about that later. Fashion and leather goods, 4%. The figures are good, even if certain North American activities impacted the average. Very good year for perfumes and cosmetics. 7% growth above the industry average. Watches and jewelry above the industry benchmark, 8%.
Selective retailing, the average of 5. Sephora is well above, unfortunately, DFS for the reasons outlined below. Over time, how did it develop? Wines and Spirits accelerated in the second half. The gap between Q3 and Q4, rather artificial because of early shipments in the U.S., but also in China. The first half of the year, pretty soft. Picking up into the second half. Far more uniform in watches and leather goods, 4%. Slowdown in watches, actually. It's essentially the jewelry business that slowed at the end of the year. Selective retailing, there again, very flat across the year. The income statement overall now won't return to sale. 15% sales growth over the year. Gross margins up slightly faster, 64.7% of sales. Flat, give or take, over last year.
Marketing and selling expenses up 18%. There's a currency impact, that was quite significant, 10 points. Excluding currency, marketing and selling is up 10%, showing the priority that we accord this aggregate. Administrative expenses, currency you need to remove, 7 points. The 12 becomes 5 with constant currency. Admin expenses aren't growing as fast as sales. All in all, this generates an increase of 16% in profit from recurring operations and a margin of 18.8%, stable versus last year. Quickly, the other income and expenses, generally an expense linked to the depreciation of intangibles, slightly lower than last year. Financial income slightly disrupted. That's of course linked to booking the sale of our stake in Hermès last year. I'll hit some detail later. Tax on profits.
There was a payout tax that we don't have this year. The rate last year was 27. We're at 33 this year. Last year, restated for Hermès, 34 down to 33 this year. It's obviously still too high, but flat year-on-year. Minorities, no change. More results at Moët Hennessy. Slightly less at DFS, no big change. You see net income is a record restated for the Hermès impact last year, EUR 3.5 billion, up 20% of last year. The split of profit from recurring operations by business. Units starting with Wines and Spirits, which delivered an excellent performance, 19%. Sales at 16%. We see that the first half was rather difficult, but we improved it in the second half, improved margin in Wines and Spirits.
At Fashion and Leather, because of euro, of course, weight of the reorg, activities in the U.S. Before you ask me the question, if you're interested, Vuitton had a margin that was stable last year, an increase in its operating income, which doesn't really vary from that of the division. In Perfumes and Cosmetics, up 1 point in operating margin, which is a lot. Watches and Jewelry, 50% increase. Last part in the first half, second half in terms of income was good. More contrast with Selective Retailing. Good improved margins in Sephora, a situation more challenging for DFS, where revenue is down and costs are more difficult to adjust, personnel and staff costs. Of course, no scope effect this year through our profit from recurring operations, no acquisitions this year.
I've given you the currency and operational effects because of the specifics of the year. If we look at what happened with the strength of the dollar versus the euro, we weren't able to both price hikes, whatever the geography, give or take whatever the business segment. Since we weren't able to have price increases, we don't have the general impact of price increases. It's in the currency impact. By splitting the two amounted to, attributing to exchange what is in fact operational. I combined them. If that causes a stir for some of you, in the second half, we had a currency impact that's slightly above 400 million EUR. That was quite significant. Financial income has changed a lot. Cost of debt is down. Less debt, less interest rates, lower interest rates. That's down. That's fairly straightforward.
The unused portion of exchange rate derivatives. The cost of derivatives sharply up. In the first half, we bought back collars in the tunnel strategy. That was a one-off. I said there'd be nothing in the second half. There was nothing. If we remove that one-off, the cost of currency hedges is broadly similar to that of last year. The income on investments is of course changed by the effect of Hermès, EUR 3.3. EUR 133 million linked to the disposal by investment funds. Nothing extraordinary in the item Others that prompts no further comment. A word on the balance sheet briefly, just to say that it's very robust. 45% of total balance sheet.
Group shareholders' equity also very liquid because we have confirmed credit lines for EUR 3.4 billion, not in the balance sheet, to meet any contingencies in terms of upheavals on the debt market. The rest, no change over the last year. A word on cash flow, which is a source of satisfaction. Mr. Arnault said available cash flow, which is up by EUR 850 million over last year to reach EUR 3.7 billion. It's an historic high for the group. Everything contributed. Cash flow from operations up 14%. Change in working capital requirement contained at EUR 400 million. That's against EUR 700 million last year. We invested slightly more than last year. All in all, you see that we generate a very significant surplus.
As you can see on this slide, allowed us to reduce the debt that went from EUR 4.8 down to EUR 4.2 billion back to available cash of EUR 3.7 billion. We have the cost of dividend, LVMH minorities, and taxes of the order of EUR 2.1 billion, about EUR 500 million of various investment income. You have the details in the materials you've received. There was a slight increase in the value of the debt in foreign currency because the euro weakened against most currencies. All in all, these various items allowed us to reduce our debt by EUR 600 million. Opposite you have the gearing ratio 16%, one of the lowest levels ever reached by the group. To end with a word on the dividend.
The dividend that we proposed at the AGM will be EUR 3.55, EUR 1.35 paid in December. That leaves EUR 2.20. If you have the past five years, an average annual increase of 11%. Thank you for listening.
Well, ladies and gentlemen, we are now happy to take your questions. By the way, I made a mistake. I said, I don't know why, that, I know that Ai Weiwei is Chinese. Apparently, I said that it is Japanese. Of course, I don't know what I was thinking, but of course, Ai Weiwei is a renowned Chinese artist and not a Japanese artist, as was mistakenly said.
I'm Antoine Belge from HSBC. Mr. Arnault, you referred to the Vuitton brand, and you said rather than opening new stores, rather enlarge them or embellish them. Are there parts of the world, maybe Mainland China or Hong Kong, where you might actually close shops? In Hong Kong in particular, you had a challenging environment. You may be prompted to close down shops there.
Last year, Mr. Navarre was optimistic about Cognac in 2015. In 2015, there was this, these talking stops, mostly in China. What's the outlook for the VSOP Cognac in China? Regarding finally the financial position of the group, it is very sound. Do you believe that such group as Tiffany or Burberry, whose price has come down, might constitute attractive targets? I know you're not going to give me a straight answer, put it this way. Are there areas where acquisitions are in order, or will you be looking mostly at organic growth?
Regarding the Vuitton shops, let me make myself clear. In Hong Kong, there's no question of closing what few shops that we have. What we do have, on the contrary, we will embellish and renovate the Central and Landmark. Hong Kong is a cyclical country, as you know. You have ups and downs there. Right now, Hong Kong is going through a trough. There's been other low points when Hong Kong was returned to China. At the time, it was full of Japanese people who left. Then the Chinese came instead. There's of course, a currency concern between China, Hong Kong and Japan. Maybe one day, the yen might come back up. We don't know. There were a number of issues there.
It's mostly an issue for DFS more than Louis Vuitton. Hong Kong will remain one of the high points of Asia and one of the drivers of our growth. What about mainland China? We said that we might close down stores in China. If we do this, it is only because as Vuitton, we'll open shops elsewhere. You have to understand that the retail picture is evolving rapidly in China. You have some areas of the country that may be attractive one day and less attractive the next day. Look at Shanghai or indeed other cities of the country where areas where we had set up shops five, 10 years ago, they were prosperous once and less so today.
Likewise, indeed, in America, even in New York City, you have areas that go up or down. Such in a new country as China, developments are even faster. Our strategy in China is to be at the right place at the right time. If you're in a place that is not so good, well, at the end of the lease, well, the lease is not renewed. Today, you know that there are too many shopping malls all over the country. Indeed, one of the economic challenges of the country is the property business that might collapse because of over, as it were, overbuilding.
Now, when there are too many malls, but this means that when new malls are built, the leases are very attractive. It might make sense to leave a mall where business was not doing so well to go to a new one where you get two or three years of free rent. Well, of course, we will take the opportunity. I mean, there may be news clippings saying that Vuitton is closing down business in China. It's not true, but, well, it sells papers. Yes, the next question is for Christophe.
Yes, yes, things don't always go as planned, but this time, we had a pleasant rebound in Q3 in China, so that was good. We can say that the destocking situation in China is behind us. Now we are entering a new China. China, of course, is a market economy, even though theoretically it's still a communist country. In any case, we have to set ourselves for the future. We know that we introduced Wines and Spirits in this country and we are in a position to generate growth in Wines and Spirits. I will address your question head on. I think there are risks in the market, but I don't believe there's a quality issue. There are two critical periods, the Autumn Festival and the Chinese New Year.
We did well at the Mid-Autumn Festival, where we gained market shares. I think we are well-positioned to have a good Chinese New Year. As Mr. Arnault said, we have to look at the, well, less long term. This is a strong brand, great potential. We have to reach out to new consumers. That's where growth is going to come from in the next five years, not to mention the rest of the portfolio. Of course, we have wide open gates for us because we have not just Cognac, champagne. The Chinese right now are drinking little champagne. There's, of course, huge potential there. We have reason to believe that China will be even bigger in the future than it was in the past.
Indeed, the trend we've seen in the U.S. will probably continue. I'm keeping our fingers crossed that this is only the beginning of the year.
Okay. Sure. On acquisition, since you asked me the question, obviously I won't answer on the brands you've mentioned. I won't raise false hopes, and I don't want to be unkind as regards the brand cited, I won't answer those two points. Acquisitions, in order to be effective, one shouldn't be in a hurry. We need to look at the good opportunities. We don't need any I mean, if opportunities arise, we'll see. What we really want to do in the group at the present time is to really focus on startups. It's not just in the digital field that there are startups. There are also startups in other areas. For starters, it's less risky, and sometimes it's more fun, and it motivates people, teams, I mean, to launch a startup.
What we want to do is manage our business on the startup mode. Even the largest, a business such as Vuitton, we must avoid managing it in a overly bureaucratic way with everything that goes with it. I mean, you're still not saying that, Mr. Guiony, you shouldn't keep an eye on the figures from time to time. You mustn't swamp them with paperwork, asking them for constant information, which generally arrives at head office without being read by anyone. Let them work in a dynamic mindset. That's what we're trying to do. We have what? 60, 65 brands. The more there are, the less we hassle them. Maybe we need to add a few so that they can operate in a more dynamic fashion. That's the group's position.
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From Exane BNP. You mentioned the TAG Heuer Connected watch that seems to be very well received by the market. During the course of the year, we'll be able to up your supply chain capacity, and what might your sales volume be on this product? On an unrelated topic, you've delivered an impressive work on Vuitton, on fashion and leather goods that are more upscale. I mean, we've seen some important changes at Donna Karan. There's another transition underway at Marc Jacobs. Do you have plans that are on the cards in 2016 to boost growth in these brands that are more entry level? On DFS and an exposure in Hong Kong.
With a low point in Hong Kong, I mean, do you plan any interventions, or are there any opportunities that you see to restructure or adjustment as regards the presence of DFS in Asia in order to better contribute to the results of Selective Retail? Thanks.
On watches. We're obviously going to up the production capacity. I won't give you the targets because our major peer doesn't give them. I fail to see why I should innovate because he's the big innovator, or so it seems. I just follow suit. I said earlier that we had a potential that was markedly higher than what we can produce. We'll try and adjust. Interesting. I mean, our partner Google and the watch, the results were published yesterday that are pretty amazing.
Think that we'll be continuing intensively the partnership in order to grow this activity. On the U.S. brands, perhaps you'd like to say what's. We're trying to reposition them in luxury, more kind of entry-level luxury market. Say a word about that. These two companies want to consolidate each on one brand. We had several lines at Donna Karan, six or seven lines. We decided to concentrate within on DKNY contemporary line for Marc Jacobs. Marc Jacobs, you know, focusing everything on Marc Jacobs. They're all positioned in the U.S. contemporary segment to focus all out on relaunching the brands. We have the talent of Marc Jacobs, it's focusing 100% on Marc Jacobs. He's left Vuitton, one of the leading talents in fashion in the U.S., he's fully committed to the project with a new management team.
The new products will be out under the Marc Jacobs brand in two, three months. In the stores, we've begun consolidating the two brands in some stores. Very encouraging results for Donna Karan. DKNY, we have very promising creative talent, U.S. two designers, and they're working to develop the brand. We're in that transition phase, and we expect to see the results partly this year and more in 2017. As regards DFS, it's clear that we already begun in 2015, and we're going to continue. We've heavily restructured the cost base. We're far more selective in the projects. We're renegotiating the rents and the leases where we can with the airports and the landlords.
There's a second key point, which is also evolving, offering in order to take account of customers from middle classes and offer a price range suited to that category. We're trying to diversify destinations to follow the tourist flow. In the spring, we'll be opening a store in Cambodia. That's a new destination, that's fully in the pioneering spirit of DFS. The second part, we'll be opening in Venice next to the Rialto Bridge. That's going to be a bridgehead for DFS in Europe on a restructure. We're now beginning the development and to restructure for the future.
Good. Mario Ortelli of Bernstein. Three questions, if I may. The first one on Louis Vuitton. A few years ago, you gave a clear mission to Mr. Burke and Mr. Arnault. That was regain the exclusivity of Louis Vuitton, design the profitability, and no problem if you lose market share or revenues were not so important. What is the new mission for the management of the company? What are the priorities? Expand profitability? Regain market share? The second question is always about Vuitton, and is, which price increases can we expect in 2016 for Louis Vuitton? The third one is about your outlook for 2016. You seem quite confident despite the volatility in the environment.
Last year, I remember that you mentioned about not cost-cutting, but be very conscious on cost, and Jean-Jacques was very good in this. This year, probably, are you planning a higher investment? If yes, given this more confident outlook, which, in which businesses there will be the highest increase of investment for the group? Thank you.
The mission. They speak in French or? Okay. Well, I will say this. Louis Vuitton's mission is that sort of we have to be, we want, I mean, this is our job description. This is our mission. We want to become the most desirable brand in the world for the next 20 years. We don't It's not so much looking at individual products or their immediate profitability or indeed marketing. That's a concept or word I don't like. When you see students in business school showing up at Vuitton sometimes, you see them always, they're asking, Mr. Arnault, well, what are we supposed to do in terms of marketing? Not all of them are graduates of school of engineering. Many come from the business schools or less scientific schools.
I tell them immediately, There's no marketing in this company. I mean, of course, it sounds paradoxical, but what I mean is that in our house, in this house, creativity should be let loose, should be entirely free, and should bring customers with it. This is not a sort of a mass market business as some of our competitors may be, especially in perfume and cosmetics. They spend their time conducting market surveys to see what customers want to buy. If you do that, you go straight to uniformity and mediocrity. I mean, the same in politics, if you want to do what people expect of you, well, the end result is a sort of a soft consensus, which means that you do something which has no character, no personality, no desirability.
Our mission is precisely the opposite. We want to create desire. We want to be desirable, with new, emblematic, iconic products, creative products, reflective of our company, of Vuitton. The paradox of marketing for us is the art of presenting products.
Making them dream when they are in contact with the company or house. We want to bring dreams to their heads. Marketing is not there to dictate what creation should be. That's our motto, as it were. That's what enabled Louis Vuitton to be the number one brand in the world. Not so much in terms of size, although, of course, that is important. Mostly in terms of the variety of desirability. That is what we want to preserve, and indeed strengthen in the next 20 years. That is our mission more so than market shares. There was something about prices rising in 20. We haven't got objectives in terms of prices.
Of course, we want to maintain Louis Vuitton's outstanding profitability. Of course, price fluctuations may be due to currency fluctuations. When the currencies go up, we can't bring the prices up, but when they come down, we can. There is likewise for the productivity. We can't say what product development there will be. We adapt to circumstances. Of course, you were referring to investment areas. Well, we are looking at investments in Wines and Spirits because our capacities need to increase because of our well, success. We need to be able to bottle more wine and spirits and store more Wines and Spirits. In wine, in watch and jewelry, we are looking also at development. We will be buying property for shops and factories.
Of course, at the end of the day, we want to maintain a good, net cash flow position. Are there further questions? Yes, in the back of the room there.
Good evening. My name is Selim Cherubini. I have two questions. Number one, in your presentation, there was little comment about the tragic events that took place in Paris and the aftermath and the effect on your brands, especially Vuitton and Taïga. Can you give us some indication as to how or what difference it made on Q4 growth? When do you expect business to come back to business as before? Then cash flow generation, you have an outstandingly sound financial position. Could you give something else to the shareholders other than the dividend payout?
Regarding the consequences of the terrorist attacks in Paris, of course, there was immediately fewer visitors in our shops. All of shops had a fewer visitors, as much as 50% down. Of course, this has been picking up slowly but surely, and we're almost back to where we were before. We're maybe 4% or 5% in terms of visitors. We are hoping that no other terrorist attacks should occur. Of course, one never knows. We didn't measure out what it meant in terms of revenue. The numbers are good. Overall, the effect isn't huge.
We are mostly concerned with motivating our people working in the field, making sure that they remain dynamic, that they shouldn't be demoralized by the context. This is, as you can imagine, true in shops. In restaurants, business is going down. There are fewer customers, fewer patrons, and they used to be difficult to find a table at the restaurant. Now, it's not so difficult. Regarding the use of cash flow, we can pay out dividends and we increase the dividend on a regular basis. There were a few cases where exceptional payouts were made to shareholders. The Hermès operation last year was a case in point. That was a one-off.
Regarding the buying back of shares, which is implicit in your question, as you know, we are not much gone on share buyback programs. Of course, when the debt level comes down, then of course, with low interest rates, there's not much point in paying off all the debt. It, it might make sense to buy back our shares, especially if the price of the shares come down, says Mr. Arnault.
Thank you. Good evening. It's Fred Speirs from UBS. I have two questions, please. The first one's about the price architecture of the Vuitton brand. We've seen a very successful evolution of the mix in the last few years. Our analysis shows that almost 40% of SKUs now are over EUR 2,500. I'd be interested to hear how satisfied you are now with your current price architecture and where you would like to see the new product introduction. The second is on the U.S. consumer. Given we've seen a slowdown in domestic U.S. spending on soft luxury in more recent quarters, but at the same time, we're seeing much better performances in Cognac and Sephora and so on. How do you read the U.S. consumer at the moment? Thank you.
Sure. The question on prices, is price resistance, is the resistance to prices in a brand such as Louis Vuitton? The answer is no. I mean, obviously, we mustn't exaggerate, but the Louis Vuitton customer is capable of buying high quality products at relatively high prices. I mean, we sell quite a few bags, leather goods, and exotic skins at very high prices. A few years back, we launched iconic lines in leather. You have one, a photograph here, on the screen. There are others. We've never had a store manager somewhere in the world say, be careful, too expensive. No. The question is, we need to offer the best quality, and it's true that Vuitton products in that respect give great satisfaction.
It doesn't mean that we must discard products that are traditionally more affordable, such as small leather goods, accessories, et cetera, through that. The priority at Louis Vuitton is to offer truly the most iconic products in terms of the quality of leather goods, leatherware, et cetera. We have no difficulty with that. Well, as to the U.S. customer, I mean, last year went very well with the brands. I mean, Cognac, as you've seen, Sephora is doing very well, and Vuitton has grown very well in the U.S. I mean, in the United States, we believe that Vuitton has about 80% U.S. American customers and far fewer foreign customers than in France. I mean, because in France, up until today, there are many visitors to France.
Having said that, last weekend, I visited a store in Lille, and it was full of French customers. In fact, the store was too small to accommodate them. They need to increase its size. U.S. customers have a proximity with a number of our brands. It's the same with Dior. For years, they are convinced that the quality and the image, and really these brands make them dream. Let's take the last question. Let's see if from Blake, another question perhaps.
Sure.
Is there one last question? Well, if there are no more questions, thank you all very much for coming, and see you next year.