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 flow. So 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. But 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 attractions. 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.
And China is slowing down as well. So 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 domestic events in France, which brought about a reduction in tourism in this country. Nonetheless, the group as a whole did well, and all of these business areas are enjoying growth, both in terms of revenue and profits.
Let's start with the Wines and Spirits. Well, we didn't fully address the situation, but the situation was good to begin with, Mr. Lavarne, need not worry. 2014 was a rougher patch because of destocking in China. The situation is being resolved as we speak.
But of course, last year, there was significant dynamic growth in the United States, especially for sales of cognac. Hence, the excellent performance in cognac. And champagne also has had significant growth with high numbers for champagne. Indeed, there are we will have to top up production if we are to keep up the performance. Regarding fashion and nether 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. Louise Vuitton in December often generates more revenue than most of that it considers during the whole year. So because of Louis Vuitton's dynamism, the new collections inspired by Nicolas Jettke, our creator whose fashion shows, of course, are very warmly received all on 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, We were I mean, the headscarves were very successful as well. The jewelry line was also very well received by our customers as a whole. And there are a number of new watches, which have been doing extremely well, so much so indeed that right now, we are out of stock for most models in many places.
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. So rather than having more boutiques and more shops, we have embellished and enlarged some of the shops that in Los Angeles that have been more famous in Paris or the shop in Los Angeles that opened in January. These 2 stores were, as I said, embellished And we felt it was rather that than opening new shops. A number of brands did extremely well.
San Die, double digit growth and many of its emblematic iconic lines with the combination of what that brand Sandy and the genies of Karl Lagerfeld meant that the creativity of that house, as it were, is renewed year on year, leaning on its Roman heritage. And you can see a picture of the headquarters of Fendi, which was inaugurated last year. And 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. And not only can she produce highly desirable products and highly modern products, and sometimes creators produce things that are so modern that not as popular. So that this 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. And our 2 American brands are being revisited, as it were.
And so I believe that they are looking to a promising future, but 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. Here you see a picture of Tommy that with Sauvage perfume, which has turned out to be a phenomenal success. Indeed, I think the greatest success of all times for male perfumes. I think it's number 1 everywhere around the world.
And 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. And of course, advertising has reached out to the entire world. This was the first time that you had Johnny Depp appearing on perfume commercial.
We have the Jadore, which is also growing. Indeed, channel number 5 was the benchmark, and it's gone better than that, Miss Dior as well. So you have Jadore and Miss Dior. And regarding makeup, you have Dior is the number one brand, not just for perfume, but also for makeup. So they are number 1 worldwide in selective retailing.
The other brands should be mentioned here. The perfumes launched by Guerlain are doing well. The Orchidre Aberial. Benefit is another brand, smaller brand 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 1 on the market. And you have the 2 other brands. You have Make Up Forever, Aqua 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 Diva brand, the Diva line, the Serpent line, which is Serpente, I beg your pardon line, a historic line that was revisited recently. You have a number of watches that have come out, Baudelaire, Baudelaire, Lucha and the brand is enjoying so much success that we have started new open new shops. We have well, we have revisited the shop in London to based on the house in Rome. And while the Bulgaria house is being beautifully run, TAG Heuer was has refocused its business, not the Jean Claude Pilar running it with great gusto.
As you know, he refocused the business on its core business, so the sporting watches, the this new watch called Crack Under Pressure is doing extremely well. And then he announced the connected watch. I have one, it's great. It's good. 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. And 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 big indeed, but it's interesting that there should be such a success and there will there's a new model coming out in the spring. And so this is really, really looking good.
Hublot now, as you know, is under Jean Claude Pilar as well. Hublot has continued its success on its emblematic models, Big Bang and Classic Fusion. And then, of course, Choume. Choume is the oldest jewelry house in the country. Indeed, it started before Napoleon.
So that takes us back some time. And it has been inactivity. It has set up shop at this point on Place Vendome, it's still flourishing. So that's so much for watches and jewelry. For selective retailing now, this is a more contrasted picture.
I was referring earlier to geopolitical situations. And well, 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 price is there or the variations have more effects, say, than in Tokyo. But unfortunately, the DFS has most of its business precisely in Hong Kong. And so we had to adjust the business model.
Well, the effect is also in Japan, but that meant there was slower sales in DFS because there were fewer tourists who went to Japan and said where the prices were more attractive. And so the currency situation meant that the sales were down and profits were down as well. Well, it is still doing all right. But in terms of profit, this is the only business unit whose profits are down. But 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 digit profits. So for the business, this is the retailing business, this is most exciting. And Sephora is doing well all over the world. Its 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 Cetra around the world on the self sale format.
And now because they are also online, you can 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 1st cosmetics distribution company, retail company in the U. S.
And the first online as well. And I think we will be the in fact, for the retailing business, for the generics business, we'll be ahead of the rest of the industry put together, not just online but also the actual brick and mortar companies. We're pretty sure of that. So plus, of course, they have all sorts of innovative services, 48 hour delivery in the U. S, etcetera.
Not to forget the Bon Marche, and you should also all take a visit visit the Bon Marche. There's an exhibition going on right now by a Japanese artist called Eigwein Yang. In any case, I believe the department store, it has enjoyed a 20% growth in which is pretty good for a department store. And 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 Marchetta having been able to put together this exhibition of Ai Weiwei's work.
And by the way, in 2015, there is the Louis Vuitton Foundation, which has had almost 1,500,000 visitors. And in 2015, over the year, we had more than 1,000,000 visitors in 2015 alone. So this, in summary, is what we've been doing in 2015, the performance of the group for the past. So 2016 now, well, 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. And I believe that the other phenomena that we mentioned, the fact that raw material commodities are coming down, will have an effect. And unfortunately, uncontrollable geopolitical events and especially the events here in France certainly had a disastrous effect on the economy. But we 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.
But 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 investors, if the stocks go down, this is a disaster and they are concerned about day to day development. But for us, we're concerned about the medium term. And what I was able to verify with the number of other people, over the next 20 years, we should remain, by and large, optimistic. The 2 drivers of the economy, namely China and U.
S, are going to keep driving the world economy. I mean, it's commonplace to say that Chinese economy is slowing down. There is all sorts of gloom and doom talk about China, but observers tend to underestimate the fundamentals of China's economy. And indeed, if you look at revenue last year, we did our revenue was stable in China. And indeed, we have more Chinese business.
If you put together Chinese customers buying inside China and outside China, sales are up. And so the fundamentals are good. China's growth this year is estimated at 5% or 6%, and 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. And 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, they may have been a bit on well, they may not have been well inspired. Some of the interventions of the government may not have been the best thing to do. But other than that, we have things looking good over the next 20 years. I mean, at least that's prognosis and that 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 4 bad years. And after the 4 bad years, there will be 2 bad years and 2 very bad years that I cannot tell you which these 4 bad years will be.
I don't know whether this will be next year or in 10 years' time. But 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 see it in the audience called The Madness of Central Banks.
Well, if you read that book, you'll see that 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. But let's get back on track. They are good years ahead. There may be some challenging years as well somewhere along the line. But 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 and then you can only have good or pleasant surprises. But regarding our company, we have a number of fine products being rolled out. Some of them are already online. We have new products. We have some iconic products also in the making.
We have a number of attractive initiatives, travel accessories and a new perfume. And that, of course, the Louis Vuitton is something new because Louis Vuitton has started the year extremely well. Regarding perfumes and cosmetics, new ideas, new products, we you may have seen this as a perfume for women, which is in a way which is called poison girl, reference to Poiseau. And that has done quite well. The innovation not just in terms of perfumes, but also makeup and cosmetics.
And so we have things looking up. We also embellishing on the magnetic lines in watches, in jewelry, Bulgaria, the long and short has started. And we are fairly confident that things will rise according to plan. Sephora is continuing its worldwide development. Australia, by the way, is a taste of growth.
Of course, Australia is a long way away, but they are doing very well out there down under DSS. And there was this issue of fewer tourists coming to Hong Kong and Macau, but there will be a shop in Venice. We're keeping Venice to be open shortly. So we're fairly we're quite confident for 20 16, the big values of the group, the creativity, the constant search for quality and indeed this entrepreneurship. These are values that all our teams share and bring us together, and 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 business is tough is when we make the most headway and when the performance is good. Strangely enough, we find that our share price goes down. It's paradoxical, but there you have it. But this pivotal entrepreneurship will bring with us the best men and women and indeed, all headhunters find it difficult to attract people with talent elsewhere than in our own company.
Well, thank you very much. I'll now give the floor to our CFO, Mr. Jean Jacques Clermi.
Good evening. So some additional 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 look at 3 columns on the right.
You see the 9 months, if we just focus on the dark blue portion organic, 9 months, 6 percent organic growth at the end of the year. Far right, we've still delivered 6% organic growth, rounded off that 5% in Q4, but 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 efficiently relatively noted in the week and 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, not 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. At excellent since it's split by euro, 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 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. Donner Curran, as Mr. Art Mill indicated, is being turned around and ended a number of secondary product lines no longer contributing sales and impacted Q4. But 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 has dipped 5%. Within 5%, China is flat minus 1%. Korea picked up at the end of the year.
Singapore positive. The 2 problem areas are, of course, Macau, Hong Kong experienced a sharp erosion in their competitiveness following currency impacts. But these difficult figures, we find the adverse 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. So some of the Japanese numbers and European figures are due to the shift of those customers from one area to another. And the 4 areas in total, there were 3 that are sharply up.
By business unit, broadly uniform, We'll discuss the published organic growth, 6% average, Wines and Spirits, it's a good year for Wines and Spirits and acceleration in Q2, more about that later. Fashion and Leather Goods, 4%. The figures in Podimina, certain North American activities impacted the average. Very good year for Perfumes and Cosmetics, 7% growth selective retailing, the average of 5%, Sephora is well above 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. So 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.
And selective retailing, they're again very flat across the year. So the income statement overall now might return to sales, 16% sales growth over the year. Gross margins up slightly faster, 64.7 percent of sales, flat, give or take over last year. Marketing and selling expenses up 18% as a currency impact and 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 of constant currency. So 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 with the sale of our stake in Honey Gracia, I'll have some detail later. Tax on profits, There was a payout tax that we don't have this year. The rate last year was $27,000,000 We're at $33,000,000 this year. Last year, restated for Hamid, 34% down to 33% this year.
It's obviously still too high, but flat year on year. Minorities, no change, more results of more than 10.5%, slightly less at BFS, so no big change. And you see net income is a record restated for the Homey's impact last year, EUR 3,500,000,000 up 20% as last year. So we split a profit from recurring operations by business units starting with Mines and Spirits, which delivered an excellent performance, 19% sales at 16%. We see that the first half was rather difficult, but we improved.
But in the second half, improved margin in Wines and Spirits, Fashion, Leather, because of euros, of course, wait to see 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 one 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 the selective rating, good improved margins in Sephora, but 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 from the current operations and our acquisitions this year, 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 book price hikes, whatever the geography gives or takes whatever the business segments. So 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, thereby splitting the 2 amounted to attributing to exchange what is in fact operational. But I combine them if that causes a stirrup of some of you in the second half. We had a currency impact that's slightly above €400,000,000 so that was quite significant. Financial income has changed a lot. Cost of debt is down, less debt, less interest rates, lower interest rates.
So that's down, that's fairly straightforward. The unused portion of the exchange rate derivatives, cost of derivatives shall be up. In the first half, we bought back colors in the tunnel strategy. That was a one off. I said there'll 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 Hermes, EUR 3,300,000, EUR 133,000,000 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 percent of total balance sheet. The shareholders' equity also very liquid because we have confirmed credit lines for EUR 3,400,000,000 not in the balance sheet to meet any contingencies in terms of upheavals on the debt market for the rest.
There are no change over the last year. A word on cash flow, which is a sort of satisfaction, Mr. Artner said, available cash flow, which is up by EUR 850,000,000 over last year to reach EUR 3,000,000,000 EUR 3,700,000,000. It's a historic high for the group. Everything contributed.
Cash flow from operations, up 14% change in working capital requirement contained at EUR 400,000,000. It's again EUR 700,000,000 last year. We invested slightly more than last year. But all in all, you see that we generate a very significant surplus, which, as you can see on this slide, allowed us to reduce the debt that went from EUR 4,800,000,000 down to EUR 4,200,000,000 back to available cash of EUR 3,700,000,000. We have the cost of dividend, LVMH, minorities about EUR 500,000,000 of various investment income.
You have the details in the materials you proceed. And there was a slight increase in the value of the debt in foreign currency because the euro weakened against most currencies. So all in all these various items allowed us to reduce our debt by EUR 600,000,000 opposite you have the gearing ratio, 16%, one of the lowest levels ever reached by the group. And 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 €2.20,000,000,000 here over the past 5 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 his sister is Japanese. And 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.
Antoine
Bel from HSBC. But Arnaud, you referred to the Zeton 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.
Nevard had a was optimistic about cognac in 2015. But was 2015, there was well, there was this destocking stopped in mostly in China. So what's the outlook for the S&P 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. So put it this way, are there areas where acquisitions are in order? Or will you be looking mostly at organic growth? Well, regarding the Vuitton shops, let me make myself clear. In Hong Kong, there's no question of closing 1 few shops that we have.
What we do have, on the contrary, we will embellish and renovate the essential 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, but there have been other low points when Hong Kong was returned to China. At the time, it was full of Japanese people who left and then the Chinese came instead.
So 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, but there were a number of issues there. And it's mostly an issue for DFS more than Louis Vuitton, but Hong Kong will remain one of the high points of Asia and one of the drivers of our growth. Now what about Mainland China?
We said that we might close down stores in China. If we do this, it is only because if you saw, we will 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 5 or 10 years ago, they were prosperous once and less so today.
Likewise, in America, even in New York City, you have areas that go up or down, but such a new country as China, developments are even faster. So our strategy in China is to be at the right place at the right time. If you're in a place that is not good, well, at the end of the lease, well, the lease is not renewed. And today, I mean, you must be some you know that there are too many shopping malls all over the country. And 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 they are there are too many malls, but this means that when new malls are built, the leases are very attractive. So it might make sense to leave a more business was not linked to wealth to go to a new one where you get 2 or 3 years of free events. And of course, we will take the opportunity. I mean, there may be newskeeping saying that Vitol is closing down business in China. It's not true, but it sells paper.
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. And 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. But in any case, we have to set ourselves for the future. We know that we introduced Wazen Spirits in this country, and we are in a position to generate growth in Wines and Spirits. But I will address your question head on.
I think there is well, there are risks in the market, but I don't believe there's a quality issue. There are 2 critical areas, the autumn festival and the Chinese New Year. We did well at the Mid Autumn Festival where we gained market shares, and I think we are well positioned to have a good Chinese New Year. But as Mr. Arnold said, we have to look at a less long term.
This is a strong brand, great potential. We have to reach out to new consumers, and that's where growth is going to come from in the next 5 years, not to mention the rest of the portfolio. Of course, we have wide open gates for us because we have one not just cognac, champagne. The Chinese right now are drinking little champagne and there is, of course, huge potential there. But we have reason to believe that China will be even bigger in the future than it was in the past.
And indeed, the trend we've seen in the U. S. Will probably continue and keeping our fingers crossed that this is only the beginning of the year.
Well, 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 to brand cited. So I won't answer those 2 points. So 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 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. And it's not just in the digital field that there are startups, 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 start up. And what we want to do is manage our business on the start up mode, even the largest, a business such as Vuitton, we must avoid managing it in an overly bureaucratic way with everything that goes with it.
I mean, you're still not saying that Mr. Drilling, 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 and let them work in a dynamic mindset. That's what we're trying to do. We have what, 60, 65 brands.
So the more there are, the less we hassle them. Maybe we need to add a few so that they can operate in more dynamic fashion. That's a great position. From XM 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 Kuranda. There's another transition underway.
Marc Jacobs, do you have plans that are on the cards in 2016 to boost growth in these 2 in these brands that are more entry level. On gear first and then exposure in Hong Kong, with a low point in Hong Kong? I mean, do you plan on any interventions? 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 the Selective Retail? Thanks.
Well, on watches, well, we're obviously going to up the production capacity, but I won't give you the targets because our major targets because our major peer doesn't give them. I failed to see why I should innovate because he's the big innovator. Also, it seems, so 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. So I think that we'll be continuing intensively the partnership in order to grow this activity. So on the U. S. Brands, perhaps you'd like to say what trying to reposition them in luxury, more kind of entry level luxury, not so good about that.
Well, these 2 companies want to consolidate each on one brand. We have several lines of Donnick around 6 or 7 lines. We decided to concentrate on DKNY contemporary line for Marc Jacobs. Marc Jacobs and we're 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 that's focusing 100% on Marc Jacobs. He's left retail and one of the leading talents in the U. S.
So he's fully committed project with a new management team. The new products will be out under the Marc Jacobs brand in 2, 3 months in the stores. We've begun consolidating the 2 brands in some stores, very encouraging results for Donner Curran, DKNY. We have very promising creative talent in the U. S.
2 designers, and they're working to develop the brand. So we're in that transition phase, and we expect to see the results partly this year and more in 2017. As regards BFS, 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 where we negotiate the rents and the leases is where we can with the airports and the landlords is the 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, and that's fully in the pioneering spirit of DFS. And the second part will be opening in Venice next to the Rialto bridge. That's going to be a bridge head for DFS in Europe on a restructure without picketing the development to restructure for the future.
Good morning. Mario Talley of Bernstein. Three questions, if I may. The first one on Louis Vuitton. A few years ago, you gave a clear mission to Nestor Breck and Le Martin 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.
Which is 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 return. And there's which price increases can we expect in 20 16 for the return? And 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 higher investment? And if yes, given this more confident outlook, which in
which businesses there will be
the highest increase of investment for the group?
The mission, they speak in French or?
All right. We'll say this. We've got Vitol's mission in the summer. 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, and that's a concept or word that looks like when you see students in business school showing up at the Vivo and sometimes you see them always asking, Mr. Arnold, what are we supposed to do in terms of marketing? Not all of them are graduates of schools of engineering, many come from the business schools or less scientific schools. And 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 letting us 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 maybe, especially in perfume. In Pacific, they spend their time conducting market service, see what customers want to buy. If you do that, you go straight to uniformity and then Q1, I mean, 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.
And so our mission is precisely because we want to create desire, we want to be desirable with new emblematic iconic products, creative products, reflective of our company, as we told. And the paradox of marketing and marketing for us is the art of presenting products and making them dream when they are in contact with the company or how we want to bring dreams to their heads, but marketing is not there to dictate what creation should be. And that's how I motto, as it were. And that's what enabled we'll be told to be the number one brand in the world, not so much in terms of size, although, of course, that is important, but mostly in terms of a variety of desirability. And that is what we want to preserve and indeed strengthen in the next 20 years.
That is our mission more so in 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. But 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. But it's likewise for productivity, we can't say what product development will be, we adapt to circumstances.
And of course, you were referring to investment areas. Well, we are looking at investments in Wazers and Spirits because our capacities need to increase because of our success. We need to be able to bottle more wines and spirits and store more wines and spirits. In wine in Washington, we're looking also at development. We will be buying property for shops and factories.
But 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. Good evening. My name is Selim Cherubini. I have two questions. Number 1, 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 Vito and Sephora.
Can you give us some indication as to how or difference it made on Q4 growth? And when do you expect business to come back to business as before? And 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 less there were fewer visitors in our shops and all of the 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 of the business, but we're hoping that no other terrorist attacks should occur, of course, and one never knows. We did measure out what I had mentioned in terms of revenue. The numbers are good.
So overall, the effect isn't huge. We are mostly concerned with motivating our people working in the field. They can show that they remain dynamic, they shouldn't be demoralized by the context. Of course, this is, as you can imagine, this is through in shops. Now in restaurants, businesses 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, of course, 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 Hermes 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 mat gone on share buyback programs. But of course, when the debt level comes down, then it's of course, with low interest rates, there's not much point in paying off all the debt. And so it might make sense to buy back our shares, especially the prices of the shares come down, says Mr. Arnault.
Thank you. Good evening. It's Fred Spiers from UBS. I have two questions, please.
The first is 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 at €2,500,000 I'd be interested to hear how satisfied you are now with your current price architecture and where you would like to see new product introductions. The second is on 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 Zephyr and so on. How do you read the U.
S. Consumer at the moment? Thank you.
It's a question on prices. Is price resistance, is there 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 products. I mean, we sell quite a few bags, leather goods and exotic skins of very high prices.
A few years back, we launched iconic lines in leather. You have one photograph here on the screen. There are others. We've never had never had a store manager somewhere in the world say, Be careful, it's 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, etcetera, do that. But the priority at Louis Vuitton is to offer truly the most iconic products in terms of the quality of leather goods, leather wear, etcetera. So we have no difficulty with that. Well, as to the U.
S. Customer, I mean, last year, it 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 in France. I mean because in France up until today, many visitors to France. But having said that, last weekend, I was visiting a store in Lille, It was full of French customers. In fact, the store was too small to accommodate and 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, please.
Let's take the last question. It's here to me. Another question perhaps.