Hello, and welcome to the LVMH 2018 First Quarter Revenue Conference Call. I'll now hand you over to Mr. Chris Hollis. Please go ahead.
Hi, I'm Chris Hollis, Director of Financial Communications at LVMH and with me is Jean Jacques Guillenie, our Chief Financial Officer. Thank you for joining us. We have some brief remarks to make about LVMH's revenue for the Q1 of 2018. As in previous periods, these revenue figures are reported in accordance with International Financial Reporting Standards. And after these remarks, Jorge and I will be happy to take your questions.
Before I begin, I must remind you that certain information to be discussed on today's call is forward looking and is subject to important risks and uncertainties that could cause actual results to differ materially. So these refer you to the Safe Harbor statement included in our press release. Turning now to our revenue announcement. Hopefully, you will have the chance to read our release, which was issued yesterday evening in both French and English. As always, it's available on the LVMH website, www.lvmh.com, as are the slides that we are using to guide today's discussion.
So kicking off the highlights of our Q1 performance, we're pleased to have reported a strong start to the year with double digit growth even in the context of strong negative currency impact given the strength of the euro compared to notably the dollar and the yen in the same period last year. All of our business groups and regions contributed to the 13% organic revenue growth we delivered in the Q3. And excluding the impact of the termination of DFS's Hong Kong International Airport concessions at the end of last year, the organic growth would have been 15% with all business groups showing double digit growth. In terms of the business groups specifically, we had good performance within Wines and Spirits and across our fashion brands. I want to call out the strong creative momentum we're seeing at Louis Vuitton, which had an excellent quarter and the continued strength of Christian Dior Couture, which, as you know, we integrated into LVMH in July 2017.
At Bafine and Christian Dior, we also continued to see robust growth across all product categories and we had impressive increases at Bulgari. Within our selective retailing business, Sephora's growth continued in key regions and DFS saw strong increases in Hong Kong and Macau. For the Q1 of 2018, this is Slide 3, total revenue rose 10% on a reported basis to 10,850,000,000 euros from €9,800,000,000 in the prior year. This includes, as I mentioned, a 13% increase in organic revenue after a 7% structure increase, principally from the inclusion of Christian Dior Couture and a 10% negative currency effect. In terms of revenue by region in euros, we continue to have a well balanced revenue mix across geographies.
As you can see on the map, Asia, including Japan, represented 33% of revenue at the end of the Q1. This was followed by U. S, including Hawaii at 22%. France was at 9%, the rest of Europe accounting for 18%. Japan represented 7% of revenue, and the remaining 11% was composed of revenue from other markets.
Compared to last year, Asia gained 2 points from the U. S, reflecting in part the weakness of the dollar versus last year's period. Looking at change relative to the prior year period, organic revenue rose double digit in all regions but Europe. Asia was the biggest driver of growth with 21% in Asia, excluding Japan and 18% in Japan, helped by the favorable exchange rates in this region compared to last year. And the U.
S. Grew a solid 10%, while Europe grew an honorable six percent. Turning now to our business group. So it's on Wines and Spirits. The 10% organic revenue growth for the quarter was entirely offset by the negative currency effect.
Breaking this down, Champagne and Wines organic revenue growth was 4%, but there was a negative 8% currency impact for the quarter, resulting in reported revenue of €422,000,000 in the Q4 of this year compared to €439,000,000 in the prior year period. For cognac and spirits, organic revenue growth was 13%, and this was offset by an 11% negative currency impact resulting in reported revenue of 773,000,000 euros compared to €757,000,000 in the year ago period. Volumes in the champagne business, this is Slide 7, were up 1% with solid organic revenue growth in all regions. A particularly good performance of our prestige QVs, which gained market share, added a positive mix impact. The States and Wines performance was primarily driven by positive price effect.
In cognac and spirits, Hennessy volumes were up 5% for the Q3. In the U. S, we saw continued progress similar to the second half of last year in the context of supply constraints. And in Asia, we saw strong momentum in China after a successful Chinese New Year campaign, while destocking of Glenmorangie by Asian distributors continued. Given the overall strong growth of Hennessy in Asia, there was a strong positive mix impact in the quarter.
Moving on to Fashion and Other Goods. This business group, Slide 8, grew a strong 16% for the quarter on an organic basis. Reported revenue was up 25 percent to €2,270,000,000 in revenue versus €3,400,000,000 in the year ago period. This resulted from a 19% structural impact, which was due to the addition of Christian du Couture as well as Raimoah, whose Q1 twenty 17 revenue was included in Q2 2017, I think, last year. This strong organic growth was particularly partially offset by a negative 10% negative currency impact.
Looking more closely at fashion and leather goods, this group overall saw strong growth in Asia and the U. S. As well as continued positive momentum in Europe. Louis Vuitton continued its creative momentum with the success of both its iconic and lines and new products and delivered an excellent performance. The Q1 saw a successful fashion show, the Louvre, a new fragrance, Le Jour Celeb and importantly welcomed a new and highly talented men's Artistic Director, Virgil Abloh.
His first show will be for the brand will take place in June during Men's Fashion Week in Paris. You'll also be hearing more about the new connected luggage horizon, including a new connected service that allows you to trace your luggage from your smartphone in the main worldwide airports. Among the other fashion Maisons I mentioned earlier, Clifton du Couture's solid performance. In addition, the brand appointed Kim Jones previously in Virgil's Road at Louis Vuitton as the Artistic Director of Dior Homme. He will also present his first collection in June during Paris Fashion Week.
So some exciting times coming in men's fashion from the group starting this summer. Fendi showed robust progress in ready to wear shoes and Moripiana had an excellent start to the year driven by its iconic and accessories lines. Celine saw good momentum this quarter and named Haile Saaman Artistic Creative and Image Director of the brand. This news was very well received in the fashion media. Givenchy's first haute couture collection by Clara Keller was well received.
Marc Jacobs continued the repositioning of its collection and work continued at Rimmelux where a new visual identity in conjunction with its milestone 120th anniversary was rolled out during the quarter. Perfumes for our perfumes and cosmetics business group, this is Slide 10, we revenue reached €1,500,000,000 compared to €1,395,000,000 in the Q1 of 2017. This reflected an impressive 17% increase in organic revenue, offset by a 9% currency impact, resulting in an 8% reported revenue growth for the quarter. The performance of this business group was driven by all segments in all regions, particularly Asia. To give you some more color on the brands, Christian Dior continued to benefit from the popularity of its iconic J'adore and Miss Dior fragrances, while Sauvage continued its success.
Makeup, like the Lip Glow, Addict Lacquer Plump and Rouge Dior and skincare lines such as Prestige and Capture also performed strongly within this business. Gala launched Mont Gala Eau De Parfum Floral and had good performance in the skincare category, driven by Abbe Royale. And perfume Givenchy saw strong performance in its makeup lines, notably face powder, Prism Libre and introduced a new fragrance called Live Blossom Crush. During the quarter, Benefit launched Bagal Bang, it's volumizing mascara. Kenzo continued the international rollout of Kenzo World, and Fresh successfully launched its black tea kombucha facial treatment essence.
Fenty Beauty by Rihanna continued its exceptional growth during the Q1, helped by social media following and rolled out the plush matte lipstick, matte from there. Now looking at our Watches and Jewelry business, this is Slide 12. Revenue in this group was €959,000,000 compared to €879,000,000 in the Q1 last year, growing a very strong 20% on an organic basis and taking into account the 11% negative currency impact, reported revenue increased 9%. The Watch and Jewelry Business Group performed well, especially well in Asia and the U. S.
In terms of the brands, Bvlgari delivered an excellent performance in the Q1, driven by the success of its Emblematic line, Saphenti, B01, Visa and Octo. The brand also opened its 1st Boston boutique in January. And Chaumet launched a new high jewelry collection, high end jewelry collection, Le Monde De De Chaumet, starting with its 1st chapter, Promenade and Preyere. The highlights of watches was the presentation of new models at Baselworld, including Albury's Octo Finissimo tourbillon automatic that set several records for its fitness. Hublot's Big Bang Sapphire tourbillon, Tag Heuer, Zimonica and Carreras and Zenith's Div Fi, 0 gs.
These are all well received at the show. Turning to Selective Retailing, Slide 14. Reported revenue was down 2% for the quarter to 3,100,000,000 euros compared to 3,150,000,000 in the year ago period. This is a result of 9% organic revenue growth offset by an 11% negative currency effect. However, if we were to exclude the impact of the Hong Kong International Airport Concessions, which were terminated last year, the organic growth would have been 16%.
Sephora delivered strong comparable store revenue growth in Asia and continued its excellent momentum across online sorry, momentum online across all regions, gaining market share. The rollout of its digitally enriched store concepts, which included the Saint Lazard store in Paris in the Q1 has been well received by customers. DFS saw strong sales growth in its Hong Kong key Galleria stores, which partly partially offset the expiration of its Hong Kong International Airport Concession. DFS also saw good performance in its recently opened Tea Galleria locations in Venice and Cambodia. At the same time, the brand opened 2 new beauty stores in Macau this quarter this last quarter.
So overall, this is the final slide. LVMH delivered a very good performance in the Q1, starting off the year strong despite currency headwinds and all of our business groups were contributed to organic growth. Going forward, we will continue to focus on innovation and creating high quality products as we selectively expand our store network and maintain a focus on cost management. While we are taking a cautious approach to the balance of the year due to geographical sorry, geopolitical and economic uncertainties, we will continue to pursue our objective for reinforcing our leadership position in the world's luxury goods market. Thank you.
And with that, we will now pass and take any questions you might have. Hugh, could you open the line, please?
Yes, of
course. And our first question is over to the line of Oliver Chen at Cowen and Company. Please go ahead. Your line is now open.
Hi. This is Jonah on for Oliver. Thank you for taking our question today. We're just hoping you could comment on the state of luxury market and customer trends in the United States. Thank
you. Okay. Thank you for your question. So the market the luxury market in the United States is obviously doing well. As you can judge from our overall numbers with double digit growth, which has been going on for quite some quarters now and is still there for the Q1 of 2018.
If you compare the trends with the end of last year, there are a few changes. We see a much better business in watches and jewelry. And in Fashion and Leather, it's less good than it was in Wine and Spirit and it's in line in Selective Distribution. So there are some changes, but overall, the business is very well oriented in the United States for the time being.
Okay. The next question is from the line of John Guy at First. Please go ahead, John. Your line is now open.
Thanks very much. Thanks, Chris. Thanks, Jean Jacques. I've got three questions, please. The first on Louis Vuitton.
Could you maybe just talk about pricing during the quarter? My sense is that the volume growth has been very strong, healthy double digits. So but in some selected markets, we did see price increases. So could you just talk about the extent of the pricing increase for the U. V.
Term in the Q1, please? My second question is around Wines and Spirits, in particular, cognac. Is it fair to assume we've had about an 800 basis point value increase for cognac and Spirits And splitting out that value again, just trying to think about what is price mix and what is the underlying raw sort of price increase there. I know you've always been cautious around just raising prices to let competition come in to Hennessy. And finally, just with regards to DFS, you mentioned in the release that you've been, I guess, changing your offer to suit the traveling consumer better.
I was just wondering what's changed within the overall DFS offer. And on for Sephora, how many Sephora self serving servicing kiosks do you now operate on a global basis? Thanks very much.
Thank you, John. I will disappoint you on the last question. I don't know the answer. I will try to know the answers for the rest. But for this one, I don't.
I will try to provide it at
a later stage. So on the pricing for Louis Vuitton, so it's not on selected markets. We increased prices for leather goods in a limited way around 1.7%, 1.8 percent in February across the board. So it
was a
widespread price increase, which didn't draw a lot of attention. It was just on Leggates. On oil and spirits, your assumption is correct. The price mix impact is about 8%. So you have altogether 5% volume increase, 4% price increase and about 4% mix impact.
The mix impact stems from the very good performance of the Ekso business, which grew double digit. We mentioned many times that we have a lot of constraints on DS and the SOP and for the time being less so on XO. So we benefited from that and obviously from the strong demand coming from the eastern part of the world. As far as prices are concerned, the 4% price increase should be well understood. It's not a straight price increase of 4%.
Price increases were lower than that on average in between 2% 3% depending on the market. But there is also an impact coming from the fact that we allocate less fund to the trade, which is a way to call discounts allocated to distributors on the basis of their volume performance. Given the fact that we are pretty constrained on our volumes, we don't see the need of allocating such funds to the trade. And technically, such funds to the trade are being accounted for as a negative to sales. So when they disappear, it's technically as if we were increasing prices and we count this within the price impact.
As far as DSS is concerned, change in offer is probably a sort of more to global words to describe what's going on. We do that at all times. I mean, we make sure that depending on the type of clients we have in a given location, we adapt the offer with more destination products or more cosmetic products depending on what the taste of such clients are. And this is what we do and we try to be we have developed tools internally, which are allowing our merchandising team to be much more precise on what they propose to the client and how they can adapt the offer depending on the location. So that's what we had in mind, but nothing but clearly spectacular that would change the business model of the FS.
That's great. Thanks, Jean Jacques. And maybe just one follow-up just on Wines and Spirits, in particular, cognac. I'm looking at January February exports that are down mid single digits on a value basis. And there's a good sort of 70 plus percent correlation on your Wines and Spirits business on a quarterly lag basis.
I mean is it right to take a slightly more sort of cautious approach to Wines and Spirits organic growth assumptions for the remainder of the year? Or do you feel comfortable with the kind of exit rates that you've seen in the Q1?
Well, for cognac, 5% is a bit on the high side. We said last year that for the next couple of years at least, we expect to grow, let's say, in between 3% 4% depending on market opportunities. So 4%, 5%, which we had coming from a strong pressure from clients to buy more is probably a little bit on
the high side. As far
as champagne is concerned, the growth in volumes is only 1%. We hope we will do a bit better in the rest of the year.
That's great. Many thanks.
We are now over to the line of Edouard Aubin of Morgan Stanley. Please go ahead. Your line is now open.
Yes, good afternoon. Edouard from Morgan Stanley. I have three questions all on Vuitton actually. So first of all, your Fashion and Leather Goods division grew 16% organically in Q1. Should we assume that Vuitton's growth was very close to that rate or even a touch higher?
Would that be too optimistic? So that's number 1. Number 2, to my knowledge, LV has not been increasing its square footage for about 18 months now. You managed to have like for like growth very significantly in Q1 despite the fact that Vuitton is already posting sales density very significantly above industry average. I guess my question is at what point does the store experience suffers from excessive traffic in the store?
So going forward, does it mean that you'll have to increase your selling space or online will be able to absorb a significant share of growth? And lastly, Vuitton's annual sales growth run rate is around €1,500,000,000 roughly, which I guess is extremely significant. And what measures are you taking to protect the exclusiveness of the brand? For example, how do you manage the best sellers around the world on that basis?
Okay. Thank you, Eduardo. So I always answer the same thing to the first question. So Vuitton is never very far from the division's average, and there is no exception there. So Vuitton is very close to the 16%, and I will not comment whether it's above or below, but it's very close.
As far as sales density is concerned, well, that's, I would say, a good problem to have, I would say. But you alluded to the right answer in your When asking the question online, it could be part of the answer. And potentially increasing the number of stores or more probably increasing the size of existing stores, sorry, as we did in the past. But frankly, for the time being, despite what you said about improving sales density, which is absolutely right, we don't feel the need for drastic action in terms of the way we welcome our clients and the way we serve them. The existing network works extremely well, and we have no particular plans to change the whole thing.
And so I missed your last
Yes. It's how you predict exclusiveness of the brand.
Exclusiveness of the brand. Well, people tend to assimilate Vuitton with Monogram. I mean, Monogram is a significant share of the business. But nevertheless, it's not Vuitton. I mean, it's not only Vuitton.
They are almost 3 times more in number of products and sales that we do on other products. And this is how we think we could keep the exclusivity of the brand. The brand has to be different things to different people and has been different things to different people for many, many years. So we know that the brand is growing. It's growing fast and we are pretty happy with that.
But it's not only monogram, it's not one single product that is running the show. I mean a lot of different things, different initiatives of different nature, be it ready to wear, be it the men business, be it handbags, be it collaboration. I mean a lot of things are being implemented within the brand to make sure that we keep it alive and kicking and that long term, it doesn't become boring. And we don't feel we are not concerned with the risk of becoming overexposed. The risk is always to lack momentum and not to be at the forefront of competition in terms of marketing.
And we think what we do now is exactly what should be done and that should enable to sustain the momentum of brand for the quarters to come.
Okay. Thank you.
Okay. We are next over line of Louise Silverhurst of Goldman Sachs. Please do go ahead. Your line is open.
Hi, good afternoon. Thanks Jean Jacques, Chris. Just two questions for me, please. In terms of just going back to Edouard's point on Louis Vuitton, can you just tell us about the manufacturing capabilities in the supply chain in terms of the execution of getting that huge volume of product out to the market during the period? And are we still looking at around 30% of product each year, which is new to the brand?
And then a follow-up just on Wines and Spirits, and apologies if I missed it, but could you tell us the number of days of inventory across the U. S. Distributors for cognac? I know it's incredibly low where it should be, but if you could give us an idea, that would be great.
So on the manufacturing capabilities, it's something we work on pretty hard. You've probably heard that we are going to open new ateliers in France in the next quarter. So that's part of the answer. Our volumes, obviously, have grown very significantly over the past few months years, and we are facing increasing demand. So again, it's a good problem to have.
In order to solve that, we need to open new capabilities. Each capability, each factory or each atollier has its own flexibility, so they can recruit more people. They have some ability to produce more hours. So we are working on that as well. We are not worried, to be frank.
I mean, it's not something we can adjust overnight. But with a little bit of time planning, we can certainly increase the production to levels that will enable us to meet further increase in the demand. But be assured that this is something we're working quite hard on because it's obviously a big opportunity that we don't want to miss. As far as wine and spirit is concerned, the number of days of inventories in the U. S.
Is quite low. It's around 15 days. So same as more as the same as what it was at the end of last year. So it's obviously a fairly constrained level. And at this type of level, we have no opportunity to serve the final clients in volumes, which are higher than the ones we would send to our own distributors and our own clients.
So obviously, one of the levers we've been putting on over the last years is not available now. We know that, and we have to thank our distributors for helping us and operating at such low level of stocks.
The next question is from the line of Antoine Belge at HSBC. Please go ahead. Your line is now open. Yes.
Hi. It's Antoine at HSBC. Three questions. First of all, on Fashion and Leather, so 16% in Q1 and for 10% in Q4. I think you mentioned in the call or the good story, I think that in December, Vuitton had kept aside some merchandise in order to make sure that there would be enough for Chinese New Year.
So has there been a sort of effect of additional supply? And would you expect that to disappear in the Q2? 2nd question on Vito, on Fashion and Leather. The FX impact was minus 10%, I think more negative than consensus was going for. You mentioned the price increase with such a volume growth, so probably strong operating leverage.
I know it's not time to talk about margins, but how are these conflicting effects going to work in H1 and then maybe over the full year? And thirdly, with regards to nationalities, I mean, 16% for fashion as well. So all nationalities must have contributed, but it seems that the slowdown in Europe due to currency has been more than compensated by maybe a fantastic OSCALA rebound in Hong Kong. And so seeing that smaller Asian countries may be small if you take country by country, but quite significant issue group, all of them have been showing strong growth. So maybe could you comment on that?
Thank you.
Okay. Thank you, Antoine, for your three questions. On Fashion and Leather, so the capacity question, you're a bit mixing offering demand. I mean, as far as offer is concerned, we set aside a few products to serve Chinese New Year as we said last year. So the month of December was definitely constrained, and we sort of freed this additional capacity in January February to serve Chinese New Year.
Now we are back to normal and to our plans in terms of supply. As far as demand is concerned, as you've seen from the numbers, and I will try to answer to your next questions on this. But as you've seen, I mean, demand seems to be well oriented. So what I can tell you is that before the end of the year, we shouldn't we don't expect to be constrained in a meaningful way. In terms of volumes, we have the ability to produce more.
We'll have new atelier, as I answered to Louise before, we'll have new atelier becoming live at some point. So we think we should be able to serve a growing demand
in the
course of this year in a meaningful way. So your question on margins with exchange ratio on the one side and price increase on other side is obviously a bit premature to answer. I think I'll give you a better answer when we get our H1 numbers. I don't even have the Q1 numbers as we speak. So it's quite hard for me to comment on that.
As far as your last question or third question on Fashion and Leather in Europe, in Asia and in the various geographies, we've seen some significant changes over the last months. We have a little bit of a slowdown in Europe in terms of growth. It's still very positive, but it's a little bit of a slowdown in terms of growth in Europe, obviously compensated by Asia and chiefly in Asia by Macau and Hong Kong. When you look at the currency movements, this is obviously very well correlated. The level of the currencies in Hong Kong and Macau is connected with the U.
S. Dollar, but softened somewhat against the renminbi. So it shifted a little bit of business into Hong Kong and Macau and to Japan to a lesser extent probably at the expense of Europe. So all this is quite positive. I mean Vuitton is double digit in Europe in Q1.
Nevertheless, we see the flows of Chinese tourists particularly moving pretty quickly where they feel they get the best deal from a currency viewpoint. It's nothing new, but happened as we expected in Q1.
Maybe just a quick follow-up. I think Chris mentioned on the removance or the sort of perimeter impact on Fashion and Leather, the Q1 versus Q2. So is it fair to assume that the overall perimeter impact in Q2 would be actually lower because it would be only deal on the maybe actually a reversal of the removals effect?
We don't know exactly how we will treat that. We'll make sure that this is clear to you when we report our numbers in July, but it's fair to assume that what you said is right.
Thank you. Our next question is from the line of Anne de Bois at Raymond James. Please go ahead. Your line is open.
Good afternoon. I have a few questions as well. The first one, again, on Louis Vuitton, can you maybe be a bit more precise on the growth from each type of customers, European, Chinese and American? And my second question is on the watch and jewelry division. Can you provide a bit more details on the growth between jewelry and watches and maybe the trend by region of this division?
And lastly, have you observed during this Q1 different performances between January, March February? Is March better than February or only February due to Chinese New Year?
Yes. On your last question, we I mean, on your last question, we always get differences in between January, Feb March because of Chinese New Year shifting usually a couple of weeks from 1 year to another. So this year, February was very, very strong and January was softer, but this was due to the fact that Chinese New Year was 2 weeks later than it was the year before. So that it's not particularly significant and quite difficult to comment. So your first question was on growth, European, Chinese, U.
S. The main time basis.
Well, I
have to say that it's
quite consistent. Most of our time base are around the growth of Vitol together. So as you don't know the growth of Vitol together, it's hard for you to conceive what it is. But as I
said, I mean, it's
not very far from the division. But the important point to have in mind is that it's pretty consistent. I mean, both the Chinese, the American, the Europeans and the Japanese are pretty well grouped around this average, which doesn't happen so often. As far as WatchNG division, is concerned, the trend was not similar to the preceding quarters. Watches were doing or jewelry was doing much better than watches.
So the division is showing about 20%. It's significantly more for Watch Sheets. And we had a very good quarter with both Chobney and sorry, more jewelry. Very good quarter, sorry about that. Very good quarter for Choumier and Bulgari.
Watches did okay. We are pretty close to if not at double digit. We are very, very close to double digit, which tends to show an improving trend there, particularly TAG Heuer had one of the best quarter in the recent past, and Hublot is still moving from strength to strength. So we are pretty happy with the situation. As far as regions are concerned, it's worth pointing out and that explains actually why Heuer is doing better that the U.
S. Was much, much better than it used to be for both watches and jewelry And Asia is still proving very strong. Only a little bit of softness in Europe and Japan, but definitely Asia and U. S. Doing okay.
Okay. Thank you very much.
Our next question is from the line of David Demer at CMCI. Please go ahead. Your line is open.
Hi, everyone. All my questions have been already answered, but maybe a small one on Jorg Couture. Are you experiencing an acceleration in growth as well for this brand? And in this case, is it flat to assume an organic growth close to 20% in Q1?
I will not organic growth on Dior. I mean, we had a very good quarter in Dior Couture. Will not give you the details, but the business did very well, I would say, across the board, particularly strong in Asia and in the U. S, which is good news. The average organic growth is above the division.
And as you know, it's not including in the division. It's recorded within the
parameter impact. Yes. But have
you seen an acceleration in growth as well for this brand like you have seen in the other brand of the Fashion Leather, good division?
It's a bit better than what it was in Q4, but in Q3, but nothing really significant. And we are talking about very high numbers. So I don't know whether the security difference is so significant.
Okay. Thank you.
We now go to the line of Fred Spiers at UBS. Please go ahead. Your line is open.
Good afternoon, Jean Jacques and Chris. Thanks for taking my questions. 2 left from my side. The first was around the volatility of the trading environment. If you were to look past the timing changes in the major holidays, do you think we're starting to see that come down at all?
And then second was just around LV pricing. Following what you've done already in Q1, is the door still open for further price increases at Vuitton later this year?
Well, the question on volatility, I mean, I think we have to live with some form of volatility whatever we do. So we know that when Chinese New Year shifts 2 weeks and it creates a lot of differences in the comparison base, it's a little bit true all over the place. So volatility is a fact of life in my view in our businesses. As far as RV is concerned, I will not comment, but frankly, we don't know. It's we have implemented an across the board price increase, which we haven't done for 3 or 4 years.
That's already one step forward. I cannot really comment. No decision has neither been studied nor taken as far as further price increase are concerned. So nothing to report on that front.
Thank you. Okay. Our next question is from the line of Thomas Chauvet of Citi. Please go ahead. Your line is now open.
Good afternoon, Jean Jacques. Three questions, please. The first one, a follow-up on cognac. Could you comment on the depletions for Exo and VSO people's Chinese New Year? And in the U.
S, you still manage to have low single digit volume growth for Versus, or at least maybe for the U. S. Business in the period against a very tough comp. Can you please update on perhaps the availability of younger eaux de vie for the rest of the year and for Versus and whether you continue to explore Leather. So if I understand well your previous comments, so for Vuitton, the store network remains stable and will remain stable, but you're planning to continue to do store enlargement and refurbs.
But other than Vuitton, where are the main CapEx plan? I'm thinking more in terms of store count expansion. Can you perhaps comment on Dior, Fendi and Celine? Is that where you see still some opportunity? And my third question, I know you wouldn't comment on the beginning of April for Fashion Lada.
It's way too early. But more generally, how do you think about the Q2 and the rest of the year where obviously the Fashion Leather division is not facing a much tough comp on a 3 year cumulative basis. I think the comp gets like 10 points tougher. I think the Q1 comp was from that standpoint on a 3 year basis a little bit milder. Are we are you still comfortable when you comment about trends are well oriented that the growth continues in subsequent quarters?
Thank you.
Thank you, Thomas. Not easy. I mean, that's not an easy question that we usually don't answer, and I will make no exception. As you know, we are not in a business where the visibility is particularly good. We try to understand the market.
We try to understand the customers, But predicting their behavior and predicting external shocks as they may happen from time to time is always a very difficult task. So I will not go into that. The only thing I can say is that we had a good start to the year, and we expect these good trends to continue. So on your more specific questions on cognac and on Vuitton, on cognac, the depletions in China were very strong in the first two months because I don't have the March numbers, but I have the Chinese New Year numbers. And they were very good.
We were up for our main categories about a third. So it's quite significant. So very good situation there. As far as the U. S.
And Versus versus VSOP is concerned, I mean, Versus is under strict production constraints. We cannot grow this business within the next couple of years, as I said, more than 3% maximum, 2.5% to 3%. And volumes in Q1 were not dissimilar to that. We are developing the SOP in the U. S.
The SOP is growing very fast in the U. S. But in terms of number of bottles, it's really very small compared to Versus. From a pure volume viewpoint, I'm not talking about a mix viewpoint, but from a pure volume viewpoint, it is very, very unlikely that the SOP could compensate for Versus And we also have some constraints in terms of production on the SOP, which is way less flexible than Versus full term. It's maybe less of a case, but at some point, the constraints on Versus will also bite into the VSOP capacity to grow.
Finally, your question on fashion and number of stores. You mentioned your Fendi and sell in. Each of these brands more or less have 200 stores. So definitely more or less. Definitely, there is some room for increase.
But for GEO facility, it's a bit early to say we are assessing plans with the changes that took place earlier on this year. For Dior, we think that we can grow the business without increasing a very large number of stores. Obviously, they are opening stores, but not in a frantic way and same thing for Fendi. So nothing really meaningful, although we keep increasing regularly the number of stores in a controlled way, I would say.
Thank you. And for Vuitton, so very, very low single digit square footage growth over the coming years on to fulfill the needs of a better store experience. And maybe some of the stores are tired and some geographies need a bit of a refit?
Well, they will do. I mean, we have a large network and we cannot revamp it we cannot revamp all of them at the same time. So we do that over a cycle of 5 to 7 years. And we do it it's a constant movement. And Vuitton, despite they are not increasing the number of stores, they are very busy in revamping and improving the, as you said, the customers' experience in the stores by either enlarging them or making them better and reviewing the way they've been operating them.
So it's really a constant movement there.
The next question is from the line of Roger Fujimori of RBC Capital Markets. Please go ahead. Your line is open.
Hi, Ginger. Hi, Chris. Two quick questions. First is a follow-up on Fashion and Leather. Could you give us a qualitative idea of which brands have seen improving trends in Q1 versus Q4?
My second question is on e commerce. Any comment or qualitative comment on the contribution to growth, especially for Fashion and Leather? And then my third is on Sephora. I think you've mentioned market share gains around the world and e commerce growth. But have you seen any changes in the competitive environment in the U.
S? And do you still plan to open 100 stores this year? Thank you.
Thank you, Riccardo. Well, we disappoint you on your first two questions, I'm afraid. I will not really comment. And quantitatively, we had most of our brands did reasonably well in Q4, but they also did reasonably well in Q3. And basically, I don't want to point the ones doing better than the others.
Frankly, this is not my intention and not my job. On e commerce, on fashion leather, I think we mentioned some numbers last year for the contribution to the group for e commerce, which was across all divisions. That's the only thing we want to comment for the time being. I don't have any specific and anything new to announce for e commerce in Q1 of this year. The trends are the same.
The scene is the landscape is changing quite fast, and we are adapting to this. But nothing to be reported, I would say, on a quarterly basis there. And as far as competitive landscape for Sephora in the U. S. Is concerned, while there are differences, the trends obviously in demand tend to change with something that we've seen for quite some quarters now, which is a really good slowdown in makeup in the U.
S, which used to be the driving force of the business. At the same time, our brands are some of the brands we carry, including brands from the RDMH Group are extremely strong at Sephora, and the business is still well oriented. For the global Sephora, we did like for like of about 6% in the Q1 of the year. The U. S.
Was slightly above that. So I think it's a good situation there. There are competitors, obviously, be they online or offline, but nothing new. I mean, we were not present in this market 20 years ago, and we managed to make our way into the prestige market in the U. S.
Obviously, the competitive landscape is changing at all times.
And 100
stores to plan for this year?
No, for our U. S. Altogether because for the U. S, it's lower than that. Altogether, I think it's a bit more than 100,000,000.
It's 120,000,000 or 130,000,000 something like that.
Okay. Thank you.
Our next question is of the line of Atia Vadha at AVO Capital. Please go ahead. Your line is open. Okay. Thier, there seems to be a lot
of noise on your line.
Okay. We will go to the next question, which is over the line of Francesca Di Pasquantonio of Deutsche Bank. Please go ahead. Your line is open.
Yes. Hi, good afternoon. I have a couple of questions, please. The first one is really to understand how much you were expect this acceleration that we have seen in Q1. So it seems the business has responded very well to this acceleration.
So my guess is that you were planning well, but just to have a sense and your thoughts around that. And secondly, can you maybe help us understand what notable initiatives are planned for your key divisions, your key brands in terms of maybe special projects, new launches, initiatives that we should be aware of and which could help us in looking at the forecasting for the next few quarters?
Well, 2 tough questions, Francesca. I mean, acceleration in Q1, I mean, we it's almost impossible to forecast that type of thing. I mean, first of all, the acceleration was not so not worthy. I mean, we had 11% organic growth in Q4. We had 13% in Q1.
I mean, that's obviously better, but should we really talk about acceleration? I don't know. I mean, it's your call, not mine. Anyway, the question for us is not to plan for acceleration, it's to make sure that if it happens, we can react well. And remember what I said about Vuitton setting aside some products at the end of last year to serve the clients' needs for Chinese New Year.
I mean that's probably the limit of what we can do, but nevertheless that's what we do. We make sure that whatever happens, we can be ready, be positive or negative. This time around, it was positive, could be negative in the future, nobody knows. So it's more about flexibility than really planning, I would say. As far as initiatives for the future are concerned, I mean, there are plenty of initiatives, most of them being confidential.
So I find it a little bit hard to develop marketing component of our business increases quarter after quarter and it's quite important to be differentiating our brands with striking marketing initiatives and this is what we try to do. If you look at what we did last year and we'll not come back on various initiatives, we took at Vuitton or elsewhere. But if the past speaks for the future, you can expect the same striking initiatives going forward. So this is exactly what we have in mind, and we hope this will help sustain and ensure the growth of the business going forward.
Okay. So you I understand the confidentiality of a lot of the things you're working on. But just to have a sense, will we have another Rihanna in perfumes and cosmetics? Will we have another Supreme in Louis Vuitton this kind of very high profile and highly contributing events whether to the profile of the brand or to the business, the traffic and so on and so forth?
I met I had the chance of meeting Rihanna last month and there is only one. So I really cannot expect that we can do the equivalent initiative, but will be plenty of initiatives, Francesca. I mean, we plan to do quite a few things, but it's obviously very difficult for me to comment at this
stage. Understood. Thank you very much.
Thank you.
Okay.
As there are no
further questions in the queue, can I please pass it back to you for any closing comments at this stage?
Well, thank you. Thank you for listening to the call. I don't have any particular further comments to make. I think we went through all the major points of the and the main features of Q1. I look forward to discussing with you at the end of July the hedge fund performance.
Thank you for attending the call. Bye bye.
This now concludes today's call. Thank you all very much for attending. And you can now disconnect your lines.