[Non-English content] Good evening to you all. I'm delighted to welcome you here to talk about the results for 2019 and a word about the outlook for 2020. 2019, you'll say that I'm perhaps repeating myself, but it's another record year thanks to the team here, who I'd like to immediately congratulate. We have managed to deliver a record in terms of figures. There are many analysts here interested in the figures. A record in terms of revenue, up 15%. We've topped EUR 50 billion. Record in profit from recurring operations, EUR 11.5 billion profit from recurring operations. Very healthy financial situation. Sharp improvement in free cash flow. We've even managed to preserve a gearing of the order of 16%, the ratio between net debt and equity, in spite of a number of investments, including the investment in Belmond this year.
2019, in terms of figures, is an excellent year. Now, if we explain that through the details of our business groups. Let's start with Wines and Spirits, that also delivered an excellent year marked by the sustained growth in Champagne, notably the most prestigious Champagnes, the vintage cuvées, Dom Pérignon, Ruinart, La Grande Dame, all cuvées that expanded strongly. The sales limitation stems from the limitation on available quantities. On spirits, Hennessy is going from record to record, because this year, once again, we've extensively exceeded the quantity sold last year. Let me remind you that now Hennessy has become the number one premium spirit in the world. It continues to grow. I'd like to thank Mr. Bernard Peillon, Chief Executive, for everything he's contributed to the business, and acknowledge his successor from the group, Mr. Laurent Boillot.
Many events marked the growth of wines and spirits this year. Just an example, the inauguration in the spring of the Château de Saran in the Champagne region, that has become a symbol for all our customers worldwide, for all our partners, and that we have restored. It henceforth represents a good business and really epitomizes the spirit of our champagne houses, notably Moët & Chandon in the region. Turning now to fashion and leather goods, beginning with Louis Vuitton, that has also achieved considerable success this year. Many new products, very successful collections. Nicolas Ghesquière organized many shows, including the Croisière show in New York. During those shows, we presented a whole set of new leather goods products and accessories supervised by Delphine that all met with considerable success. I have to say that Vuitton continues to be by far and away the world's number one luxury brand.
That's deliberately. We have production issues because we've opened a new workshop in France, a new workshop in the United States, and that's not enough to meet the extensive demand for our products. That doesn't really matter because we've got good growth, and we'll be able to concentrate on the new products. The new Vuitton Maisons. We've opened a certain number this year. I'd just like to flag the outstanding Maison that we opened in Seoul at the end of 2019 with an iconic building. I don't know if you have a photograph. Perhaps not. By Frank Gehry. It's an absolutely outstanding building. Since the Maison was opened, it was already a Maison Vuitton in the past, but sales have increased significantly.
Vuitton continues to go from strength to strength with a focus on quality, because Vuitton products are reputed to be of the finest quality in the world, and our customers appreciate that. Virgil Abloh, the men's lines in Full year in our stores this year, met with considerable success. Second fashion brand, Christian Dior, which also met with considerable success. Many shows in London. It was an historic success with over 600,000 visitors. Many new locations. The store opened this year with Pietro on the Champs-Élysées is temporary during the renovation of the historic maison close by on Avenue Montaigne. Two exceptional designers, Kim Jones and Maria Grazia, for women's line, that are both very successful. No need to dwell on that.
What you're interested this evening, the figures, they're excellent, and that will continue given the collections that are planned, all the ancillary products that are being designed, and their distribution throughout the world with substantial growth rates. Other Maisons, Fendi, that unfortunately mourned the passing of its historic designer, Karl Lagerfeld. There were a number of tributes to him. One runway show in Rome in front of the Colosseum with a high fashion and fur collection that met with wide acclaim. This iconic Italian brand continues to grow. The other brands of the fashion group, there's Loewe with J.W. Anderson, a very talented designer with whom we've been working for many years now and allowed us with Loewe to develop stores throughout the world, whose success is growing year after year and now achieving remarkable growth rates. Similarly, Berluti, that's also fairing very well with high-quality men's products.
Loro Piana and, of course, Rimowa, that is also achieving remarkable growth rates since we acquired it. That's for fashion and leather goods. Perfumes and cosmetics also delivered very good growth, 9% significantly above the cosmetics markets. You saw the results are not growing in the same way. It's not due to the iconic brands such as Dior, Guerlain, or Givenchy, that are growing very well both in revenue and profit. As Jean-Jacques Guiony will tell you that a charge booked on certain small American brands that is impacting the profit. Christian Dior delivered great performance. The Homme Sauvage fragrance is the leading men's fragrance in the world, that's noting. The Rouge lipstick from Dior is also the world's number one lipstick. We're selling one lipstick every second in the world. That's quite impressive. Great product. Not to mention the other products that have just been launched.
Care products, rose oil, Capture Totale with a serum for the ladies. I urge you to give it a try. It's absolutely outstanding. I've tried it. I tell you that it works wonders. Guerlain, too, great success based in part on care. Skin care, we got great products there. In particular the Abeille Royale that is meeting with great success across developed countries. Guerlain has always been highly focused on sustainable development and has a major initiative aimed at preserving insects and bees in particular, because one of the problems today is that with everything that's happening in the world in terms of the environment, the number of insects over the past 10 years has decreased drastically.
When you're driving in your car, it's actually quite striking to note, is when I was young, driving my car, and after a few hours, the windscreen was littered with insects, and now there aren't any. Insects are disappearing. If we don't try and stem that, soon we'll end up, and Madam Bénard is fully aware of that, there won't be any insects left. That's why we're trying to look after the bees. Other brands are doing very well, notably the collection that we launched with Kris and Rihanna, very successful. Rihanna, in fact, we launched, but it's small, her brand with her fashion business. Watches and jewelry, there again, great progress. Let's start with Bulgari. That is delivering strong performance. New product lines with the development of existing lines. Shown here is the new watch that's very iconic, made in its design.
It's an exclusive Bulgari design, the Serpenti, that's a big hit and excellent financials. Bulgari, since we acquired it, we've multiplied the revenue by just over two, and operating profit five-fold. Soon we'll be acquiring Tiffany. That's a target we're setting to our Tiffany teams. Okay, it took 10 years, but we won't deliver that tomorrow morning. If we can achieve that, it will have been a good acquisition. Don't mention that. Have to keep that under wraps. Otherwise, people were saying that we're buying on the cheap, as we are paying rather a lot in U.S. dollars. Watches, things are going well. Hublot, very strong growth, many new products. TAG Heuer. This year, we revamped the distribution network. We've reduced inventories. We did away with a number of retailers who weren't following our recommendation. We tried to reduce inventory levels.
That's why the figures for the year, a little strained on TAG Heuer, but it'll pick up this with the launch of a great connected watch that has lots of applications, apps, including one for golfers. That's quite incredible. Chaumet. Chaumet too has been very successful this year, with many new creations, including Bee My Love that's so successful that there again, it's out of stock. Selective retailing. Well, Sephora, Chris is here, very successful, doing very well. I won't give the figures because we said we weren't going to disclose them, but they're impressive. When we bought the business, and I think back 20 years ago, it generated EUR 100 million in revenue. Now, we've added a few noughts, a few zeros, that's what we can say. It's pretty good thanks to our teams. Great business that's expanded strongly its internet business.
DFS, slightly tougher because DFS is largely based in Hong Kong. You're all familiar with the difficulties in Hong Kong. We've really cut costs. It remains profitable, but profitability is down, and it's set to pick up once again as soon as there are problems. There are others that have arrived since the problems faced by the region will disappear, and that Hong Kong's difficulties once again disappear. Center of business for retailing is Le Bon Marché, a very fine store that works very well. Also the integration in 2019 of the wonderful Belmond Hotels in the group, and we're working on them. That will extend our business to a more experiential area. There's a lot of synergies with our products, and I won't go into details now. For 2020, as with previous years, the climate is buoyant.
It will remain so, as I've said on several occasions today. In the coming years, we're not going to be able to escape a financial crisis at some point or another. This very unusual situation, or at least unique as compared when I started in the business where interest rates are at an all-time low, close to zero, negative, where the world is awash with liquidity, asset prices continued to rise. That can't last eternally. There's bound to be a readjustment. Where will it come from? I don't know. For over 10 years now, there hasn't been a major global economic crisis, it will necessarily end up by happening. I think that this year, given the U.S. election, given a whole set of factors, growth that must be kickstarted in Europe, I don't think that will happen. It won't happen this year.
This year, from the macroeconomic standpoint, it should be a good year, but if there are questions, well, there's the influence of the outbreak of the disease in China. I can speak to that later if you like and just say that the group continues to grow, continues the course it has set itself by building on its values, creativity at the heart of everything we do, the quality of our product, one of the prime reasons why customers buy our products. The agility, the entrepreneurial spirit of our teams. We're a family business, and the fact that we're a family business allows us to take a long-term perspective that's vital in our business. Analysts here mustn't expect us to look at the quarter with the share price for the next six months. I see some skeptical looks, but we're pretty indifferent to that.
It doesn't matter in the least to me. I don't manage things on that basis. For the company, that's good news. The last value I've added is commitment. The group's commitment is fundamental for young people, for our customers. What does that mean? It means that when the group's products is bought, it must have meaning, and we want to understand what the group is doing aside from making great products that people aspire to. That what we do to address current problems, those of general interest. That's what we've been doing now for over 20 years on the environment with Madame Bénard and her successor, who's just arrived, Madame Valade, with a very dynamic inclusion policy with our human resources of cultural diversity. We're keenly interested in our social economic environment. We support a number of causes.
I'm sure you're familiar with them,
EUR 53 billion, up 15% compared to last year. 15% can be broken down into three parts. First is the currency effect, 3%. If you look to the left, you can see that the currency effect is positive, that is not always the case. It was not the case last year. In almost constant quarter after quarter, about 3%. One percentage point structure impact, that is the integration of Belmond. It was consolidated as of April, that's why the structure effect is higher in Q4. Proper growth, organic growth, 10%. That was, again, pretty much consistent, 11%, 10%, 11%. 8% Q4 seems to be slightly less than the others, that's something of an illusion because there were two factors in the basis of comparison in Q3. There were two factors.
First, you had an increased VAT rate in Japan in October 1st. The Japanese took advantage, well, bought much more in September, much less in October because of the increase in VAT. There was increased business in September. In wines and spirits, there was some replenishment of inventory restocking in Q3 in Cognac in the U.S. There was the opposite effect afterwards because, of course, all the sales that took place in Q3 could not, of course, be repeated in Q4. All in all, you have a 1.5% organic growth. If so, if you reshift Q3 and Q4, you end up with 9.5% organic growth quarter-on-quarter, and that sort of smoothes out this step that you see from Q3 to Q4.
If you look at the geographic breakdown by region of sales, you have about 30% in Asia, an additional one percentage point in Europe. And that is also to do with the currency effect in Europe. America being pretty much the same. So what happened in the various parts of the world? You can see that more or less everything went the right way. In the U.S., up 6%. Growth was somewhat less in Q4. That is partly to do with the stocking and destocking of Cognac that happened between Q3 and Q4. Hence, the performance in Q4 was somewhat less than the rest of the year. Japan, where the - 4% is all to do with this VAT effect. Although it's difficult to measure that, but I think this is mostly behind us. So we made up for the losses of Q4. And so that's pretty much the case.
It may not be always the case for watches and jewelry. It may not be the case, but elsewhere it is. Asia, excellent. We had
Up 16%, well, 17% in H1, only 12% in H2. This is to do with Hong Kong. Hong Kong in Q3 was down 25%, and of course, the deterioration in Hong Kong was only one week in the 12 weeks of Q3, whereas in Q4 you had -40% over the quarter. In Europe, revenue not only was stable, but actually improved in the last quarter compared to the first three quarters, and this is pretty unusual. If you look at revenue by business group, I'll look only at the right-hand side, organic growth. 6% on wine and spirits. You have mostly to do with the mixed price effect, but also it is to do simply because we have premium wines and spirits. 6% organic growth is excellent. Fashion and leather goods, significant growth, 17%, up 17%, and last year's basis of comparison already was pretty challenging.
This was an outstanding year in fashion and leather goods. Perfumes and cosmetics up 9%. Again, a pretty good year. A bit more challenging in watches and jewelry. We had the contrasting picture. On the one hand, Bulgari had an excellent year, but TAG Heuer, being repositioned, had suffered some decline, hence the mitigated organic growth, 3%. The Hong Kong effect was somewhat out of proportion, in watches and jewelry. There was, as I said, the Japan effect, where we had trouble making up for the losses of Q3. Well, we had to make up for the losses of Q4. We have selective retailing, only enjoyed a 5% growth, and mostly to do with the Hong Kong situation and DFS.
If you look at revenue growth, Wines & Spirits, without de-stocking, it would be 6% in Q4 and somewhat less than 7% in the first nine months. Fashion & Leather Goods, still a very high performance in Q4. Perfumes & Cosmetics ended the year beautifully, but as I said, it was a bit more complicated in Watches & Jewelry for the reasons I mentioned just now. If you look at the income statement per se, you have it up on the screen. The sales revenue up 15%, gross margin 66.2%. That's pretty much in line with sales, a slightly negative currency effect. Marketing & Selling expenses. Within that, you have Marketing & Selling expenses, not including currency effect. Selling expenses were up 10% and marketing 11%, whereas G&A, not including currency effect, were up 8%.
All in all, we have profit from recurring operation, EUR 11.5 billion compared to EUR 10 billion. That's quite significant. Other operating income and expenses. We have quite a few one-off items, mostly the subsidy of EUR 100 million to repair Notre-Dame de Paris after the fire. There was also the acquisition costs of Tiffany, and that was already recognized as early as 2019, plus some depreciation of intangible assets. Financial income and expenses. I have a special slide. I'll get back to that. Taxes were up. We have a slight increase, 27% income tax rate, slightly one percentage point more than last year. Minority interest, pretty much the same. You have, of course, more revenue from Moët & Chandon, but less from DFS because of the situation of DFS.
All in all, we are looking at a group share of net profit upwards of EUR 7.1 billion, up 13% compared to last year. You look at the profit from recurring operations by business group first, you can see that Wines & Spirits up 6%, are slightly less than revenue, but still pretty good. We had a negative currency effect in the first half of the year. Fashion and Leather Goods, up 24%, so that's more than revenue, a splendid performance driven by Vuitton and Christian Dior, as Mr. Arnault said, but true for other businesses as well. Perfumes and Cosmetics suffered only 1% in terms of profits. There was a number of brands and other assets were depreciated. Without that depreciation, it would be almost 10%, so in line with revenue. This is a bit deceptive, the figure here for Perfumes and Cosmetics.
Watches and Jewelry, there was some compensation between TAG Heuer and Bulgari, as I said, same situation as for revenue. And Selective Retailing, again, there was the counter effect of DFS in the second half of the year in Hong Kong. For the half year changes, no significant changes, and that's the main message on that slide. No degradation in H2. In fact, the other way around, because you have a better growth in H2 than in H1. + 16% compared to 14% in H1. You have the depreciation of H2 in Perfumes and Cosmetics and Watches and Jewelry. You have the Hong Kong effect. As I said, Fashion and Leather Goods are up 29%, 10 percentage points more than the growth of revenue in H2. If you have a breakdown of the Profit from Recurring Operation, you have the structure impact +EUR 94 million, that's Belmond.
Currency effect, positive to the tune of EUR 266 million. That was only in H2. There was nothing in H1. The balance is, of course, organic growth. I don't know if the word organic means much in terms of profit as such, but the idea is that the two other items are highlighted here. Regarding financial income now, it was about EUR 400 million, now it's EUR 559 million. That's the net financial expense. The cost of financial debt is pretty much the same. Interest rates are the same. Principal is about the same. Interest on lease liabilities. That means a portion of the rental income shouldn't be here, but that is a result of IFRS 16, so EUR 219 million. Because the standard prohibits us from restating 2018, which would have given us a chance to present numbers clearly, I'm afraid I have no basis of comparison here.
This is completely incomprehensible. The cost of currency derivatives, that was up. That was up for two reasons. Number one, there was more hedging for receivables and because, of course, the overall volume was up, so we have more subsidiaries, more revenue. There are some technical effects on the value of calls sold in a tunnel we sell through that, and that was down because the volatility and the unit cost of hedging went up. Fair value of adjustment of available for sale financial assets, that's a bit complicated, but that's our portfolio of financial assets. That's not an actual capital gain that is recognized. It is underlying capital gain. Last year, this was down. This year, it is up.
We had, on paper, a charge of EUR 100 million last year, and now we have, on paper again, a profit of EUR 82 million, but that's not a recognized capital gain. Now, if you look at the balance sheet, there's a slight increase. I'll talk about the debt later on, but you have the consolidation of Belmond, of course. That has brought in lots of assets. Belmond owns most of its hotels. There's also, because we recognize EUR 12 billion in assets on leases and EUR 12 billion in debt. Because of IFRS 16, all these items are affected. If you look at the cash position, that's incomprehensible, I'm afraid. The one thing that is constant, that's the last line, that is operating free cash flow. Now that is up EUR 5.4 billion to about EUR 6.2 billion from about 13% increase.
That's what's left when we've paid for capital expenditure and working capital requirements have absorbed the growth dividends and the rest is in non-operation part is the balance. EUR 6.2 billion was used. There were EUR 3.7 billion for dividend, EUR 3.3 billion for acquisitions, the balance is EUR 0.8 billion or EUR 700 million-EUR 800 million. The net debt stands at about EUR 6.2 billion, which is almost the same amount as free cash flow. That accounts for 16% of equity. The debt to equity ratio is 16%. Dividends, by way of conclusion. Dividend is up 13%, as will be proposed to the general annual meeting. There was an interim dividend in December, EUR 4.60 per share is the balance that will be paid out in February. One slide, which I will spare you, that's the effects of IFRS 16 on our accounts.
The only thing I will say, that it explains clearly how we made a great step backward in terms of financial legibility. Thank you for your attention.
Well, ladies and gentlemen, we're now available to take your questions. If there are any questions, I'm sure there are. If you'd kindly introduce yourself before putting your question.
Edouard Aubin from Morgan Stanley. I've got three questions. The first, obviously, if you could give us an update on the impact of the coronavirus these past few days. On fashion and leather goods, two questions. Market expectations for this year in terms of organic growth of about 10%. You're not giving any guidance, but earlier you mentioned production manufacturing constraints. Those manufacturing constraints and the year underway will prevent you from delivering on the market's expectations that are high point these past years.
On the margin for fashion and leather goods, you didn't have any operational leverage in the first half with a negative impact in terms of currency, strong expansion of the margin into H2, 200 basis points, if I'm not mistaken. Could you return to the reasons that account for the strong expansion of the margin in terms of currency, possibly price increases at Vuitton and Vuitton volume growth? Thanks.
Well, on the outbreak of the disease, what can we say? What I said, the group as each and every time an unexpected event occurs, first reaction, let's not panic. Let's analyze the situation calmly. Next, when we question our teams in China, because that's where it started, they all say it's very early days to have an answer. To know how long all this will last. Having said that, several points. They say several things to me.
It would appear that this virus is not as aggressive as that that was detected back when there was the SARS outbreak in Hong Kong. Chinese government has reacted very strongly, very robustly, given the strength of the reaction, we can assume that their reaction will have consequences, very marked consequences, on curbing, on fighting this epidemic. We question, I can't really subscribe to that, because we don't know what the outcome will be at the end of the day. They do seem to say that the peaks, the high point of this epidemic should be reached over the coming weeks. We ask them, well, how long will it last? How long will it take to resorb? Their answer is that it may be partially or partly resorbed during the course of March or at the end of March.
That's the information that is available to me. I cannot confirm that with certainty. That's what we're hearing. Don't write it. It's probably wrong, but that's the information available to us. Having said that, by comparison, someone who's highly informed said to me, and he's sitting in the front row here, "Do you know how many people die from the flu every year in France? About 10,000." That's what you said, right? Far from being a leading flu specialist, I'm not saying that this virus can be compared to the flu virus. I don't know. I'm not a doctor. That's the state of play. It all depends on the impact, as you say. What's the impact on the business? We can't answer.
If it lasts a couple of months or if it's resorbed over the next two and a half months, it won't be all that bad. If it were to last two years, it would be a totally different matter. That's what I can say. Well, manufacturing constraints. Well, they're going to have new workshops will be opening this year, we're going to try and meet that demand. Growth for the sake of growth is not our objective. What we want is to continue to produce quality products, satisfy our customers. Growth is good. It delights the shareholders. I'm also a shareholder, I can't say that I look askance at it's not really the objective. You'll get a bit of growth.
On question number three and profit margins. Yes, in that division, margins were down about one percentage points in Q2. It's mostly to do with currency effects because there was a positive effect in 2018. For H2, the profit margin was down 3.5%, mostly to do with operational factor, slightly less for currency effect. Growth of revenue was faster than growth of costs, and growth of revenue was mostly volume growth. It's not in terms of price. For Vuitton, there was maybe one percentage point in price effects last year. It's mostly to do with volumes in Vuitton. It's mostly price and not volume. This is throughout the production line, by the way.
Thank you.
Sorry. Zuzanna Pusz from UBS. I have three questions. First of all, just to follow up on the price increases. You mentioned it was 1% for Vuitton for the year, but can you just give more color what exactly was the price increase? I think it was in November. Was it around mid-single digit, if I'm correct? Also, just out of curiosity, because I think historically, price increases were implemented usually at the beginning of the year. Is this just a change, the pricing policy or the growth was so strong that it made sense to increase prices? Secondly, also on fashion leather goods. Obviously, 15% is still very good growth in Q4, but it seems like it's a pretty big deceleration versus Q3. I'm just wondering if it's all just driven by Japan and Hong Kong.
Could it be that, as you've mentioned, there were some capacity constraints, so maybe you decided to hold some volumes for the Chinese New Year? Thirdly, also on the coronavirus, sorry, maybe that will be the last question on that. Just for us to have an idea, because it's obviously very unclear how the situation will develop. How should we think of your ability to control costs? Because margins are very impressive, at historical highs. Would you say that versus the history you have more ability to control costs, because there is a lot of IMP you could cut or any color around that would be very helpful. Thank you.
Surely. Regarding price increases at Vuitton, there was no price increase in 2019, not across the board. There were some price increases here and there, in various countries. Then, there were some effects of price increases that occurred at the end of 2018, but that were, again, one-off items, and it's pretty negligible. There were some price increases to compensate for monetary depreciation for devaluations. Regarding organic growth in fashion, this rather pathetic 15% increase from three to four. In Japan, we had a 25% increase in Japan in Q3 and stable in Q4. There alone, you have 10% of our business there. Hong Kong, we already mentioned, we were down 25% in Q3 and looking overall at - 40% in Q4. Of course, this had an impact, but it meant that growth, instead of being 19% in Q3, it was only 15% in Q4.
That's still pretty good. The last question about keeping costs under control, that's always something of a challenge, but the epidemic is occurring in a country where variable cost is the highest share. The leases is the highest cost in percentage of revenue. It's not the case in Hong Kong, but certainly the case in mainland China. There will be a mechanical adjustment of costs. Should there be less business, there would be less costs as well.
[Non-English content] Lucas.
Thank you from Bernstein. I have a question for you about the dynamics of cosmetics in the U.S. We noticed a slight slowdown that we sensed at Sephora in Q3, if I recall correctly. Today, you're mentioning an adjustment of the value of inventories of small cosmetics brands in the U.S. Is there a pickup in that slowdown that we'd noticed in American cosmetics, if there's something more significant underway at that level? Secondly, I was wondering, looking at the possibilities to recover in some of the brands in transition, whether you have reasonably a hope for an improvement of a few small sections that were lagging behind, such Marc Jacobs. We haven't really said very much about that brand, I know that you had recovery programs underway for a while now. Any news about Celine and the transition of watches, the decisions that were taken?
The Swiss Competition Commission, are they going to have an impact on you in any way? I'm referring to what was decided about the sale of movements by the state in Switzerland. Thirdly, if you could give us an overview of your new initiatives in the field of ESG, that have increasingly interested to investors. You brought in a brand that's well-known for being a leader in that field. If you could give us some color on your ambitions there, that would be very useful.
As regards the cosmetics markets, I think that globally, we're seeing performance that remains in line with the past, in terms of geography, the growth rates are not evenly distributed. Asia growing strongly, an American market that's not faring so well. That's reported data. Within that, we see after
Skyrocketing sales in makeup from 2013 to 2017. Well, of late, that growth has slowed and there's actually stronger growth in skin care. That's what I can say.
On that front, following up on what Mr. Arnault and Jean-Jacques said about inventories, it's true that we launched a whole set of new brands, and on those brands, we should maybe have done some more gradual cleanup.
It happens that we actually did it in one fell swoop for those brands. Aside from that, brands continue to do well. The Fenty brand with Rihanna had a great year. There was some tidying up that we should have done earlier. On the two brands that you mentioned, Marc Jacobs and Celine, there are improvements in both cases. Celine, you saw, we've totally revamped the aesthetics. It's off to a good start. We've just launched in 2019, perfumes.
We added a product line with great products. Some of you may have seen it. It's quite an extraordinary product.
Marc Jacobs, we're working on improving and we're gradually improving with the new management team that's been in place for two years now. Where operating profit, do we talk about January? Well, January is off to a very good start. That's a scoop for you. Just to contribute to help you write your piece.
The last question. Yes, I'll take that. I think that Mr. Arnault mentioned commitment as a value that is growing in strength. It's not as if we just started. Our efforts on the environment started many years ago and delivering very good results.
In our life program, we had set specific goals for 2020. I can say that three out of the four goals have already been reached at the end of 2019. There is still work to be done on the fourth. What is true is that we are strengthening the teams, both for the environment and on the social front to give renewed impetus and to strengthen our efforts in areas that are important for our stakeholders, customers, employees, all of us, and I am sure that these initiatives will be more widely disseminated. It is not a work of improvisation. In fact, we should have invited you to the reception that we hosted here two months ago on everything we have achieved in terms of the environment, thanks to Sylvie Bénard, dating back to the early '90s.
It's very impressive, the conclusion, I can say without false modesty that we're better in the know-how than others who are perhaps more efficient when it comes to shouting it from the rooftops.
Good evening, Paolo Levi from the Italian Press Agency. Could you confirm or deny the noises that have been doing the rounds for some time on a presumed interest by LVMH or the family for the acquisition of the AC Milan football team?
Well, listen, this is al subject that really does hold a mystery, because I really admire AC Milan. It's a great team, great club, extraordinary players. Some of you phone me or write to me asking, "What's happening? What's going on?" It's probably the sixth or the seventh time in the past six years that I've denied having the slightest operational interest or conversation to acquire this great soccer club.
Don't know if what I'm saying this evening will come to anything, probably not. It'll just fuel the rumor mill and a number of magazines, people say, "Well, he's really keenly interested." Will the mystery continue? I just don't know. Maybe an Italian mystery. Who knows?
[Non-English content], Antoine Belge, HSBC. I have three questions. Number one, I would like to congratulate you on this outstanding performance of fashion and leather goods, the best since the year 2004. I believe that handbags did extremely well and leather goods in particular, but I think that the other products also enjoyed significant growth. Outside leather goods, what are the main items? I believe that this purchase
Of the gemstone, that is, of course, a very strong gesture. Can you comment on that? There was something about the online sales. Should you sell only on your own website? Richemont has been spending lots of money trying to develop their website. I believe that 24 Sèvres became 24S. You haven't mentioned this, is this one area that is of lesser interest, or is the outlook not quite as good as others? Finally, about Cognac and Champagne in 2020. Cognac, we saw that Q4 was a bit slower, and of course, there was a change in management. Could you say something about depletion and sellout on Champagne? I believe that last year you wanted to go for premium brands, but volumes were stable. There was maybe a mixed price effect.
Well, on Vuitton, I will not reveal the details of Louis Vuitton, but as you rightly pointed out, the product line has become broader. We have, of course, perfumes. We have watches. You have jewelry. Of course, all of these have been very successful. Ready to wear, that is fashion, both for men and women, both have been very successful. We have Nicolas Ghesquière and Virgil Abloh, and that includes shoes, by the way. These are very successful. We've expanded our lines of business. Originally, fair enough, it was the trunks and bags. Of course, we've expanded and diversified greatly since then. For jewelry in particular, that business shows great potential. Have you seen the gemstone? You should take a look, Place Vendôme. This gemstone comes from Botswana. It is 1,750 carats. It is a raw stone. It's pure magic.
If you look at the number of visitors that come to see the stone, it's quite incredible. It's on its way to Taiwan. I think we'll ship it to Taiwan in two or three weeks, where it will be displayed there. In any case, Louis Vuitton, as a brand, has diversified away from just leather goods. Its core business was leather goods, but from that, we gained legitimacy in many other fields, and perfumes are enjoying significant revenue. In fact, there is one business where we can't even keep up with demand, and that's what we call the nomadic objects that involve a number of designers. Some of them are on display at Place Vendôme, and there again, they are very much in demand. You have actual items of furniture that sell extremely well. Now, online sales.
When I look at online sales from the big sites, I am somewhat skeptical. Maybe I'm old school, but when I look at a business, I look at profits to see how well they're doing. All of them, all these online sites are losing money, so that's a poor indicator. The bigger they are, the more money they lose. We were asked to become involved in this. I was never keen. There is one minor site called 24S, but that is no exception to the rule. Well, because it's small, it doesn't lose much money, so we developed it modestly. Maybe we'll find a way to make it make money. At this point, we haven't found a way to make it profitable. It's almost insignificant for us. The internet is a service that we provide. For Sephora, online sales are very effective. Why?
You have people who come to the site because they know exactly what they want. On most of the sites, I'm not going to name names, but people are out there to look for discounts or bargains, as a result of which these sites cannot be profitable because they have to have low prices, otherwise they lose their customers. Look at Amazon, of course. This is an outstanding company. If you look at the figures, the products they sell online, having bought them beforehand, lose money. Where they do make money is on what they call the marketplace. They don't own the stock. They don't own the inventory. They use their database to provide customers to other merchants. They take a commission. That, by the way, and we will try and resist this, because that is how they sell counterfeits.
That is a connection to organized crime, because when you have a site selling counterfeit products, this is always financed either by organized crime or indeed, it ends up in the pockets of terrorism. Is it right that big websites should make money being associated with organized crime? I don't know what you think, I find this shocking. We have to do a lot if we want to avoid the sale of counterfeit product. Well, we have luxury products, but you also have counterfeit medicine and such like, and that's not right, because the sale of these counterfeit products serves to finance terrorism and organized crime.
There was a question about Cognac and Champagne.
We asked for Champagne.
Yes. On Champagne, there was an outstanding year for the prestige names. The 2008 vintage was an outstanding success. We will continue down that path, not just with Dom Pérignon, but La Grande Dame, Veuve Clicquot, will be doing the same this year as last year. Krug, Ruinart, just as previous years. We will try and ensure that we give priority to high value than high volumes. Regarding Cognac, last year we started with low inventory levels in the U.S., so there was some restocking. There was a big advertising campaign, you may remember Ridley Scott. XO did extremely well. Because there was some restocking and because of the advertising campaign, there was more depletion, that is more sales, and hence the good sales performance, especially for VS in the United States, and we certainly intend to continue this year.
Stocks will keep going up because they still haven't reached the right level, but there's good depletion as well, and we believe that we will be as good this year as we were last year. Two final questions, and then Jean-Jacques Guiony will be available to take your questions directly.
Good evening. I'm from "Le Monde" newspaper. Could you say a word about the setup you put in place in the U.K. for Brexit? Do you plan to increase prices across the channel? Just to return to Amazon has a plan for a platform for selling luxury goods. I assume that given your assessment of Amazon, you won't be a part of that. Am I mistaken? Thirdly, have you looked at the buyback of Prada in December as the Italian press seems to indicate?
Well, the Italian press lends me many ideas, which, a number of cases, wide of the mark. In Amazon, you're absolutely right. That was your first. Brexit. Do you want to answer about Brexit?
Well, just like everybody else, we went through the whole spectrum of emotions about Brexit. Now we know pretty much what to expect, so we are not concerned about stocking or things vanishing from our inventory. Regarding prices, there's no currency depreciation in sight. The pound sterling apparently is looking up rather than down.
Final question, please. You see, I'm giving you the floor.
Thank you. I really do appreciate that, Mr. Arnault. Thank you. Congratulations for the pretty good results. Three questions for you. First of all, Rihanna had a great success with cosmetics. Congratulations. However, the fashion company you set up with her is far slower in achieving growth. The big success of Rihanna for the time being is in lingerie with the tech world, Los Angeles. Maybe you've had negotiations with her about what's happening there. Secondly, you have a fine brand in Italy called Pucci. You haven't appointed a new creative or artistic designer. There are noises that you're trying to sell. I know that generally you're an entrepreneur who prefers to buy brands rather than selling them. Is there a decision in the offing there? Thirdly, almost 10 years ago, John Galliano left your group.
You still hold the brand, but there are no Galliano stores to my knowledge, no revenue. Why didn't you sell the brand because once again, apparently, there seem to be buyers for it.
On Rihanna, well, it's off to a good start. Wait and see what comes next and what we do. She's got loads of ideas. I'm sure we'll do some very interesting things. Next, on the Galliano brand. Well, we own the brand. Doesn't pose a problem. It's not losing any money. We'll wait and see how things develop. We can come up with some ideas. Pucci, ditto, small brand for the time being. I'd say that it's never really taken off. It's good to have small brands, too. We say maybe one day, we'll come across a great designer who says, "I've got wonderful ideas for this small brand, and we'll make something very good." We're really just tapping the archives.
Thank you all very much.