Okay. Hi there, everybody. Thank you very much indeed for joining us this morning. I am going to begin today with a very quick overview of our full-year results, and then Julie Brown, our new Chief Operating and Financial Officer, will take you through the detail of the numbers. We will update you on our five key areas of focus within our productivity and efficiency plans that we first outlined to you back in November. After that, we'll be happy to take your questions, and as usual, we have other members of our senior team here in the room today to take part in these discussions. I should just mention, in this context, that while Marco Gobbetti is not here today, he is looking forward to getting to know you all over the coming months after he starts in his CEO role in July.
I'd also like to take this opportunity to thank John Smith, who is with us for his final results meeting today following several months of transition with Julie. As you know, John has made an immense contribution during his time with Burberry, and we all wish him the very best of luck with his new adventures. Thank you, John. Let me begin with the results that we published this morning. Burberry made good progress last year in a mixed external environment, and we continued to make strategic choices to elevate our luxury retail and digital business to strengthen our brand and to reposition Burberry for growth as we maintain our focus on maximizing long-term shareholder value. Let me start by commenting just briefly on these points to give you a little bit of context.
In terms of the external environment, recent estimates suggest that the luxury market was broadly flat in calendar 2016. However, there was a marked improvement towards the end of the year, not least as Chinese consumption strengthened and Europe rallied in tandem. Our own performance improved in the 2nd half in line with these broader trends. At the same time, we continued to take actions for the longer term as we further strengthen our luxury brand positioning globally, including in wholesale, particularly in the U.S., and in licensing, not least as we build our direct retail operations in Japan. These actions are critical to unlocking the potential of our brand across channels and regions, together with the productivity and efficiency program that we'll turn to in just a moment.
The full benefits of all of these actions will take time to realize, but we are pleased with the progress over this, the foundational year. We have begun to see the early benefits of strategic actions and improved performance in key focus areas such as customer retention, retail conversion, and the outperformance of fashion and bags. We have continued on our path to reshaping our business for the future, both with the actions I just mentioned in wholesale and licensing, the implementation of one label, and our new deal with Coty to accelerate the growth of our beauty business. We are becoming a more efficient business. We are on track with our cost savings commitments, with the GBP 20 million that we delivered last year planned to increase to GBP 50 million in full year 2018, and at least GBP 100 million by full year 2019.
We announced the planned establishment of Burberry Business Services just a couple of weeks ago. Finally, we have taken action to reinforce our leadership team in areas that will be critical for our next phase of growth. This, of course, includes the appointment of Marco and Julie with their exceptional track records in luxury and business transformation respectively. It also includes senior appointments right across our organization, from product to the customer experience to technology. All this is important context when considering our headline numbers for the past year. At GBP 2.8 billion, total revenue was down 2% underlying, with retail, our key focus, outperforming at up 3% overall and with comps up 1%. Adjusted profit before tax was down 21% underlying to GBP 462 million, in part reflecting the strategic actions that I've just mentioned.
The business remained highly cash generative, with net cash increasing by GBP 149 million to GBP 809 million. We have increased the 2017 dividend by 5% to GBP 0.389, and also announced a further share buyback of GBP 300 million today, which includes the distribution of the upfront sum from the Coty deal, and this builds on the GBP 150 million that we announced in May 2016. With that, I will now hand over to Julie, who will take you through the details of the numbers. Thanks, Julie.
Thank you, Christopher, and good morning, ladies and gentlemen. The focus of FY 2017 was on laying the foundations for the future and continuing to take actions to elevate the brand and reposition our business for growth. Revenue was GBP 2.8 billion, down 2% underlying and up 10% reported. Adjusted profit before tax was GBP 462 million, down 21% underlying and 10% reported with GBP 131 million gained from foreign exchange. Adjusted EPS was up 11%, reflecting reported profit growth and the accretive impact of the share buyback. With strong free cash generation, we closed the year with net cash of GBP 809 million, up GBP 149 million after buybacks and the dividend. Adjusted retail wholesale return on invested capital is increased by 70 basis points to 15.4%. Finally, we proposed a full year dividend of GBP 0.389, up 5%.
This slide lays out the changes to our revenue during the year from FY 2016 to FY 2017. The retail revenue growth of 3% was driven by strength in comparable sales in Europe with some space growth in Asia and a decline in Americas. Here you can see the impact of the strategic choices we have made to reshape our business. In wholesale, in beauty, in licensing, these are all high revenue streams. Wholesale, excluding beauty, was negatively impacted by a significant decline in the U.S., in part as we took actions to reposition the brand in a market that has become increasingly characterized by discounting in department stores. In beauty, we rationalized the distribution in key markets to elevate our positioning, as well as experience distributor de-stocking. Finally, licensing revenues were down primarily due to the planned license expiry in Japan.
Sales were down by 2% underlying. Currency added 12 percentage points, bringing full year revenues to GBP 2.8 billion, up 10%. Being new to the business, I've taken a step back. Burberry is going through a significant transformation from a licensed wholesale model to a business that is now approaching 80% retail. The business is also more diversified with now 60% of revenues from apparel, compared with over 70% 10 years ago. Over the same period, we've been building our standing as an accessories player with now almost 40% of our revenues, which we see as a very high potential growth category in the future. Christopher will come on to talk more about this. We've also been on a journey geographically with our markets at different stages of maturity. This slide shows the revenue split of our business by region.
In Asia, for example, 90% of our business is retail, whereas in Americas, we have more work to do to elevate the Burberry brand, given our history as a wholesale business. As you can see from the chart on the right, this has had an impact on our U.S. wholesale revenues and had consequences for profit this year. In this context, taking this context in mind, let's take a look at the profit movement from full year 2016 to full year 2017. Profit of GBP 416 million in full year 2016 declined by GBP 90 million or 21% on an underlying basis, partly due to the direct impact of actions taken to elevate the brand in wholesale, beauty and licensing. The decline in wholesale, including beauty, was the most significant, notably in the U.S. and in the U.K.
For example, in beauty in the U.K., we reduced our distributors from 3,500 to 35 authorized points of sale. In addition, management delivered GBP 20 million of savings from the strategic cost program, partially offset by GBP 8 million of strategic investments. Finally, within other, this includes the reestablishment of the PRP charge of GBP 37 million as guided. Impairment charges reduced by GBP 22 million. Another gross margin and OpEx changes where tight cost management partly mitigated underlying cost inflation. Overall profit grew from GBP 416 million to GBP 459 million, supported by a currency gain of GBP 131 million. Looking at the retail wholesale P&L. Adjusted operating profit was GBP 437 million, down 19% underlying and up 15% reported. Looking at the main drivers, gross margin was unchanged at 69.6%. Benefits from exchange and positive channel mix were offset by adverse product mix and strategic actions in beauty.
On OpEx, we delivered 50 basis points improvement as a percentage of sales with FX benefits in addition to the impact of the items we've mentioned before. Operating profit margins improved by 50 basis points in the year to 15.9%. Turning to the group income statement. Adjusted PBT was up GBP 42 million to GBP 462 million, down 21% underlying. Underlying items total GBP 68 million. I will return to this on the next slide. Our effective tax rate on adjusted profits rose by 110 basis points to 25.8%, principally due to the change in the mix of our geographic profits, coupled with a change in the transfer pricing approach by an overseas tax authority. We completed the purchase of 6.7 million shares during the year, contributing to adjusted EPS growth of 11%. Firstly, as Christopher referenced, we announced our strategic partnership with Coty in April.
Their deep beauty and industry expertise and first-class global distribution will support the acceleration and development of our beauty business. The terms are financially attractive, with an upfront payment of GBP 180 million and ongoing royalty payments. In addition, the terms of the adjusting items then, the beauty charges of GBP 41 million comprise the intangible charge that we took in half 1, together with provisions taken half 2 relating to the deal with Coty. The restructuring charge of GBP 21 million relates to the cost-saving program and is in line with our guidance. The final items relate to China and the Middle East, where we have taken additional control. Turning to cash, the business remains strongly cash generative, with GBP 689 million of cash inflows from operations.
The key factors to this are working capital inflows of GBP 56 million, with inventory down, receivables inflow driven by the decline in beauty and wholesale revenue, and a payables inflow predominantly due to the rebuild of the PRP charge. CapEx of GBP 104 million was below our initial guidance, principally due to the phasing of our projects. Offsetting these benefits, tax paid was higher due to sterling weakness and the timing of payments. In total, our free cash flow of GBP 465 million grew 70% year-on-year, and our cash conversion is exceptionally high this year at about 130%, well above our historic average of 85%. This concludes the financial review of full year 2017. Turning to the longer term, I thought it would be helpful to articulate our value creation proposition.
Our five key strategic pillars are designed to deliver revenue growth and margin improvement over time, coupled with growth in adjusted EPS. Our focus is on supporting continued strong cash generation, coupled with a clear capital allocation framework to drive returns to our shareholders. This is how I think about capital allocation. Consistent with the group strategy, we have four priorities for the use of our cash. First, we will reinvest in the business to drive organic growth. Second, we will maintain our progressive dividend policy. Third, we will pursue selected strategic investments in line with our stated initiatives. Typically, these investments tend to be infrequent, but they can be significant. Fourth, to the extent where there is surplus capital to these needs, we will return it to our shareholders.
Underpinning these priorities is our decision to maintain a strong balance sheet and maintain solid investment-grade credit metrics. We assess our balance sheet strength by referring to lease adjusted net debt to EBITDA ratios and also our fixed charge cover. Our lease adjusted net debt to EBITDA ratio is 0.5 times currently. For planning purposes, we expect to maintain a ratio of 0.5 to 1 times. I'll provide an example of how we've used this framework and how we'll apply it going forward. This year, the business generated over GBP 569 million of cash before capital expenditure. We then prioritized our investments. First, we reinvested to drive organic growth. Capital expenditure this year of GBP 104 million was lower than average, and we expect to return to more normalized levels of about GBP 140 million in full year 2018. Second, we're committed to our progressive dividend policy.
This means that our dividend will be flat or grow in pence per share year on year. This year, the dividend grew 5%, and we paid out GBP 164 million in the year. Third, regarding strategic investments, we paid GBP 69 million for the purchase of the non-controlling interest in China and Burberry Middle East. Finally, returned GBP 97 million of cash by way of a buyback. In total, our net cash increased by GBP 149 million, bringing our closing net cash balance to GBP 0.8 billion or on a lease adjusted net debt basis of minus GBP 0.4 billion. Before I close on this slide on cash, having reviewed our expected cash generation and considering our capital allocation framework, the board has decided to commence a new share buyback of £300 million. This incorporates the distribution of the Coty upfront sum.
This is expected to be completed in full year 2018, in addition to the remaining GBP 50 million of share repurchases to run relating to our previous announcement. The board will keep our returns to shareholders under regular review. Turning to full year 2018, our guidance is detailed on this slide. For revenue, our focus is retail and is on productivity, driven by traffic conversion and retention, and no net contribution from new space is expected. For wholesale, we expect the first half to be down a mid-single digit percentage underlying, reflecting the potential disruption from the beauty deal. The transition of beauty from a wholesale business to a license in the second half will drive a decline in half two wholesale. We would also expect some ongoing brand leverage in this activity.
In terms of licensing, revenue in the full year is expected to be up 20% underlying, driven by the increase in beauty income in half two. For profit, adjusted PBT will benefit from GBP 50 million of cumulative cost savings. This is GBP 30 million net of reinvestment. Adjusted EPS growth will improve ahead of PBT due to an expected 80 basis point improvement in our tax rate and the impact of the share repurchase program. Cash generation is expected to remain strong, and this will be deployed in line with our capital allocation framework. We have, as usual, updated our foreign exchange guidance, and if exchange rates at the end of April prevail for the full year, we expect to see a negative impact on adjusted PBT of £30 million.
This is an incremental GBP 20 million since we spoke in April due to the strengthening of sterling over the past four weeks. With the benefit first half more than offset by the headwind in the second. Finally, I would like to update you on our plans to simplify our communication with the market. For full year 2018, we will remove our reporting our business performance from six to four times a year. To improve disclosure, we will also consolidate consensus expectations for four key metrics, and we will publish these on our website ahead of each set of results. With that, I am very pleased to hand back to Christopher.
Thank you very much, Julie. It has now been just one year since we shared our ambitions for greater productivity and efficiency across our business, and six months since we first talked in detail about our five areas of focus to deliver this over the coming years. We wanted today to take the opportunity to reflect on some progress that we've made across each of these, and why this reinforces our confidence in benefits that will build over the course of this multi-year program. Julie and I will split the presentation. I will start by covering product focus, space productivity, and e-commerce leadership, after which Julie will give the detail on operational excellence, and I'll then come back to close on inspired people.
Before we begin, and to set the scene for what we'll be talking about, we'd like to share just a short video that covers some of the highlights from our second half.
Your father can imagine whole worlds in his head. I saw the storm clouds moving across your eyes, and I could hear the war drums pounding from inside your mind. I gave all my life for love, but it still was not enough. It still was not enough. It still was not enough. My heart shattered apart with your sanity. I won't leave. The stars scattered across a haunted galaxy. Please hold on through heaven and hell. Hold on to each other or I fear we won't recover. On your side, I'm still on your, on your side. Don't let it break us, we can't let it fade away, fade away. On your side, I'm still on your, on your side. I'm still on your On your side, I'm still on your, on your side. I'm still on your
I'll turn first to product focus, which sits at the very heart of so much of what we plan to achieve through the revenue-driving elements of our productivity and efficiency program, from driving space productivity to realizing our e-commerce ambitions. We are making a lot of changes to what we're doing and how we're doing it in this area, from design to production to distribution, all in service of creating a simpler, more focused, and more compelling offer for all of our customers. I've talked before about how we're simplifying our offer through SKU reduction and the implementation of one label, and we have delivered on our plans here. We have rolled out one label to all channels globally, greatly simplifying the customer experience.
We met our targets of a 15%-20% assortment reduction at both markets last year, with further progress for our upcoming May market in the showroom downstairs, and I hope you all had a chance to go down there. These reductions have supported the outperformance of fashion by giving greater visibility to the newness in our collections, as well as to helping to drive a double-digit improvement in depth per option and a mid-single-digit increase in full price sell-through for our Spring/Summer 2017 collection. Today, I'd like to highlight a couple of things that we're doing to make the offer more focused and more compelling. The first is the more strategic approach that we're taking to our key categories.
As a reminder, this has involved identifying a handful of key product categories where we see the greatest potential for future outperformance, and we will invest in accordingly over the coming years. Where we have begun to implement this new approach, we are seeing good early results, with bags, our initial priority category, up 16% in the year. This growth in bags has been driven by wide-ranging changes to what we create and how we work. For example, we've developed a much sharper focus on building our strongest key shapes into long-term pillars with the introduction of more novelty in colors and fabrications, driving continued growth in core styles. In tandem, we're introducing new styles with a focus on creating new bag pillars for the future.
I do hope you will have seen the recent marketing for our new DK88 bag, examples of which are here around you in the room today. The name DK88 is named for the code of our gabardine fabric and constructed from a new leather inspired by its texture. With a standalone campaign, dedicated store windows, and a supporting program of customer events, this launch marks a real shift in how we think about and invest behind this category. Whilst it's clearly still early days, we are delighted with the very strong results. Finally, this progress in bags is being underpinned by changes to how we work. In addition to the introduction of end-to-end category management that we talked to you about last time, we're also bringing in new talent to our teams commensurate with our ambitions in this area.
This has included the recent appointment of a new design lead for accessories who comes to us with an outstanding luxury pedigree. With a pipeline of categories identified for the future, we intend to replicate this success in bags in other areas over time, whether by increasing penetration and taking share in less established categories for our brand, or by innovating our core. With the recent success of our new lightweight tropical gabardine showing the potential here. This more strategic approach to key categories goes hand in hand with what we're doing differently to drive newness and fashion. This is critical to brand momentum and brand energy, and central to unlocking the significant opportunity we have to grow repeat business with our local customers.
It will also be a major focus for me as I spend a greater proportion of my time on product once Marco is fully on board. I know we can do much, much more here. Let me give you just a couple of examples of changes which help drive the outperformance of fashion during the year. First, the strong response to our direct-to-consumer runway shows. For our February show, we saw great brand momentum with a 50% increase in engagement on social media. We saw a 50% increase in visitors to our Makers House venue to 30,000 people over a seven-day period. Editorial coverage of the collection almost doubled on an already very strong September. This was reflected in good commercial results. Runway collection sales were up strongly for both seasons, including to new customers, reinforcing how important fashion is to attracting new consumers to our brand.
We will continue to explore, evolve, and refine our ways of working around all of our shows and experiences in the months ahead. The other area that I'd highlight as driving the strength of fashion is a much extended selection of more commercial non-runway products that carries the show's themes into our wider collections, and which arrive in store and online shortly after. These products are presented alongside the runway collection itself and enable more customers to buy into the excitement of the show at a wider range of price points and styles, whilst injecting more newness into our overall assortments. Sales of our runway collection and these commercial extensions were together up more than 25% in February versus September, and we see further upside here.
To close on product, I'd like to turn just briefly to last month's announcement of our new partnership with Coty in beauty, which is consistent with this more focused approach to managing all of our categories. In four years of direct operation, we have made real progress in elevating our beauty business, establishing a family of fragrance pillars that are performing strongly and building our nascent makeup business. Now, with this solid base in place, it's the right time to leverage the scale and distribution of a great partner to take beauty to the next level whilst retaining creative control to ensure consistency with the wider Burberry brand. We are excited to be working with Coty, and our plans are on track for the transition to this new structure in October. Let's turn now to productive space, the second revenue-focused pillar in the program.
As we've highlighted before, one of the most significant opportunities for Burberry over the coming years is to drive sales per square foot closer to the level of our peers. We made good progress on driving core metrics in support of this during the year. With conversion increases in all key markets and improvements in retention globally, most notably from our highest-spending customers, where we saw high teens % growth in our business year-on-year. This improvement has been supported by the implementation of new ways of working within our priority initiative retail experience. I'd like to touch now on some specific examples of progress within this since we last updated you in November.
Let's begin with service, where two key milestones over recent months were the introduction of our new service model client and the rollout of a new global customer feedback tool based on Net Promoter Score. Our new client model is ensuring all retail teams around the world are working to the same elevated luxury service standards and focusing on customers as clients with whom we're building an ongoing relationship. This is critical as we evolve our business to attract more local customers and balancing our historic emphasis on the traveling luxury consumer. This evolution of our service model is being complemented by our new customer feedback tool, now live in almost 280 stores and online. This is already allowing us to be much more responsive in how we manage the experiences that our customers have in stores and on our website.
Early results show NPS scores consistent with the best of our luxury peers. The second area that I'd highlight within retail excellence is cultivation, where we have accelerated the expansion of our customer value management program and our private clients teams. This is enabling us to bring more customers closer to our brand and products through appointments, events, and experiences with good results. For example, we are now driving a much more significant proportion of our mainline revenues through appointments from minimal levels historically. These appointment transaction values are twice as high as our overall average as customers respond positively to this much more tailored and personalized experience. We're also developing a more immersive and innovative program of events with a sharper product focus.
Just a couple of weeks ago, we launched our new DK88 personalization concept in our New York Soho store, and we are rolling this out to flagship locations globally. Our show finale Cape Exhibition is currently traveling the world with a great response from existing and new customers. This richer, more personalized approach to cultivation drove a significant uplift in repeat business in the year, complementing the actions we're taking in product to tailor our offer more effectively to the local customer. Finally, under productive space, I'd highlight the progress we're making with our omnichannel program, which is a key area of focus for the future as we look to stay ahead of evolving customer shopping behaviors. Through this program, we have significantly increased the amount of product available to our online customers by enabling us to fulfill commerce orders from store stock.
With online stock availability up 7% and significant improvements to digital conversion through the program, we are pleased with the early progress here. As we move into 2017-18, we are extending the scope of our productive space work beyond its initial emphasis on retail productivity, including to consider our wholesale business globally and how this can best support the achievement of our overall aims in respect of future growth. Let me conclude with e-commerce leadership, the last of our key drivers of revenue growth. As Julie mentioned earlier, we were pleased that digital once again outperformed last year as we sharpened our focus on converting digital awareness to e-commerce sales. This performance was underpinned by a comprehensive program of improvements, initiatives, and innovations covering all aspects of the digital customer experience and designed to ensure that Burberry continues to lead the sector in this critical space.
As with our other revenue-driving strategies, e-commerce leadership includes near-term elements and longer-term investments that will yield benefits over time. Again, I'll just highlight two examples with a focus on the second half of the year. The relaunch of our [inaudible] improvements that I talked to you about last time, with its much richer experience and improved functionality, two-thirds of our digital traffic. Building burberry.com remains a key focus for the future, with conversion improving across both mobile and desktop, and a pipeline of improvements to both sites in work. The second example I'd highlight under e-commerce is continued innovation in our third-party relationships online. We see this as a significant opportunity to drive not only sales, but also brand perception with a wider audience.
Recent collaborations with Harrods here in the U.K., Barneys in the U.S., and Shinsegae in Korea are just three examples of the best-in-class relationships that we're developing with retailers online. We're also continuing to innovate with leaders in the digital space. From experimenting with the early stages of artificial intelligence with Facebook and Kakao, to creating augmented reality experiences with Line in Japan, and testing the waters of social commerce with WeChat. These kinds of partnerships form an important part of our future e-commerce ambitions. Finally, we have recently concluded the initial pilot of our new Burberry app, which we'll be rolling out globally over the coming months. We look forward to this becoming a core part of our digital universe as customers continue to move fluidly between the on and the offline worlds, expecting seamless and personalized experiences.
With that, we'll turn from revenue and productivity drivers to efficiencies and ways of working. I'll hand over in just a second to Julie, who will cover some of the key areas that we have worked on over the past 12 months and where we have made real strides forward. This progress is in part demonstrated by the significant cost savings that we have realized in 2017 and our plan to accelerate these much further over the next two years. We're also feeling the benefits in how we're working, with greater simplicity and consistency in our processes and a more efficient mindset. Our proposed establishment of Burberry Business Services, the new shared service center that we intend to open in Leeds later this year, is perhaps the most significant example of how we're making this a reality for the future.
These changes can sometimes be challenging, but they are undoubtedly the right thing to do as we continue to evolve and grow. I'm incredibly proud of how our organization has started to work differently and to build for the future. With that, over to you, Julie.
Thank you, Christopher. To start, I thought it would be useful to remind you of our operating expense split as shown here. We have GBP 1.5 billion of operating expenses comprising a third employee costs, a third property-related charges, and a third marketing other. Our targeted cost savings of at least GBP 100 million sterling by FY 2019 are about 10% of our OpEx cost base, excluding property and depreciation. Given this, in addition to our operating model and ways of working, we've identified four major areas of opportunity to improve our efficiency. These are process simplification, procurement, inventory management, and information technology. I'll run through a few examples for each. Firstly, process simplification. Earlier this month, we announced that we're proposing to open a new office, Burberry Business Services, in Leeds in October, as Christopher mentioned.
This brings together shared service teams from procurement, finance, HR, in addition to some customer service and IT roles. In total, we're anticipating 300 roles will move from London, all subject to employee consultation. This will foster teamwork across functions and facilitate end-to-end processes, and importantly, will also generate significant savings by reducing our office space requirements in London. Second, procure effectively. Burberry has annual indirect procurement spend in excess of GBP 600 million, and we're now taking a global approach to this with a focus on six key categories of spend. One example is the retender of our global communications contract, with significant savings generated through a new supplier, together with an enhanced service for customers and employees in stores and offices globally. The second example is the move to SAP Ariba Guided Buying, a digital catalog-based procurement system.
Just a few examples of the efficiency gains in the pilot are a 50% reduction in the number of steps to raise a purchase order, a 65% reduction in the time taken to approve an order, 100% increase in the number of invoices processed without manual intervention. Thirdly, I'll move on to inventory management. Inventory is our largest sum of capital invested in the business, so any opportunity here to improve it is significant. From this summer, we'll be rolling out a new phase of our omnichannel journey, the solution will allow an online order to be fulfilled either directly from the store or our distribution centers to better serve our customers in 44 countries. It will enable same-day delivery in key cities globally, will also offer instant collect in-store in over 200 stores.
This will improve stock utilization, our service to customers, reducing delivery times. The fourth area we're improving is information and technology. Our core technology platforms are between five and 15 years old. Through the years, these platforms have been adapted to support high demands and changes within the business, resulting in a high degree of complexity and bespoke development. Over the next 2 years, we'll move to a single stack platform with a combined solution for both retail and wholesale, taking full advantage of operating in the SAP HANA Enterprise Cloud, supporting enhanced and more responsive decision-making throughout the business. We've also launched a new product lifecycle management tool to enable more timely development of products and enhance vendor and supplier collaboration. We're developing new digital tool for sales associates and for customer insight.
This slide shows the major triggers for the delivery of the cost savings building from the GBP 20 million this year, as Christopher mentioned, to the annualized GBP 100 million by FY 2019. The operating model and the procurement benefits run throughout, but the step change coming from Burberry Business Services and the efficiencies from omnichannel and IT platform really start to deliver at the end of 2018 and into 2019. Finally, we've established a transformation management office with milestone tracking for each of the major programs underway. A new tool links individual milestones with accountable owners and monetary benefits delivery. This slide shows how we're measuring the success of this program. For product focus, it's all about maximizing our full price sell-through in our mainline stores.
To measure productive space and e-commerce leadership, we track the key levers of the retail equation and also our customer experience via Net Promoter Scores. The key metrics for operational excellence will be margin, inventory turn, and the savings we've delivered. For inspired people, it's all about simplifying our operating model and ensuring we have the right capabilities to develop our plans. Ultimately, the five key strategic pillars are all designed to deliver revenue and profit growth and improve return on invested capital. With that, please hand back to Christopher.
Me again. Thank you, Julie. To close this morning's presentations, I wanted to give some insights into our fifth and final pillar, inspired people. As we've said before, we know the most critical enabler of all of our strategies for the future is our people, the human partners of the systems and the processes you just heard about under operational excellence. In practical terms, this means creating an organization that is the right shape and the right size to deliver. Having the right capabilities in the right places and ensuring our teams are inspired and motivated. Let me touch on a couple of areas of recent progress here. Firstly, we're concluding work on the evolution of our operating model to allow us to drive greater global consistency, and at the same time, as better meeting the needs of our local customers.
This is a central focus for us. We now have plans in place to support it through how we design our organization for the future, with changes already underway. Alongside this evolution of our structure, we're also simplifying our ways of working, which had become highly complex during a period of rapid growth. What this means in practice is that we have looked at the key processes in every part of our business and identified ways in which we can do them more efficiently and with clearer ownership and accountability. This is also allowing people to focus their time where they add the most value. We're already seeing real benefits across our organization. The second area that I'd highlight under Inspired People is how we've amplified our focus on culture during the year, critical as we manage the business through a period of significant change.
This is centered on an enhanced employee engagement program designed to strengthen our Burberry values of protect, explore, and inspire, together with the pioneering spirit that defines us. We have further reinforced this engagement program with an increased emphasis on fostering talent at all levels, with highlights including the graduation of our first cohort of Burberry apprentices and enhanced training and development opportunities across the company. Finally, under Inspired People, I'd like to touch on the increased focus that we're putting on Burberry's commitment to the places and communities where our people live and work. This is a fundamental part of our culture, our focus on this area in recent years has seen us make a real impact.
From being named as a textiles, apparel, and luxury goods industry leader in the Dow Jones Sustainability Index for the very first time, to the difference that we've made to the lives of thousands of disadvantaged young people around the world through the work of The Burberry Foundation. We are proud of these achievements. We have the appetite to do much more in the coming years ahead. With this in mind, we have recently finalized plans to bring together our sustainability work, philanthropic giving, and volunteering under a new and more ambitious responsibility strategy. This is designed to address the most material, social, and environmental challenges in and around our operational footprint. It will focus on three areas: positively impacting the communities that sustain our industry, creating positive change through all of our products, and achieving carbon neutrality and revaluing waste.
Each will have a set of challenging public-facing goals and a flagship program to be delivered hand-in-hand with expert partners. We look forward to announcing the details later on this year. I hope over the past 40 minutes or so, we've been able to give you a sense of the momentum and changes within our business as we begin to realize the significant opportunities ahead of us, why the progress we are making gives us real confidence for the road ahead. This will be the last time I address you in this forum in the role of CEO. While I look forward to seeing many of you in other fora in the months and the years to come, it felt right to end today with some personal reflections on the nature of what lies ahead for Burberry based on my own experience with this remarkable brand.
When I joined Burberry 16 years ago, the company was unrecognizable compared to where we are today. We were a licensed heritage brand, not a fashion company. We weren't in the luxury sector. We simply were not part of that conversation. Of course, there was already something extraordinary and unique about Burberry that had to do with Britishness and tradition and a garment in the form of the trench coat that had threaded itself through the history of this country. We didn't have anything to say to a younger generation who were excited by fashion and who were interested in Britishness, not because of our history, but because of the modernity of our culture, the vibrancy and the excitement of our artists and our music and our design. Over the last 16 years or so, we have transformed ourselves.
We have become a fashion company, global in our reach, synonymous with British luxury, talking to a new generation of consumers in a language they understand. Of course, a transformation like this is not without its complexities, like many companies that grow fast, we did so in a sometimes unwieldy way. As well as there being things we did better than our peers, there were also things we did less well. Looking back just for a moment, we are really proud of the distance that we have traveled. We have achieved what we have by staying true to our history, but never, ever standing still. In that same spirit, I know that in order to continue that progress, we need to continue to take nothing for granted.
This is what we've been doing over the past year as we have begun to evolve our business for its next phase of growth. It is what we will continue to do in the years to come, as we challenge ourselves to be the best that we can be. Unafraid of change, but true to our history and our heritage. Bold in our ambitions, responsible as an organization, driven always by British creativity and design. It's for that reason that I stand here today in a spirit of huge optimism. The job of reshaping Burberry for the next generation is not done, but it has begun. I can say to you in absolute confidence that Burberry will go on to still greater things in the years ahead.
In many ways, I see one of the highlights of my term as CEO as the recruitment of Marco Gobbetti, with his exceptional record in this industry, to be a true partner for me in this next phase, a great leader for this company. For me personally, it will enable me to redouble my focus on design and on making products and telling stories that inspire our customers around the world. Because that is the essence of who we are and what we do as a company. My own passion for making Burberry the most compelling brand, selling the most finely crafted products in the most innovative ways has never, ever been stronger.
I should just finish by extending my thanks to our shareholders and also to our chairman and our board, who have been unstintingly supportive of me when I took on the role of CEO, when I decided to pass the baton on, and at all points in between. With that, we would be very happy to take your questions. John. Actually, oh, we are? Hang on. Can we ask, I'm doing a Julie Brown here. Can we ask that we limit it to two questions per person so that we can get round the room? I know we have limited time with everyone today. John.
Thanks, Christopher. It's John Guy from MainFirst. Two questions please. On cost savings and the opportunities. You provided us with quite a lot of information, which is great. Could you maybe simplify it a little bit and just to say, will the OpEx as a percentage of sales finally go below 50% on a sustainable basis? I think you're still trending well above peers, and I appreciate you have more fashion and ready-to-wear element relative to other players. If you could maybe look at your opportunities and say from one to five, how inefficient do you think you really are today? One being very inefficient, five being very efficient. You could scale it for us. On retail productivity. Sales per square meter, I guess in EUR, and I appreciate adjusting for the FX impact.
You're probably still 15%-20% below peers. You've talked about focusing on product. Personalization has been a big driver, could you give us a little bit more about how you feel you can still bridge that gap? Thanks.
I'll take the cost saving one, and I think Christopher is going to take the retail productivity one. In terms of the cost saving, as you mentioned, we have got a difference with some of the peers in that we're still an apparel company, and some of the peers have got a stronger leather and handbag accessory presence. Having said that, one of the reasons we've put the program in place to drive out GBP 100 million of savings is to address this issue and move towards closing that gap. In terms of operating expenses, we've got an underlying increase in operating expenses, if you might call inflation-related increase, which is a low single-digit number.
Offsetting that, we are working extremely hard to keep that under very good control and deliver the cost savings that we've promised and committed to you, GBP 50 million cumulatively by the end of this year. More than probably at least GBP 100 million by the end of 2019 on an annualized basis. The levers to deliver that are really clear to us. We've got a very firm plan now underpinning those what were quite high-level numbers. It's been driven by procurement, by the operating model, also by improving IT technology. There are a number of key, and Burberry Business Services is a big change that we're going to bring about, which gives us labor arbitrage plus office space being freed up.
I think net net, what we expect to see overall at constant exchange rates, and assuming the revenue delivers, we will see an improvement in our margin, and that's what we expect to see.
John, in terms of retail productivity, I think we outlined a couple of things today, but it's really a multifaceted program that we've got. We've got a big focus on retaining existing customers and a big program of work for that retention. That obviously includes the Burberry private clients team that we have built extensively over the past 12 months, and we've seen a great uplift since we've put that focus. We have done a lot of investment into training of our sales associates, all with the intention of increasing conversion and, of course, footfall that comes both with that training, with product, and with brand energy and brand heat. We've also got a big program of work underway all around product.
We have changed the teams considerably in terms of how we're organized as a company to make sure that the newness and the fashion really gets a proper display in the right way in our stores. We have become a little overheavy in the way of our continuity was front and center, and we're swapping that round. We've seen some fantastic results over the year since we've been putting that program in place. Then we've talked about these categories that we've described, bags being the first one, where we're doing a 360 category management of those areas. Again, in bags over the year, we saw plus 16 increase. It's really a multifaceted program. It includes product, it includes people, and of course, a lot of retail initiatives under our Retail Excellence banner.
Thank you.
Thanks, John. Luca.
Thank you very much. Luca Solca from Exane BNP Paribas. Your productivity and efficiency plan is very interesting and fascinating, but there's one point that I don't understand. In a quarter where some of your peers are producing very strong organic growth, Gucci in the high 40s or Vuitton in the teens, isn't there also an issue of effectiveness? If you agree with that, what are you planning to do to address this, in the coming quarters? Why do you think that this is there in the first place? Thank you.
Luca, I think, we can't talk about our peers in this forum. What I will say is that we're very happy with where we are, based on what we talked about 12 months ago, where we are as a company. We have been doing a lot of reshaping of our organization, preparing for future growth. We are reshaping the business in our wholesale channel. We've had a very strong wholesale business. One of the reasons we went from three labels to one label was as we switched our business from a wholesale model to a retail model. We have also been controlling a lot of the distribution of that wholesale channel that had become very discounted. We've been coming out of a lot of those channels as well.
We have also changed the shape of our business with the Coty deal that we announced just a couple of months ago. In terms of revenue, we have talked about the emphasis and also the success of our conversion, our retention, the success that we've had and the outperformance that we've had in bags and in fashion. We have also described the efficiency cost program that we are on track to deliver this year, as well as the GBP 20 million that we did last year and committed to GBP 100 million, by FY 2019. We are also transitioning, a significant transition, management transition, not just Marco and Julie that we talked about, but it goes further, deeper into our organization. We are where we had planned to be. We are setting ourselves up for growth, and clearly, much more opportunity ahead of us.
Do you expect through that to maintain your market share as a consequence?
We expect to grow our market share.
Thank you. Thomas Chauvet from Citi. I have two questions. The first one for Christopher. You mentioned Burberry is maybe a unique brand because of its heritage in some categories. Its Britishness, quite unique in the industry. Your iconic categories, scarves and trench coats, which is probably about a third of your, 30% of your business, if not, I'm mistaken, have been pretty weak over the last year. Could you give us, firstly, the retail like for like of scarves and trench in FY 2017, and two, give us maybe an honest view as you're going to refocus on product in following Marco Gobbetti's joining. Give us your honest assessment of what's going wrong.
If I look at Vuitton's core business or category or Hermès, Birkin and Kelly, or Moncler's down jacket, these brands have accelerated strongly, in recent quarters on their iconic product, but you've seemed to have had lots of weakness in the last few quarters. Is it a problem of competitive environment in those categories where you see more player price positioning, problem of distribution? You alluded a bit to it's communication. Can you fix that? Are you confident for FY 2018? Secondly, on your slide about the capital allocation framework, the third point is you want to focus on strategic investment that are infrequent in nature but potentially significant. Does this include potentially the acquisition of other luxury brands? As we're seeing a pickup in M&A activity consolidation in the space in recent months, as I'm sure you've been aware. Thank you.
Thanks, Tom. I'll just talk about product. We still clearly have a lot more to do as we transition from three labels to one label. I don't want anybody to underestimate the challenge of going from three labels to one label. That is a big transformation. We have also, as we've talked about, reduced our SKU count by up to 15%-20% each market that we've had throughout last year. This is all in aid of having a stronger presence of newness, fashion, and innovation, which, as we were just talking about with John, is something that has perhaps not been as clear in our stores. It's been there, but perhaps our customers haven't seen it. We've had a lot of complexity because of the scale of the three labels.
Just simplifying that down into one has enabled us to not only innovate more, put more marketing spend, more storytelling around each product, but it allows us also to innovate each product going forward. We have a lot to do, but we've also done a lot over this foundational year.
I think it's also worth adding to Christopher's comment that in terms of our performance, what we found is that the fashion component of our business, when we look at fashion versus replen, the fashion component of our business is performing very strongly. The newness and the innovation side of the business is where we spend most of its time, I think, is really very powerful. You mention about scarves and trench. We don't provide that split, as you know. We only do it by product category, retail and wholesale together. What we can say is that we've seen a significant improvement through the tropical gabardine in the trench. That's really been very strong, particularly in Asia. The lighter weight gabardine has gone down extremely well.
Scarves have been a bit more challenging for us because we annualized against the Scarf Bar in the previous period, which was a big success in the previous year. You've got that comparative issue there.
I think also, Tom.
Just to add to that, I hope that you are able to see in the market downstairs, there is a huge pipeline of newness in our core categories like scarves and light coats, outerwear, trench coats. Whilst we were a little softer in the year, particularly when you compare the outperformance of the fashion that we had in the collections and the bags, it's certainly not something that we're overly concerned about because of everything that we have coming through. Julie just mentioned tropical gabardine, which we've had a great success with since we launched.
Yeah. Thank you. Then just in terms of capital allocation, what we wanted to do is lay out a framework that would stay with us for many years and really give investors and yourselves in this room the ability to see how we think about using the cash and how we prioritize the use of our cash. The third one that you referred to, clearly, I can't comment on anything going forward in that because it would be very stock market sensitive. Historically, it would be the type of things we've done regarding buying out the non-controlling interest in China. The Burberry Middle East would be an example of that. Actually, the proceeds from Coty are an example of that going in the other direction. It's cash inflowing. What we wanted to do was just give you an insight into how we think about it.
We've got a clear statement about the leverage. We want to maintain solid investment-grade credit metrics, which by that we mean about a half to 1 times net debt to EBITDA. Then on the top, you can see number 1, organic growth, number 2, dividend, number 3 would be possibly M&A or the type of deal we've done with Coty where we've got proceeds coming in, then number 4, we will distribute the cash to our shareholders via either buybacks or dividends. It's trying to give you an insight into the way we think about it.
Thank you.
Yeah, Warwick.
Thank you. It's Warwick Okines from Deutsche Bank. I've got two questions. Firstly, on CapEx, are you investing enough? In the last two years, you've had CapEx below depreciation, also you've about GBP 70 million cumulatively below what the beginning of each year was guided to. The step up to next year is still broadly in line with depreciation. That's my first question. Secondly, on wholesale, I appreciate you can't guide for the second half in wholesale, but thinking about the second half ex beauty, could you just talk about what requirements you have for further cleanup in your business? Because it's quite hard to get a feeling of how much more there is to go in that respect.
I'm happy with that. First of all, on capital expenditure, I think in terms of the low capital expenditure this year at GBP 104, we do see it as phasing. We've obviously had a change in our IT leader, and IT tends to be a big component within the capital expenditure program. We've had a change in our IT leader. We've just got a new leader, Mark McClennon , come from Unilever, we've been therefore revising and looking at the IT strategy. As far as the stores are concerned, obviously we've got a new CEO coming in, Marco, with a great deal of experience in this area. In terms of some of the store refurbishments, we decided to get Marco's view around that together with Christopher's. Hence, there's been, I think, just a change in the phasing.
I would expect us to be spending in the order of GBP 140 million in full year 2018, and we've got a clear capital budget relating to that with clear plans relating to that, split between IT projects, store refurbishments, et cetera. That's a clear plan. In terms of the wholesale picture, we do see that in the second half, that we will continue to do work in wholesale. As you've seen from our results this year and the year before, our goal is to ensure that the positioning of the Burberry brand in wholesale is similar to the retail presence.
We've worked hard to build the right image for Burberry in the retail sector where we can control how it appears, but in the wholesale, and in particular in the U.S., as you know, with very high discounting environment, we don't feel it necessarily positions the brand in the right way. Those of you that I spoke to in the trading update, you saw that we deliberately curtailed our markdown in the fourth quarter in the U.S., not necessarily to follow the department stores, and we've deliberately withdrawn from some of the promotional activities that takes place in department stores. I think that if that challenging situation continues in the U.S. market, I think we will probably continue to do some work in the second half relating to that. At this stage, clearly, we know the order book for the first half wholesale.
We don't know the order book for the second half wholesale. I think you're used to us not guiding specifically on that at this point in time.
I'll just add as well, if I may, on wholesale. Wholesale remains a really important channel. We just know that we have got some discrepancies with our positioning in different parts of the world. We know that we have much work to do in the U.S. There are a lot of discounting channels in the U.S. wholesale. We have very strong relationships with our partners in the U.S., and we're working together to strategically make sure that we have a global view of our positioning. I just want to make sure that everybody understands in this room, wholesale remains a very important part of our distribution. Hey, Mario.
Morning. The first question is about fashion. You mentioned many time in your speech, Christopher, the term fashion. We are seeing that the luxury customer is more inclined to find innovation in fashion. Brands are reacting in a different way. A brand like Gucci became a clear fashion advocate at the moment, using some heritage element of the past in its offer. A brand like Vuitton remain a heritage brand. Is increasing in innovation. What do you have in mind for Burberry? Will Burberry become a fashion brand a la Gucci, or will move more in the road of Vuitton, or you will find a third way? The second question is about pricing. What was the impact of pricing on the full year 2016 result? In your budget for the fiscal year 2017, what do you think will be the contribution of pricing? Thank you.
Okay. We can't really compare ourselves to a Gucci and Louis Vuitton. I know right now Gucci is having its moment, therefore, that's a comparison. Burberry was born from a trench coat. We were born from ready-to-wear. We have a very strong history. We will build on that heritage, but we've also always had this very pioneering spirit, this spirit of innovation. It's why we have always used digital as a platform to communicate to our customers. The British references that we use, I mention it a little bit in terms of design, in terms of art, in terms of film, that will always remain the backbone. Our heritage and our history, and the story that we've had for over 160 years will always be the foundation from which we build.
We don't see it as about being either a fashion company or a heritage company. I think that's what Britishness is about, this mix of something that is very traditional, very conservative, very historic, with something that is very innovative, very pioneering, with a touch of eccentricity, and that is what defines Burberry as a brand, both in terms of its product, but also touches everything from the way that we communicate to customers, our service, our training, indeed the culture within the company. Pricing.
Yeah, pricing. Okay.
Donald, do you want to touch on global pricing?
Mario, as we've talked about in the past, you know we manage our prices on an ongoing basis, managing between brand positioning as well as foreign exchange. We wouldn't disclose what benefit we're seeing either way, but what I can tell you is that the price changes that we have enacted this year, price increases in the U.K., price decreases in Asia, we've been very satisfied with the result that we've seen.
For the budget 2017, for pricing the budget, what would you have in your current budget for price increase or decrease? What would be your conclusion?
Yeah, just looking at the overall figures. We would expect it to be very minimal in terms of budgeting. We measure AUR, it includes an element of mix Going on, obviously, rather than just like for like. It's been fairly consistent. Overall, as Donald said, we've had differences by region. Overall, it's been fairly consistent. Fairly flat in 2016, full year 2016. 2017, a slight increase. Broadly, we wouldn't expect a big increase in 2018.
Hi, good morning. I'm Helen Brand from UBS. Whilst we've got you, Donald, I was just wondering if you could give us your insights into what's going on in the U.S. at the moment. A lot of commentary around the structural decline of retail. Are you happy with the Burberry store estate, in terms of the retail stores? How much further over the medium term is there to cut in wholesale in terms of locations? Secondly, maybe one for you, Julie. We focused a lot on retail wholesale EBIT margin. As we've seen, retail is now a huge part of the business. Do you have any insights into what the retail EBIT margin is? What do you think the opportunity is for that part of the distribution channel?
I'll take on the Americas. I think it's widely reported that probably the largest issue across the Americas is traffic. That's not anyone in particular, it's across the entire industry. It's whether it's mono-brand stores or in department stores. We know that traffic is the biggest issue. As far as our portfolio, we feel quite comfortable with where we are distributed today from a retail perspective. On an ongoing basis, we evaluate each term as it comes up to determine whether we're going to remodel and stay, whether we're going to stay in place without a remodel, or whether we would close that location. Those are taken on a one for one basis. Again, tied back into our broader strategy around retail and wholesale.
On wholesale, I think we've been quite open about the fact that we believe that our distribution is wider than our peer group, and that that's something that we would want to continue to address. As Christopher rightfully said, there is no question whatsoever that wholesale is a critical part of our business in the Americas. It's fundamental to the model. We've been working very closely with all of our partners in developing strategies by location. We feel quite good about that.
Just to follow up, since the move to one label, are you having better conversations with the department stores, do you think?
Great question. Our perspective, if I'm honest with you, early on, there was a lot of questions. What does this mean for us? You know our distribution was not only in a single store, we had multiple floor locations depending on the brand. While it was a difficult early conversation, all of our partners now are absolutely aligned with us. They have understood the vision that Christopher had in transitioning us to one label and are actually seeing the results from it.
I think actually a great example that Donald shared with me the other day is, for example, Saks Fifth Avenue, where we had three spaces within Saks Fifth Avenue. We are now more productive in one space. I think that, again, they're just examples of why it's really important to have a brand presence in the store that is concentrated as one brand rather than these multiple labels. We've got time for one more.
There was a second question on margin.
Oh, I'm sorry.
I'll just Yeah. She stuck to her two questions.
Sorry.
In terms of retail wholesale, we are at 15.9%. I would draw attention as well to the group margin, which is 16.6%. We get the uplift from the licensing. The group margin is actually more favorable. We do not split out retail and wholesale, and you probably would not expect me to at this stage. We manage the businesses alongside each other anyway, so we could not split it out completely because we have got shared costs. We do expect to see an improvement in the retail margin over time as we improve store productivity, and that is really the main driver overall of driving improvement in our retail margins.
Louise. Hi, the last one.
Thank you. Hi, it is Louise Singlehurst from Morgan Stanley. Two questions from me, please. In terms of the capital allocation, there is clearly a much stronger message that is coming across from you today. Just to confirm the 0.5x-1x is the annual target going forward. If so, does not that seem a little bit conservative if we think about the messaging about no space expansion, so ultimately lower CapEx and less lumpy spend, no beauty, et cetera. Secondly, a question for Julie. You are just five months in. You have clearly had a busy start to the period at Burberry. You talked about taking a fresh look at the business. When you look at the cyclical industry, do you think Burberry is now in the position with all the cost action that is being taken to deliver much less volatility in earnings going forward, barring FX, of course?
Thank you.
Capital allocation was the first one. Capital allocation was the first one, then earnings. In terms of capital allocation and the conservatism, we have been deliberately somewhat conservative with the leverage ratio. We've obviously looked at the peers as well. Quite a number will run with relatively low leverage levels. For Burberry at this point in its transition, 0.5 to one feels right. Number of factors behind that. One is we've always got the currency exposure. You've seen the impact of currency on our business this year. Clearly, as the new CFO, I'm going to be relatively conservative about that, just because of the volatility that we've seen in exchange rates. That is an exposure to Burberry going forward, therefore we're being conservative about that.
The second thing, obviously, we've got a new CEO coming in, and he will take his position in July. We didn't want to prejudge anything relating to that, so we want to fully involve Marco in capital allocation decisions and our framework. The next area really is about the volatility of the earnings. What we are doing is we are laying out clearly our kind of recipe, if you like, for value creation. We're very focused on driving top-line benefits, and we've got three pillars that are all geared towards doing that, as Christopher spoke about. What we're also doing is controlling the costs, putting a great deal of discipline around the costs, and also delivering the cost savings that we've committed to the market and putting very rigorous plans behind doing that, including taking some very bold decisions.
The decision we've taken recently to announce Burberry Business Services, which is now going through consultation, will affect 300 roles in Burberry, and Beauty is affecting around 100 roles. These are the biggest change programs we've ever embarked on as an organization. You'll see us delivering through a lot of determination to deliver that earnings enhancement. The next level of leverage obviously comes through the interest charge and the tax rate, and you've seen we're making some improvements in that. We're looking to give earnings growth to our shareholders, but obviously protecting the brand is the number one priority.
Thank you very much indeed everybody for joining us today. I hope we gave you.
Christopher, just before we wind up, can I just, as chairman, I'd like to just pay a tribute and say a big thank you to Christopher. Today, it is his last results presentation as chief executive. He's going to really miss you guys a lot. I want you to know that. What I want you to know is, just to echo, first of all, what Christopher was saying about the business going through a lot of change, going through a transition, Christopher has led that process, particularly in the last year, at a time of great change and some very tough decisions that have had to be taken, the right decisions, taken with great integrity, very selfless decisions because he thought it was in the interest of the company and in the people. For that, Christopher, a huge thank you to you. Thank you.
Thank you.