Ladies and gentlemen, welcome to the Financial Year 2020 Annual Results Presentation, live webcast and conference call for Compagnie Financiere Richemont. I am Alessandro, your call operator. I would like to remind you that all participants will be in listen only mode and the conference is being recorded. The presentation will be followed by a question and answer session. The conference must not be recorded for publication or broadcast.
At this time, it is my pleasure to hand over to Sophie Canha, Group Corporate Communications Director. Please go ahead.
Thank you, Alessandro, and good morning. We hope that you, your families and your colleagues are all well in these difficult times. And while we are disappointed that we cannot host a physical meeting as originally planned, we are pleased that you are able to join the audio webcast of Richemont's 2020 annual results. This is Sophie Kania. And joining us today from Richemont from different parts of the world are Johann Rupert, Chairman Jerome Lambert, CEO Burkhard Brun, CFO Pierre Louis Nyorun, CEO of Cartier and Nicolas Abos, CEO of Anclaes and Arpels as well as James Fraser, IR Executive.
Jerome will begin the presentation with a summary of our response to the COVID-nineteen pandemic before taking you through last year's financial highlights and sales. Burkhard will then discuss the Maisons key developments and Group's financials. We will hand back to Jerome for her conclusion, which will be followed by a review of all the questions that you kindly provided. Today's presentation and company's announcements are available on richemont.com and an archive of this audio webcast will be available on our website at 3 pm Geneva time today. Before we begin, now I draw your attention to the disclaimer on our presentation and company announcement regarding forward looking statements as defined in the United States Private Securities Litigation Reform Act of 1995.
Thank you. I will now hand over to Jerome.
Thank you, Sophie. Good morning, ladies and gentlemen. Thank you for taking the time to participate in today's presentation during this exceptional period for us all. I would like to start by taking you through the actions Richemont has taken in response to the spread of COVID-nineteen. To deal with these unique and challenging times, we have adopted a 4 stage approach: health and safety, business continuity, remediation and restart measures.
1st and foremost, the health and safety and well-being of our colleagues, clients, partners, communities have always been our top priority. From the outset, we have taken strict precautions always in alignment with the World Health Organization, Governmental and Local Health Authorities guidelines. We are being in regular communication with our colleagues in addition to providing a 20 fourseven helpline and well-being support. As the pandemic spread from Asia Pacific across Europe and the Middle East and then to the Americas, we temporarily closed many of our boutiques and office, some of our distribution centers, notably Zoos at our online distributors and most of our production facilities either fully or partially. At the end of March, following some reopening in Asia Pacific, close to 45% of our directly operated stores were closed.
These figures rose to nearly 3 quarter of our distribution when including external point of sales with 3 regions, namely America, Europe and Middle East, all nearly completely closed. Throughout Richemont, Richemont has been committed to supporting the communities where we operate. In addition to our early donation to the Red Cross in V1, around 100 support initiative have been implemented throughout the group by our Maisons businesses. There are too many to list them here, but let me name a few. Pelletier, Richemont, Fluentine and Therapiens, have plagued over 1,000,000 masks to medical staff and frontline workers in Italy, in addition to the masks they are providing for our colleagues and their families.
YOOX NET A PORTER partnered with local charities in London, New York, Hong Kong and Milan repurpose their delivery fleet and deliver thousands of packages containing full medicine and essential items and personal protection equipment to those most in need and to hospitals. Cartier has made several donation to organization and program worldwide including Medecins Sans Frontieres, visiting nurse service in New York, the Red Cross Society of China and the Emirates Rescretion. The second set of measures we have taken relates to ensuring business continuity. We have kept our operations running at a minimum level to be ready to gain momentum when the situation improves. A small number of production facility remain open to serve essential operation, and some distribution centers continues to serve our open stores and online customers, always following governmental and public health guidelines.
Many of us have also embraced working remotely. The ramp up from 1,000 to over 10,000 was done in less than 10 days, and our technology team has done an excellent job making this happen as quickly as smoothly as possible. Our past investment in digital infrastructure have allowed our teams to maintain direct contact with clients either through our Maison website, call center or through social media channels. Our Maisons has swiftly embraced those new digital opportunities, and we have therefore been able to generate increased sales via our website, 3rd party website and across multiple digital channels. Before going through the remediation measures, whose benefit will flow through more in financial year 2021 than in financial year 2020, let me tell you what we estimate the pandemic impact is for the year under review.
We estimate approximately €800,000,000 on sales, around €450,000,000 on operating profit and some €350,000,000 on cash generation. Cash is our fortress. It allows us to stay agile and give us the freedom to take a long term view with our Maisons and businesses, keeping employment high and honoring our commitments to stakeholders. To this end, we promptly implemented a range of remediation measures for cash preparation. We quickly tailored inventories to end consumer demand and adjusted our production capacities and corresponding supply chain needs accordingly.
These measures are helping to contain working capital requirements. We are restricting operating expenditure, such as communication and selling and distribution expenses to business critical spend only, while maintaining our focus on new retail, which is the operating model we are aiming at. It consists of using big data to intimately know our clients and being able to meet their expectation at any time, anywhere and with any device. We are renegotiating 3rd party agreements where we can. A hiring and tariff freeze is being implemented while capital expenditure is being reduced by postponing our compelling projects such as store opening and renovation, and we are limiting spend to only key strategic projects.
Remember, there is always a lead and lag effect between initiation of cost saving and cash preservation measures and the time they show in our financials. In a nutshell, our priority is to protect our people and preserve our ability to benefit from any improvement in the environment. In light of COVID-nineteen, Richemont's Board of Director has also decided it is prudent to propose a lower cash dividend. Let's now look at our restart measures, which mainly consist of reopening facilities whenever allowed by authorities, always maintaining strict safety protocols. This is what happened in March in part of North Asia, including with reduced opening hours and shift arrangements.
Restart measures also include focusing on new retail, just discussed, the USA and allocating resources and reallocating stock where sales have resumed such as China and Korea. Before turning to the numbers, let me remind you that the group financial statement for the prior year ended 31st March 2019 included 11 months of YOOX NET A PORTER result and 10 months of Watchfinder's results. Sales for the year increased by 2% at actual exchange rates and were in line with the prior year at constant exchange rates. Excluding online distributors, sales for the year decreased by 1% at actual exchange rates and by 3% at constant rates. COVID-nineteen had a significant impact on the Q4, where sales declined by 18% at exchange rate and by 19% at constant rates.
As a reminder, sales had increased by 8% 5%, respectively, in the 1st 9 months of the year under review. Operating profit was down by 20 2 percent to €1,528,000,000 largely impacted by temporary stock closure in the 4th quarter. Profit for the year amounted to €931,000,000 The magnitude of the decline can be primarily attributed to the non recurrence of the post tax non cash gain of €1,378,000,000 on the revaluation of YOOX NET A PORTER Group shares and prior year to tender offer as well as the €245,000,000 foreign exchange loss on monetary items. The net cash position remained strong at €2,395,000,000 Let me now walk through the group sales performance, 1st by region, then by distribution channels and finally by product line. As always, changes versus last year are expressed in constant currencies.
Also, Hong Kong refers to Hong Kong SAR, China Macao refers to Macao SR China and Taiwan refers to Taiwan China. Finally, China refers to Mainland. Let us start with sales in Europe, where sales increased by 4% and by 1% when excluding online distributors. In the Q4, sales were impacted by COVID-nineteen and declined by 10% following an 8% improvement for the 9 months ended December 2019. Performance for the year was varied across the main markets.
Sales in the United Kingdom grew by double digit, while sales in France declined, affected by lower tourist and domestic spending following strikes and social unrest. There was mid single digit sales progression at the Jewellery Maisons, which partly benefited from the consolidation of Boucher Lati and a slight decrease at the Specialist Watchmakers. Sales at online distributors rose by double digits, partly benefiting from a comparison to the previous year, which included 11 months of sales for YOOX NET A PORTER and 10 months for Watchfinder and Co. Retail sales recorded a mid single digit increase, while wholesale sales contracted primarily due to optimization of the watch wholesale network. Online retail sales continued to grow by double digit.
With 30% of group sales, Europe remains our 2nd largest market. Let us move now to Asia Pacific, our largest region with 35% of group sales. Sales for the year decreased by 6% and by 7% excluding online distributors. This decline is largely explained by 2 factors: social unrest in Hong Kong for the largest part of the year and the outbreak of the COVID-nineteen pandemic during the Q4 when sales declined by 37%. For the full year, sales in China and Korea rose by double digit.
This progression, however, was not enough to offset the 40% sales decline in Hong Kong. Sales grew at the online distributors but contracted in all other business areas. By channel, both retail and wholesale sales were lower than in the previous year. Let us now look at the Americas, which accounted for 20% of group sales, with U. S.
Remaining our largest market ahead of China. Sales in the Americas grew by 6% and by 2%, excluding online distributors. The online distributors drove growth while double digit sales progression, while our jewelry and fashion and accessory Maisons posted single digit increase. The decline in wholesale sales was more than offset by a double digit increase in retail, both online and offline. Let's now turn to Japan, where sales accounting for 8% of the group total declined by 1% overall.
Excluding online distributor, they were in line with the previous year. COVID-nineteen weighted heavily on domestic and touristic spending in the Q4 with sales retreating by 21% versus the Q1 of the prior year. Sales for the year were also negatively impacted by the relatively strength of the Japanese yen and the October 2019 increase in VAT. It is worth noting, however, that sales at Yuri Maisons were stable compared with the previous year and that most Maisons within the Specialist Watchmaker grew from high single to double digit rates. Wholesale and online sales posted growth, while retail sales declined slightly.
And finally, let us review sales in the Middle East and Africa region, which represented 7% of the group sale. Sales were 3% slower overall and down by 6%, excluding online distributors. While sales in the 1st 9 months of the year had been stable, they decreased by 12% in the Q4. There was a strong increase in sales at online distributors, so not enough to compensate for decline at the group's Maisons as the outbreak of COVID-nineteen and an unstable environment impacted strongly the final quarter of the year. From a distribution channel perspective, retail sales were in line with the previous year, wholesale sales declined and online retail sales rose sharply.
Let us now turn to sales by distribution channel, beginning with retail. Sales in our 11.75 directly operated stores decreased by 2%, affected by temporary store closures during the Q4 and following 5% growth in the 1st 9 growth of the year. By the end of March, however, most of our stores in China had resumed activity. Sales for the year increased at online distributors and were stable at Jewellery Maisons. Europe and the Americas delivered growth, while sales in the Middle East and Africa region were stable, while other regions declined.
Retail sales accounting for 51% of group sales compared to 53% a year ago. Next, let's look on Online Retail, which posted strong double digit sales growth at Maisons and online distributors across almost all regions. Sales benefited from an increasingly digital clientele and from a favorable comparative due to the timing on the online distributors consolidation in the previous year. The contribution of online sales to sales grew by 300 basis points to 19%. Finally, wholesale.
Sales were 5% lower after decreasing by 1% in the 1st 9 months. In addition to the COVID-nineteen outbreak, temporary store closure at our franchise partners and multi brand retail partners due to social unrest in Hong Kong and France weighted on sales. Growth in Japan was more than offset by decline in other regions. Sales declined in all business areas. Specialist watchmakers were, in addition, impacted by network optimization initiatives.
Which contributed into the Q3 of this financial year. Wholesale sales represented 30% of group sales compared to 31% a year ago. And finally, let us move to the sales breakdown by product line. Jewellery sales were in line with the prior year with good sales in Europe and the Americas mitigated by a slowdown in Asia Pacific. Jewellery was the largest contributor to group sales with 36% of total sales.
Lower watch sales reflected wholesale channel optimization initiative and continued disruptions in Hong Kong, initially by street process and thereafter by COVID-nineteen. There was a slight decline in leisure goods sales with closing whilst closing grew strongly. The later partly benefited from a favorable comparable with the previous year due to the effect of the online distributors consolidation as previously mentioned. Burkhart will now take you through the Maisons and segment highlights. Over to you, Burkhart.
Thank you, Jerome. Let me start with the Jewellery Maisons. After rising by 8% in the 1st 9 months of the year, sales rose by 2% for the full year following the impact of COVID-nineteen in the 4th quarter. Europe, the Americas and Japan led regional growth and more than compensated for lower sales in Asia. Retail sales increased moderately.
Online retail sales grew strongly. The decline in operating margin was limited to 28.8%. This contraction can be partly attributed to higher gold prices and a muted increase in costs linked to continued investments in retail network renovations and digital communication initiatives. In addition, the outbreak of COVID-nineteen led to store closures and event cancellation fees. Let us look at the key developments over the past 12 months.
Growth in jewelry was moderate with notable performances from icons such as Justeinclu at Cartier and Alhambra from Michaelif and Arpels as well as from the successful launch of Clash de Cartier at the beginning of the financial year. The Clash collection has continued to gain momentum with new references in white gold and Amazonite recently introduced. Since this acquisition in September 2019, Boucher Lotte has performed well, notably its emblematic Magrit collection. In watches, sales were moderately lower compared to the prior year, particularly impacted by protests in Hong Kong and the COVID-nineteen outbreak. There was strong performance from Pantera and Santos at Cartier and Alhambra at Van Cleef and Arpels.
Retail sales growth partly benefited from new store openings, notably in China, the reopening of renovated stores in several locations across Europe as well as from the integration of Boucherlati. Online retail continued to perform well with double digit growth. This was aided by the launch of Cartier's flagship store on Alibaba's Tmall Luxury Pavilion in the Q4, which had strong initial take ups. The decline in wholesale sales reflected several months of street protests and a difficult trading environment in France and Hong Kong. Let us now review our Specialist Watchmakers business area, where sales declined by 4% in an overall challenging environment despite increases in Japan and the Americas for the year under review and good growth in China during the 1st 9 months.
Retail and wholesale sales as a whole declined for the year, following a stable performance in the 1st 9 months before the impact of COVID-nineteen in the Q4. There was strict cost control of both of inventories at our multi brine retail partners and of cost throughout the year. Cost savings were, however, not sizable enough to compensate for the combined effect of lower sales, higher gold prices and a stronger Swiss francs impacting the cost base. As a result, operating margin was 220 basis points lower at 10.6%. Let us look at some highlights of the past 12 months.
Sales declined across most Maisons. There was, however, notable growth at Lange and Sohne and Panerai with good response to the new accessories line and various anniversary additions at Lange 1, at Lange and Sohne and the launch of the submersible Carbotech at Panerai. The decrease in retail sales reflected a sharp contraction in Asia Pacific, primarily attributed to COVID-nineteen. All other regions posted growth increase in Japan. Online retail sales continued to expand, albeit from a low base, with broad based growth across Maisons and regions.
Lower wholesale sales primarily reflected unrest in Hong Kong and France and the subsequent effects of COVID-nineteen. Sales were also impacted by the optimization of the wholesale distribution network, which was completed at the end of the third quarter. Now let us turn to online distributors, where sales increased by 15%. Nearly all regions, led by the Americas, posted double digit growth. This performance was achieved notwithstanding the temporary closure of the Landriono distribution center in Italy following a storm last summer and the temporary closures of distribution centers in the Q4 linked to the COVID-nineteen outbreak.
On a technical note, let me bring to your attention our decision to reclassify the amortization of intangible assets and inventory adjustments We have done this so that operating results better reflect the operational performance of each business area. Prior year figures have been restated to reflect this change, which will primarily apply to Online Distributors. Online Distributors posted an operating loss of €241,000,000 for the year compared with a €99,000,000 loss in the prior year. This reflects a number of factors: a highly competitive pricing environment for online fashion, higher fulfillment costs partly linked to the Landrygano storm, increased communication spending and continued investments in IT, mostly linked to Mr. Porter's and more recently NetApportis platform migration as well as international expansion costs at Watchfinder and Co.
Let us
look at some operational developments. Since April 2019, YOOX NET A PORTER Group has introduced more than 600 new brands, including Audemars Piguet and launched more than 300 exclusive capsules, notably with Saint Laurent. Expansion of key categories has continued, notably hard luxury and beauty. Mr. Porter's migration to the new platform has been successfully completed.
The process has commenced for Net A Porter. The Fengmao joint venture with Alibaba continues to develop favorably. After 6 months of operations, the Net A Porter flagship store on the Tmall Luxury Pavilion now features more than 165 brands, including some Chinese brands. Among the many digital initiatives introduced this year, I would cite 2 at YOOX, utilizing artificial intelligence. YOOX Mirror enables customers to develop avatars to try on outfits and share the looks.
Also at YOOX, a new size and fit tool helps customers identify the right clothing size. This year saw the launch of HOOX NET A PORTER's Modern Artisan Project, a sustainable luxury capsule collection of men's and women's wear in partnership with the Princess Foundation. This complements the Net Sustain platform, which promotes sustainable fashion and encompasses 100 brands in its 2nd season. Watchfinder and Co. Enjoyed strong growth on a full year comparable basis.
Performance was strongly driven by the U. K. And the business has now expanded into France, Switzerland, Germany, Hong Kong and more recently the U. S. Finally, let us move to other, which primarily includes our fashion and accessories maisons.
Sales were 5% lower for the year, following a stable performance for the 1st 9 months. Growth in the Americas was offset by other regions, particularly in Asia Pacific. Sales were lower in the retail and wholesale channels, while online retail showed robust growth. Operating losses increased by €46,000,000 to €141,000,000 The deterioration can be explained by lower sales and a €45,000,000 asset impairment at Alaya, Dunhill and Purdy. However, it is worth noting that a tighter capital allocation leading to a reduction in inventory and CapEx led to a lower cash outflow.
Let us look at the developments of the main Maisons. There were contrasting results across Maisons. Montblanc's growth in the Americas and Peter Millers globally were not able to offset declines at some of the other Maisons in regions. Montblanc had notably good performance from its tech products and from new categories such as trolleys. Retail sales were lower, impacted by temporary closures, though Daniel and Montblanc showed resilience with higher sales in most regions.
The decline in wholesale sales was contained by good growth in the Americas. The strong growth in online retail sales was driven by Montblanc and Peter Millard, which were some of our first Maisons to embrace this channel. Overall, for the fashion and accessories Maisons, online sales reached 9% of total sales compared to 5% a year ago. Let me now walk you through the rest of the P and L. Gross profit was broadly in line with the prior year.
At 60.5%, gross margin for the group was down by 130 basis points, mainly due to higher gold prices, lower manufacturing capacity utilization and a competitive pricing environment in online fashion, in addition to the full year dilutive effect of the online distributors. The Groupe Maisons gross margin, however, was strong at 66%. Let us now look at our operating expenses. Overall, expenses increased by 6%. Selling and distribution expenses increased by 2%.
The limited increase reflects early mitigation measures following the COVID-nineteen outbreak and postponing of non essential renovation of store openings. It also includes the first time adoption of IFRS 16 leases. Selling and distribution expenses represented 50% of total operating expenses for those with only partly refundable fees. The most notable was the €22,000,000 charge for Watches and Wonders Geneva, which was to take place in April. Excluding this charge, the increase in communication spending was limited to 4%.
Communication expenses represented 9.9% of group sales, slightly more than the 9.6% in the prior year, but accounted for 20% of operating expenses, in line with last year. Fulfillment expenses at €352,000,000 increased by 54% and represented 5% of operating expenses. These costs are related to the fulfillment of online orders at the online distributors and the Groupe Maisons. Almost half of the increase was due to the first line inclusion of fulfillment costs for Groupe Maisons that were reported across other expense categories in the prior year. Remaining increase was mostly driven by the full year effect of the consolidation of the online distributors and extra costs due to the storm damage in Italy last summer.
Administrative expenses grew by 10%. The increase can be mostly attributed to the strengthening of the Swiss francs, IT and logistics spending and digital initiatives at Online Distributors and Group's Maisons as well as the strengthening of some teams, notably in digital. Other expenses amounted to €254,000,000 These included €200,000,000 for amortization of intangible assets on acquisition, primarily related to online distributors. Also included were €48,000,000 of nonrecurring items, mainly related to impairment charges for the group's fashion and accessories maisons. The prior year period included onetime expenses of €95,000,000 This leads us to operating profit, which was down by 22% as operating expenses increased at a higher rate than group sales growth.
There was a time lag between the impact of temporary store closures on sales and the effectiveness of cost mitigating measures promptly implemented in the wake of COVID-nineteen in the Q4 of the year under review. Operating margin for the year stood at 10.7% or 14.9 percent excluding Online Distributors. Let us now review the P and L items below profit, starting with finance costs. Net finance costs for the period amounted to €337,000,000 compared with €183,000,000 in the prior year. The increase was mainly due to a €233,000,000 increase net foreign exchange losses on monetary items and no lease interest expense from first time adoption of IFRS 16.
These were partly offset by €44,000,000 net gain on hedging activities that compared with a €112,000,000 loss in the prior year. Profit for the year decreased to €931,000,000 This was primarily due to the non recurrence of the €1,378,000,000 post tax noncash accounting gain on the revaluation of YNAP shares that we held prior to the tender offer. Also contributing to the decline was the reduced operating profit and the higher net finance costs just mentioned. I would now like to focus on our cash flow from operations. Cash flow generated from operations improved by 4 €46,000,000 to €2,797,000,000 This was mainly a result of €724,000,000 in higher Lower working capital needs, rising Lower working capital needs arising from a lower increase in inventories and lower trade receivables, largely due to lower wholesale orders, also contributed to the increased cash flow from operations.
Let us now turn to our gross capital expenditure, which amounted to €735,000,000 Expenditures were 11% lower than the prior year as some projects were postponed or canceled due to COVID-nineteen. 44% of expenditures were focused on points of sale. This mainly related to boutique openings, such as Cartier at Hong Kong K11 and renovations, such as Cartier on Old Bond Street in London and Van Cleef and Arpels on Rodeo Drive in Los Angeles. Manufacturing spending amounted to 13% of capital expenditures and mostly related to R and D and machinery, the largest portion being at Cartier. Other investments at 43% of total spending included IT expenditures, mainly at YOOX NET A PORTER and to a lesser extent at the group in the Maisons.
Let us now discuss free cash flow. Free cash inflow amounted to €1,024,000,000 a decrease of €122,000,000 Higher cash flow from operations was more than offset by the inclusion of lease payments under IFRS 16 as well as higher taxes paid. Let us now turn to our balance sheet. Our balance sheet remains strong with shareholders' equity representing 57% of total equity and liabilities compared with 61% a year ago. Net cash of €2,395,000,000 is €133,000,000 lower than the prior year.
The decrease can be partly attributed to the Boucherlati acquisition. Let us now talk about our dividend proposal. In these unprecedented times, without visibility on how the environment will develop, our Board of Directors has decided that it is in the best interest of all stakeholders to preserve maximum liquidity in the short term, and therefore, to lower the dividend proposal to CHF 1 per A share. In order to reward loyalty and long term shareholders, the Board is also evaluating an equity based shareholder loyalty scheme as a supplementary benefit to enable shareholders to capture any ultimate improvement in global conditions. The scheme will be announced prior to the publishing of the AGM notice.
I will now hand you back to Jerome, who will conclude the presentation.
Thank you, Burkhard. Before making my closing remarks, I would like to update on the main digital initiatives that took place this year within the group. First, the acceleration of the digital agenda of YNAP and our Maisons. At Duke's Net A Porter, we support this platform migration has been completed successfully and work has started on the replatforming of Net A Porter. On the Maisons side, with a sudden temporary closure of so many of our stores, our Maisons digital capabilities have had to develop further, notably for a number of our specialist watchmakers.
We are also looking to extend the range of service offered and the reach of our Maison e commerce facilities into new market by having fully localized websites. Alaya, Chloe and Danil have already joined the YOOX online flagship store platform, and we have started to roll this out for Montblanc before adding all the Maisons. The long term objective is to offer a seamless experience to our clients through greater access to inventory. It will also give our Maisons visibility of our inventories across fulfillment center and stores. The second element is the increased collaboration with Alibaba through Feng Mao, our JV with Alibaba, which led there to the launch of Net A Porter flagship store on Timo Luxury Pavilion last fall.
The store already retails 100 and 65 luxury designers brands in China and its earlier results are promising. We are working closely with Alibaba to maximize traffic to the store. The collaboration also extends to the opening of flagship stores on Timal Luxury Pavilion for a number of our Maisons, Starting with Cartier in the Q4 of the year in the review. Despite launching amid the COVID-nineteen outbreak, the Cartier flagship has performed ahead of expectations. We are again working closely with Alibaba to target their vast client base and to extend our reach by in first and second tier cities.
In addition, this partnership recently allowed us to help the Fondation de la Autologerie, or Swatch and Wonders on the cloud following the cancellation of the physical event in Geneva. The event was hosted virtually from China with many Richemont Maisons launching new collections online, a unique and innovative ways of delivering the experience of the salon to the partner and the public. 3rd and last element, Watchfinder, our also digital native business, which is on track with its internalization plans, which include locally based showrooms, retail stores and websites in local language and currencies Watchfinder expanded 1 year in 5 areas: France, Switzerland, Germany, Hong Kong and the U. S. To conclude, sales operation and demand have all been strongly impacted by COVID-nineteen.
Also, we have seen some resilience in jewelry and clothing and have also experienced an attainable acceleration of online sales at our Maisons. In this context, safeguarding our people, brand equity, assets and partners remains our number one priority. Beginning in March, in China and Korea, we have seen a gradual and cautious reopening of stores, workshop, manufacturing sites, distribution centers and offices. This is slowly extending to the rest of the world as government and local health authorities sanctions are losing us of restrictions. This different timescale will require from us a lot of agility.
Our restart measures will follow 2 axes. 1 is focused on the U. S. And maintaining a good level of activity in part of Asia, where our sales have resumed. And the second one is digital, what we refer to as new retail.
This crisis with a new social distancing norm has undoubtedly accelerated the digitalization of our world and this means expanding our service and improving experience for our clients. We have the capacity to withstand this crisis, thanks to our strong dedicated teams and a robust balance sheet with over €6,000,000,000 in total liquidity. Our collective ability to adapt to the changing aspiration of our clients and to navigate a constantly evolving landscape give us confidence that we will emerge from this crisis even stronger. I would like to thank everyone at Richemont for their hard work and continued commitment. We will now open the floor to questions.
Thank you.
Thank you, Jerome. And thank you so many of you having taken the time to email your most pressing questions in our most pressing questions and concerns. We really appreciated your reactivity. Many questions were widely shared. I will read them in the standing order of prevalence for you.
The most frequently asked questions relate, look at the list, to COVID-nineteen impact. Basically, what is the impact and especially the long term consequences? Do you have any thoughts on if and how consumer spending habits will change in terms of product, channel, brand? What implications are there for Richemont Business Model? Will there be an even more aggressive focus on digital omnichannel?
And consequently, what would be the implications on the store footprint? So I don't know whether yes.
Johan, Rupert. Yes, obvious, we've had a massive impact like a number of industries. Will consumer spending habits change? It's a very good question. Yes, it will.
I suspect that in 10 years' time, you people are going to be how is your online business going. Already when we're in China and we speak to Alibaba, the main discussion is online. And then when we get to new retail, we start talking offline. I think that companies that have ignored it and have been resistant to change we'll find that the catch up is very, very difficult. So when you ask about questions on NIP, any really any of the online businesses.
It should be viewed as new retail. And it should be viewed as our clients wishing to have a seamless experience with the product of their choice and with the Maison of their choice. Now we've seen from Teng Mao to if you look at our joint venture in China, through to Peter Millar in the United States, through to where we've opened stores in Europe. A migration in where we've opened in Europe, we have a far higher conversion rate in store when the customers come to the store because they've basically made up their mind online and inquired. And in many cases, it's becoming we'll buy and then pick up.
So that's a trend that will continue. We have been active in it through investments in NAP, where originally it was fashion, but we're bringing in more and more hardlux free onto the platform, not only our own, but competitors.
It's
a way in which we in our attempts so it's 2 fold. Firstly, it's serving the customers. And secondly, it helps us to change fixed costs of leases into variable costs, which is critical. And we will continue to advance down that road. But I think in a sense, it helps not to be scared.
I mean, some of you are old enough that you remember that I told you that I was the first Apple computer agent in South Africa in the 80s. I think Richmond was built on Apple Mac 2s. And it's hilarious today to have to explain that 1 DJI drone's little SD card has the memory capacity of 1,500,000 Apple Mac 2s. But so we have from the beginning embraced technology and how it makes our lives easier. So this is not new.
But now we have something where technology make our clients' lives a lot easier. And instead of worrying about it and bad mouthing it, we've embraced it. If we can move and continue to move more and more of our sales of our well, out of our stores, but online, we will change our operating leverage in the right direction. And that is the real goal with our business model. And will it accelerate some decisions?
I'm not sure. Are we aggressive enough? All I can say is we are embracing new retail. We are learning enormous amounts from our association with Alibaba. And the one thing I requested even throughout the standstill was that we would not cut back on the costs of developing new retail in China.
So yes, we are emphasizing it, and yes, we're moving ahead. Is that sufficient? Any of my colleagues want to add? Because the next question is why NAPP? How can it become a good investment for shareholders?
It is a good investment right now. And returning to profitability or not, they had a disaster with a tornado last December, November, December, where the distribution center was shut. Obviously, we had to shut the distribution centers. It would not have been prudent. So we even shut a distribution center, though it was not required.
And we do not regret the NIP buyout. I'm just reading from the next sentence and maybe Sophie you can direct and help us ask our colleagues to add to it.
Sure. Jerome, would you like to add anything? [SPEAKER JEAN
FRANCOIS VAN
BOXMEER:] Yes. Yes. [SPEAKER JEAN FRANCOIS VAN BOXMEER:] So maybe I can read the question because Mr. Rupert had it in front of him, but for the benefit of the audio investors and analysts listening to us. So basically, the question was whether why not was a good investment for shareholders and whether we were regretting doing this 50% buyout and how can we articulate and what was basically our omni channel strategy going forward?
Yes. So Sophie, just two things to add. Just Johan mentioned some DC closure. Indeed, we closed the DC in England, our DC 1, which is our main NAP or DC very early year in April to adopt very strict and secure conditions of work for Collecx at that time. And what is also very important to say that the interconnection Alaya that are operated Alaya that are operated through the UFS network and are on their way to adopt a new era, which is the omni stock model of NAP.
Montblanc is moving on the platform this summer and then will be followed by the other Maisons. When it comes to another good example of the ecosystem, it's Feng Mao, Alibaba and China. This year we don't we have not had Watch and Wonders physically in Geneva. So we had to replace it by a digital event to present the new products and Krishmore is with the other Maison of CXS or Watch and Wonders are among the only ones who have presented the new products this year. Thanks to a digital platform.
The digital platform was presented on Tmall on ThingNow. It was the 1st multi brand event organized on Tmall simultaneously on the various brands Pavillon and on Figma itself. And it was having 100 of millions of impressions. We reached several 1000000 of 100 of impressions throughout that network presenting the new products and we have seen a significant impact on our e commerce in China this year. What is also very interesting is as Johan was saying, even after opening, we see a change in attitude and behavior.
So I mean, e commerce in China for hard luxury goods was already progressing strongly in January, February. But even now, in this month, in China, we see up to triple digit growth with our e commerce despite store reopening. Underlining that it has changed behavior and that there is a stronger fusion between the offline and the online store.
Thank you, Jerome. The next question relates to dividend and whether we can comment on our dividend policy. I think that's a question for you, Mr.
Sophie, as I'm responsible for this, I ought to feel this and not let poor Buka defend my suggestions. We have always believed in protecting our balance sheet. We've always had sufficient dividend cover in order to have enough liquidity at the center. For years, a lot of investment banks questioned us about that it's a lazy balance sheet, etcetera. But having been through this in 'eighty seven and in 'ninety nine, 2000 and in 2,008, We and it's not being Rupert de Baer or anything.
It's just being in the position where we could make our own decisions, where we can safeguard our colleagues' positions. And where we're in charge of our own destiny. So we did that bond issue. It's long term. And we are in a secure cash position to ride out even if this COVID-nineteen tragedy extends for longer than we hope.
In other words, that it doesn't end as quickly as we hope. Now until there is a readily available vaccine, and I stress readily available to many, many, many people. Their people will live in fear. So even though China has opened domestically, and yesterday, we learned from a director of ours who has been between Shanghai and Beijing for the last month and a half. And things are normal again internally.
And we are seeing the results throughout our stores. So but they're not traveling. Nobody is traveling. And until people feel sufficiently safe, I doubt that we will return to a pre COVID stage. Now we have 100, but at least 100 top institutions working on a vaccine.
Then we have similar brains working on tests, easy testing, which testing is as important. We are still as a society working through this. I don't think anybody has any idea as to when a vaccine will be available. But my friends in this scientific world tell me it's going to be a lot longer than what politicians, especially those who are running for election in November, hope. But that there will be other but there will be good news in other fields, not in the vaccine field, in the interim.
So in order to conserve cash, we halved our dividend. I've cut my salary in half. So even though I do give it to charity, I think it's important to set an example. However, I didn't want the loyal 30 year shareholders that have been loyal to us to suffer by having to sell if they need the dividends for cash flow reasons and to miss a potential uptick if a vaccine or not should I say when a vaccine is found. So I suggested to our investment bankers 3 days ago, is there not a way in which we can give our shareholders at the dividend date a warrant where they can buy Richemont shares at a future date.
It's an option, which is really an option on the ingenuity of man. It's an option in the hope that we will find some kind of vaccine during the period of that option. Because frankly, folks, if we don't, the whole world is going to be in such a mess that whether you own shares or options, it's not going to make a damn difference because we're all going to be in even deeper trouble. But it will reward shareholders for the pain that they're taking now. And we, as a management, will share that pain.
We are going to cut costs, salaries included. We are also looking at all of the CapEx, so that we, as management, have a communality of interest with all of our stakeholders, the shareholders and all of our colleagues. And it was with that view that we structured the dividend as we did. And I know it's going to lead to more questions, but that was the rationale behind. We have enough cash to ensure our survival.
And when you look at a number of our Maisons, it's in the First World War, it's in the Second World War, it's in war upon war and problem after problem. And as the guardians of these missiles, all we have to ensure is that we see through this COVID-nineteen pandemic. I don't know, it will probably be to more questions, but Sophie that's the best I can do for now.
Thank you, Mr. Rupert. It was very clear. So the next set of questions actually relate to jewelry. So really for Cyrille and Nicolas.
So one was most often raised relates to new entrants in jewelry and notably how do we compare new entrants, particularly as part of Tiffany following LVMH integration and whether we consider LVMH acquisition of Tiffany to be a game changer? And what and how do you see Cartier and Vampless in the relative market share gain? And maybe I'll stop here and ask the other jewelry related questions after.
I will just start by saying that we will obviously offer Tiffany as well. And when you look at the free cash flow of Tiffany, Van Cleek's free cash flow is higher than Tiffany's free cash flow. And but I'll leave I'd leave it over to my colleagues to discuss the potential of new entrants.
How do you confirm basically?
I think if you have a look at the online sales or sorry, the auction sales at Christie's and Sotheby's, you will invariably find that the items that attract the most demand and desire are Cartier and Van Cleef. And recently, they sold a tutti frutti bracelet for $1,300,000 online. And I would say until we see some of the new entrants having such a demand. It's not countering them, but it's making sure that we carry on doing what we're doing internally. But I'll ask Kirill and Nicolas to expand.
Yes. So I will carry on from then and then we'll pass to Nicolas. So for the this question, I think there are 3 parts of answer. The first one is that Tiffany is not exactly a new entrant. It's been in the jury work for quite some time.
And of course, when being acquired by the big group, you can expect that to make more effort to be more competitive. So as Johan said, it means that we have to be even more creative on one side to develop faster our brand equity, but to continue what we have been doing for many years. And also the product line being successful also on the vintage market with the auctions. The other side of the question is that the branded jewelry, especially international brand, is continuously gaining share against the non branded. And probably with this COVID-nineteen, the smaller players would face more difficulty than the big ones.
So probably the share of the branded jury will increase after this crisis. And on that, the bigger leaders in the market will be best placed. So I think it will be in some way the outbreak will be quite different, but positive to the branded jury as a whole. So it's both in some way a competition and also help to support the branded Jewry. As far as we stay true to who we are and having stronger identity in design and in DNA and the other side continue to develop the international brand stature.
In the 3rd part, say in jewelry, what is difficult is to make some identifiable products because contrary to watches, you don't put the name on it. And so to find strong recognizable designs is quite difficult part. And whether both for Van Cleef or for Kathy, we have both strong icons like Clove or Justeinclu or Trinity and the recently launched Clash, which will be immediately recognized and linked to the brand, but also in the more collective design like Panther as an overall theme or that tutti fruity as an iconic style, not only one single product, Cartier has many. And these are the keys to be successful, I think, in the international market. So we're confident that we can ride through that.
The biggest issue being the COVID, but after the COVID, probably our situation will be stronger. I'll let it to Nicolas to continue.
Thank you, Cyrille. Basically, you covered a bit everything. I think that 1st and foremost, yes, the branded jewelry has been developing in the last decades and will probably continue to develop in the future. And there have always been a variety or diversity of players, some more creative, some more local, some more fashion oriented. There are not so many that have really withstood over time, over generations and over centuries.
Cartier and Van Cleef and Arpels are part of that group and we see the long term value and the long term appreciation and the way it translates at auction as the Chairman was mentioning. So we are quite confident there. It's a world with diversity of players that represent when they do their job well, diversity of style, diversity of identities. The stronger the identity, the better the success. And as Pierre was mentioning, it's always about having a balance between icons, if you're fortunate enough to be a brand with icons.
And for Arpels, it would be a Galambra collection or a piece like the zip necklace in high jewelry. And to balance that with creativity, like the Perlee collection for instance that we've been developing very, very successfully over the last few years. So new players or acquisition within that category, we don't consider really that they're going to be a threat to what we do.
Thank you, Nicolas. We've got 3 more questions on jewelry. So let me start with the first one. With high jewelry sales driven by the field up factor and by the EIP events likely to be reduced going forward, do you expect that segment to suffer more than entry or mid price jewelry for Cartier and Vancre Gen Arpels in the year ahead? So Nicolas, would you like to continue before
Yes. Thank you, Sophie. You can. I think that Hydroy has a lot of dimensions. I mean, we're talking mostly about unique exceptional pieces.
They are appreciated as works of art. They are appreciated for their investment value. And they are also appreciated sometimes as a beautiful extraordinary accessory that you're going to wear. In times like that, of course, the investment value, the artistic dimension maybe prevail. And the way we interact with hydro collectors and clients, it's true sometimes very visible, beautiful events, international gatherings, launches, but it's mostly through very personalized long term relationship with these clients.
And this relationship even in times like these are kept, are nurtured, are still there which the contact of course with these clients and collectors. So they're going to be put less visible fireworks, less beautiful events, but the true relationship and long term relationship with clients and collectors remains and is probably even stronger than before.
Thank you Nicolas. Cyrille, would you like to add anything?
Yes. I fully agree on that, meaning in this period and as Johan was mentioning before, people are traveling less, so meaning we have to come closer to them. In a period of confinement, it can be, of course, a bit difficult. But as we have there the strong customer base and we know them 1 by 1 and we have seen a beautiful offer, we'll find a way to make it work. For the time being, everyone had to stop and it and the event has to be canceled because there is no public gathering.
It doesn't mean that the interest of the high jury will stop and that the one to one contact will maybe even more valid. And that the social occasion to have things which are more on private things will still be there. But when it's on private, you also still have to express who you are. It's not because there is the confinement that there will be no way any more weddings and that there will be any more social occasion to be together and to appreciate these products. But we have to come closer to the clients on our own.
Thank you, Celine. The next two questions on jewelry are, will price increases be a lever to help offset cost pressures and support suppliers and employees? And if not, is there a need to increase the pace of innovation in jewelry to drive demand and keep up with increasing competition? And maybe the next one might be for workout, not this one, but the following one that I'm going to read, which is given that your 2 key brands are already positive, so the highest margin in the industry, will profit growth be driven essentially by top out growth going forward rather than margin expansion? So the first one relates to the price increases and innovation.
If I can start on that. I know I mentioned there is a gold price increase and on that we it would gradually reflect. But to say we have a very large offer, which is quite, I think, well perceived by customers for the value of the design in there. So we don't see it as a big threat for the time being. We have, on the other hand, also very, very big movements in currency.
So that we have to adjust in there when the markets are going to be reopening. But it's kind of a normal part of our activity constantly to have the right offer, rightly priced for clients. So currently, we don't see that we have to make massive price increases to face that. Is it kind of a normal adjustment to what we have been doing in the past? The most important is to have products which are in desire, and I think we are quite well in there.
And then we had mentioned before about creativity. So of course, we have to develop and to adjust to probably different taste for aspiration or since you want to be more subdued and more geared to value for money, but also again, we have everything in our portfolio. Nicolas, to you?
Yes. I can only concur. I think that as Johan and Chairman mentioning, our customers are not really looking at all jewels for the weight of gold that they represent, looking at our jewels for the accretive dimension and their meaning. So I think it's even reinforced in payers like that. And I don't see either massive price increases becoming necessary in the foreseeable future.
But then for creativity, it's quite interesting to in periods like the one that we're going through today to look at the way houses reacted during wars or very, very deep and strong crisis. And there was usually a surge of creativity and a very strong impact of style. And if you look, for instance, at the jewelry that was created after the 2nd World War, it was very much about yellow gold and color stones, some pieces that were more discrete, but reflecting a real positive vision of life and an element of luck and celebration of happiness. And typically, the type of value that we're even pushing more in our creations as we speak, trying to reflect also on the evolution of taste and expectations of our clients when they are facing the drama that surround us and trying to interpret what they will appreciate in the future in the style and the design. So this is one way to express creativity and innovation and to adapt to these times.
And to continue on that, most of our design, both of ANKLIF and CAR T are timeless, meaning the LOFT was created 19 69, Amge Stanklou in 1969 and tutti frutti in the 1920s and the Panther forever. So the part of the term is that it's contemporary to all generation and basically in all circumstance of their life. So we will run through that as well.
Thank you, Thierry. Thank you, Nicolas. So the question on jewelry related to profit growth, whether it will be driven essentially by top line or whether you can expect some margin expansion?
Yes. Thank you, Sophie. Just a couple of points that I would like to raise and this as to this question. Now if we look at the nature of our, let's say, operating model, it is a model that is today for the jewelry Maisons strongly geared towards our own retail network, which, by the very nature of it, consumes capital for mainly CapEx for our store network, the inventory that goes with it and is by nature, I would say, more geared towards a higher fixed cost base and a lower variability of the cost base. That's nothing new.
So against that fact, obviously, growth is a necessity, and that applies to all the businesses that we have with a big portion of physical retail. So if we stay fixated on that, that would mean, yes, growth is a necessity going forward. Now the Chairman spoke about it or has spoken about it for a very long period of time, that we are going into a new retail environment. And one of the underlying fundamentals of the new retail environment or business model is not only serving customers better wherever and however and whenever they wish to be served by our Maisons. But also and that is what we are experiencing today in China, especially through our partnership with Alibaba, is that it allows your cost model or your cost structure, your economic model to become more variable.
And this means that there will, over time, clearly be a shift of resources from fixed resources to more variable resources, which will help us absorb cost pressures better, especially if they're short term cost pressures as we're experiencing right now. And it will help us, and that's clearly our outlook, to assure growth, but also to assure, over time, margin expansion. There's no guidance here. This is a question of how we structurally view the way forward.
Sophie? Yes. Thank you, Burkhard. Sorry, I was on mute. So the next question relates to portfolio of the group.
How do we how do you imagine the scope of the group in 10 years and your own succession planning? And also, investors would love for Richemont to be only Cartier and Van Piere and Arpen. Tell us about portfolio construction and if there's anything you would have done differently. Is there a scenario an opportunity to shrink the group to its better performing assets? And conversely, are you looking for possible targets?
The answer is we always look at everything all the time. Full stop.
Then there's another question on M and A and whether there is a debate at the Board on the opportunity to merge with another industry player?
I think that is best asked from our friend at Bernstein since I keep on reading that he has information that I don't have access to about various proposals from mergers and acquisitions, etcetera. We have got no intention of merging or being acquired.
Thank you, Mr. Rupert. Actually, to be fair to look at, that came from 2 of the brokers. So but the one that I'm going to read is actually But the one that's
always given me the heads up what we're about to do that I don't know about, it's always been Luca.
Okay. So the question from Luca actually relates to our critical mass in S and A and whether we have an S and A in stock luxury, it could be fashion and leather goods and whether we have any strategic plans basically to make an acquisition, I would think, looking at the question.
It's a very good extremely glad that we are not variably exposed to fast fashion, because I think the problems that we have in our supply chain with watches 3, 4 years ago before, luckily, we cleaned everything up to the extent that up to the 15th January this year, our Watch division was really the key leading performer. I just am glad that we are not caught in that horrible situation where the inventories for the fall and winter season are nowhere to be found. They're not in the market. And the stock that is there will be viewed as old stock. So I think the whole idea it's just so in a sense, thank God, we weren't as successful as some of our competitors.
However, I do believe there is going to be a relook by society at our habits that we've developed of turning what should be consumer durables into consumer disposables. This idea that you just wear a fall season and then next year you get another fall season and you get the new cruise line and you get this and that. I'm not sure that people will not look back in decades ahead, look back and say, what were these people thinking, buying and throwing away to such an extent. But this is across all product categories. I think our habits have been wasteful as society.
As I said earlier on, if you take every human being alive today, every single one of us, and you pack us in light sardines, we will easily fit in 1 cubic kilometer. And yet we carry on consuming all the raw materials, we carry on as if there is no global warming, We carry on polluting the ocean, cutting down forests. And maybe nature gave us a good pause so that we can look at some of our habits as human beings. And I think that will guide consumers and it's certainly going to guide us at Richemont.
Thank you, Mr. Rupert. The next question relates to more to wholesale, maybe fashion, but I would think also watches. Whether we can comment on the situation of our main third party dealers and share feedback on potential order cancellations, inventory buybacks, Jamie. And whether post COVID-nineteen, we will need to close down wholesale doors further following last year's closures.
Yes. Just for when it comes to inventory, the first for the inventory is the one for the watch activities. We introduced 2 good years ago, 3 years ago, our system that is called Bousterin that is giving us the opportunity at Richemont to know every single month the evolution of also sell out to know the evolution of the stock and the supply chain of the Maison is being adapted to the sellout and we transformed our system into a long transformation. And move from a sell in logic to a sell out logic and to a true demand or a supply chain driven approach. So as Johan was saying earlier, that adaptation that took quite a lot of energy is giving us the opportunity to have an industrial approach, which is what we call internally follows the trend, where we on a weekly basis adapt our output.
So here, the risk is very much under control and the stock level end of March compared to 1 year earlier has not significantly evolved. So it's the biggest and first takeout. When it comes to soft luxury, we have been as well very on the focusing on the stock evolution for Maison Lac Cloe. So Cloe being very much active in having a very strong stock management. You see it in the numbers that Burkhart was underlying where the fashion accessory Maisons have reduced their consumption of cash.
So you can imagine if they could do it internally, they had to have the same level of discipline externally with the other players. There the process is less of course organized and systematized than the other one. And finally, when it comes to inventory, again, the new retailer dimension is the next challenge for us, because within new retail, we have the Omni stock. And with the Omni stock, it is the full availability of stock in a given of time for all through the whole device, through the any device, any location and through any channel, which is our next challenge with diverse opportunity throughout the crisis to have even more availability on our stock. Today, we have a good control.
What we want to have to the good control is a good availability of our stock anywhere or anytime into any device. Thank you.
Yes. Thank you. Another question on related to gross margin and basically inventory, so I think it's more for Burkhart. Whether we've booked any major provisions at the end of March 2020 and what measures are we taking to protect gross margin? That was in relation to potential excess inventory in Harvey Luxury, at White Knot and the fashion brand.
Yes. Just thank you, Sophie, for the question. Let me just add to what or build on what Jerome just spoke about. If we look at our inventory position, I think and we've had many of those discussions over the last few weeks, we are extremely happy now that we have very early on addressed, and you remember the heat we took from that for that over the last few years, When we address the inventory situation in the watches side, in the trade, but also in our own inventories. And that went all the way through flexibilizing the manufacturing side of it
to
really reorient all operations towards true demand, true end customer demand. We're very happy that we did that and we're very happy with the inventory position we have in Specialist Watchmakers because it reflects the business development that we've seen and was able to flexibly adjust towards the end of the year, towards the Q4, which by the way was not just the Q4. We started early on because already in summer, when we saw the significant disruption that we've seen in Hong Kong impact the watch business, we immediately addressed the resulting inventory questions. On the, let's say, fashion and accessories business, and we're exposed to that both directly at our own F and A Maisons and through our online distributor, YOOX NET A PORTER. There has been very strong inventory discipline.
Inventory levels have even come down at YOOX NET A PORTER in terms of coverage. So there has been a very strong focus on that. Once again, the mantra that we're talking about is true end customer demand. So we're happy on that. The inventory position is constantly and consistently assessed.
Inventory coverage rates are virtually flat compared to the previous year. So I take that as a good sign of good reactivity. So no need at the present time to worry about that for us. Obviously, this is a constant monitoring process. Now gross margin was, I would say, more strongly impacted by on the online distributor side, we've talked about it in the past.
There has been a lot of pressure on the commercial margin due to the very competitive pricing environment. YOOX NET A PORTER has suffered from that, but has also taken a stand to not follow through with the same pressure that we've seen from the market side because the long term relationship with the brands that are distributed through YOOX NET A PORTER's platforms and YOOX NET A PORTER's own brands has to be protected. The basis of their success is the healthy relationship with the brands that they distribute. That's why at a certain point, they took a stand. So we have we've had margin pressure throughout the year for YOOX NET A PORTER, and that is the biggest element that is that has led to a relative dilution of in the gross margin.
The Groupe Maisons gross margin has remained, as we flagged in the investor presentation, has remained strong at 66%. There is a bit of impact from the FX side, obviously, due to the strengthening of the Swiss francs. There's also a bit of effect from the strengthening of some of the raw materials that we use in watches and in jewelry, especially gold. We talked about that. My jewelry colleagues have commented that for the time being, to be able to absorb that without having to resort to price increases.
So I'd say for the time being and especially reflecting on the situation, which we are, we are quite content with what we have achieved. And obviously, we are still in the same situation and the efforts have to continue. Sophie, back to you.
Yes. Thank you, Burkhard. So the next question is really to the plant sale, especially Asian. So are you are we concerned about less balance in our revenues going forward with an ever more dominant Asian client base? What are the risks?
And how do we address them? And in another question related to it, more specifically to the Chinese spent in China, which tool are we using and what are the prospects in our views? Thank you.
Let somebody else answer for a change.
Silila, would you like to If I can comment on this one, yes. So, let's say, there had been confirmed also the past year, a kind of reduction of price differential, making that we had a rather solid customer base locally in every region. And of course, also having a travel retail network, but what we see now that the Chinese are traveling less, so they are buying more in China because we have a strong presence in China, both in retail and e comm and this presence in there. We see things doing very well with Korean domestic, while the Korean duty free is not there. So in some way, we have a broad base, which was already geared to local clientele and supporting them wherever they buy.
So in some way, we are less exposed compared to those who are only targeting the traveling customers when they are in trouble. And we know that some of the brands were having very, very low price in Europe just to attract customers to come and buy there and had a substantial part of this sit there done with customers coming from abroad. So I think we are less exposed than some others and because we can address customers wherever they are. Again, with the policies we had to try to develop customers base wherever they are and also to treat them wherever they buy And we continue to do that adjusting to the new world.
Thanks.
Okay.
Thank you, Cyrille. So looking at the next question, let me go down the list. Regarding distribution, more specifically for watches, are there more changes to come to positioning and distribution in watches? Jerome, would you like to reply to your question?
I think that when it comes to the watch distribution and the watch offer, The first element that we see around the collection is what my colleague said as well for jewelry that the importance of iconic lines. So we see that the iconic lines of the Maisons, Pilot, Traverso, Nevesenner along the Maisons of Richemont are stronger have been stronger and stronger in the last few years and are the ones that will be the ones that benefit the most resisting the best and will show the best resilience over the period. Between the quest for value and the recognition effect that these iconic lines have, they're definitely a very strong one. These iconic lines are also the lines in which Maisons are expressing their true DNA and then expressing yourself through your iconic line can mean as well a lot creativity and a lot of reinvention. Again, you see the reversal at Jaeger Lecoultre is being aligned continuously or reinventing itself decade by decade and getting more and more value and success.
When it comes to distribution channel, the watch distribution, we'll probably see and we have seen it throughout, firstly, Europe in the last 3 to 5 years, a consolidation of the distribution. We see that the bigger wholesale channel are representing a larger and larger share of the business itself. And USA is a little bit more fragmented. There is a little bit more doors, but it follows roughly the same trend of consolidation. It offers us this consolidation also some opportunities because it helps us to build strong partnership.
It's important to maintain a strong presence and local anchoring and that we can do only over the time and the consolidation that is happening is happening us doing so, so external partnership, external boutique as they have been developed with these strong partners are reinventing wholesale and here there is no opposition between the model with the model of new retail because these shops can be very much part of the new or the Omni Stock model and throughout the extension of guarantee of last year that you probably remember. There is also an opportunity to create with the partners a better service for the end client with them and to entertain a longer relationship with the client, including them into the cycle of service and value creation.
While we're still on watches, so a bit of a provocative question. How do you explain that only 3 to 4 privately owned brands have captured nearly 100 percent of the industry growth over the past 2 to 3 years? And why should it change going forward?
First, I don't know what it numbers are not really given on the market. So the question is asking to make a comment on numbers that are not published. So if somebody has a market share or presentation, then it would be very interesting. If we speak from demand, there are some indicators that are very valid that there is a number of products that are offered in gray markets that discount rate on the products. What we have seen over the last years is it's a constant decline on this element.
So it means in somehow the capability to a better capture to a better capability to capture the demand of our end consumer. And again, that's what we want to do and what we aim to. If you see the development of our Maisons these days, we speak a lot from China, but we can also integrate it speak from Korea just now. You will see there the presence of Maisons, their extension. And it's not a big secret to say that 3 to 5 years ago, a big part of the business done in Europe was not done with or in consumer of Europe and big part of it was re exported in other parts of the world.
The decision that we took to stop it and to focus either on local in each market and on serving and developing our capacities and presence in the market where had a strong development in terms of demand, so such as China, has given us the opportunity of capturing a real better part of it. So I won't say that 3 Maisons have captured everything and the other one has not captured. And I don't know the other one. But when it comes to Richemont, we have more end clients today than we used to have before.
Thank you, Jerome. And the next question relates to Watchfinder. Whether we can comment on the performance of a pre owned market for watches in the COVID-nineteen environment and whether Watchfinder benefited from it?
Yes. I may give an answer on that, Sophie. That's an interesting market and again, it's part of giving more service to the clients of high end watches. Long, long time ago, clients were used to buy 1 watch, then they started to buy more watches more than one watch and therefore came the dimension and the necessity to have more fluidity in their collection. And what Watchfinder is integrating that in somehow a reduction of friction of in that new ecosystem of owning expensive or hard luxury goods like watches.
Since the start of the COVID, we had the 1st 2 weeks, which are being very present in UK. So I would what I would say is primarily representing UK and Europe. We saw our 1st 2 weeks of decline and then we saw a very strong rebound of demand. And today on the digital in the digital segment on digital offering and network Watchfinder is growing. So, it's somehow the attention to the watches that you are looking for collectors and lovers of these watches has not been diminished.
Of course, the shops that are closed are not operating, but the e commerce digital part is very
Thank you, Jerome.
Thank you.
The next question is for Mr. Rupert. But basically, whether we're satisfied with the progress made thus far and in the fact that we're stating 3 years ago that Richemont needed to be ahead of the curve, whether we think we are ahead of the curve and how is Richemont going to navigate big uncertainties from here?
No, when we used ahead of the curve, I never thought we'd see a COVID-nineteen and the curve and the famous curve. But our curve that we met was that we wanted to find out the true demand. We cleaned up watch business totally. And we downsized, right sized watch business so that our stock is up, which we let them sell out. And that's led to a very good period up to roundabout the 15th of January.
So I'm very happy that our watch business is in a very good position. As for being ahead of the curve, our goal is still to move as much of our fixed cost into variable cost. We have managed to put on very important new leases with no minimums, but with profit sharing,
which
I don't think any of us should mind because it moves the operating leverage in the right direction. We have embraced and will continue to do so new retail. And as we said earlier on, I guess in 10 years' time, those of us who are still around here or those of you that are still around here will be asked questions, how is your offline business going? So yes, we are moving in the right direction. And we will try and continue.
For instance, during the Chinese lockdown, the one thing we carried on doing was to support our Chinese progression, broadly put our Chinese new retail business.
Thank you. The next question relates to Travel Retail and also our stake in D3. So basically, what is the stake in D3 as of mid May? What is the future of that investment? And how we see the future of travel retail?
Yes.
As Johan was referring to the business until 15th Jan or 20th Jan for the watches, where indeed we are taken and surprised by what is what's happening in V1. For Travel Retail and Dufry, we had the same pass. We are growing our business, our sell out business was growing over 30% between Dufry and Richemont. So it was very significant step. We managed to open significant shop between with Dufry in China, with Cartier and Montblanc for example.
We had a strong development of the presence of Montblanc in travel retail with Dufry with strong sellout performance, again over 30% of growth. So until end of Jan, we had a very progressing well on our roadmap. We all know that in between what happened with Travel Retail. Said that, it may take a little bit of time, but when it comes to aggregation of clients and physical aggregation of clients, we know that airport and a new transport ways will continue to be important. And a good demonstration or good proof of it is again probably China.
In China today, the inside China travel retail is progressing extremely well, extremely quickly. The Sanan area in Bayer statistics that we saw a couple of days ago were showing that basically everything was booked there for the next 12 or 18 months. And the activity in travel retail there are progressing and Watch and Wonders will have a presence there, but many other luxury Maisons not from our group will be present there and we organize Pavilion and present. So there is a new travel retail which knows a new geography that is taking place. We have to further work in time and for sure when we speak from reinventing the distribution, it's also true for the way we distribute our products inclusive watches and the possibility in future to reinvent our multi brand shopper with You Free in this point of aggregation of traffic is definitely very important.
But that's a 3, 5 years view when it comes to what we can build together there.
Yes, Sophie. And on the other element of the question, or the other part of the question, current stake is 8%. We had acquired 7.5% and then due to the share buyback and subsequent cancellation of the shares done by Dufry over the last 2 years, our stake went slightly up to 8%. That's where we are standing today.
Thank you, Burkhard.
Back to you.
There's a question from a South African analyst for Mr. Rupert. Does Mr. Rupert foresee a world restricted travel restrictions such as visa, health certificates of some sort imposed
Yes, it's a very good question. Will we have COVID-nineteen passport? I think I'm probably the only one old enough to remember that those of us from the so called colonies, India, etcetera, South Africa had to travel with yellow fever certificates. Without going into details, I do believe that we will pretty soon, we will have kits available where testing will be quicker and immediate. There are various projects on the go, because I do not believe that airlines can function, without and restaurants, etcetera, etcetera.
So that's what I alluded to when I said testing will be critical. I think it already exists. I don't think you'll get into China or New Zealand without some form of proving that you don't have the virus. But how and in which form, I'm not sure.
Thank you, Mr. Raffet. We don't have so much time left. So looking at the other questions raised, were quite a number of questions again around e commerce. And if we can maybe give provide an update on that was partially answered already also during the presentation.
But on the transformation of our e commerce platform, what we can what we think that we can deliver in the year ahead and any updates on our advantage sorry, synergies on income? Thank you. Including extension plans in Asia.
I can start to give her a first part of the answer, Sophie. So when it comes to our platform, our first part is the replatforming work at YOOX NET A PORTER. Mr. Porter was successfully achieved. Now we are working on NET A PORTER itself and the team is working on within that pre platforming to introduce localization of NAP new geography.
So which is with this time will bring another dimension of a direct positive impact on client reach, which was not done before. So they are confident enough now to head a new dimension to their platforming. So that's one for a positive thing. 2nd one, when it comes to synergies, yes, indeed, we announced it 2 years ago that making a better use of the platform of the technical platform of NAP or or namely the OFS-one for Maisons. The OFS-one is the one that have been powered many Maisons are within the luxury industry and many of them offer in the carrying environment.
So there we had already 3 Maisons with the new Clourial Alaya. Montblanc will move there before the end of summer. So that's it will give the opportunity to the Maisons to have a much more down platform and to have more client front end much more that to client needs and to cover a new geographic. And then we follow the steps one after the other. So that's on one hand.
The other hand is the old deployment of distant sales within all our network and Richemont has a chance to have built now or years ago a very strong network of call center. We have hundreds of colleagues working in our call center giving a very high level of service. And as said, there is having in front force, in particular now in the U. S. To maintain a high level and qualitative service.
So here as well, we accelerate. All our watchmaking Maisons will be e commerce active until the end of this fiscal year, which is a major acceleration. So in a nutshell, we can say that all what we had in the pipe for the next few years, we try to encapsulate now in less than 18 months. As Johan said, the investment in new retail has not been cut. On contrary, they've been our primary focus to maintain and to accelerate the transformation.
Okay. So to continue on that subject, you partially also answered. Can you please give us an update of the JV with Alibaba in China? What has worked well? And what has proved challenging so far?
And could you share your long term vision for that business from a top line and profitability standpoint? Thank you.
So I will stick to what has been done so far because it has been quite a journey. Johan launches, there is a JV in November or 1 year ago. So that's only 15 months after 18 months 15 months after him shaking the hand of Daniel Tsang to launch the operation. Remember that we launched it 6 less than 9 months after in September, October. In between, it indeed progressed very well.
We have more than 100 and 65 Maisons already active on the system. We will have for fallwinter next season again another 20 to 30 Maisons to join in very significant names. What is very interesting in the case of Egg Mao is that they are because it's genuinely started now, the biggest a bigger presence of hard luxury goods. So we are CASI at 10% of our business, which is very high within Figmao and the role now and the importance of Figmao in the Watch and Wonder's launch and all these digit dimension is very important for what we can do there. So yes, indeed, progressing very well, more and more Maisons joining and a very strong team to the point that we will make a local buy, local video, local content production from in the next weeks weeks and days to come.
Just built a studio for that locally. And with the setup of the technical partnership, this famous TP, it's a very agile setup. So it's progressing at the right speed. And then even the COVID times that has been in somehow freezing the activity during 4 to 6 weeks has been completely absorbed and when we are back on track with if not advanced compared to the agenda that we set ourselves.
Thank you, Jerome. Thank you. So it's 11:30, so really no time unfortunately to take questions from the phone. Two questions, one very short. What is the percentage of stores, manufacturing sites, distribution centers that are currently closed across the globe.
And the next one and last one will be whether you can provide an update on new management for the F and A area? And notably, how is Mr. Bellini fitting with Clouet for instance? Thank you.
Yes. Sofia, I can start to give her some information on as a percentage of manufacturing and stores that are open. Today, when it comes to manufacture and to facility site, we estimate that we have up to 78% of our facilities that are open. They are not all producing at 100%, but we had 78%. So our manufacturer opened at 40% when it comes to that.
And when it comes to the distribution view today in our so called heat map, we have today are 40% of our distribution that is open when we take retail and wholesale. So retail is more open now. We are up to 55%. Then if we mix retail and wholesale, we are at 40% of opening.
Thank you, Gerald. And on the F and A question?
So the F and A question is about the management and so
That's right.
Yes, indeed. Yes, we have Ricardo, I believe, just started in late autumn at Chloe. So that's a good period to well learn and understand your Maisons that they are going like all the other Maisons in a lot of creativity work and that's very interesting to see how they're inventing a new way of communication. If you they've been very active, for example, with voice and sound, They've launched very active program called Chloe Voice, for example, where Natasha has been inventing many friends of the brand and they've been interacting with Loveless clients of the brand. The brand has also been very active in supplying goods for the community.
They had a very nice initiative providing cover blues for nurse here in France to the throughout the hospital. And finally, they are launching very interesting initiative as well with live streaming in China. So we have been launching already 5 sequential operation in live streaming associating shops, live streaming on different digital format and client connection and sales transformation. So that's again part of this year new retail transformation in which the team is very active. And as Burkhard was saying, in the same time, they are working a lot on their like all the branches towards their supply chain.
They're being like all the soft luxury, very active with their production in Italy, running after the last weeks of the closing to maintain a good supply and a good level of presentation of collection. And as many of the players are a big part of this presentation in the weeks to come will be done as well digitally. Thank you, Sophie.
Thank you, Jerome. Well, this is the now the end of our full year 2020 results presentation. Thank you again very much for your questions and participation. That was really very much appreciated. And obviously, James and I are at your disposal to answer any questions.
Have a good day. Speak soon. Bye bye.
Thank you. Bye bye.
Ladies and gentlemen, thank you for participating in the conference call.