Watching over the Internet, particularly our Richemont colleagues in our shared service centers and our colleagues in all 20 of our Maisons. The business environment has continued to be subdued and contrasted by region. Momentum further improved in the U. S. And Japan, but this has not been fully reflected due to foreign exchange.
Europe is still in a subdued environment. There is less enthusiasm to buy luxury goods in China. In this context, sales grew by 4% on a reported basis and 9% at constant currencies. This reflected growth across all segments, all regions, in particularly the Americas, and however, mitigated by 5 points negative on foreign exchange. The operating profit declined by 1% in value terms, leading to an operating margin of 25.7%.
We did enjoy a strong increase from cash flow from operations that more than doubled to approximately BRL1.3 billion in the period, thanks to strong working capital management by all of our Maisons. Let's now look at sales. 1st, in Europe, and as usual, my comments will relate to the constant currency growth, and this will apply to all the other regions as well. Sales rose by 10%. This rate reflects primarily organic growth as only 4 new stores were opened in the period.
Strength of tourism continued, albeit at a lower rate. We did have a pretty resilient domestic situation, particularly in the United Kingdom and Russia. Van Cleef and Arpels and the Specialist Watchmakers did particularly well. Sales in Russia grew in line with the region after significant high jewelry sales last year. Let's move to the Middle East and Africa.
Sales grew at 11% on a constant rate basis with good momentum across all major countries. Most sales, as you know, occur in Dubai and Abu Dhabi, and we did open up 5 stores between those two countries in the period. Sales growth was primarily reflected by premium watches, jewelry and Montblanc. Let's move to sales in the Asia Pacific region. It's our largest region generating about 40% of our group sales.
The low growth rate of 4% reflects a contrasted performance among the countries. China Mainland China down 10% with wholesale particularly affected, while retail was stable. However, Macau, Hong Kong and South Asian markets such as Thailand, Indonesia and Malaysia grew by double digits. Korea was also strong with high single digit growth. Growth was particularly driven by Mainland Chinese traveling to other Asian markets to take advantage of price differentials.
Van Cleef and Arpels, Jaeger and IWC were particularly noteworthy in the region during the period. Let's move to the Americas. With 17% growth, it enjoyed the strongest growth on par with Japan. All segments and all product categories enjoyed solid performance. Overall, the region benefited from 2 internal boutique openings.
Domestic tourism again was strong and the integration of Peter Millar certainly assisted the results since October 2012. Let's turn now to Japan. Remains our 4th largest single market with 8% of group sales on par with Mainland China. The 18% sales growth was broad based across all Maisons and primarily organic. But of course, this is driven by attractive price positioning after the 29% depreciation of the euro.
This has only partially been compensated by price increases, which we took in April May, and we will be taking price increases again in September October. At Let's now look at sales by Let's now look at sales by network. Retail generates 52% of group sales. Its 11% growth reflected the impact of 29 new internal stores, primarily in Mainland China. The good performance of the NET A PORTER Group and our Maisons existing boutique network.
Within our wholesale partners, inventory levels are generally healthy. Let's now look at sales by product line. This sales underlines our core Watch and Jewelry segments, which enjoyed growth that accounted for 89% of the group sales growth. The slide also shows the strong momentum continued momentum of our jewelry business, which grew 14% at constant rates. We had a more moderate growth in the watch product category at 7% after 3 consecutive outstanding years, primarily attributable to Cartier.
It also shows the growing importance of clothing, mainly related to the Net A Porter Group and the integration of Peter Millar. Clothing is now our 3rd largest segment. Listed here on this slide are the main points to remember about the Maisons performance. Profitability is stable at exceptionally high levels at the Jewelry Maisons and Specialist Watchmakers. Results to Montblanc Maisons were down on last year as a result of lower sales and one off items, which we will comment on later.
Results of other Maisons have been affected primarily by soft sales. The NET A PORTER group continues to show further progress in sales development and profitability. Let's now look at the main developments on sales and product launches within each business segment and Maison for which Sophie will now take you through.
Thank you, Gary, and good morning, everyone. So as usual, we'll start with the jewelry maisons. Jewelry as a product line enjoyed a remarkable performance both at Cartier and Antilles and Arpels. It compensated for the slower performance of Cartier watches stable at constant currencies. Nonetheless, Cartier's profitability remained at a high level, while Van Cleef and Arpels profitability continued to improve.
Overall, operating contribution grew by 3%, leading to a stable contribution margin of 37%. First, Cartier. Cartier enjoyed a moderate organic sales growth, primarily led by Japan, Southeast Asia, the Americas and Brazil. Demand for jewelry continued to be particularly strong. This is all the more noteworthy as jewelry did not benefit from high jewelry sales since the new Odyssey high jewelry collection was launched only last month.
Lower wholesale orders for Cartier gold and jewelry watches weighed on Cartier's overall watch performance. However, Cartier's steel and diamond studded gold and steel watches enjoyed a good performance notably the 10 Congresses pictured here on the slide. To increase capacity and control in jewelry, Cartier is integrating a jewelry maker. This is a long term supplier of excess jewelry for Cartier. For watches, a new watch movement facility just started operations in Switzerland.
Now, Vancic and Arpels. Vancic and Arpels generated an outstanding performance across regions and segments supported by the Alain Bra and Between the Finger Rings jewelry line by the Pierre de Caracter Variation high jewelry collections and for watches by the charm and pointy complication pieces. Its distribution network is being further trimmed with the closure of all external washpoint of sales and the selective opening of 6 internal stores primarily in growth markets. The specialist watchmakers. This segment, which accounts for 30% of sales and 36% of profits, so a good increase in sales across most specialist watchmakers.
Most of them improved their results, including Baume et Mercier. All in all, the 7% increase in operating contribution was achieved thanks to pricing power, distribution and product mix and improved network performance, retail network performance, which largely compensated for substantial ForEx headwinds. As a result, healthy operating contribution margin was maintained at 30 2% of sales. So we start with Piaget. Piaget's performance was positive in all regions, particularly in Europe and Japan.
The strongest growth was achieved with jewelry and high jewelry. The half year saw confirmation of the success of its iconic products, namely the Ultra Thin Ultra Altiplano, watches as well as the position and rose jewelry lines. Part of Piaget's jewelry plan consists in renovating its retail network to the new boutique concept, which supports its focus on jewelry. Today, 27 stores out of the 89 have adopted this new concept. Moving on to Vacheron Constantin.
The Maisons' significant growth continues to be constrained by shortages. Vacheron Constantin inaugurated new manufacturing premises in the Vallejo while an extension of its manufacturing facility at Plant Eiroirte is underway. Vacheron Constantin recorded a good performance at its 19 internal stores, partly driven by 2 new boutiques, including the new Paris flagship stores. Its patrimony line continued to lead sales. Let's have a look now at Long and Sonne.
Long and Sonne benefited from a strong demand for its complication and high complications such as the Grand Complication and the Grand Lange 1. It also enjoyed an excellent retail performance underpinned by the stores opened in fiscal year 2013. The extension of its manufacturing site is expected to become operational early 2015. Now Roger Dubuis, which posted substantial sales growth led by most regions, high end complications and the continued success of a velvet line which is a ladies line for at Roger Dubuis. Within complication, the Excalibur Quartier and Excalibur Dougal Tourbillon did particularly well.
And now I would like to turn to Jaeger LeCoultre. This Maison posted remarkable sales growth across geographies and channels driven by all collections including the feminine line Rendezvous which was just launched in fiscal year 2013. It is celebrating its 180th anniversary with a Jubilee collection set and events around the world. Retail was particularly successful driven by the openings of Hong Kong Cosway Bay and Costa Mesa near Los Angeles as well as renovated Paris flagship store, a Place Vendome. Now let's look at IWC.
The Maisons generated good growth across most geographies. The Portuguese, Pilot and Portofino lines continued to be among the Maisons' bestsellers. And the launch of the new Azenia also positively impacted sales. So Officine Pane Hai whose sales growth was robust, especially in Europe, the Middle East and Japan led by the manufacturer collection, in particular the Luminor 1950 collection. Its new manufacturing facility should be operational by March 2014.
It will increase both capacity and integration levels. Now let's turn to Baume and Mercier, which saw a notable increase in sales, primarily thanks to Europe and easier comparatives. The new Clifton and Glassyma are doing well. Sales to Chinese are expected to improve thanks to the joint venture with Cho Tai Fook which became operational this summer. So we are now looking at the main developments of the Mont Blanc Maisons these past 6 months.
Sales momentum was supported by watch growth but negatively impacted by the weight of writing instruments down over last year and the weight of domestic Chinese and domestic Western European clientele. While sales in Asia Pacific were weak, sales grew across all the other regions. Worth noting is the ongoing positive e commerce development. It is small, but in the U. S, it would represent Montblanc's largest stores and in the U.
K, it's 3rd largest. Operating contribution halved, bringing the contribution margin down to 7%. But please bear in mind that this incorporates a €30,000,000 exceptional item, which is linked to the exit of the high end ladies jewelry line and also to reposition certain organizational activities. So finally, the other business area where the operating contribution was a 35,000,000 loss. Improving results at the Metaporte Group, Riesemaul's unbranded watch component manufacturing facilities and the positive contribution of Peter Millan have only partly offset underperformance at Alfred Daniel, Chloe and Lancel.
The change in structure of the textile Maisons with further integration into the shared service organization should improve the performance of the fashion and accessories maisons over time through better controls and better access to more operating leverage. First, Alfred Dunhill. The Maisons suffered challenging trading conditions given China's environment. Its significant growth in Japan, its 2nd largest market, was not enough to offset the strong depreciation of the yen. The new management is now in place with a strong focus on British and innovation as well as bespoke where they foresee a significant development both for men's wear and for leather.
Let us move on to Lancel, whose decline in sales derived from its exposure to the French market. However, new models like the Caron Suite Saint Can't and the L. Shopping bag generated strong demand and subsequent shortages. The management's team transition is ongoing with the arrival of a new creative director and other key appointments. Chloe generated good sales except in Europe, 34% of sales, which weighed on overall sales momentum.
Asia Pacific and the Americas, retail and ready to do well. In leather, the belly bag enjoyed a promising debut. Finally, the Net A Porter Group. Growth rates remains well above group rates, driven by the Americas, Mr. Porter and the Outnet sites.
Worth mentioning is the continued improvement in the product offer of the NET A PORTER sites and the MR PORTER sites with introduction of beauty care products both for men and women. I shall now hand over to Gary. Thank you.
Thank you, Sophie, for that update on all of the Maisons. Let's now grind through the numbers in detail. First, our operating profits. We experienced a slight decline over the period versus last year of 1% to EUR 1,370,000,000 This, we believe, is a satisfactory performance given the currency environment, which directly affects gross margin. Expenses grew in a controlled way as expected with most of the increases coming from new boutiques and increased IT spending.
The half year operating margin is marginally declined to 25.7%, which is still the 2nd highest half year performance in Richemont's history. Let's now look at gross margin and expenses in more detail. In value terms, gross profit increased by 3%, but experienced a 90 basis point decline to 63.9 percent of sales. This is primarily due to negative foreign exchange, which contributed 80 basis points of the decline and 18 basis points related to the inventory charges at Mont Blanc that Sophie spoke of previously. We continue to benefit in the Maisons from pricing power and our increased share of retail.
Let's now look at operating expenses in detail. Net operating expenses were up 5% in reported basis, broadly in line with sales. The ratio remains stable at 38% of sales. What were the increases in the cost base in the period? New boutiques added 4%, communication costs added 1%, all other S and D and admin costs rose by 4%, and this was offset by foreign exchange of 4%.
Selling and distribution costs, which were 57% of total operating expenses rose by 5%, primarily reflecting sales growth, network developments, staffing of retail departments and the opening of 29 internal stores. On a constant rate basis, S and D expenses rose by 10% in the period. This growth rate is below the 12%, which we had indicated through the full year in May. However, at this stage, we are guiding at 12% on a constant Communication costs were flat in the first half, leading to a ratio of 8% of sales. As previously stated, we continue to expect communication costs for the full year to be between 9% 9.5% of sales.
Administration and other expenses grew by 13%. This 13% includes a BRL23 1,000,000 charge relating to the increase year on year in our Social Security charges related to our stock option program due to the increase in the share price performance in the first half of the year. If you go back and check, it was actually a decline last year. So that's why the significant swing. If we exclude this charge, costs grew by 7% or 12% on a constant basis.
The underlying growth reflects the development of our backbone operations in IT generally and more specifically in the platforms in growth markets. Excluding the charge I just mentioned, we continue to expect administration and other expenses to grow 12% on a constant rate basis for the full year. Let's now look at finance costs. Net financial expense grew primarily due to our U. S.
Dollar long term loan. We did benefit from €112,000,000 gain in our hedging program in the 1st 6 months compared to €108,000,000 charge in the previous period. Depreciation of the Swiss franc versus the euro meant that in the period under review, we recorded non cash gains in respect of our group investments in the amount of €15,000,000 This was against a slight gain last year. In summary, financial income amounted to €69,000,000 for the period versus a cost of €99,000,000 a year ago. Let's now focus on the items of net profit.
Net profit for the year for the 1st 6 months grew by 10% to approximately €1,200,000,000 This was driven by a reversal in the finance costs, as you've previously seen, and offset, however, by a rise in our tax rate, which was 17.5% for the year for the period. We continue to expect a sustainable underlying tax rate of 17% to 19%, and we expect 17.5% for the full year. Let's now look at our cash flow. We enjoyed strong cash flow from operations at 1,292,000,000 euros The stability in our operating profit was augmented by strong management of working capital in the 1st 6 months. Inventory grew by only €56,000,000 compared to a €369,000,000 growth in the previous year.
Rotations remained stable at 16.6 months. Our receivable portfolio continues to be healthy. We are 96% current of all balances. This compares to 94% at September last year. The build was $202,000,000 compared to $289,000,000 in the previous period, and this reflects the overall performance of the wholesale channel generally.
Finally, the settlement of our derivative contracts generated cash inflows of €49,000,000 in the period compared with €175,000,000 outflow in the previous period. Now let's provide some color on capital expenditures. Capital expenditures were broadly in line with last year's level, €257,000,000 and represented approximately 5% of sales. As previously noted, we've increased our investments in manufacturing facilities. We've continued our investments in our internal and external boutique networks as well as our 3rd party distribution partners.
We've expanded and improved our distribution platforms and IT systems. We will continue to our investment program as planned. We expect to spend about €800,000,000 this year in CapEx. The next slide will provide some details on the type of investments we made in the 6 months. Over 40% of the increase was dedicated to investments in manufacturing expansion and integration.
They included a new Cartier watch movement component factory in Switzerland, which is now operational. The Panerai new manufacturing facility above Neuchatel is expected to be operational at the end of this fiscal year. Vacheron Constantin's capacity expansion for its movements manufacturing that was also opened this year. Langa capacity expansion continues and that facility is expected to be open in autumn 2014. And our Maren project for high end movements is due to be completed on schedule in early 2015.
Retail and external point of sale investments continued, but at a slower rate. The most notable projects were 11 new stores for our Specialist Watchmakers, notably IWC, Vacheron and Panerai new Cartier projects in Paris and Abu Dhabi and several boutique renovations worldwide, such as the Cartier flagships in Geneva and Moscow and Van Cleef in New York City, Fifth Avenue. Investments in other, primarily related to continued investment in systems, distribution platforms and the NET A PORTER Group. Now let's move to free cash flow. Cash flow from operations financed, as you would expect, higher taxes and significant but stable capital investments as we've just seen.
Free cash inflow amounted to €849,000,000 for the period, which was substantially above the prior year. Now let's look at our balance sheet. We continue to enjoy a strong balance sheet with equity representing 70% of the total. Net cash and investments at September 30 amounted to €3,900,000,000 compared to €3,200,000,000 in at March 2013. Of our cash and investment positions, cash holdings in Swiss francs amounted to €1,900,000,000 Let's now have some concluding slides.
1st October sales. October sales grew by 6% on a reported basis and 12% on a constant rate basis. All regions experienced growth in reported terms except for Japan, which continues to be affected by negative foreign exchange. Asia Pacific improved during the month, thanks to robust high jewelry sales. Our directly owned retail stores continue to outperform the wholesale channel globally.
While comparatives will start to ease this month, bear in mind that the environment remains subdued and that currencies remain unfavorable at the present time, most notably the yen. And now to conclude, I want to focus on a couple of points. At Piaget, we are allocating additional resources to further develop Piaget's jewelry, now just below 15% of sales. We've begun to renovate the existing retail network, as Sophie said, to a new concept better suited to the jewelry offer. As she mentioned, we have 27 boutiques already in the new concept.
At Montblanc, the new management team has decided to focus on more accessible price points with watches, leather, riding instrument and men's jewelry as its core focus. In addition, a number of stores, which do not fit with the new strategy, will be allocated internally to other Maisons. We will continue to invest in Cartier by launching significant multiyear projects late in this fiscal year. These projects include the renovation of the New York and Tokyo flagship locations as well as the construction of a new jewelry manufacturer in Switzerland. Our ERP Gemini project continues.
Europe and North American distribution systems are now completed with Japan to be up and running next year. Manufacturing systems were upgraded at IWC this year and will be installed in Piaget at the beginning of next year. I also want to reiterate the statement that we made this morning in that we have completed the review of all of our Maisons. We will invest in all to ensure their long term prosperity. No disposals are under consideration at this time or for the foreseeable future.
We believe that this approach is the best way to increase value for our shareholders. Bernard, Richard and I are fully committed to seeing that all 20 of our Maisons prosper. Thank you. And now I'm sure you all have some questions for Sophie and I.
Before you start asking questions, we kindly ask you to announce yourself and also your company. Thank you.
Thank you very much. Lucas Holger from Exane BNP Paribas. I have a few questions on demand. You seem to have a relatively prudent view and you're talking about a subdued environment. I wonder if you could tell us how you see demand trends possibly going deeper into Mainland China.
On the one hand, Hong Kong and Macau and the Greater China markets as well as the United States that has been a very strong support this year? And what are the trends that you're experiencing more recently? What kind of outlook do you have for that side of the market? Going into your actions, I seem to understand that you were concerned a few months back about retail productivity. Retail productivity seems to be one of the supporting factors in your performance today.
Would you be expecting to push retail forward at this stage even more? And given the good results from e commerce, what are your plans to expand e commerce and generate like for like growth on the back of that? I think you were on a different subject reporting that the Cartier watches pipeline is prepared. If you could tell us about what you have coming from that front, that would be also great.
And Luca, maybe you should leave a few for your
call. I'm not sure I got all the questions, Luca, but we'll try.
First color on the literature.
The numbers in October, excluding the high jewelry sales in Asia, were pretty much on trend. I will say maybe the mix in Asia, Mainland China within those numbers are changing a bit. I think the lower price points, Montblanc and accessories done, he'll continue to struggle. But I think the watches are getting a little better. We're not there to call a bottom.
We don't do that. We don't know what's going to happen. But the numbers seem to be just a bit better. In terms of the retail expansion, we're opening up less stores this year. We'll open up 50.
Net. Net 50. It's a little too early for me to comment on next year. Certainly, if we believe in certain of the fashion and accessory brands, Dunhill as an example, we're going to have to allocate some capital to them. Now does that mean more stores?
I'm not sure. Does it mean maybe more square footage? Probably. Probably. In terms of e commerce, last year, we opened up a call center in Europe for all of the brands.
That's starting. It's small, but there's business there. The platform in America continues. If you think about the contact center as a store, it's Montblanc's number one store in America. And we're preparing the field to start e commerce in Asia and Japan sometime next year.
Did I get everything, Luca, or? I think the product is coming. Most of it will be at SIHH. And
mid November as well.
Yes, mid November. I mean if you look at Cartier in the first half, watches were flat.
That cost more trades.
I think and pretty much Asia was flat, Europe was flat. Japan was great, although that's on a constant rate basis, it's obvious. And America was a bit down. So it was a mixed environment. But I think it's been pretty stable.
Now the comparables are going to get easier, but who knows? Let's see. Let's see.
Helen Norris from Barclays. A couple of questions for me. I think firstly, on Japan, you said you increased prices in September, October. Can you quantify that price increase? And have you seen any slowdown in demand since that price increase?
No. Okay. That was quick. And secondly, I may have missed it, but on gross margin, you were guiding to 60 4%, I believe, for the full year previously. Given the FX moves, is that still a sensible assumption?
And that was the guidance at constant currency, if you remember.
I mean I think and okay, I don't know what the exchange rates are going to be. You know that, right? If we use the closing rates as of September and you projected that through, we'll probably lose 1 point for the full year. But who knows?
And then just on Net A Porter. I think your aim is to breakeven on that business. How is the profitability? Obviously, the sales were very good. How was the profitability in the first half and your expectations for the year?
I mean, they're on the way. Certainly, they're profitable without the amortization. That's for sure. So they're hitting their plan this year. I'm not cranking anymore.
And finally, just on the portfolio review. Can you just elaborate a little bit more around the thinking and what went on that and your decision there on the portfolio review, so in terms of shareholder value and the returns, etcetera, that we talked about previously?
I think I was pretty clear, Helen, what I said up there, but maybe some color. The press reports and everything were frankly astonishing to us. The only thing that we considered our strategic options on was Lendell. I'm happy to say that because we told our employees specifically that we're considering options. And we concluded that the best way to increase shareholder value was to retain not only Lancel, but all the brands.
I think Richard, Bernard and I were fairly new in our seats together. I think Fornaz knows what he's doing from a marketing perspective. I think if you look at the changes we've made at Dunhill, we have a great new management team. I mean, we believe they're product people, which is nice and maybe refreshing. So with the strength of our balance sheet, we've always said we should invest in our brands.
And if we believe we should do that, and we think we can increase value. And as I said this time last year, are the operating margins going to approach watch and jewelry levels? No. But do we think we can invest and get a decent return for us? We believe we can do that, and we're committed to that.
Yes, good morning. John Cox with Kepler Cheuvreux. A couple of questions for you. Obviously, a lot of stuff on the manufacturing rollout in the watches. Do you think you're still on track to be self sufficient in financial 2016?
That's the first question. 2nd question, can you just remind us on the split in Cartier? Is it roughly fifty-fifty watches and jewelry? And then the third question, just given the fact that this review hasn't really led to any disposals, should we really think be thinking about you maybe you need more scale in terms of buying other businesses in sort of fashion and others to build critical mass, which is probably something you've been missing. Is that now more of a strategic option for you?
Well, John, first, I can't really remind you what the split between Cartier watches and jewelry is because I've never told you that before. So I'm not going to That
was a good try.
That was a good try. I think we have 20 children. We want to put the best management teams in all of those 20 businesses. We believe we've done that in Dunhill. We believe we've done that in Mont Blanc now.
And just because I mentioned those 2, don't read into, I think, poorly of anyone else. So we need to add capital in that. I mean, our structure is such that the operating talent really should be resident in the brands. So, if we can attract and retain talent in those individual Meijans, we should be okay. And your third what was the third question, John?
On the self sufficiency. On the self sufficiency, yes. I mean, the ruling is out. We've always said that we're comfortable with where we are, and we are still comfortable. I mean, it's something in terms of my process or what have you, frankly, we don't even think about anymore.
Can you just wait? Because otherwise, the webcast, you always wanted to hear you.
Just on you missed a part of the question earlier on you talked about Mainland China, maybe trends slightly improving. Just in Hong Kong and Macau, there's some sort of stuff coming out, maybe it's actually slowing down there, but you wouldn't you would say you've not seen anything like that in Hong Kong and Macau
more recently? Well, let's be clear. For Mainland China, what I said is the numbers are still the numbers and the headline trends are still the same, but the mix is changing, okay? In terms of Greater Southeast Asia, we're on trend.
So
Mario Ortelio, San Bernstein Bernstein. Three questions for me. The division that was more cielient in the margin was the Jewelry Maisons division, who slightly increased. The margin, I would like understand what was the price increase that you applied to sustain the margin despite the negative FX environment? The second one is, as a result of your portfolio assessment, in which brand you will make the major investment going forward?
And the last one is about Montblanc. You mentioned a change of strategy. How long will it take this repositioning of Montblanc towards lower pricing points?
In terms of investments, we believe in all 20 of the brands. So we're going to invest in all 20 of them. I think we need to give the management teams a time to execute their strategy. I think Mont Blanc is still profitable, but to put a time line on that, I think, is inappropriate. But we certainly believe in the strategy that Jerome is going to execute with his new team.
And you'll see for the first time, I have a Montblanc pen in my hand. And being an old Dunhill guy, you never saw that before.
Well, Jean will be happy not to show about tabloids.
And
the margins.
And the margins. And the margins. And the margins. I mean, I think we said in the first half okay, I have to check my notes on that now. Hold on.
Yes, I mean, generally, we were we only raise our prices once a year unless there's currency problems, right? We were 3% to 4% on most of the brands worldwide at the beginning of the year, 9% in Japan, and we adjusted Japan in September at 6.
In all the 20 brands, but
Can you repeat, Mariam, please, because we didn't hear.
My apologies. So you will invest in all the 20 brands, but the sort of priority would be you have done something, I think. You mentioned Piaget, you will invest in jewelry. Any other hot areas of investment?
I think with $3,800,000,000 in cash sitting on your balance sheet, priorities aren't a problem. Patrick, I tried to answer all of your questions in my presentation, so I'm surprised you have a couple.
[SPEAKER JEAN FRANCOIS VAN BOXMEER:] Yes, really.
Lots of my questions are answered. Just regarding your October sales, you're mentioning that excluding these high jewelry sales, it was more or less the same trend, so meaning plus 9% in local currencies. Did I get this right?
I think then if you exclude the high jewelry, then the trend continued.
So cost 9?
The trend continued.
And secondly, regarding admin costs, you were mentioning it plus 12% in local currencies for the full year?
12%.
Yes, 12. What about next year in terms is there another substantial IT spend or is then coming down to a more reasonable level?
It should be. Yes, I think so. I mean, we have invested quite a bit that has to end, I would say, at some point. It all depends on what the sales are from a budget standpoint, which I don't know, but it should be less. It should be less.
Okay.
And thirdly, regarding your financial result, as expected, high hedging gains. But on the other hand, you had some losses on monetary items. What was behind this?
Well, I think what we do is and we've been quite open about it, we generally our hedging program, we hedge net cash flows 1 year out, and we target 70% of those cash flows. So that's one thing. When our distribution platform sells product to America, let's say, they invoice in local currency and the payment terms tend to be 60 days. And when they book that invoice, they hedge that. So we had a gain in the previous period and a loss in this period.
That's what that is.
And my last question, could you give us some flavor how much was have been the losses at Dunhill, Cloy and Lossl in H1?
I think you look at the portfolio, I mean, clearly, the movement, I would say, relates mostly to Chloe and Dunhill.
Okay. That's all.
I think this is it. Should we is there any last question or have we answered everything?
Have a go.
You're not obliged.
You're not obliged, right?
So I'll come back for some moment. Just on the Social Security payment, I guess, in nature, that would be one off provided your stock remains at the same level?
Yes. I mean, certainly, a large portion of that has crystallized in the first half. Okay, if all things being equal, if the stock price didn't move from September 30 to that's it, right? It wouldn't move at all.
Yes. Okay. And then just your guidance is a wrong word, but the you see a 100 basis point impact on the gross margin.
For the full year.
Just on the FX. And you don't see any offsetting gains from lower gold and diamond prices?
I think as we've said, that takes 12 to 18 months to come through. So we'll see that next year.
You don't think you'll see any in the second half?
I don't think so, no.
Okay. All right. Okay.
Well, thank you. I think this is Viela's presentation. Thank you. And thank you