Welcome to the LVMH First Quarter 2016 Revenue Conference Call. I will now hand over Mr. Chris. Sir, please go ahead.
Chris Hollis: Director, Financial Communications:
Hello. I am Chris Hollis, Director of Financial Communications at LVMH and with me is Jean-Jacques Guiony, our Chief Financial Officer. Thank you for joining us. We have some brief remarks to make about LVMH’s revenue for the first quarter of 2016. As in previous periods these revenues are being reported in accordance with IFRS. After these remarks, Jean-Jacques and I will be happy to take your questions.
But before I begin, I must remind you that certain information to be discussed on today’s call is forward-looking and subject to important risks and uncertainties that could cause actual results to differ materially. For these I refer you to the Safe Harbor statement included in our press release.
Turning now to yesterday’s, yesterday evening’s announcement. Hopefully you all have the chance to read our release which was issued in both French and English. As always, it is available on LVMH’s website www.lvmh.com as are the slides that we are using to guide today’s discussions. We’ll start with the first slide, slide number one anyway which gives you the key revenue highlights for our first quarter performance.
We see Q1 as a good start to the year in the context of a challenging and unfavorable environment. We delivered 3% organic revenue growth driven by the US, Europe, and Japan, while experiencing volatile trends in the rest of Asia. Looking at the business groups, we saw continued creative momentum at Louis Vuitton, and the concentration around new product lines at the other fashion brands particularly those based in the US.
Within our Wines & Spirits business, Champagne showed strength in Europe and Cognac continued its momentum in the US, Glenmorangie recovering in China.
The Perfumes & Cosmetics business, Parfums Christian Dior was the highlight delivering an exceptional performance. In Watches & Jewelry, TAG Heuer is successfully refocusing its strategy and the Jewelry brands demonstrated robust performance during the quarter and finally within Selective Distribution, DFS was affected by the environment in Hong Kong and Macau whilst it continued to build on its very strong momentum.
For the first quarter turning to Slide 2, total revenue rose 4% on a reported basis to EUR8.60 billion from EUR8.32 billion in the prior year. This includes as I mentioned a 3% rise in organic revenue and a 1% structural increase from the integration of the French newspaper, Le Parisien in other activities.
While there are some encouraging impacts on a business group level, the overall impact on the group level was small.
Turning to revenue by regions, we continued to have a well-balanced revenue mix across geographies. As you can see on the map on Slide 3, the Euro terms, Asia including Japan represented 37% revenue for the first quarter. Of course for the first quarter it was a little bit boosted by Chinese New Year in that region.
Europe including France accounted for 26%, the US including Hawaii represented 25%, and the remaining 12% related to revenue from other markets.
In terms of change relative to last year’s first quarter, organic revenue rose on a geographical basis in Euro terms in both US and Japan. Europe also delivered growth -- to 7% -- it rose 6% sorry in US and Japan. Europe also delivered growth with a 7% increase while the rest of Asia saw a 2% decline. So similar trends to what we saw in Q4 is slightly higher growth in Europe and US being offset by Japan by the Yen strength the end of January and some impacts on tourist flows.
Let’s look more closely at each business, starting with Wines & Spirits. Organic revenue grew 6% with the total revenue rising to EUR1.03 billion from EUR992 million in the first quarter of last year. On a reported basis, this group was up 4% after taking into account a 2% negative currency impact. If we break this down by champagne and wines; in champagne and wines revenue grew 3% on an organic basis with a negative 2% currency impact reached EUR401 million in the first quarter of this year compared to EUR397 million in the year prior.
Revenue for Cognac & Spirits saw a 7% increase in organic growth after a negative 1% currency impact to reach EUR633 million compared to the EUR95 million in the year ago first quarter.
Looking at Champagne & Wines; volumes in the Champagne business were down 1%. Organic revenue channels we saw growth in Europe partially offset by the impact and the performance in the US primarily due to the timing of price increases. Estates & Wines recorded good organic growth driven by positive pricing effect. In Cognac & Spirits, Hennessy volumes were up 8% for the first quarter reflecting continued strong momentum in the US.
We are also encouraged to see the gradual recovery of Cognac in China with trends in February looking healthy. As we have seen in the past, it is always dangerous to extrapolate the first quarter trends. Both Belvedere and Glenmorangie demonstrated sustained growth.
Moving on to Fashion & Leather Goods, slide 7. This business group was flat for the quarter both on the reported and organic basis. Revenue remained basically steady at EUR2.97 billion versus EUR2.98 billion in the year ago period. To give you some color in Fashion & Leather Goods.
This group experienced continued growth in Europe except France where popular tourist destinations saw a marked decline in traffic in the quarter. Japan continued to grow albeit at low rates and -- continued to be impacted by the ongoing changes at our US brands, and finally the rest of Asia remained a challenging region even though there were some signs of improvements. At Louie Vuitton the brand continued its creative momentum with its new models while received during the recent shows and the continued success for this historic Leather Goods lines, in addition the brand New Blossom Jewelry and precious Watch collection were positively received. Among the other fashion brands, Fendi showed solid performance in its Leather and ready-to-wear lines.
Loro Piana continued its focus on exceptional quality products and Celine demonstrated a good momentum due to the successful developments of new segment including and small other goods, and the discontinuation of the DKNYC and DK jeans lines at Donna Karan at the end of last year as well as the more recent label changes and Marc Jacobs had the negative impact of around 2% on this business groups growth.
For our Perfumes and Cosmetics business group slide 9, revenue reach 1.21 billion compared $1.13 billion in the first quarter of 2015 this reflected an organic revenue increase of 9% offset by 2% currency impact bringing revenue growth for the quarter to 7% on a reported basis. I should note that the 2015 figure has been adjusted to take into account reclassification of the Kendo cosmetics company from selective retailing to perfumes and cosmetics. The performance of this business group was by the strong momentum of perfumes and makeup in Europe and in US. Christian Dior new Sauvage fragrance continued success and the new campaign of iconic’s adore fragrance through the launch of Nouvelle Eau Lumiere has been well received.
That has also been a positive response to the new Poison Girls fragrance and good performance of the Dior Addict makeup line.
During the quarter Guerlain launched a La Petite Robe Noire make-up line and its Orchidee Imperiale skincare lines showed solid progress link to the celebration of its 10 year anniversary. Guerlain also opened its first fragrance only shop Central line in Paris. Givenchy saw continued progress in his make-up lines and benefits continues its innovation in make-up with products such as liquid highlighter and to finish up with the highlights for this group as make-up forever and Kendo portfolio of brands and notably kept on deep, beauty are enjoying rapid progress.
Now looking at our Watches and Jewelry business, Slide 11; revenue in this group was EUR774 million compared to EUR723 million in first quarter of last year growing 7% in the period on both an organic and reported basis. The growth this quarter in Watches and Jewelry is essentially being driven by progressive recovery and TAG Heuer and continued growth in jewelry. After the successful reopening last TAG Heuer connected watches attracting a young clientele and this core offering is gaining momentum this is expected to continue into the second quarter given the success of the Basel watch fair. It was also a solid performance in jewelry with all brands contributing to this growth it’s successful new B.zero 1 collection and it’s renovated London Bond Street flagship store together with Chaumet success particularly in Asia are among the highlights in the quarter.
Selective Retailing group was up 4% on an organic and reported basis to EUR2.75 billion from EUR2.65 billion in year ago period when it was a truly a tale of two very different themes.
Sephora, this is slide 14, delivered very solid organic revenue growth overall and a double-digit comparable store increase in North America and the Middle East as well as in Russia and Southeast Asia. In addition, the brand continued its robust online sales and during the quarter Sephora continued to expand its store network in locations in Europe, Asia and US, and launched ecommerce in Southeast Asia.
The DFS was impacted by the continued challenging market environment in Hong Kong and Macau but showed good performance in Japan where it benefited from Chinese tourism. It also opened a new T Galleria in Siem Reap in Cambodia in March.
So overall our range showed good performance against a challenging economic background. All our businesses contributed to growth in the first quarter with the exception of Fashion & Leather Goods which was affected lower tourist flows in France and the discontinuation of certain product lines. The group continued to benefit from both its businesses versus business and geographic diversity and going forward will continue to focus on innovation and creating high quality products while selectively expanding our store network as we pursue our objective for increasing our leadership position in the global luxury goods market.
Thank you and with that we’ll take any question you might have. Lorran, please could you open the lines?.
Question & Answer
.
Operator:
Yes sir. Ladies and gentlemen, if you wish to ask a question, please press zero and one on your telephone keypad and we have a first question from Mr. David D from BCG. Please go ahead, sir.
Analyst:
Hi everyone. Two questions please on LV just to better understand the -- behind this slowdown in Q1. Have you seen renewed weakness of the local demand in your main markets Europe, US and China or the slowdown recovering Q1 is only receivable tool of tourist spending and if it’s the case, can you share with us the current rate of tourist spending at LV total sales please, if they just shop in Europe and have a second question on pricing. It seems that you didn’t implemented any price increase so far.
Are you planning something for the rest of this year maybe some price increases in Europe to reduce the gap versus China for example. Thank you.
Jean-Jacques Guiony: Finance
Well thank you. So on the weakness or potential weakness in local markets, the answer is definitely no. What we have seen in the US, in Europe and obviously to a lesser extent in Asia but it’s true as well in China is a fairly strong resilience in some areas like Europe some significant growth of local customers. So basically the slowdown, the limited slowdown that we have seen in Q1 comes smoothly and this is not a surprise and unfortunately for all of us come mostly from the tourist flows and the slowdown in tourist flows particularly from the eastern part of the world into the western part of the world.
This year tourists at Vuitton I think it’s about 35% to 37%. It’s obviously higher in some areas like Europe where it’s in excess overall of 50% and some areas like at the US and Japan although as far as Japan is concerned, the share of tourists is growing but all other areas, the share of tourists is pretty small below 10%. Price increase I am not going to disclosure our price policy. You are absolutely right in saying that we have not increased in the main areas we have not increased our prices.
We did a -- price increases in areas where currencies have been particularly weak because of which we didn’t do anything. We don’t really doubt but we have no plans, no particular plans to announce yet.
Analyst:
Thank you.
Operator:
So we have another question from Mr. -- from Deutsche bank. Please go ahead.
Analyst:
Good afternoon. I had a question about the drag from the discontinuation of some US lines in the quarter. Firstly, did you see similar dragging in Q4 or what other activity really begin to hit Q1 and if so, do you expect the same sort of quantum of drag over the next couple of quarters please? Thank you.
Jean-Jacques Guiony:
Thank you. Basically at Donna Karan where we discontinued both DKNY jeans and DKNY -- we started doing that about December last year. So the drag on Q4 was extremely limited last year. It is much more significant in Q1 of this year and obviously the impact will last till we anniversarize the discontinuation of the slides end of the year.
As far as Q1 is concerned, we estimate that the impact on the division all together on the group of Fashion & Leather group of business, was about 2%. So absence this discontinuation of lines, the growth would have been 2% instead of zero. So it’s quite significant and we’ll prepare most of the year.
Analyst:
Presumably in Q3 a little bit more than other quarters because it’s a more of a wholesale quarter.
Jean-Jacques Guiony:
Yes but I mean if you look at ‘18 in the global context of Fashion & Leather, there could be some differences but talking about digit-to-digit so it’s a bit complicated but you may be right, yes.
Analyst:
Sure and if I may one more, and can you comment also on Cognac price rises during the quarter if you made any. Thank you.
Jean-Jacques Guiony:
No, we didn’t. We will probably do something in Q2 but not in Q1.
Analyst:
Thank you very much.
Operator:
We have another question from -- from Raymond James. Please go ahead madam.
Analyst:
Hi, good afternoon. Two questions for me please. The first one, in Fashion & Leather Goods, can you provide more granularity on this quarter regarding the months after months of improvement in March best is February. This is really in France? My second question is on Cognac.
Can you give a bit more details regarding the Chinese New Year? I think you mentioned during the presentation that still have trends where quite healthy and lastly what should -- can you confirm that Bvlgari is growing double digit and do you expect -- to maintain such a nice pace of growth? Thank you.
Jean-Jacques Guiony:
Well the first answer to your question is no. We are not going to provide you with the detail monthly numbers. We release quarterly figures so we don’t have to read further details. What I can tell you as far as France is concerned and as far as Vuitton is concerned because Vuitton is the brand which is most affected by the change in touristic flows in France that we don’t really see any improvement as of today.
It will take a while and after the terrorist attacks of November, it took a while before the impact for sales, but once it sells, we know that it’s going to take a few additional months to normalize.
As far Chinese New Year for Cognac is concerned we are quite happy with the sellout numbers for Chinese New Year. The Chinese Year started to decline but nevertheless altogether we ended with pretty good performance. As far as -- is concerned with did positive around mid-single digit depictions for Chinese New Year and as far as -- is concerned, it was better than that. I don’t know whether we’re going to extrapolate this but the start of the year for us is very good.
As far as Watches & Jewelry and Bvlgari is concerned, as you know we don’t disclose precise figures on brands and I don’t know where you get that Bvlgari was double digit. We did much better with Bvlgari in Q1 than in Q4. Q4 as you remember had a marked scale down for the brand. Last year Q1 was much better.
It’s particularly strong with Jewelry a little less so with Watches but all in all I couldn’t say turning around because it was only one quarter that was a little bit under pressure last year but nevertheless a good improvement in Q1 this year.
Analyst:
Thank you.
Operator:
We have a question from Luca Solca from Exane BNP Paribas. Please go ahead sir.
Luca Solca: Exane BNP Paribas:
Yes, hello. I was wondering whether you could give us a sense of demand by nationality, irrespective way it’s demand is emerging and I understand that that the terrorist attack had an impact in Europe a negative impact in Europe I wonder what you are seeing on the main nationalities especially the Chinese and the Americans and the domestic Europeans if you could give us a little bit of granularity on that front.
Secondly you have condition on -- within Fashion & Leather Goods as you can trend today became the -- and Mark Jacobs I wonder what prospects you see for them to reach a new normal and when you anticipate that this could happen if this is something that we could see in 2016 or whether it will take longer? And last but not least, there seems to be a strong momentum in some of you watches brand I was wondering whether you could help us understand the different dynamics in that division between -- and watches. Thank you very much indeed.
Jean-Jacques Guiony:
Thank you Luca. So demand by nationality no dramatic changes compared to Q4. We saw Chinese demand being flattish to a bit more positive in Q4 and it was flattish in Q1 both at home and as far as touristic markets are concerned whereas we had a significant discrepancy between the two last year’s so that’s probably more of the new thing I mean it’s more balanced as opposed to what we had last year. As far as American customers are concerned, it’s more or less the same trend as the one we have last year.
For European customers, its more complicated to measure and I am obviously answering on Vuitton because it’s the only brand where we can measure it with accuracy that even for them it’s quite complicated to measure. We have seen some pretty strong numbers in Italy, in the UK, even in France despite the drop in the touristic markets and what happened in the last year. So in all we see even in Japan was alright -- growth in the customer base but anyway it’s not that bad so we’ve seen Domestic trends being reasonably strong in Q1.
Your question on the contemporary brand DKNY and Marc Jacobs and prospect for a new normal, it’s obviously a very difficult question. The only thing I can say is that, I would say two things. One is that as far as 2016 is concerned, we are doing according to our expectations I mean collection after collection of season to season we see volume of business being in line with budget or even exceeding it so it’s quite encouraging. This being said that type of turnaround doesn’t take two seasons or two quarters.
I mean it’s much stronger than that. As far as 2016 is concerned, we more or less know with the bookings what we are doing to do. So I can qualify as start of a turnaround because it’s done according to our plans maybe you will have the different feeling as numbers will be lower than last year but it’s different maybe it’s -- on that. I don’t think we will see a lot improvement before 2017 anyway.
As far as Watches & Jewelry is concerned as you said I mean the momentum for Watches as particularly all-time higher is quite strong.
It’s not -- it didn’t start just there I mean it’s some improvement in the offer that’s we have started a couple of years ago so we are I think getting the benefit of the repositioning, the lowering of prices of the brand even the US market which was quite difficult which had been quite difficult to some years is improving now so we are pretty pleased with the turnaround that took that is some way to give buzzer was okay with -- concerns it took more of the tour business unlike as brand so it’s very encouraging as far as we concern I said or I made few comments or -- business is -- very well and I am talking about basic resort of BO1 introduction and -- that we have done in the first quarter of the year working X2 well the watch business is still particularly the female watch business is still little bit under pressure as it was towards the at the end of the year the -- are doing okay but the -- lines are struggling bit so it’s not get us for people from that overall I mean we register as you can grow for the brand but -- be contrast between jewelry and watches.
Luca Solca:
Understood. Thank you very much indeed.
Operator:
We have another question from Mr. Antoine Belge from HSBC. Please go ahead sir.
Antoine Belge: HSB
Its Antoine. Three questions first of all I would like to comeback on your comment about the impact of the non-LV brands on Fashion & Leather. I appreciate the comment especially on the US lines presumably other brands et cetera are doing quite well. I’m trying to get at is the delta for the always been minus 3 if you compared to 116 versus is said is been more substitute for the we do to my second question is regarding how we should think about comparison to efficient and leather in Q2 I think there is amongst investors and people are quite reflect at last year maybe Q1 in Q2 wasn’t the this is new the previous year that because of the price increase that happen in April 2014 or actually are you I just to be as well because you had a big end benefited from tourist specially in Europe in Q2 it’s about are you taking a more of attitude on at you don’t define any on Champagne the first quarter seems to impacted by from timing difference in volumes so are still quite considered in the lot of and Champagne steady business of the last three years so basically are you expecting the effect later and Champagne.
Thank you.
Jean-Jacques Guiony:
Thank you for ask the question as far as our needs concerning the get you will and you want me to give you the difference in the growth of in Q4 and Q1 which obviously not going to give you there was little that we as well as I mean there is slowdown from the division which might give main and you is mainly attributable to the DKNY jeans as I mentioned before unto our extends to -- there was also limit of a slowdown may be less so at LV which is mostly coming from Paris. I would say we have but we are double digit down in Paris with Vuitton. No surprise to that.
Paris is an important place to the business for Vuitton. We may have recover the little bit of this outside France although it’s not obvious because most tourists not only visit France but they usually visit other countries as well so the impact is probably felt in on the country basis but there was also a little bit of a slowdown at Vuitton so that’s all I can say on this at this point in time.
The basis for comparison in Q2 I mean you know the numbers so if will you get the only way to answer your question is to look out two years’ numbers and the which has been effect raising the impact of the changes in 2014 which created a low growth environment in Q1 2015 and high growth environment in Q2 2015 due to the distorted comparison base. If you look over two years it’s more as same type of it’s more as same type of growth so I don’t think we should bother to match about all --and what is important as far as we are concern is to look forward and to trying to benefit from --to manage the business with the current environment as it goes to really looking at the -- wage and what happened last year whether there was increase in part in 2015 numbers and so on. As far as Champagne is concerned, yes there is a timing issue as last year we had a price increase late March or early April so always been this happened particularly in the US there is a big pick up ion volumes in both sell-in and sell-out before the price increase. We don’t do that this year maybe there will be a price increase later on in the year.
It’s not decided yet. So the pricing base was a bit affected hence the flattish or slightly negative volumes for Champagne. We remain pretty optimistic for the rest of the year for Champagne the European business is doing okay the Japanese business is also doing okay and the US business will certainly normalize after this strong compression base in Q1 and normalize for the rest of the year.
Operator:
We have another question from Citigroup. Please go ahead sir.
Analyst:
Good afternoon. I have two questions please. The first one at retail I mean you seem quite happy about the pricing the product to several years of reengineering and subtle changes. Can you perhaps give us some qualitative comments on what’s kind of categories did well between the smaller goods with more affordable price points to classic canvas bag I think you mentioned that it did very well and the high-end leather bags on which you communicated a lot in the past that you seeing differences in price points, tangible differences.
Secondly on Japan, I am just trying to understand what happened in Q1. I mean the two year comparative was stopped because of the spike ahead of the increase two years ago but the one year comp wasn’t. So are you seeing an underlying demand slowdown with the local content, are you seeing moderation in tourist demand from Chinese given the stronger Japanese Yen we saw a slightly weaker tourist trend into Japan from Chinese versus January for instance and thirdly on DFS Hong Kong, can you comment perhaps on traffic this is average basket are you still seeing a less sophisticated shopper into this channel and given outlook for that business when are you thinking of starting to discussion about the renewal of the Hong Kong effort and what would be the trigger for you distant other than a rent reduction.
Thank you.
Jean-Jacques Guiony:
Okay. Thank you. So on the growth differences in between price points at Vuitton I will not go into details. The only thing I can tell you is that if you look at the product trends for leather goods irrespective of canvas, leather goods etcetera and the only category that did really much better done the rest on a consistent basis is smaller than they could which is very important category for us and it did really much better it was exactly the same in Q3 and Q4 so it’s really I think the trends so that the smaller that good portfolio of -- is doing very well.
For the rest I mean I cannot go into details there pluses and minuses and even with -- price bracket there are something nice doing that -- I think the you the we are looking rely on three different models. We have a lot of products in the stores so the pluses and minuses so it’s very difficult for me to give you a trend in that’s part from the we need to consistent our the consistent our performance of goods.
Analyst:
as follow up already on small leather goods which are they trying correctly mainly canvas generally and quite affordable price point is it way for you to attract new type of customers to the brand or is it just a trading down from your existing client that is interesting and maybe small dynamic categories like adverse etcetera just trying to behind that.
Jean-Jacques Guiony:
the strategy is to half the range of affordable project with their high attractiveness the trading down is not something we have in mind and they remind that for the price of the good value and some other brands so it’s affordable it’s high quality it’s fabulous design instead of etcetera it’s high value and that’s what we are find to the growth was one of the goods for but we’ve goods I seeing new we can design in this part of particular product and it works very well the strategies are very convincing accessory with through of product and that’s the strategy behind it, it’s not fitting down it’s not anything like that is that any expression of the brand that we do should be convincing and this is particularly convincing the proof is the reaction from the customer base so you’re question on Japan and China I mean in Japan we had as I said we flattish domestic -- in Q1 the touristic flows where is growing obviously not necessarily at the same gross rate as the one we had before because when we look at only two years back I mean this trend was nonexistence obviously you get triple digit grows for a while and then it throws down but in terms of millions of Euros being addict to business in Japan is quite significant and represented was gross of the touristic business in Japan. You are right and saying that the Japanese Yen became stronger towards the end of the quarter but it to be early to asset to consequences if any of these friend sitting into Japanese Yes versus the -- and finally your question on the affairs it seems exactly the same and we see traffic is arise and the we have discussed that declining so that’s been situation sometime in Hong Kong we seeing science of a changing the into future as far as the airport is concern the only thing I would say that the maturity or the imperials to current concessions is --.
Analyst:
Thank you.
Operator:
So we have another question from Mr. Fed Spares from UBS. Please go ahead sir.
Analyst:
Hi, good afternoon, two questions from me please firstly within --handbags if you exclude or more that good could you drive some color on how the handbag growth being driven by higher ASPs compete volumes. Secondly yesterday we have some progress on the conference call that are looking to bring a new products with a -- pricing range of less than 10% between regions just in interested how you feel about your current region forecast Thank you.
Jean-Jacques Guiony:
Well on your first question the day our features will provide us with the information guarantee their was on surface this question unfortunately our lots comment on the this is obviously way to from a commercial view point I am sorry as far as trends is concerned and with 10% price and basis enhanced to our commented yesterday it’s I am not really in position to comment from it was decision or plan the only thing I would say as far as we are concerned we think that the 10% global range is to now to cover the tax differences in between countries and we have countries and which are below the taxes like China for instance the import duty LBT of consumption tax and etcetera so I having a 10% price range if this price range applies to price this variable decline I mean not enough to net prices to those prices a variable decline in stores it’s obviously in my view not I don’t have details you know through to comment.
Operator:
We have a question from --. Please go ahead madam.
Analyst:
Thanks. Good afternoon. Going on this I had two question I belief first of all regarding sales to Chinese customers I understood that there was reflected in Q1 but I didn’t get the sales 20 US customers so could you just remind us what is sales trends and my second question was about the -- all getting grows of around 7% in Q1 could you give us more color about the sleet between the person such had in the U.S. and the one that you had in China please.
Thank you very much.
Jean-Jacques Guiony:
Okay for the U.S. customer its mid-single-digit and I was looking at a my number when -- you second question your second question -- things about what is --for the --.
Analyst:
Yes Cognac.
Jean-Jacques Guiony:
Cognac in the U.S. is for most -- in volumes in Q1 more less is hiring was trend that we see we ended the quarter is very low level stock is where distributors so we will see away how we manage the replenishment of this in the months and quarters to come.
Analyst:
Okay and about sales trends settings sales trading in China did you give any color.
Jean-Jacques Guiony:
It’s a quite positive for -- let’s for VSOP because VSOP last year we had we still had large daily substantial numbers of big outlets in that we close March April we are profitable so despite the volumes of always down year and in China we still had some unprofitable business that we decided to discontinue from March April onwards last year was comparison based is still bit savor able in Q1 because of normalize as of Q2 so setting was slightly down in China and -- radium sale out.
Analyst:
Okay thanks. Just the turn back to just a comeback to the US customers trending Q1 was there any change in trends versus Q4 did you see any slight from US customers.
Jean-Jacques Guiony:
Yes it’s not seems significant enough to trends and to come in further.
Analyst:
Okay Thank you very much.
Jean-Jacques Guiony:
Thank you.
Operator:
So we have another question from please go ahead sir.
Analyst:
Hi this thank for taking our question we had just question on support in the US are you planning accelerating the store openings in the US and how do you feel about the current phase of your US star base Thank you.
Jean-Jacques Guiony:
Thank you for your question accelerating I don’t think so I mean although the US market versus absolutely fantastic and has been absolutely fantastic for 5 or 6 years in row we have our capability to open more stores and to be more efficient in this respect but sometimes more is to mentioned we always seeing that we’re already opening about 20 to 50 stores a year the US it’s a lot seems enough work and it’s lot mistakes if you see what I mean defiantly as you speak up the process of opening store you end up opening in the wrong places and that’s in the north so are pretty happy with to manage their sort of basis accounting in the US and we are not the process as far as due to headcount is concern they are obviously question as to how many stores we would have in the US with currency 350 or little bit more than that in the US U.S. we can certainly open many more --manage two different formats that’s really too early to give more precise numbers.
Analyst:
Thank you. Best of luck.
Jean-Jacques Guiony:
Thank you.
Operator:
Okay we have another question from Rogerio Sugimory from --. Please go ahead.
Analyst:
Hi two quick questions first on the session that in Asia just wondering if you could comment on sequential trends you showing in China, Korea and rest of Asia in Q1 and the second could you give an idea about the lack of growth you enjoying --online and how much online accounts for today. Thank you.
Jean-Jacques Guiony:
We don’t really expect that second question. You know that the we don’t communicate that I mean same amounts as the one on handbags but we don’t previously I mean it’s very sensitive in progression from a competition view point so we will not comment as far as main in China the rest of Asia is concern I didn’t hear to beginning to few questions --packets for -- and leather we have gross rate being almost flat there for Asia in the -- of the year. China being little bit better than Asia obviously Hong Kong and Macau are still deep down for the demand brands. Korea is definitely are the right spot of Asia prices of particularly favorable there --level of the current one so it helps the business a lot the Singapore is doing okay Australia is doing very fine so basically we have I think we mention in the press release that there is a contrast situation in Asia that’s exactly I mean we have a same situation in middle in China Macao and Hong Kong willing down and some pocket of the worlds like Japan Korea Australia and Singapore toward it’s extend.
Analyst:
Okay Thank you.
Jean-Jacques Guiony:
Maybe one last question.
Operator:
Yes. We have question from --. Please go ahead.
Analyst:
hi Good afternoon thank you taking my question last one just on indication that we full of in the previous one on the performance of ready versus accessory and then a comment on the maybe longer trend view of few trends in the past the goods indication that events specific strength and also in today in press release you mentioned that the division our perform what do you think is still trying up to few years our performance you said innovation that can mix that would be appreciated thank you.
Jean-Jacques Guiony:
Growth is like engineer the brand is stronger between to introduction and strength of the brand and I think this is not obviously achievable in two quarters but it comes from history of product introduction and brand management with brand under our own management and under the previous owners management the run is very strong I think we may be clear for the particular actually create if we and the product introduction we which bit and etcetera our extremely strong expression of this brand and obviously they found they are their customers and as strong business been has been generated if you have on that little bit opportunity Asian of the just to network I think this explains the strength of the brand over the last total four years it’s sounds like doing process I mean it’s never ending that were I would say which we still have to brand we still have improve the network and to launch exciting products in terms of do so.
Analyst:
Thank you and the.
Jean-Jacques Guiony:
I am sorry. What was question I.
Analyst:
What’s performance we finish we got between -- and access to indeed--.
Jean-Jacques Guiony:
To have difference with we still have but now was to different difference in what. In the performance. I cannot some enter the basis and as far as we is concern if you could -- into the -- raise what it is in terms of rise points particularly the adjust business performing there subject to business.
Analyst:
Okay thanks.
Jean-Jacques Guiony:
Maybe one another couple of questions.
Operator:
Yes we have another question from Anna --from -- please go ahead Madam.
Analyst:
Hi I just pleased to clarify this two things comments and is it really with that implies EUR250 million of sales of doing you’ll getting -- or is that you timing things more in Q1.
Jean-Jacques Guiony:
On a year-to-date win.
Analyst:
Yes if I analyze 2% of the last year session have good sales in price of general $50 million.
Jean-Jacques Guiony:
Yes you’re right.
Analyst:
Sales giving up $10 to $50 million year is the sales on the Crain.
Jean-Jacques Guiony:
We are closing the teams and to see business and your assumption on the amount of business as well closing is right.
Analyst:
Okay just on nationality you set change among American demand mid-single digit for the shares your change among strong Japan single-digit growth so I just wondering where is that first week by nationality.
Jean-Jacques Guiony:
Incomes from various places middle east Latin America not all the European customers are further take I am not going to elaborate on this but you can think the operator for they said I’m not very far from the type of defiantly that we had in Q1 so this is not in consistent in my view with their pluses minuses will not going to details.
Analyst:
Okay Thank you.
Jean-Jacques Guiony:
One last one.
Operator:
Okay. We have another question. Please go ahead.
Analyst:
Yes Good afternoon I have a one additional question regarding session the return do you expect any specific long part of for Q2 few with.
Jean-Jacques Guiony:
Plenty I mean another to our significant portion of business obviously they will be launches there will be plenty of them as I said no we on dependent on one single particular not the same type of otherwise but you have for instance I mean there is away a lots number of initiatives being taken and the new one single initiative should half a particular I mean we expect to half to have our project pipeline in our stronger as it’s been for some time and should help support the business.
Analyst:
Thank you very much.
Chris Hollis:
Thank you. That concludes the conference call so I look forward to discussing with you H1 numbers and --. Thank you and have a nice day.
Operator:
Ladies and gentlemen this concludes the conference. We thank you for your participation. You may now disconnect.
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