LVMH Moet Hennessy Louis Vuitton SE

PAR:MC

Earnings Call Transcript 2018-Q1

[Operator]

Hello, and welcome to the LVMH 2018 First Quarter Revenue Conference Call. I'll now hand you over to Mr. Chris Hollis. Please go ahead.

[Chris Hollis, Director of Financial Communications]

Hi. I'm 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 2018. As in previous periods, these revenue figures are reported in accordance with International Financial Reporting Standards, and after these remarks, Jean-Jacques and I will be happy to take your questions.Before I begin, I must remind you that certain information to be discussed on today's call is forward looking and is 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 our revenue announcement. Hopefully, you've all had the chance to read our release, which was issued yesterday evening in both French and English. As always, it's available on LVMH website, www.lvmh.com, as are the slides that we're using to guide today's discussion.So kicking off the highlights of our first quarter performance. We're pleased to have reported a strong start to the year with double-digit growth, even in the context of strong negative currency impact, given the strength of the euro compared to negatively the dollar and the yen in the same period last year.All of our business groups and regions contributed to the 13% organic revenue growth we delivered in the first quarter. And excluding the impact of the termination of DFS' Hong Kong International Airport concessions at the end of last year, the organic growth would have been 15% with all business groups showing double-digit growth.In terms of the business groups specifically, we had good performance within Wines & Spirits and across our fashion brands. I want to call out the strong creative momentum we're seeing at Louis Vuitton, which had an excellent quarter, and the continued strength of Christian Dior Couture, which, as you know, we integrated into LVMH in July 2017.At Parfums Christian Dior, we also continued to see robust growth across all product categories, and we had impressive increases at Bvlgari.Within our Selective Retailing business, Sephora's growth continued in key regions and DFS saw strong increases in Hong Kong and Macao.For the first quarter of 2018, this is Slide 3, total revenue rose 10% on a reported basis to EUR 10.85 billion from EUR 9.8 billion in the prior year. This includes, as I mentioned, a 13% increase in organic revenue after a 7% structure increase, principally from the inclusion of Christian Dior Couture and a 10% negative currency effect.In terms of revenue by region in euros, we continue to have a well-balanced revenue mix across geographies. As you can see on the map, Asia, including Japan, represented 33% of revenue at the end of the first quarter. This is followed by U.S., including Hawaii, at 22%; France with 9%; the rest of Europe accounting for 18%. Japan represented 7% of revenue and the remaining 11% was composed of revenue from other markets. Compared to last year, Asia gained 2 points from the U.S., reflecting in part the weakness of the dollar versus last year's period.Looking at change relative to the prior year period, organic revenue rose double digit in all regions but Europe. Asia was the biggest driver of growth with 21% in Asia, excluding Japan; and 18% in Japan, helped by the favorable exchange rates in this region compared to last year. And the U.S. grew a solid 10%, while Europe grew an honorable 6%.Turning now to our business group. Let's start with Wines & Spirits. The 10% organic revenue growth for the quarter was entirely offset by the negative currency effect. Breaking this down, champagne and wines organic revenue growth was 4%, but there was a negative 8% currency impact for the quarter, resulting in reported revenue of EUR 422 million in the fourth (sic) [ first ] quarter of this year compared to EUR 439 million in the prior year period.For Cognac and Spirits, organic revenue growth was 13%, and this was offset by an 11% negative currency impact, resulting in reported revenue of EUR 773 million compared to EUR 757 million in the year-ago period.Volumes in the champagne business, this is Slide 7, were up 1% with solid organic revenue growth in all regions, a particularly good performance of our prestige cuvées, which gained market share added a positive mix impact. Estates & Wines performance was primarily driven by positive price effect.In Cognac and Spirits, Hennessy volumes were up 5% for the first quarter. In the U.S., we saw continued progress similar to the second half of last year in the context of supply constraints. And in Asia, we saw a strong momentum in China after a successful Chinese New Year campaign, while destocking of Glenmorangie by Asian distributors continue.Given the overall strong growth of Hennessy in Asia, there was a strong positive mix impact in the quarter.Moving on to Fashion & Leather Goods. This business group, on Slide 8, grew a strong 16% for the quarter on an organic basis. Reported revenue is up 25% to EUR 4.27 billion in revenue versus EUR 3.4 billion in the year-ago period. This resulted from a 19% structural impact, which was due to the addition of Christian Dior Couture as well as Rimowa, whose Q1 2017 revenue was included in Q2 2017. This is last year. This strong organic growth was particular -- partially offset by a negative 10% negative currency impact.Looking more closely at Fashion & Leather Goods. This group overall saw strong growth in Asia and the U.S. as well as continued positive momentum in Europe. Louis Vuitton continued its creative momentum with the success of both its iconic and -- lines and new products and delivered an excellent performance. The first quarter saw a successful fashion show, the Louvre; a new fragrance, Le Jour Se Lève, and importantly, welcomed a new and highly talented men's Artistic Director, Virgil Abloh. His first show will be -- for the brand will take place in June during Men's Fashion Week in Paris. You'll also be hearing more about the new connected luggage, Horizon, including a new connected service that allows you to trace your luggage from your smartphone in the main worldwide airports.Among the other fashion Maisons, I mentioned earlier, Christian Dior Couture's solid performance. In addition, the brand appointed Kim Jones, previously in Virgil's role at Louis Vuitton, the Artistic Director of Dior Homme. He would also present his first collection in June during Paris Fashion Week. So some exciting times coming in men's fashion from the group starting this summer.Fendi showed robust progress in Ready-to-Wear and Shoes and Loro Piana had an excellent start to the year, driven by its iconic and accessories lines. Céline saw good momentum this quarter and named Hedi Slimane Artistic, Creative and Image Director of the brand. This news was very well received in the fashion media. And Givenchy's first haute couture collection by Clare Waight Keller was well received.Marc Jacobs continued the repositioning of its collection. Work continued at Rimowa where a new visual identity in conjunction with its [ Marseilles ] 120th anniversary was rolled out during the quarter.Perfumes. For our Perfumes & Cosmetics business group, this is Slide 10, revenue reached EUR 1.5 billion compared to EUR 1.395 billion in the first quarter of 2017. This reflected an impressive 17% increase in organic revenue offset by a 9% currency impact, resulting in a 8% reported revenue growth for the quarter. The performance of this business group was driven by all segments in all regions, particularly Asia. To give you some more color on the brands, Christian Dior continued to benefit from the popularity of its iconic J'adore and Miss Dior fragrances, while Sauvage continued its success.Makeup, notably Lip Glow, Addict Lacquer Plump and Rouge Dior and skincare lines such as Prestige and Capture also performed strongly within this business.Guerlain launched Mon Guerlain Eau de Parfum Florale and had good performance in the skincare category, driven by Abeille Royale. In perfume, Givenchy saw strong performance in its makeup lines, notably face powder, Prisme Libre and introduced a new fragrance called Live Blossom Crush.During the quarter, Benefit launched BADgal BANG!, its volumizing mascara; Kenzo continued the international rollout of Kenzo World; and Fresh successfully launched its Black Tea Kombucha facial treatment essence. Fenty Beauty by Rihanna continued exceptional -- its exceptional growth during the first quarter, helped by social media following and rolled out the Plush Matte lipstick Mattemoiselle.Now looking at our Watches & Jewelry business, this is Slide 12. Revenue in this group was EUR 959 million compared to EUR 879 million in the first quarter last year, growing a very strong 20% on an organic basis, and taking into account the 11% negative currency impact, reported revenue increased 9%.The Watch & Jewelry business group performed well, especially well in Asia and the U.S. In terms of the brands, Bvlgari delivered an excellent performance in the first quarter, driven by the success of its emblematic lines, Serpenti, B.zero1, Diva and Octo. The brand also opened its first Boston boutique in January. And Chaumet launched a new high jewelry collection -- high-end jewelry collection, Les Mondes de Chaumet, starting with its first chapter, Promenades Impériales.The highlights for watches was the presentation of new models at Baselworld, including Bvlgari's Octo Finissimo Tourbillon Automatic that set several records for its thinness, Hublot's Big Bang Sapphire Tourbillon, TAG Heuer's new Monaco and Carrera and Zenith's Defy Zero G. These were all well received at the show.Turning to Selective Retailing, Slide 14. Reported revenue was down 2% for the quarter to EUR 3.1 billion compared to EUR 3.15 billion in the year-ago period. This is a result of 9% organic revenue growth, offset by an 11% negative currency effect. However, if we were to exclude the impact of the Hong Kong International Airport concessions, which were terminated last year, the organic growth would have been 16%.Sephora delivered strong comparable store revenue growth in Asia and continued its excellent momentum across online -- sorry, momentum online across all regions, gaining market share. The rollout of its digitally enriched store concepts, which included the Saint-Lazare store in Paris in the first quarter, has been well received by customers.DFS saw strong sales growth in its Hong Kong T Galleria stores, which partly -- partially offset the expiration of its Hong Kong International Airport concession. DFS also saw good performance in its recently opened T Galleria locations in Venice and Cambodia. At the same time, the brand opened 2 new beauty stores in Macao this quarter -- this last quarter.So overall, this is the final slide, LVMH delivered a very good performance in the first quarter, starting off the year strong despite currency headwinds, and all of our business groups were contributive to organic growth. Going forward, we will continue to focus on innovation and creating high-quality products as we selectively expand our store network and maintain a focus on cost management. While we're taking a cautious approach to the balance of the year due to geographical -- sorry, geopolitical and economic uncertainties, we'll continue to pursue our objectives of reinforcing our leadership position in the world's luxury goods market.Thank you. And that -- with that we'll now pass -- take any questions you might have. Hugh, could you open the line, please?

[Operator]

[Operator Instructions] And our first question is over the line of Oliver Chen at Cowen and Company.

[Unknown Analyst]

This is [ Jonna ] on for Oliver. We're just hoping you could comment on the state of luxury market and customer trends in the United States.

[Chris Hollis, Director of Financial Communications]

Okay. Thank you for your question. So the market -- the luxury market in the United States is obviously doing well, as you can judge from our overall numbers with double-digit growth, which has been going on for quite some quarters now and it's still there for the first quarter of 2018. If you compare the trends with the end of last year, there are few changes. We see a much better business in Watches & Jewelry and in Fashion & Leather. It's less good than it was in Wines & Spirits, and it's in line in Selective Distribution. So there are some changes, but overall the business is very well oriented in the United States for the time being.

[Operator]

The next question is over the line of John Guy at MainFirst.

[John William George Guy, Managing Director]

I've got 3 questions, please. The first on Louis Vuitton. Could you maybe just talk about pricing during the quarter. My sense is that the volume growth has been very strong, a healthy double digit. So -- but in some selected markets, we did see price increases. So could you just talk about the extent of the pricing increase on Louis Vuitton in the first quarter, please? My second question is around Wines & Spirits, and in particular Cognac. Is it fair to assume we've had about an 800 basis point value increase for Cognac and Spirits? And splitting out that value again, just trying to think about what is price mix and what is the underlying rules for the price increase there? I know you've always been cautious around just raising prices to let competition come in to Hennessy. And finally, just with regards to DFS, you mentioned in the release that you've been, I guess, changing your offer to suit the traveling consumer better. I was just wondering what's changed within the overall DFS offer. And on the Sephora, how many Sephora self-serving -- self-servicing kiosks do you now operate on the global basis?

[Jean-Jacques Guiony]

Thank you, John. I will disappoint you on the last question, that I don't know the answer. I will try to know the answers for the rest, but for this one, I don't. I will try to provide it at the late stage. So on the pricing for Louis Vuitton, so it's not on selected markets. We increased prices for leather goods in a limited way around 1.7%, 1.8% in February across the board. So it was widespread price increase, which didn't draw a lot of attention, and it was just on leather goods. On Wines & Spirits, your assumption is correct. The price mix impact is about 8%. So you have altogether a 5% volume increase, 4% price increase and about 4% mix impact. The mix impact stems from the very good performance of the X.O business, which grew double digit. We mention many times that we have a lot of constraints on V.S and V.S.O.P and for the time being, less so on X.O., so we benefited from that and, obviously, from the strong demand coming from the eastern part of the world. As far as prices are concerned, the 4% price increase should be well understood. It's not straight price increase of 4%. Price increases were lower than that, on average in between 2% and 3%, depending on the market. But there is also an impact coming from the fact that we allocate less fund to the trade, which is a way to call discounts allocated to distributors on the basis of their volume performance. Given the fact that we are pretty constrained on our volumes, we don't see the need of allocating such funds to the trade. And technically, such funds to the trade are being accounted for as a negative to sales. So when they disappear, it's technically as if we were increasing prices, and we count these within the price impact. As far as DFS is concerned, change in offer is probably a sort of more -- too global words to describe what's going on. We do that at all times. I mean, we make sure that depending on the type of clients we have in a given location, we adapt the offer with more destination products or more cosmetic products depending on what the taste of such clients are. And this is what we do and we try to be. We have developed tools internally, which are allowing our merchandising team to be much more precise on what they propose to the client and how they can adapt the offer depending on the location. So that's what we had in mind, but nothing particularly spectacular that would change the business model of DFS.

[John William George Guy, Managing Director]

That's great. Maybe just one follow-up just on Wines & Spirits, in particular Cognac. I'm looking at January and February exports that are down mid-single digits on a value basis. And there's a good sort of 70-plus percent correlation on your Wines & Spirits business on a quarterly lag basis. I mean, is it right to take a slightly more sort of cautious approach to Wines & Spirits organic growth assumptions for the remainder of the year? Or do you feel comfortable with the kind of exit rates that you're seeing in the first quarter?

[Jean-Jacques Guiony]

Well, for Cognac, 5% is a bit on the high side. We said last year that for the next couple of years, at least, we expect to grow, let's say, in between 3% and 4%, depending on market opportunities. So 5%, which we had coming from a strong pressure from clients to buy more is probably a little bit on the high side. As far as champagne is concerned, the growth in volumes is only 1%. We hope we will do a bit better in the rest of the year.

[Operator]

We are now over to the line of Edouard Aubin of Morgan Stanley.

[Edouard Aubin, Head of Luxury Goods]

Edouard Aubin from Morgan Stanley. I have 3 questions, all on Vuitton actually. So first of all, your fashion and leather goods division grew 16% organically in Q1. Should we assume that Vuitton's growth was very close to that rate or even a touch higher? Or would that be too optimistic? So that's number one. Number two, to my knowledge, LV has not been increasing its square footage for about 18 months now. You managed to have like-for-like growth very significantly in Q1 despite the fact that Vuitton is already posting sales density very significantly above industry average. I guess my question is, at what point does the store experience suffers from excessive traffic in the store? So going forward, does it mean that you'll have to increase your selling space or online would be able to absorb a significant share of growth? And lastly, Vuitton's annual sales growth run rate is around EUR 1.5 billion roughly, which, I guess, is extremely significant. And what measures are you taking to protect the exclusiveness of the brand? For example, how do you manage the bestsellers around the world on that basis?

[Jean-Jacques Guiony]

Okay. Thank you, Edouard. So I will answer the same thing to the first question. So Vuitton is never very far from the division's average, and there is no exception there. So Vuitton is very close to the 16%. And I will not comment whether it's above or below, but it's very close. As far as sales density is concerned, well, that's, I would say, a good problem to have, I would say. But you alluded to the right answer in your -- when asking the question, online could be part of the answer. And potentially increasing the number of stores or more probably increasing the size of existing stores, as we did in the past. But frankly, for the time being, despite what you said about improving sales density, which is absolutely right, we don't feel the need for a drastic action in terms of the way we welcome our clients and the way we serve them. The existing network works extremely well and we have no particular plans to change the whole thing. Sorry, I missed your last...

[Chris Hollis, Director of Financial Communications]

The EUR 1.5 billion annual sales growth.

[Edouard Aubin, Head of Luxury Goods]

Yes, it's how you protect the exclusiveness of the brand.

[Jean-Jacques Guiony]

Exclusiveness of the brand. Well, people tend to assimilate Vuitton with Monogram. I mean, Monogram is a significant share of the business, but nevertheless, it's not Vuitton. I mean, it's not only Vuitton. They are almost 3 times more in number of products and sales that we do on other products, and this is how we think we could keep the exclusivity of the brand. The brandness would be different things to different people and has been different things to different people for many, many years. So we know that the brand is growing. It's growing fast and we are pretty happy with that, but it's not only Monogram. It's not one single product that is running the show. I mean, a lot of different things, different initiatives of different nature, be it Ready-to-Wear, be it the men business, be it handbags, be it collaboration. I mean, a lot of things are being implanted within the brand to make sure that we keep it alive and kicking, and that long term it doesn't become boring. We don't feel -- we are not concerned with the risk of becoming overexposed. The risk is always to lack momentum and not to be at the forefront of competition in terms of marketing. And we think what we do now is exactly what should be done and that should enable to sustain the momentum of the brand for the quarters to come.

[Operator]

We are next over to the line of Louise Singlehurst of Goldman Sachs.

[Louise Susan Singlehurst, Equity Analyst]

Just 2 questions for me, please. In terms of just going back to Edouard's point on Louis Vuitton. Can you just tell us about the manufacturing capabilities and the supply chain in terms of the execution of getting that huge volume of product out to the market during the period? I know we're still looking at around 30% of product each year, which is new to the brand. And then a follow-up just on Wines & Spirits, and apologies if I missed it. But could you tell us the number of days of inventory across the U.S. distributors for Cognac? I know it's incredibly low where it should be, but if you could give us an idea, that would be great.

[Jean-Jacques Guiony]

So on the manufacturing capabilities, it's something we work on pretty hard. You've probably heard that we are going to open new ateliers in France in the next quarter, so that's part of the answer. Our volumes, obviously, have grown very significantly over the past few months and years, and we are facing increasing demand. So again, it's a good problem to have. But we're -- in order to solve that, we need to open new capabilities. Each capability -- each factory or each atelier has its own flexibility, so they can recruit more people. They have some ability to produce more hours, so we are working on that as well. We are not worried, to be frank. I mean, it's not something we can adjust overnight. But with a little bit of time planning, we can certainly increase the production to levels that will enable us to meet further increase in the demand. But be assured that this is something we're working quite hard on because it's obviously a big opportunity that we don't want to miss. As far as Wine & Spirits is concerned, the number of days of inventories in the U.S. is quite low. It's around 15 days. So same as -- more or less the same as what it was at the end of last year. So it's obviously a very constrained level in that this type of level, we have no opportunity to serve the final client in volumes which are higher than the ones we would send to our own distributors and our own clients. So obviously, one of the levels we've been putting on over the last years is not available now. We know that and we have to thank our distributors for helping us and operating at such low level of stocks.

[Operator]

The next question is from the line of Antoine Belge at HSBC.

[Antoine Belge, Global of Consumer and Retail Research]

It's Antoine, HSBC. Three questions. First of all, on Fashion & Leather. So 16% in Q1, also 10% in Q4. I think you mentioned in the call -- sorry, in January's meeting that in December, Vuitton had kept aside some merchandise in order to make sure that, that would be enough for Chinese New Year. So has there been a sort of effect of additional supply? And would you expect that to disappear in the second quarter? Second question on Vuitton, Fashion & Leather, the FX impact was minus 10%. I think more negative than consensus was going for. You mentioned the price increase with such a volume growth, so probably strong operating leverage. I know it's not time to talk about margins, but how this -- are these conflicting FX going to work in H1 and then maybe over the full year? And thirdly, with regards to nationalities, I mean, 16% for fashion is -- so all nationalities would have contributed. But it seems that the slowdown in your objective currency that has been more than compensated by maybe a fantastic or stellar rebound in Hong Kong. And so since the smaller Asian countries may be small if you take country by country, but quite significant issue group, all of them have been showing some strong growth. So maybe could you comment on that?

[Jean-Jacques Guiony]

Okay. Thank you, Antoine, for your 3 questions. On Fashion & Leather, so the capacity question, you're little bit mixing offer and demand. I mean, as far as offer is concerned, we set aside a few products to serve Chinese New Year, as we said last year. So the month of December was definitely constrained, and we sort of freed this additional capacity in January and February to serve Chinese New Year. Now we are back to normal and to our plans in terms of supply. As far as demand is concerned, as you've seen from the numbers, and I will try to answer to your next questions on this, but as you've seen, I mean, demand seems to be well oriented. So what I can tell you is that before the end of the year, we don't expect to be constrained in a meaningful way. In terms of volumes, we have the ability to produce more. We have new atelier, as I answered to Louise before, we have new atelier becoming live at some point. So we think we should be able to serve a growing demand in the course of this year in a meaningful way. So your question on margins with exchange ratio on the one side and price increase on the other side is obviously a bit premature to answer. I think I'll give you better answer when we get our H1 numbers. I don't even have the Q1 numbers as we speak, so it's quite hard for me to comment on that. As far as your last question or third question on Fashion & Leather in Europe, in Asia and in the various geographies, we've seen some significant changes over the last months. We have a little bit of a slowdown in Europe in terms of growth. It's still very positive, but it's a little bit of slowdown in terms of growth in Europe, obviously, compensated by Asia and chiefly in Asia by Macao and Hong Kong. When you look at the currency movements, this is obviously very well correlated. The level of the -- the currencies in Hong Kong and Macao is connected with the U.S. dollar, that softened somewhat against the renminbi. So it shifted a little bit of business into Hong Kong and Macao and to Japan to a lesser extent, probably at the expense of Europe. So all these is quite positive. I mean, Vuitton is double digits in Europe in Q1. Nevertheless, we see the flows of Chinese tourists particularly moving pretty quickly whether she or they get the best deal from a currency viewpoint. It's nothing new, but it happened as we expected in Q1.

[Antoine Belge, Global of Consumer and Retail Research]

Maybe just a quick follow-up. As, I think, Chris mentioned on Rimowa, the sort of perimeter impact on Fashion & Leather either Q1 versus Q2. So is it fair to assume that the overall perimeter impact in Q2 would be actually lower because it would be only deal on the maybe actually a -- sort of the Rimowa effect?

[Jean-Jacques Guiony]

We don't know exactly how we will treat that. We'll make sure that this is clear to you when we report our numbers in July, but it's fair to assume that what you said is right.

[Operator]

Our next question is from the line of Hermine de Bentzmann at Raymond James.

[Hermine de Bentzmann, Research Analyst]

I have a few questions as well. The first one again on Louis Vuitton. Can you maybe be a bit more precise on the growth from each type of customers, European, Chinese and American? And my second question is on the Watch & Jewelry division. Can you provide a bit more detail on the growth between jewelry and watches and maybe the trend by region of this division? And lastly, have you observed during this Q1 any difference [indiscernible] months between January, March and February? Is March better than February? Or only February due to Chinese New Year?

[Jean-Jacques Guiony]

On your last question, we think -- I mean, on your last question, we always get differences in between January, Feb and March because of Chinese New Year shifting usually couple of weeks from one year to another. So this year, February was very, very strong and January was softer, but this was due to the fact that Chinese New Year was 2 weeks later than it was the year before. So that -- it's not particularly significant and quite difficult to comment. So your -- sorry, your first question was on...

[Chris Hollis, Director of Financial Communications]

Growth. European, Chinese, U.S.

[Jean-Jacques Guiony]

The main client basis. Well, I have to say that it's quite consistent. Most of our client base are around the growth of Vuitton together. So as you don't know the growth of Vuitton altogether, it's hard for you to conceive what it is. But as I said, I mean, it's not very far from the division. The important point to have in mind is that it's pretty consistent. I mean, both the Chinese, the American, the Europeans and the Japanese are pretty well grouped around this average, which doesn't happen so often. As far as Watch & Jewelry division is concerned, the trend was not similar to the preceding quarters. Watches were doing -- jewelry was doing much better than watches. So the division is showing about 20%. It's significantly more for watches, and we had a very good quarter with both Chaumet and...

[Chris Hollis, Director of Financial Communications]

Jewelry.

[Jean-Jacques Guiony]

Sorry, jewelry. Very good quarter, sorry about that, very good quarter for Chaumet and Bvlgari. Watches did okay. We are pretty close to, if not at double digit, we are very, very close to double digit, which tends to show an improving trend there. Particularly, TAG Heuer had one of the best quarter in the recent past and Hublot is still moving from strength to strength. Se we are pretty happy with the situation. As far as regions are concerned, it's worth pointing out and that explains actually why TAG Heuer is doing better, that the U.S. was much, much better than it used to be for both Watches & Jewelry. And Asia is improving very strong. Only a little bit of softness in Europe and Japan, but definitely Asia and U.S. doing okay.

[Operator]

Our next question is from the line of David Da Maia at CM-CIC.

[David Da Maia, Research Analyst]

All my questions have been already answered, but maybe a small one on Dior Couture. Are you experiencing an acceleration in growth as well for this brand? And in this case, is it fair to assume an organic growth close to 20% in Q1?

[Jean-Jacques Guiony]

I will not comment on organic growth on Dior. I mean, we had a very good quarter in -- at Dior Couture. I will not give you the details, but the business did very well, I would say, across the board, particularly strong in Asia and in the U.S., which is good news. The average organic growth is above the division, and as you know, it's not included in the division. It's recorded within the perimeter impact.

[David Da Maia, Research Analyst]

Yes. But have you seen an acceleration in growth as well for this brand like you have seen in the other brand of the Fashion & Leather good division?

[Jean-Jacques Guiony]

It's a bit better than what it was in Q4, but -- in Q3, but nothing really significant. And we are talking about very high numbers. So I don't know whether such a difference is so significant.

[Operator]

We now go to the line of Fred Speirs at UBS.

[John Frederick Speirs, Director & Research Analyst]

Two left from my side. The first was around the volatility of the trading environment. If you were to look past the timing changes in major holidays, do you think we're starting to see that come down at all? And then second was just around LV pricing. Following what you've done already in Q1, is it all still open for further price increases at Vuitton later this year?

[Jean-Jacques Guiony]

Well, the question on volatility, I mean, I think we have to live with some form of volatility with whatever we do. So we know that when Chinese New Year shifts 2 weeks, I mean, it creates a lot of differences for all the [indiscernible] corporation base. It's a little bit true all over the place. Volatility is a fact of life, in my view, in our businesses. As far as LV is concerned, I will not comment, but frankly, we don't know. It's -- we have implemented an across-the-board price increase, which we haven't done for 3, 4 years. That's already one step forward. I cannot really comment on the decision of neither been studied nor taken as far as further price increase are concerned. So nothing to report on that front.

[Operator]

Our next question is over the line of Thomas Chauvet at Citi.

[Thomas Vincent Chauvet]

Three questions, please. The first one, follow-up on Cognac. Could you comment on the depletions for X.O and V.S.O.P post Chinese New Year? And in the U.S., you still manage to have low single-digit volume growth for V.S. or at least maybe for the U.S. business in the period against a very tough comp. Can you please update on perhaps the availability of younger order fee for the rest of the year and for V.S. and whether you continue to explore the opportunity to push V.S.O.P in that market? Secondly, a question on square footage in fashion leather. So if I understand well, your previous comment, so for Vuitton, the store network remains stable and will remain stable, but you're planning to continue to do store enlargement and refurbs. But other than Vuitton, where are the main CapEx plan? I'm thinking more in terms of store count expansion. Can you perhaps comment on Dior, Fendi and Céline? Is it where you see still some opportunity? And my third question, I know you wouldn't comment on the beginning of April for Fashion & Leather, it's way too early. But more generally, how do you think about the second quarter and the rest of the year where, obviously, the fashion leather division is now facing a much tough comp on a 3-year cumulative basis? I think the comp gets like 10 points tougher. I think the first quarter comp was from that standpoint on a 3-year basis a little bit milder. Are we -- are you still comfortable when you comment about trends are well oriented that the growth continues in subsequent quarters?

[Jean-Jacques Guiony]

Thank you, Tom. No, not easy -- I mean, that's not an easy question, that we usually don't answer and I will make no exception. As you know, we are not in a business where the visibility is particularly good. We try to understand the market. We try to understand the customers, but predicting the behavior and predicting external shocks as they may happen from time to time is always a very difficult task. So I will not go into that. The only thing I can say that we had a good start to the year, and we expect these good trends to continue. So on your most specific questions on Cognac and on Vuitton. On Cognac, the depletions in China were very strong in the first 2 months because I don't have the March numbers. But I have the Chinese New Year numbers and they were very good. We were -- our main category is about 1/3, so it's quite significant. So very good situation there. As far as the U.S. and V.S. -- versus V.S.O.P is concerned, I mean, V.S. is under strict production constraints. We cannot grow this business within the next couple of years, as I said, more than 3% maximum, 2.5% to 3%. And volumes in Q1 were not dissimilar to that. We are developing V.S.O.P in the U.S. V.S.O.P is growing very fast in the U.S. But in terms of number of [ portholes ], it's really very small compared to V.S. So from a pure volume viewpoint, I'm not talking about a mix viewpoint, but from a pure volume viewpoint, it is very, very unlikely that V.S.O.P could compensate for V.S. And we also have some constraints in terms of production on V.S.O.P., which is way less flexible than V.S. Full term it may be less of a case, but at some point, the constraints on V.S will also bite into the V.S.O.P capacity to grow. Finally, your question on fashion and number of stores. You mentioned Dior, Fendi and Céline, each of these brands more or less have 200 stores, so definitely more or less -- definitely, there is some room for increase. But for Dior -- for Céline, it's a bit early to say. We are reassessing plans with the changes that took place earlier on this year. For Dior, we think that we can grow the business without increasing a very large number of stores. Obviously, Dior opening stores, but not in a frantic way. And same thing for Fendi. So nothing really meaningful, although we keep increasing regularly the number of stores in a controlled way, I would say.

[Thomas Vincent Chauvet]

And for Vuitton, so very, very low single digits square footage growth over the coming years on -- to fulfill the need of a better store experience. And maybe some of the stores are tired and some geographies need a bit of a refit?

[Jean-Jacques Guiony]

Well, they always do. I mean, we have a large network and we cannot revamp it -- we cannot revamp all of them at the same time. So we do that over a cycle of 5 to 7 years, and we do it -- it's a constant movement. And Vuitton, despite they are not increasing the number of stores, they are very busy in revamping and improving the -- as you said, the customers experience in the stores by either enlarging them or making them better and reviewing the way they've been operating them. So it's really a constant movement there.

[Operator]

The next question is from the line of Rogerio Fujimori of RBC Capital Markets.

[Rogerio Fujimori, Analyst]

Two quick questions. First is a follow-up on Fashion & Leather. Excluding LV and Dior, could you give us a qualitative idea of which brands have seen improving trends in Q1 versus Q4? My second question is on e-commerce. Any comment -- or qualitative comment on the contribution to growth, especially for Fashion & Leather? And then my third is on Sephora. I think you've mentioned market share gains around the world and e-commerce growth, but have you seen any changes in the competitive environment in the U.S.? And do you still plan to open 100 stores this year?

[Jean-Jacques Guiony]

Thank you, Rogerio. Well, we disappoint you on your first 2 questions. I'm afraid I will not really comment. And quantitatively, we had most of our brands did reasonably well in Q4, but they also did reasonably well in Q3. And definitely, I don't want to point the ones doing better than the others. Frankly, this is not my intention and not my job. On e-commerce, on Fashion & Leather, I think we mentioned some numbers last year for the contribution to the group for e-commerce, which was across all divisions. That's the only thing we want to comment for the time being. I don't have any specific and anything new to announce for e-commerce in Q1 of this year. The trends are the same. The scene is, the landscape is changing quite fast and we are adapting to these, but nothing to be reported, I would say, on a quarterly basis there. And as far as competitive landscape for Sephora and the U.S. is concerned, while there are differences, the trends obviously in demand tend to change with something that we've seen for quite some quarters now, which is really a slowdown in makeup in the U.S., which used to be the driving force of the business. At the same time, our brands are -- some of the brands we carry, including brands from the Image group, are extremely strong at Sephora and the business is still well oriented for the global Sephora. We did like-for-like of about 6% in the first quarter of the year. The U.S. was slightly above that. So I think it's a good situation there. There are competitors, obviously, be it online or off-line, but nothing new. I mean, we were not present in this market 20 years ago, and we managed to make our way into the prestige market in the U.S. Obviously, the competitive landscape is changing at all times.

[Rogerio Fujimori, Analyst]

And the 100 stores still planned for this year?

[Jean-Jacques Guiony]

No. For Sephora U.S. altogether, because for...

[Chris Hollis, Director of Financial Communications]

Followed by U.S.

[Jean-Jacques Guiony]

Within that altogether. I think it's a bit more than the 100. It's 120 or 130, something like that.

[Operator]

Next question is over the line of [indiscernible] at Aveo Capital. Okay, [indiscernible] there seems to be a lot of noise on your line. Okay, we will go to the next question, which is over the line of Francesca Di Pasquantonio of Deutsche Bank.

[Francesca Di Pasquantonio, Research Analyst]

Yes. I have a couple of questions, please. The first one is really to understand how much you were expecting this acceleration that we have seen in Q1. So it seems the business has responded very well to this acceleration. So my guess is you were planning well, but just to have a sense and your thoughts around that. And secondly, can you maybe help us understand what notable initiatives are planned for your key divisions, your key brands in terms of maybe special projects, new launches, initiatives that we should be aware of and which could help us in looking at the forecasting for the next few quarters?

[Jean-Jacques Guiony]

Well, 2 tough questions, Francesca. I mean, acceleration in Q1 -- I mean, we -- it's almost impossible to forecast that type of thing. I mean, first of all, the acceleration was not so -- not worthy. I mean, we had 11% organic growth in Q4. We have 13% in Q1. I mean, that's obviously better, but should we really talk about acceleration? I don't know. I mean, it's your call, not mine. Anyway, the question for us is not to plan for acceleration is to make sure that if it happens, we can react well. And remember what I said about Vuitton, setting aside some products at the end of last year to serve the client's needs for Chinese New Year, I mean, that's probably the limit of what we can do, but nevertheless, that's what we do. We make sure that whatever happens, we can be ready, be positive or negative. This time around, it was positive. It could be negative in the future, nobody knows. So it's more about flexibility than really planning what I would say. As far as initiatives for the future are concerned, I mean, there are plenty of initiatives, most of them being confidential. So I find it a little bit hard to develop on this. But the marketing component of our business increases quarter after quarter and it's quite important to be differentiating our brands with striking marketing initiatives and this is what we try to do. If you look at what we did last year, and I will not come back on the various initiatives we took at Vuitton elsewhere, but the past speaks for the future. You can expect the same striking initiatives going forward because it's exactly what we have in mind, and we hope this will help sustain and fuel the growth of the business going forward.

[Francesca Di Pasquantonio, Research Analyst]

Okay. So I understand you know the confidentiality of a lot of the things you're working on. But just to have a sense, will we have another Rihanna in Perfumes & Cosmetics? Will we have another Supreme in Louis Vuitton, this kind of very high-profile and highly contributing events whether you're new to the profile -- of the brand or to the business, the traffic and so on, so forth?

[Jean-Jacques Guiony]

I met -- I had the chance of meeting Rihanna last month and there is only one. So I really cannot expect that we can do an equivalent initiative. But there will be plenty of initiative, Francesca. I mean, we plan to do quite a few things, but it's obviously very difficult for me to comment at this stage.

[Operator]

[Operator Instructions] As there are no further questions in the queue, can I please pass it back to you for any closing comments at this stage?

[Jean-Jacques Guiony]

Well, thank you. Thank you for listening to the call. I don't have any particular further comments to make. I think we went through all the major points of the -- and the main features of Q1. I look forward to discussing with you at the end of July the interim performance. Thank you for attending the call. Bye-bye.

[Operator]

This now concludes today's call. Thank you all very much for attending, and you can now disconnect your lines.