Chairman's message

Philippe Benacin

With €422 million in sales, up 15% from one year earlier, 2017 was a very good year. How do you account for this result?

Without a doubt, the year was "rather good". A performance made possible by better-than-expected sales from all our brands.

Our top-selling brands, Montblanc, Jimmy Choo and Lanvin, consolidated their positions while maintaining sustained and steady growth driven by the strength of their established lines and new launches in 2017.

However, excellent performances in the year were also achieved by virtually all our portfolio's brands.

Coach, the brand's first men's fragrance, one year after the women's line’s launch, got off to a very promising start. As a result, confirming its potential, revenue for this brand reached €51 million in less than 18 months.

With growth of 32%, Rochas fragrances, driven by the timeless Eau de Rochas and the successful Mademoiselle line’s launch also exceeded expectations with €38 million in sales.

And in general, sales levels for all our brands were very good, including in particular for Karl Lagerfeld fragrances which returned to growth and whose Parfums Matières duo received a very warm welcome from our customers.

All these factors contributed to excellent sales, but also to an improvement in our operating margin which rose to 14.2%, despite significantly higher advertising expenditures in 2017.

Still, your projections for 2018 issued in November were considered conservative?

Our guidance is always characterized as too conservative… More seriously, we just completed a three-year period of sustained growth and revenue from €297 million to €422 million. For that reason, we believe it is strategically wise, and even essential, to slowdown the pace of our launches to consolidate these gains. Ensuring that a launch is successful is relatively easy. However, it is much more important to ensure a line's sustainability over the longer-term. When we see that the Montblanc Legend line is continuing to add market share seven years after its launch, then we are certain that this strategy of consolidation is the best.

To move ahead in 2019 on an even stronger footing?

Absolutely! While the 2018 program is relatively modest in terms of launches, despite a few noteworthy initiatives, in particular with flankers for some of our brands, an extremely rich line-up of major launches is in the works for 2019. For Montblanc, Coach, Lanvin and Rochas… And also in 2020, for Jimmy Choo in particular…

The following two years will thus be extremely eventful and our teams are already fully focused on preparations for these many projects.

That is also why it was necessary for us to slow the pace in 2018.

You still have substantial cash resources but have not completed an acquisition in nearly 3 years…

With a cash position of €230 million, we do indeed have the resources to seriously consider all potential acquisition opportunities. We are constantly considering such options, though always based on the same criteria: Namely, it must make real sense!

The last two acquisitions completed in 2015, Coach and Rochas, accounted for nearly €90 million of our sales in 2017, and reinforce our conviction every day in the relevance of our criteria. This means we will not make an acquisition simply because we can, but we do look very closely at the rare opportunities which emerge. The day we determine an acquisition makes strategic sense, then we will act. I just can't say whether this will be in 2018, 2019 or 2020. However, thanks to our financial position, we will not miss any opportunity.

A word in closing?

Rather, a few words… For a number of years we have decided to support our launches and significantly increase advertising investments. This strategy has paid off. Our sales are growing, we are continuing to add market share and our operating margin has remained at a very high level of between 13.5% and 14%. We have a portfolio of very high quality and complementary brands which I am convinced will grow in the medium-term. It is thus an understatement if I say that we are very confident…

Philippe Benacin

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Market data on August 21th, 2018 at 17h35

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