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Good day, and thank you for standing by. Welcome to the Prada Group 2026 Half Year Results Conference Call and webcast. [Operator Instructions] Please also note that today's conference is being recorded. I would now like to turn the conference over to Mr. Andrea Bonini, Group CFO. Please go ahead, sir.

Good afternoon, everyone, and thank you for joining Prada Group's First Half 2026 Results Call. This is Andrea Bonini, Group Chief Financial Officer, and I'm delighted to be with you again. I'm joined by Mr. Andrea Guerra and Mr. Lorenzo Bertelli.

The agenda for today's session is on Page 4, and as always, it will be followed by Q&A. As a reminder, during today's call, we may discuss forward-looking statements, which are subject to risks, uncertainties and factors beyond our control that could cause the actual outcome and returns to differ materially from such statements. Please refer to the disclaimers included on Slide 2 of our presentation. With that, I will hand over to Mr. Guerra.

Hello, and welcome from my side as well. With the end of 2025, for sure, we have completed a fantastic cycle of constant growth and expansion for our Prada Group. I think we have been all very pleased for this long journey. And I think that we also paved and created the foundations for the new cycle. In 2026, as we already talked about it earlier in the year, we are building a new cycle and a new cycle, which is pretty simple and is made of a constant solid growth for Prada, a normalized but substantial growth for Miu Miu and a new brand and creative journey through important milestones for Versace.

I think that these are very important objectives. And also very simple ways of saying that we want to build again this new cycle of growth on our three main brands. At the end of the first semester, we have been able to accomplish our fundamental objectives on all three brands without Church's included. So we are happy of these first 6 months and ready for the next.

In details, this means that the Group overall growth at constant FX first half has been 16% organic without Versace and constant FX at 5% with an acceleration in Q2 at plus 7% on a 6% of a year ago.

Going to the brands, Prada, solid growth and maybe something more. Since January, we have seen an acceleration on all important KPIs regarding new clients, regional spread, average price. We have been dynamic. We've offered a number of different projects to the market that have been appreciated. We have grown all categories and always keeping in mind that Middle East is reducing our 6% growth in Q2 by 100 bps.

Miu Miu, we had to normalize. We normalized. We're yet today normalizing, but with great desirability and love for the brand. This is something that it's there and will continue to be there. And this will remain our North Star without shortcuts. We had to adapt mentally to a new way of doing in a new world of normalized growth.

Took some weeks, maybe some months between the end of the year and beginning of the year. I think that today, we are ready and committed. We delivered a positive 3% on a 40% of a year ago. On top of this, I think that we are also well equipped for the second half with a complete new collection of leather goods that I think can really help us in maintaining the rhythm.

Middle East impact in Q2 has been something around 300 basis points. So I would say that the Miu Miu effect from the Middle East has been quite big.

Versace, first 6 months of the year, in line with expectations, top line and bottom line. Having said so, this means that we work hard on many different things in these first 6 months, organization, synergies, costs, journey, commercial milestones. It's a long journey, but I think that we started it. Since July 1, Pieter Mulier is on board, and we are extremely happy about it.

Now we have another tough 6 months with no show. And we need to fight. We need to get all the right opportunities and not burn any of them. We are all working on it. So even for the Versace brand, these first 6 months have been in line with our desires. Thank you. Now Lorenzo, you can take it from here, and I will be back for our closing remarks.

Thank you, Andrea, and good afternoon. The first 6 months of the year have shown once again that Prada is much more than a fashion brand. It's a creative platform where fashion, culture, innovation continuously reinforce one another. Everything starts with creativity. Our fashion shows and campaign continue to express a distinctive point of view on contemporary society while exploring new artistic and cultural territories.

Prada Nylon, days of summer and the Spring/Summer '26 campaign were certainly among the highlights of this first half of the year. Beyond fashion initiatives such as Prada Mode and Prada Frames foster dialogue across disciplines and creative communities, while the presentation in New York of the latest chapter of our partnership with Axiom Space further enforces Prada's unique positioning and the intersection of design, advanced production development and high-performance material.

We also continue to elevate the brand experience through landmark destination. The announcement of Prada Galleria project in Milan, which will officially unveil in September, reflects our ambition to create immersive spaces where hospitality, culture and retail come together to express the Prada universe in a richer and more engaging ways. Prada's ability to connect product, culture and experience remains one of the brand's defining strengths.

Looking at Miu Miu now. Throughout the semester, fashion show campaign and special projects such as Miu Miu Upcycled continue to shape a distinctive vision of feminity, while signature culture initiatives including Summer Reads, Women’s Tales, and Dirty Blizzard further strengthen Miu Miu’s unique voice in contemporary culture.

For the reopening of Ginza flagship in Tokyo, Miu Miu debuted with Chat Club and a celebration of a brand's long-standing connection with Japan through a unique cultural format promoting creative exchange.

Moreover, collaborations such as the one with Tennis player Coco Gauff continue to engage new communities, extending the brand's relevance well beyond fashion. Miu Miu allure continues to lie in its ability to evolve and expand its reach, attracting new audiences without ever compromising on its free spirited identity.

Moving now to a brief update on Versace. As you remember, we have discussed in more detail the strategic priorities during our call in March. Those objectives are confirmed and so is the action timeline. During the first 6 months of the year, the brand has performed in line with expectation as we set the basis for a gradual improvement of the quality of top line.

Retail execution continued to be a key area of focus alongside the rationalization of the network with selective closures of nonstrategic stores.

Most importantly, the arrival of Pieter Mulier as new Creative Director marked the beginning of the brand's aesthetic repositioning. We welcome Pieter's visionary talent and we wish him good luck with his exciting journey.

In regards to our ESG target, over the past 6 months, we have continued to make tangible progress across our key sustainable priorities. We advanced our transition to lower impact raw materials, achieved ZDHC accelerator starting recognition of our commitment to responsible chemical management, strengthened the collaboration to accelerate supply chain decarbonization and further embrace circularity through the last latest Re-Nylon collection.

At the same time, we continue to invest in our people by advancing our D&I agenda and promoting gender equity, expanding trade initiatives and launching a global no-violence awareness journey to foster a culture of respect.

Finally, through SEA BEYOND and our educational partnership, we expanded our positive impact by engaging students and children in environmental education, constantly promoting initiatives aimed to inspiring awareness and empowering future generation. I will now leave it to Andrea Bonini to walk you through the financial review section. Thank you.

Thank you, Lorenzo. The group reported net revenues in excess of EUR 3 billion, up 16% versus H1 '25 at constant FX. On an organic basis, revenues grew 5% year-on-year with Q2 accelerating to plus 7%. This performance marks the 22nd consecutive quarter of organic growth at group level.

Exchange rates had a negative impact of 490 points on revenues and the increase at current exchange rates is therefore, plus 11%. Retail sales for the period totaled EUR 2.6 billion, up 3% organic versus H1 '25 at constant FX against double-digit comps of plus 10% last year.

EBIT adjusted was steady year-on-year on an organic basis as greater marketing investments were offset by efficiencies and cost discipline in other areas, including corporate, retail and industrial.

Including Versace and the FX impact, EBIT adjusted reached EUR 530 million with a margin of 17.4%. Net cash flow improved year-on-year, even in reported terms, and we closed the semester with a net debt position of EUR 693 million.

Moving to Slide 14, net revenues by channel. The group recorded net revenues of EUR 3 billion in the first half of the year, up 16% at constant FX, plus 5% organic. At retail level, sales reached EUR 2.63 billion, up 12% at constant FX, plus 3% organic against plus 10% in H1 '25.

The second quarter saw an acceleration to plus 5% from plus 1% in Q1 despite the greater impact of the conflict in Middle East. The region had a negative impact of approximately 1.5 percentage points on retail organic performance for the semester.

Wholesale was up 40% over the semester, plus 20% organic, sustained by both independent wholesale and duty-free. You may remember, H1 '25 was impacted by some negative phasing effects on deliveries and year-on-year growth benefits of that this year, but our selective strategy remains unchanged. Trends were positive on royalties, up 73% at constant FX, plus 12% organic, supported by both eyewear and beauty.

Turning to next slide, retail sales by brand. Prada reported retail sales up 3% in H1, strengthening to plus 6% in the second quarter, a very positive performance underpinned by like-for-like full price sales. The improvement was broad-based across regions with notable strength in Americas, Japan and APAC.

Miu Miu remained highly desirable, continuing to show positive trends. Retail sales were up 3% in the semester on plus 49% in H1 '25, with Q2 performance in line with Q1. The Middle East had a negative impact of 3 percentage points on Miu Miu's performance in the 6 months as the brand has higher than group's average exposure to the region.

As for Versace, we are pleased with the performance, which was in line with expectations with the brand contributing EUR 219 million to retail sales in H1 '26.

Moving to the next slide, retail sales by geography. Asia Pacific continued to show strength, growing at plus 15% at constant FX, plus 6% organic. Prada made further progress in Q2, supported by solid execution and positive trends across the region. Miu Miu's growth remained robust throughout the period.

Performance in Europe was up 5%, down 4% organic, with Q2 showing signs of improvement, supported by a recovery in both tourist spending and local demand.

The Americas remained buoyant, up 37% constant FX, plus 17% organic, with Q2 accelerating on higher local demand. Both Prada and Miu Miu continued to benefit from strengthened organizations and investments.

Positive performance in Japan, up 6% in H1, plus 2% organic, with Q2 showing improving trends supported by solid local consumption and increased traveler demand.

Finally, the prolongment of the conflict continued to weigh on Middle East with the region down 24% in the semester. Local demand remained relatively resilient over the period, improving quarter-on-quarter.

Turning to next slide. Underlying profitability was steady year-on-year, measured on an organic basis. Efficiencies, cost discipline and operating leverage helped offsetting higher marketing investments in part due to phasing. Factoring in Versace and FX, EBIT adjusted margin landed at 17.4% or EUR 530 million. Of the roughly 500 basis points of dilution versus the organic EBIT adjusted margin, 2/3 come from Versace and 1/3 from FX.

Moving to Slide 18. CapEx for the first half of 2026 was EUR 226 million. In retail, we balanced capital allocation across new openings, renovations and relocations, and we also progressed with the planned store closures. Strengthening the industrial platform and advancing the digital transformation journey continued to be the other key area of focus.

As a reminder, we expect CapEx as a percentage of sales to start reducing from the current fiscal year. Moving to the next slide. Net working capital reached EUR 956 million, including Versace and remained stable at 15% of net sales in organic terms, reflected continued effective working capital management.

Lastly, the group retains a solid balance sheet, closing the semester with a net debt position of EUR 693 million after a CapEx cash out of EUR 247 million and dividend payments of circa EUR 400 million. With that, I will hand over to Andrea Guerra for his closing remarks.

Closing remarks. Our storyline for this year is very clear, and I would say also simple, and I will stress it again, and I will try to describe a few things that we're doing. And I really think that these are vital going forward. So on one side, top-tier consumers drive the market and they are even stronger than before. And I think that we have been delivering and we will continue to deliver and even this huge epicenter of Milan Galleria will help on this, I think that we are ready to pamper and service these consumers the best possible.

On the other side, new ideas, new projects need to happen to attract to the industry younger clients. I think that this is one of the biggest challenge of our industry. And I also think that Miu Miu first, Prada second, we are ready for this.

Third, when we talk about brands, credibility and desirability are the two mantras. I think that being credible in this world is half of the job. Being desirable in this world is the other half of the job. The equation is clear. And I think that with our creativity, our creative directors, our way of managing our brands, our long tenure in managing our brands, I think that we are in one of the best position to satisfy this.

There is no obvious growth trends across the world. There are some in some countries, but not all across the world. And I think that even if there is no obvious growth patterns in some areas of the world, there is still huge opportunities for us. This is what we're doing. I said it at the beginning, what are the objectives for Prada, what are the objectives for Miu Miu and what are the objectives for Versace, and we will continue working around them. [Foreign Language], we can now switch to your questions and comments.

[Operator Instructions] Are now going to proceed with our first question. The questions come from the line of Luca Solca from Bernstein.

My first question is about retail space productivity. You have developed Miu Miu very significantly in the past few years, but you also increased the retail network. Could you give us a sense of how the sales per square foot would compare across the three main brands that you have, Prada, Miu Miu and Versace?

You're asking obviously a question that we will not answer, but I will give you some flavor around it. So I think Miu Miu is top of the industry. Considering the size and considering basically in 5 years, the growth we had. And at the end, we basically enlarged the network by 10 stores. So I think it's top of the industry.

As we all know, Prada had to recover. So we knew it, I think, has been one of the first topics we discussed 4 years ago. And if you look at Prada since 2021, '22, '23, '24, '25, '26, everything you have seen is basically -- not basically, it's like-for-like. So did we improve? Yes, we improved. Are we with the best? No, I think there is yet a journey to be done. On Versace, I wouldn't begin today the conversation. Next year, we can begin the conversation.

Of course, Andrea. My second question is about Miu Miu. Some of your peers at some point with smaller brands at some point, very significant success, except they couldn't maintain it. This was on the back of the brand becoming very hot or product becoming very popular or whatever. I could name names, but I will abstain from that. What safeguards and what actions are you planning in order to avoid this sort of marked normalization turns into fading? What can you potentially feel in order to maintain this level and continue to grow as you stated your ambition, the Miu Miu remit?

So first of all, I think there is a mathematical thing to be taken in consideration that is we have grown very significantly from a low baseline. So yes, we have grown significantly. We have reached a significant level of revenue just shy of the EUR 2 billion, but we were starting from EUR 450 million 5 years ago. So it means that those percentage growth were there.

I think that one basic thing happened. We tried our best not to take shortcuts and to keep things as simple as we could. What do I mean by that? 6 years ago, 5 years ago, we had -- maybe I go wrong by some units, 155 stores, and today, we've got 165 stores. So we didn't follow success and opened wherever people were offering wherever to open. And we did not even increase significantly the square footage of our stores. We didn't enter new categories that were not really part of our core brand.

You know how many times people have been asking us to enter men, to enter licenses or to enter whatever you can think about. When you have success, the only thing you should be able to say is no to basically 90% of the proposal that are done to you.

So this is what we are trying to do. And believe me, if you were asking me, let me include Middle East in the equation. Andrea, would you sign to be at plus 5%, plus 6% on Miu Miu in 2026 on a plus 40% of 2025, I would have signed.

Understood. Lastly, if I may ask another question. This has to do with pricing. We have seen a significant like-for-like price inflation in soft luxury. And when we look at the growth, again, in the broader market, looking at your peers, we see that those that are resisting sort of adjusting their mix and coming to engage with the middle class aspirational consumers other ones growing the least.

So I wonder, you have shown remarkable ability to increase prices. But at the same time, we are facing a polarized market with the top spenders spending on the front foot and the aspirational consumers struggling. What is your thinking and your actions or your plans about maintaining the engagement of aspirational middle class consumers who are, nevertheless, 55% or so of the total market?

Let me put it this way. The biggest opportunity -- we're talking about Prada now. The biggest opportunity we have is with top spenders. I mean if you look to our price range, we have always been pretty shallow with our price range. We can discuss our entry price. I'm pretty comfortable in mid-2026 with most of our new entry prices in many different product categories from ready-to-wear to leather goods.

And the real challenge we have, the real opportunity is to satisfy an unbelievable demand from top spenders Prada has that's somehow we have been in our history, reluctant to satisfy. I think that we are proving ourselves that we can play in different segments.

I don't want to talk about have mass price points, okay? But I'm ready to talk about really keeping our entry price stable and being able to enlarge the price range. This is what we're trying to do today because the top spenders are there, they're healthy, they are wealthy, and we need to gain our fair share there.

We are now going to take our next question -- and the questions come from the line of Anne-Laure Bismuth from HSBC.

I have two questions, please. The first one is on the Prada brand. So would it be possible to have an idea of what was the split of the growth between volume, price and mix and which category did perform best in Q2? And I assume the Q2 already reflects the good reception of the new bag lines that have been launched recently?

So you mixed a message I was giving the new bag line was Miu Miu was not Prada.

Yes, you have also launched a new handbag line for the Prada brand recently.

I mean, I was referring to Miu Miu, but obviously, we have been launching new Prada lines on bags during this first semester, yes. So I would say we were slightly positive on volume, and then it was more a mix effect rather than a price effect. In terms of categories, we were on all categories positive, men and women. On shoes, we were very shy negative.

Okay. And my second question is regarding the marketing spending, which was -- so the marketing to sales ratio was a bit more elevated in H1. Can you remind me what was in Q2? And should we expect the marketing to sales ratio that is broadly similar to last year for the full year?

Hi, I am Andrea Bonini, no change in marketing vis-a-vis what we said before in the sense that, I mean, we would expect it to be the incidence at the end of the year in line with last year or maybe slightly above that. And so yes, in the first half, there was a bit of a phasing effect, but no changes otherwise. Any other question from you.

We are now going to proceed with our next question. And the questions come from the line of Erwan Rambourg from Goldman Sachs.

I hope you can hear me. I'd like to squeeze in three, if I can. Erwan Rambourg from Goldman Sachs. So first, on Versace, now that you run the brand, I don't know if you can share maybe some positive or negative surprises since you took over the management of that.

And linked to Versace, I think Andrea Bonini, you mentioned that dilution in the EBIT margin in H1 was about 2/3 of the 520 basis points, so about 350 basis points. What do you envisage the dilution from the integration to be in H2, please?

So you take your first part of the question is Lorenzo speaking. So negative surprise, no, we find out what we were expecting during the period of the acquisition. I would say positive, the people, the environment, everybody is super engaged. There is a good energy, nice energy, especially from -- also especially when -- from July, Pieter joined the group. So there is a lot of excitement and positive energy. And so this is the positive. Other than that, I would say no negative surprise, and that's it. Andrea?

Not significantly different for full year versus H1.

Okay. Meaning 350 basis points of dilution possible?

Yes, thereabouts.

Okay. Okay. So my second question is on -- so it's obviously quite surprising to see the Prada brand growing at a faster pace than Miu Miu this quarter. But obviously, we know what the base is, so it doesn't mean much. But Prada is growing at a faster pace very clearly than the market. So I'm wondering what are you doing right? And how can this market share gain momentum sustain?

So obviously, the growth of Miu Miu has been very visible. It's now 5 years that Prada is growing above the market. So -- and again, a repeat like-for-like. So I think it's a question of positioning. It's a question of credibility.

And I think even a little bit proactivity to the market with ideas, projects and things that can allow us to engage different segments of consumers. I mean, I think this is what we have been able to do so far. Obviously, now it's -- we need to go forward. We need to keep it on, and we need to continue to fight.

Okay. Great. And then maybe last short question. And maybe I missed this, I'm sorry, during the presentation, but wholesale business underlying is growing 20%. Is there a one-off in there? And how do you think about sustainable growth in that channel?

There I mentioned it because it was -- well, more than this year was last year with a bit of a one-off -- negative one-off in the sense that it was phasing with some deliveries more delayed, and therefore, we benefit of that this year. So growth year-on-year is higher, but no changes in terms of underlying strategy and therefore, also expectation year-end.

How much would you imagine the channel to grow on a full year basis?

You look at the past couple of years and the approach remains selective.

We are now going to proceed with the next question. And the questions come from the line of Oriana Cardani from Intesa Sanpaolo.

The first one regards to the Chinese cluster. Can you tell us the performance of this cluster in second quarter for Prada? And if there were any differences in trends between Mainland China and Greater China region? And in general, what is your opinion on the trading environment in China and your outlook for the second part of the year?

Hi, Andrea Bonini. I'll go beyond that in the sense that I'm sure that the question will come. So in addition to Chinese, I'll give you also some flavor around the other nationalities. So for Chinese, it was very positive. The second quarter, it was up double digit. So it further improved versus Q1. And it was positive both in terms of local spending, but also what they spent abroad.

Having said that, it's not easy. I mean, it's not without challenges in the sense that, I mean, we continue to see from a traffic point of view, industry-wide, at least what we pick up, a challenging environment in terms of traffic. So it's -- again, it's a challenge day in, day out, but the team did a great job, and they managed to achieve a very good result.

Europeans is -- it was flattish in Q2, slightly improving. North American is clearly the very positive note. So very positive demand and further accelerating quarter-on-quarter. Domestic consumption and also it was flattish on -- for Japanese clients.

Understood. And my second question is on the gross margin. Do you expect gross margin in the second part of the year to be similar to that of the first part?

Yes.

We are now going to proceed with our next question. And the questions come from the line of Natasha Bonnet from Morgan Stanley.

I have three, if that's all right. So the first, Andrea, regarding Miu Miu, which grew 3% in the first half. At the start of the year, you mentioned potentially growing double digit for the full year. Do you think that's still feasible?

And then also, can you give us maybe the spacing contribution in H1 from Miu Miu? And then you also mentioned that the Q2 growth of plus 3% was a normalized level. Obviously, that includes a 300 basis point impact from the Middle East. Would you say that mid-single-digit growth is a good proxy for 2027 from Miu Miu at a normalized level?

If whatever I say, then you will tell me that I said something. So I think that Miu Miu has an opportunity to grow between the 5% and the 10% long term. I've got no doubts about this. Looking to this specific year, I really thought that we would have seen an industry improvement during the year that we are not exactly seeing in terms of traffic. So we will continue to fight. We were at plus 6% in Q2. We were in plus 3% in Q1. So we had -- we have seen that kind of improvement that I was talking about.

Obviously, going forward, we have a part of the world which becomes a little bit easier in terms of comps, while another part of the world remains pretty challenging. So I mean, for any of our brands, going from 5% to 10%, I think that, that would be a solid performance going forward. In terms of space, I would say that the plus 6% is with a like-for-like, 0 minus 1.

And then my second question would be on Prada, which obviously has seen an impressive re-acceleration in the second quarter. Can you give us any more KPIs of what has really driven this re-acceleration? I know you said full price sales are really strong. I mean, do you expect this to continue? And are there any regions where the brand is resonating particularly well?

I think -- I mean, if we go back, it's a long story. I mean, we knew that we had to catch up in the United States. we are catching up. I think we are growing, and we are really doing what we have to do. And I think that, that is yet a long journey.

In China, for sure, again, we needed to go back to our fair share. And I think that we are trying to achieve it, but still it's a long journey. In Europe, most probably it's where we have grown the fastest in the last 4, 5 years. And this year, in some cities, we are not performing as we would love.

I think the industry is not far away from what we have achieved. And Japan remains one of our places of the world where Prada is loved. And as soon as there is an opportunity with local clients, we have taken -- we are taking it, and we will always take it home.

And then my last quick question would just be -- I was hopeful if you could update us on the group's latest thoughts regarding potentially a dual listing with Milan?

Nothing to say. Nothing to add. Next question, please.

We are now going to proceed with our next question. And the questions come from the line of Daria Nasledysheva from Bank of America.

This is Daria from Bank of America. I have three, if I can go one by one. For Versace, you have already closed 10 stores, if I'm correct, since the end of last year. How many stores are you planning to close, rationalize over the next 12 months? If you could provide any color on that?

Lorenzo taking the question. Yes, there is a rationalization of the network. So we will have closure and openings. I think in the next year, we'll see more downtrend around other 10 and also for looking for better location. And also you think from 2028 when there is more clearness on the market of Pieter collection, then we will look at, again, looking at the better location. But let's say, we will have another slightly smaller network next year. And then from '28, we will look at opportunities of better location.

Perfect. And if I can ask on profitability. You have kindly helped us frame the FX impact on EBIT margin in the first half. Could you please provide any indication for the second half and respectively, the full year, how are we thinking about FX?

Andrea Bonini, I'm not going to be specific because I think that FX has proven volatile and rather unpredictable, considering also the evolution of geopolitics and so on. But I would say we would expect in the second half less of a headwind in terms of both revenue, obviously, but also from a profitability point of view, but not going to be more specific than that.

And my last one, if I can try. Could you please share any color on trading so far in July, particularly for Prada brand? And how should we be thinking about the second half revenue progression also considering a more challenging comparison base, not just for yourself, but for the industry as well? If you could share some thoughts on the outlook?

So first of all, we have seen last week of June and a couple of weeks of July, which were soft. And then we went back to a good rhythm. So it looked like a little bit our January. And it's very complicated, I have to tell you to answer in a proper manner to your question. I mean there are so many things happening. So I do not know. I mean, as I said at the beginning of the year, we have to prove that Prada can have a solid growth throughout quarters, throughout the years.

So we are doing everything we can to achieve that. That's it. Let's see how the world goes. I mean we all thought that what happened in Middle East and Iran was finished and then restarted all at once. Let's see what happens in October. Let's see what happens in Israel. It's very complicated. I don't want to make it too macro.

But at the end, it's -- everything is influencing everything. The market which is less readable today is China. It is much dependent on events and activities, on holidays, on moments of tourism. So that is the less readable market today. But as I said, it's the market where Prada has the biggest opportunity in market share gain.

We are now going to proceed with our next question. And the questions come from the line of Chiara Battistini, JPMorgan.

My first question going back on the gross margin, please. I'm guessing that excluding the Versace consolidation, gross margin might have been up. Am I right, first of all?

And second, also considering the channel mix, I guess, was negative given the strength of wholesale. Can you talk about the underlying drivers of the gross margin on an organic basis, please?

Hi, Chiara. Andrea Bonini. You're right, slightly up excluding the impact of Versace. I'll say that from an underlying point of view, pretty much unchanged and various effects, as you say, compensating each other. But also, I mean, we talked before -- you mentioned wholesale, but if I have to make an example on the -- with the opposite sign, I mean, we talked before about the performance of Prada being better in full price rather than in outlet. And so there's various factors. But the underlying is pretty much unchanged. And then there are some accounting effects and others that helped a bit, but it's slightly up.

Great. The second question on South Korea, unless I missed it, I don't think you've commented on the performance there. So I was wondering if you could give us an update on your performance during the quarter, both with locals and with tourists, please?

Very positive, again, another bright note in terms of performance. And split what I can tell you. I can tell you local better and stronger and traveler slightly subdued.

Okay. And finally, maybe anything you can share on your next projects on stores for Prada and Miu Miu in H2 and possibly any glimpse into next year, please? On store openings?

I think that we have a huge milestone coming for Prada, which is September. where we are opening this multi-floor cultural, artistic fashion, art, retail, food experience over 6 or 7 floors in Galleria and Milano, mid-September. And I think that this will become the epicenter of the epicenters.

This will become the place where to host all our friends of the world, all our clients of the world and to allow anyone to really enter into a world which is not just fashion, but it's narrative, it's cultural. It's a place where you can really understand Prada 360 degrees from our roots to where we are today and to where we will try to be soon. So I think that this is the biggest, largest, huge milestone we have.

We will now take our next question and the questions come from the line of Thomas Chauvet from Citi.

I have three, please. The first one on the Prada brand, Andrea, you said China was the most difficult market to apprehend. You kindly provided Andrea Bonini, the performance by nationality, the biggest growth improvement sequentially came from the Chinese cohort. So can you explain perhaps what is happening for the Prada brand in China with the Chinese consumer? Why is it resonating so well now in a very difficult market?

I'll say it again. I think in the most humble manner. We're doing our homework. I mean we were -- we are under represented in China, and the team is doing an unbelievable job. I think that we are managing our stores differently. We are managing our relationship with our clients differently. We are today attracting new clients to the brand.

Rong Zhai, our Chinese epicenter is working 360 degrees from the Art Foundation to our marvelous cafe Mi Shang to the -- our apartment for our top clients. So we are offering a 360 degrees experience to our clients. But it's a tough environment. It's a very tough environment, I have to tell you.

Secondly, on the Middle East, which deteriorated a little bit quarter-on-quarter. Can you perhaps comment on what you saw in June and July in the region, particularly with locals.

No, it deteriorated because, Thomas, it's the impact of having 3 months of impact, right, and rather than 1 month in Q1. But in terms of underlying trends, it was actually improving. And so at some point, I think we were seeing local demand being back at last year level and therefore, like proving very resilient and past few weeks, again, a bit more volatile. But sequentially, since the start of the conflict, we've seen an improvement in terms of local demand.

Okay. That was my question, what was the sort of exit rate. So you're close to flat in June or July?

It was at some point. I mean we've had weeks where it was closed and then some other weeks where we're still seeing a negative number, but it was more in the, call it, minus 10, minus 20 rather than minus 40, minus 50 as at the beginning of the conflict.

Okay. And just finally, on Versace, just trying to get a bit more color on the numbers. Thanks for the disclosure already. But could you comment perhaps on the Versace performance in H1, particularly in retail? And then are you still comfortable with an EBIT loss for the year? I think you had said in line with last year at around EUR 80 million, EUR 90 million.

If my calculation is correct, I think the loss was EUR 90 million already in the first half. Were there any restructuring charges in H1 or maybe there'll be in H2 beyond the impact of the 10 store closures that you did?

So I'll start from this last point. And no, we're very far from the minus EUR 90 million. So I'm happy on the back of this call, I mean, with the team, of course, I mean, they can help you sort of figure it out where the misunderstanding is, but it is way less than half than that in the first half.

Therefore, yes, it's very much in line with our expectation, as we said at the beginning of the year to keep it in the two digits on EBIT. And look, on top line, it was also in line with our expectations. And so if you remember that we provided also some indication of what the contraction because we do expect a contraction on top line at the end of the year might be, and it is tracking that way. I would leave it at that.

One point, sorry, and I want to clarify because I don't want to -- I may have misunderstood Chiara’s question earlier. Because when I answer about sort of the split of local traveler, it was with reference to the nationality because I was following up on my previous answer.

If the question was related to Korea and not Koreans, clearly, local are positive, but traveler spending in Korea is also way much stronger than local. Hopefully, that clarifies if there was a misunderstanding. Thomas, sorry back to you if you've got anything else.

Thanks, Andrea. I'll follow up with the team because I said the EBIT margin for the first half was in line with last year, excluding Versace. So if you strip out the sales of Versace and you keep whatever 22.5% EBIT margin, you get an implied loss for Versace of about EUR 90 million. So I must have missed something about what you define as organic EBIT margin, but I’ll follow up offline.

Okay, fine. Maybe it's FX related because as I said, I mean, there's two components. And so -- but yes, as you say, I mean, I think it probably makes sense to follow up later.

We are now going to proceed with our next question. And the questions come from the line of Charles-Louis Scotti from Kepler Cheuvreux.

Just a follow-up question on Versace. Could you explain why the brand is weighing so heavily on the working capital? And do you see meaningful scope to improve Versace working capital over time? And thank you for the clarification on the loss at Versace in H1.

Could you give us also an indication on the potential free cash flow burn also of the brand in the first half and the expected burn on a full year basis?

What I would say is that, I mean, let's start with this because also I think it will help addressing two points in -- with one answer. But the reality is we don’t actually seeing waiting that much in terms of cash flow absorption from working capital and from CapEx as well from Versace was very limited. Therefore, cash flow is not too far away from EBIT, what I can say. And indeed, I mean, for what is the rest, I mean, if you look at the organic working capital is also stable.

Okay. I have a follow-up question on on Versace. Could you please also give us an indication of the time line for Pieter Mulier’s first fashion shows and the expected cadence for the arrival of his collection in stores?

And more broadly, how many seasons or collections do you think it will take before the product assortment is fully refreshed under this new creative direction and this will help us better model the potential timing for the top line inflection.

So the first collection of Pieter will La Vacanza. So it will be launched in May next year. So to have just this collection in all the store end of second half '28, but I would say every store is '28.

Okay. And just one final question, if I may, more financial question rather than operational. When I look at Prada Group, you continue to deliver best-in-class growth and profitability and yet the stock trades at one of the lowest valuation multiples in the sector.

Does this disconnect make you consider launching a share buyback, for example, another, I don't know, significant capital allocation initiative that could unlock some shareholder value, particularly given that balance sheet remains very strong even after the Versace acquisition.

What I would say is answer a similar question before on that vein. And if we had something to announce or to disclose, I mean, we would do it. But at the moment, there is nothing to disclose. Last question, please.

Yes. We are now going to proceed with one last question. And the questions come from the line of Chris Gao from CLSA.

I have two quick follow-ups. The first one is about the performance by cluster for Miu Miu brand. You talk about the performance by class of product co-brand, and we are very happy to see you've been getting very strong growth among Chinese cluster. I want to understand for Miu Miu by cluster, do you see any difference versus what you see from product co-brand trends like Chinese, Americans, Europeans. So anything to highlight here?

Hi, Chris. Andrea Bonini. Plus and minuses compared to Prada because also bear in mind that they reflect different journeys in the past years and different also presence in the different geographies, different contribution from the different geographies already. What I would say and sort of point out is we've seen weaker trend with Chinese and Europeans, stronger trends with Japanese, and I'll leave at that.

This is very helpful. My second question is also regarding your store level investments. So we're happy to see the very strong China, Chinese growth, and we understand that during our channel check, we see both your same-store sales in China and your enlarged renovated store performance are also very good, right? So basically, we believe what you do in your store investment has been helped a lot regarding the acceleration for product core brand.

So basically, I just want to understand in the midterm, could you please provide us some more color regarding how many more renovations or enlargement projects as a percentage of your total stores are in your plan because we do see it helping the brand's performance?

I think this is a trend that we are having since some time, and I would consider nothing changes in the midterm. Most probably, we will cut some stores in China in the next couple of years in being second or third stores in some cities, and I don't think that those second or third store are valuable anymore.

So most probably, we will continue to renovate in some cases, enlarging to host proper apartments. But on the other side, most probably we're going to cut two or three stores a year for the next 2, 3 years.

So this concludes the question-and-answer session. I'll now hand back to you for closing remarks.

Thank you. Thank you to all of you, and hope to see you soon. [Foreign Language]

This concludes today's conference call. Thank you all for participating. You may now disconnect your lines. Thank you.

Good day, and thank you for standing by. Welcome to Prada Group Q1 2026 Revenue Update. At this time, all participants in a listen-only mode. [Operator Instructions] And please note that today's conference is being recorded.

I would now like to turn the conference over to Mr. Andrea Bonini, Group CFO. Please go ahead, sir.

Good afternoon, everyone, and thank you for joining the Prada Group's First Quarter 2026 Revenue Update. With me today is our Group CEO, Andrea Guerra. And as always, we will start with the presentation and then move to Q&A.

Before we start, please be reminded that during today's call, we may discuss forward-looking statements, which are subject to risks, uncertainties and factors beyond our control, and the actual outcome and returns may differ materially from such statements.

Please refer to the disclaimers included on Slide 2 of our presentation. And with that, I will hand over to Andrea Guerra.

Hello, everyone. Nice meeting you all. We met a couple of months ago. And I would say that the world is constantly giving us new surprises and we are certainly living through a prolonged challenging and unique period for our business, for the industry and for the world. Having said so, I think that Q1 was our toughest quarter in terms of comparables. And I always would love to remind that Q1 2025 was plus 13% on 2024.

So we are really pleased to report another organic positive quarter for both Prada and Miu Miu. I think that this was a very challenging quarter considering the comps, considering what is happening in the world and considering the fact that basically 50% of creative directors of major brands change, and this was the first season of their products in the market.

Middle East is an issue. As I always remind everyone is, first of all, a territory full of great our people, great stakeholders, great allies in the business, and we would love to see it as fast as we can back to great beauty.

So the impact on Q1, always keep in mind that basically, it was the worst moment, but only basically 1 month was approximately 150 basis points on our growth, a little bit less on Prada around 100 basis points, much more on Miu Miu close to 250 basis points. So this is just the underlying and the borders of the conversation of today.

Prada, solid. We said it 2 months ago, it will be a solid year. where underlying performance is stronger than what we report, but it's fine. We have taken further steps to reduce our exposure to outlets.

And as a result, our full price growth is above -- well above the reported breakeven level that you see today, and this will become more visible as we move through 2026. In the first 4 months of the year, Prada experienced, I would say, a negative start. During the first 15 days of January. As you all remember, we had a great holidays period and maybe clients took a little bit of a rest. Then performance steadily turned positive and has continued to improve solidly after today. Women better than men and men catching up.

We recorded with Prada well above average growth in both North and South America. We talked about this region in length and I think that we are really taking back our correct market share, and hopefully, the journey will be still long. We had an above-average performance in Greater China, and Korea. And again, I would repeat the same thing I said in Americas. I think that our fair market share is higher than what we have today. And so happy. And even in Japan, we had a better performance.

Europe was slightly below average. Our home market has delivered strong comparables for over a decade. However, some stores in secondary cities have been affected in recent months by decline in tourist spending.

We will be back.

On Miu Miu, let me start saying that the past 5 years, we have seen a plus 20% on the first year in terms of revenue growth, plus 20% on the second revenue growth year. Then we had a plus plus 58%. Then we had the plus 93% and in 2025, we reached another plus 35%. So it was not just a kind of bonfire but has been 5 years of constant grade growth of Miu Miu. The bar is now high. We are in the ballpark of EUR 1.7 billion, EUR 1.8 billion annually. And we delivered a 2%, which would have been very close to the 5% that we had in mind initially.

We have grown well in all places, Americas, where we still have a small footprint, so really a long journey yet. A solid performance in Asia, Greater China, Korea. And again, in Europe, we were slightly lowered than what we expected. My reasoning is, we are a little bit newer in Europe compared to other regions in the world with Miu Miu. So we are more affected by lower tourism expenditure in Europe. And I think we are building our solid foundations with our fantastic stores in Milan, Paris and London, and I think that we will be stronger in the future.

I think that Miu Miu has successfully avoided a lot of brand exposures, mistakes, excessive store expansion or enter into many product categories. The brand ranks among the top in desirability, and we will continue to pursue our long-term growth trajectory without any kind of compromise. Just to give you an idea of how healthy the brand is?

If we sum up outlet and wholesale in Miu Miu, basically, we don't reach the 12%, 13% of the total sales of the plant.

Turning to Versace. I don't think there is a lot to be add compared to what we discussed 2 months ago. We are progressing in line with our plans simplifying business model from many different several perspectives, particularly in terms of sales channels and discounting.

The trajectory so far is in line with our expectation. Revenue and EBIT is in line with what we expected so far after the first 4 months. Q3 will be the quarter in which we will be more challenged. Because we are not doing any kind of show, but we are getting ready for the beginning of the great journey in 2027.

Having said this, I will come back at the end, but I will give now the word to Andrea.

Thank you. Starting with net revenues by channel. The group recorded net revenues of EUR 1.43 billion in the first quarter of the year, up 14% at constant FX, plus 3% organic against Q1 '25.

Over the period, exchange rates had a significant negative impact of 740 basis points. At retail level, sales reached EUR 1.24 billion, up 10% at constant FX, plus 1% organic, driven by full price sales and against double-digit comps of 13% in Q1 '25. The conflict in the Middle East, as Andrea mentioned, had a negative impact of approximately 1.5 percentage points on the organic performance for the period. Wholesale was up 40%, plus 17% organic, sustained by the restart of shipments to strategic partners, Saks Global and by the duty-free channel performance.

Positive trends on royalties as well, up 84% at constant FX, plus 15% organic, supported by both eyewear and fragrances.

Turning to the next slide, retail sales by brand. Prada closed the quarter with retail sales up 0.4%, in line with Q4. This result came thanks to stronger underlying trends considering the impact of Middle East and indeed, despite that, another sequential improvement in full price sales, partially offset by further reduction of the contribution from outlets. Worth calling out the Americas and Asia Pacific, which delivered further quarter-on-quarter improvement over the period.

Miu Miu remained highly desirable, continued to grow at a normalized pace with retail sales up 2.4% over the period against the toughest comparison of the year plus 60%. The performance reflects 2.5 percentage points negative impact from Middle East, resulting from higher exposure of the brand to the region vis-a-vis Prada.

Finally, Versace retail performance over the quarter was in line with expectations, contributing in excess of EUR 100 million in retail sales.

Moving to the next slide, retail sales by geography. Asia Pacific continued to show strength, growing at plus 13% at constant FX, plus 5% organic. Miu Miu continued to exhibit robust growth. Prada showed further progression quarter-on-quarter, supported by solid execution and positive trends across Mainland China, Hong Kong, Macau and Korea.

Performance in Europe was up 2%, down 6% organic, driven by a more pronounced contraction in traveler spending and a more modest decline in local consumption. Such performance reflects a challenging basis with multiyear growth, including Q1 '25 at plus 14%. And I would add that we've seen encouraging signs recently in terms of travel spending.

The Americas remained buoyant, up 34% constant FX, plus 15% organic, supported by strong local demand. Both Prada and Miu Miu continue to reap the benefits of the investments we've made in the network, but most importantly, in the teams over the past quarters, and we continue to see meaningful opportunities ahead.

Japan proved resilient with local consumption remaining stable against a very positive Q1, '25. Retail sales in the region were up 1% at constant FX and down 2% on an organic basis.

And finally, on Middle East, the conflict weighed on both domestic and tourist spending as the region was down 22% over the quarter. Both the cost and FX and organic and the impact may be even more material in Q2 if it ends up impacting the whole quarter compared to the 1-month impact of Q1, obviously.

With this, Andrea will take over for some final remarks.

I'm happy with the start of the year. And with the acceleration we are observing, especially in the last couple of months and especially on Prada. We remain confident as our brands continue to demonstrate strong desirability.

At the same time, we're navigating a phase of significant creative transformation across several brands. So many new collections have been entered in the market and huge investment has been made. And on the other side, we're staying firmly on our strategic path.

I think that the rules of the games of this new world are very clear to us. A constant and total unique split of commitment between high end. And we have been strengthening organization, product offer, hospitality standards and new store infrastructures. And when I say split of commitments, on the other side, I think, focus on our enterprise offering, with a mission to attract new consumers to our brands. I think that this is very clear, and this is what we are doing today.

I think that whatever the world is offering us, whatever our specific industry is offering us, we are committed to our group ambitious objectives, as we work towards initiating a new and sustained phase of growth. And if you have comments or questions, here, we are to answer them. [Foreign Language]

[Operator Instructions] We are now going to proceed with our first question. The questions come from the line of Ed Aubin from Morgan Stanley.

So Andrea we are -- I guess, so you spoke quite fast. So I just wanted to clarify to make sure I understood what you said. Did I understand that the last two months, March, April, have been a bit better than January and February.

And if that's the case, is that excluding trends in the Middle East? Or if you could just clarify, that would be helpful.

So let me say that I removed from any kind of conversation the Middle East effect that I've given you as a general effect that we will see also during the next six months. What we have seen in March and April is a constant improvement and happy about it.

Okay. Got it. And then Miu Miu -- I mean, on the last call, you had actually told us, that you were expecting a relatively soft start to the year. So again, that was provided, but still, the deceleration is quite steep. Because I think it's the first time in years that you have single digit and you're increasing your selling space. So your like-for-like, I guess, must have turn negative.

In a nutshell, if you exclude the Middle East, what kind of surprised you in terms of the nationality not totally clear to me. It looks like, obviously, Europe was soft as well from Miu Miu. But where was the deceleration the steepest in terms of the brand?

Europe, you said it. It's basically, I mean -- if I look to comparisons, if I look to relative terms, if I look to our growth rates in Americas, Asia and all the rest, Italy and France are the two places where we declined a little bit more than what we expected.

Got it. And you -- are you -- to an extent, are you confident that things could reaccelerate? Is it gradual? Is it -- in terms of -- for the Miu Miu brand during the course of the year?

So I think that, first of all, in terms of comps, things become easier, especially on the second half, especially on certain Prada categories. And we had been seeing a slowdown in tourism in Europe from, let's say, mid-second quarter onwards. So I am still positive. Obviously, when you have everything doing positive, everything doing positive except a couple of countries, I think this is still valid, then we need to be successful.

We are now going to proceed with our next question and the question comes from the line of Anne-Laure Bismuth from HSBC.

My first question is about the Middle East. Some of your peers have provided the initiation of the performance for the month of March. Will it be possible to have an indication about that?

And -- or has it been improving for the month of April? And finally, what is the exposure of Miu Miu to the Middle East, please?

I think we have given the -- all the numbers that we feel to give you. I mean, on Middle East, you have always to consider three effects. On Middle East, there is a touristic effect in the Middle East, which is slightly balanced by the fact, that Middle Easterns are spending more money in their local countries. But on the other side, you also have to consider that main three airports of Middle East have been slowing down.

So even Asian tourism in Europe has been a little bit declining. So -- and the numbers we have given the effect on Miu Miu, it will be in the region of the 250 basis points. And this is Middle East, obviously.

We are now going to proceed with the next question. And the questions come from the line of Oriana Cardani Intesa SanPaolo.

The first one regards the exposure to travel and retail. Can you remind us the weight of this segment on your total revenues?

Oriana, not a number we disclose. I would expect it to be not dissimilar from the rest of the sector.

Okay. And my second question is on the direct-to-consumer growth profile in the quarter.

If you can quantify the perimeter effect for Prada and for Miu Miu?

I'm not sure I understand the question, sorry.

Yes. Regarding the regrowth of the retail for Prada and Miu Miu. Can you tell us the perimeter effect, so the impact of the perimeter effect?

Space, new openings. That's what you.

Yes, Yes.

I understood, understood. For Prada, we can consider the performance like-for-like.

For Miu Miu, there is indeed a contribution from new openings helping performance what we see in like-for-like store is that there's a very, very good number of them, that are steady, and there are a few with exceptional performance and productivity in 2025, which are replacing a bit.

And it won't be a surprise that, as Andrea already said, they are in Europe, particularly in Italy and in France. And having said that, their KPIs remain extremely good.

We are now going to proceed our next question. And the questions come from the line of Chris Gao from CLSA.

So firstly, specify with you regarding the China cluster trends and also other major clusters. So basically, how are these like Japanese, South Korean and also other major classes like Americans doing. So can we specify a little bit on that, just to make sure we understand the full picture.

I understand when you comment on regional performance, you comment a little bit. I just want to specify. So for Chinese cluster, do you still see the positive growth like you saw previously? How is the trend 2Q-to-date? And how about other clusters 2Q to date trends? This is my first question.

It's positive for -- with reference to the Chinese cluster that you asked about specifically. It is positive for Prada. It's positive for Miu Miu. Therefore, it is positive at group level. And as we said, it's solid.

When we look at the clusters, from the comments we already made, I believe you can infer that the softness was with reference to Europe, and with -- in Europe, I mean, of course, you have a European component and you have then a tourist traveler component.

And the traveler component tourist component is the one that was impacted the most in Q1 by also the events we know, but also when we look at the European cluster was softer. The rest as we already said, I mean, very, very solid. With the exception of the release of course.

Right, right. This is very helpful. So the second question is regarding the growth drivers. So some other luxury peers actually commented on some sequential improvement noted on the new consumer recruitment. So I just want to understand more like regarding the current growth has been seen on Miu Miu and also on Chinese.

Are you also seeing a similar trend? Or actually, you are seeing still more balanced growth between new customer acquisition and existing customers?

So what we have, I think, Miu Miu is -- still have a good pace so -- and has its own, had its own history and trajectory and today's reality in China as they were asking.

Looking to Prada we have seen since June, July last year, sequential improvement on all KPIs. And we have seen it. We have seen it slightly in the first month, some up and downs, and we have seen it some more vigorous evolution between pre-Chinese New Year, after Chinese New Year and the last couple of months.

Right. So the last quick one is about -- can you specify more about like the pricing, like pricing and mix contribution for Prada and Miu Miu brand?

Yes. As I was saying in the last, I think that we have -- we are having a kind of two businesses in one. So one side we're seeing volumes in the entry price segments. On the other side, we're seeing extremely great value on high-value transactions.

So I think that all of this at the end is giving a kind of an average. But inside the average, there are two very big differences.

We are now going to proceed with our next question and the questions come from the line of James Grzinic from Jefferies.

I have 3 or 4 very quick ones, so I'll ask them one by one, if okay. Can you perhaps tell us how much stronger the full price sales growth was at Prada, compared to that plus 0.4% that you reported for the brand. That would be the first one, please.

One give more than what we said. It's -- as Andrea said, is a solid number.

All right. And then, I guess, Andrea, specifically during your prep remarks, that there was almost like in promptu addition of talking to seeing encouraging signs in travel spend recently in Europe. Can you perhaps expand a little bit on that because it felt a little bit surprising. So I just wanted to check whether I got the right end of that specific?

It's green shoots that we've seen now and then. I think we mentioned it before that we saw a very positive impact, for example, in Italy and Milan in the period of the Winter Olympics. And -- what I was referring to is that recently, very recently, I think we've seen not just in Italy, but more broadly in different parts of Europe, some positive trends that are encouraging. But as always, I think it's already quite complicated, I think, to read trends into quarterly results.

I think it's even more difficult when we want to read too much into monthly or biweekly trends. But nonetheless, I mean, considering even since the start of the year, the bad news geopolitically, macro-economically and so on, I mean, have been significant. I mean let's also start looking at the green shoots when we see them.

Got it. And just quickly following on Miu Miu. It sounds like you're comfortable with the idea that you might have an acceleration in the second half of the year especially. Can I just ask, do you sense that Q1 was the trough for brand delivery, specifically.

I would love to be a magician and being able to really answer your question. I mean there are so many things happening in the world, that is very complicated too. I mean what I said is what I repeat in terms of comps, there is a better off second half, in terms of the durability of the brand, we're still at the maximum.

The team is enthusiastic and great. I think that new products insertions are all great. So let's go and battle it and fight for it and let's see what happens.

Great. And I guess one last one, sorry, bear with me. You talked about a lot of newness efforts elsewhere in the industry. And I presume having to cope with marketing budgets being elevated in other brands.

Have you responded? Have you stepped up efforts from your own perspective? Or have you maintained the line in terms of intensity of marketing investments. So to get a little bit of a sense of...

We maintain our line -- we maintain our path. We maintain our line, nothing different. I mean, we are so happy of how we have come out in the fashion shows, always in the top 3-5 shows of the season. We have seen the kind of interaction with our clients and fans across the world.

So really nothing -- we didn't do nothing, and we have gone through our own journey.

[Operator Instructions] We are now going to proceed with the next question. The question come from the line of Melania Grippo from BNP Paribas.

This is Melania Grippo from BNP Paribas. I would like to ask you, if you could please give us an idea of what was the performance by category for both brands, I mean, which category did outperform in Q1?

So as I said, on Prada, women was better than men. Leather goods came first. Ready-to-wear was good and shoes was stirred.

And the same thing applies to Miu Miu?

Miu Miu was balanced.

And also, I have a follow-up on what you mentioned regarding the full price sales. I just would like to understand you're continuing to cast your number of outlets, if you can update there?

In the next 3 years, we will trim yet another 5, 6 stores. And for 2026, basically, we are done.

We are now going to proceed with the next question, and the questions come from the line of Mavis Hui from DBS.

Can I just ask, firstly, our wholesale organic growth was very strong at 17%. And how much of that wholesale growth is Versace versus Prada and Miu Miu, please?

No, it was basically the -- yes, yes. So there is no Versace in there, but it's the -- what we discussed at the end of the fourth quarter and the effect of the tax, balance up and down.

Great. And then my second question is that on our Q1 retail organic growth is 1%. And because I think partly because again, it's a very strong comp a year ago. So if we go along the year as the year progressed, the comps actually will use.

So what is the realistic organic growth range for Prada group into the coming quarters?

Especially into the second half when the base effect would be much lower. Thank you.

Thank you. I believe that everything we discuss until now is to try and give a sense of what we see, what we feel, what we believe may happen and at the same time of the many uncertainties that remain. And therefore, I don't think we can be more specific than would add anything, to what we already said in that regard.

Definitely. And my last question is that what is our latest proportion of sales coming from tourist consumption globally year-to-date? And how would such level compare to like past 2 to 3 years?

We've never given that figure, and I believe there was the same question asked before to what -- to which I give the same answer.

I'd say that if you compare the past couple of years, I mean, like travel flows change all the time. And we've seen it also in the past few months. Think about what's been happening in Japan, for example, and so on and so forth. But the overall mix and contribution doesn't change that significantly.

We are now going to proceed with our next question and the questions comes from the line of Paola Carboni, Equita SIM.

Sorry, just one question from my side left. It's about the space effect at Miu Miu, should we also assume that this should become more evident in the next few quarters?

And if you can remind us your plan in this respect for 2026 and 2027.

The answer to the second part of the question is, Andrea, said it in the past call, we've got an expectation to add for Miu Miu between -- by the end of the year, another 5 to 10 stores. So no changes in that regard.

And therefore, I mean, of course, these stores will take time to get to a run rate and also the openings will be in the next months, some closures, some more towards the end of the year. But yes, there would be even if not meaningful, but there would be some impact coming positive.

And do you confirm, if I remember correct, that we shouldn't envisage a further space effect or further store openings for 2027 or am I wrong?

Significant. No, not significant because, I mean, as we said, there will be, of course, openings, but there will also be closures. And so net-net, no material on Miu Miu.

I believe the question was on Miu Miu. On Prada net-net, we will probably be negative with more closures than openings.

We are now going to proceed with our next question. And the questions come from the line of Luca Solca from Bernstein.

I seem to remember, Andrea, from one of our last conversations that you are planning to attract attention back to Prada, that you have a few big white rabbits that could potentially be extracted from your hat without revealing any secrets.

Could we maybe get an idea of where you would get them? Is it major events that you're planning, is it a major store openings. We are, I think, in a market where the wind is very, very, very weak.

And so catching the wind is important, catching attention from consumers is very important. We see that your competitors have done that by appointing new creative directors. I wonder what you could counteract to that.

So first of all, I think that we have two regions in the world, where we still have to conquer our fair share. And it's two big regions in the world, and it's America and China. And I mean, we are doing and we are showing to those markets a very high level of commitment. Always keep in mind the purchase of buildings on Fifth Avenue and future projects there. And on the other side, in China with the Rong Zhai development I think that we have built our epicenter in China.

And I think that both teams are really evolving extremely well, and we still have, I think, a long journey of opportunities and market share gain.

Then we are -- I think that we are very well balanced on today, on certain things where we were not. So we were not fully ready for high-value transactions. I think we are today. I think that we have to prove to ourselves more than to our clients. And I think that in the last 12, 18 months, we have been able to do it.

And we sold more precious bags in these first four months compared to all 2025. So we are evolving and we are growing.

Similarly, we always had a way to attract with certain of our product categories, new clients. We have done a huge push on our Re-Nylon projects, our UNESCO and the SEA BEYOND project during the month of April, out of stores and in the stores with a real new Re-Nylon collection, very well received and with very competitive pricing.

So I think we are going both ways. We discussed about Alexander house, but we are now going to open in the next 12 months, at least another 3 or 4 big places for Prada and we will talk about them as we move along.

I think that we are over with the questions. Thank you to all of you, and see you soon.

This concludes today's conference call. Thank you all for participating. You may now disconnect your lines. Thank you.

Good day, and thank you for standing by. Welcome to the Prada Group Full Year 2025 Results Presentation. [Operator Instructions] And please note that today's conference is being recorded. I would now like to turn the conference over to Mr. Andrea Bonini, Group CFO. Please go ahead, sir.

Good afternoon, everyone, and thank you for joining Prada Group's Full Year 2025 Results Conference Call. This is Andrea Bonini Group Chief Financial Officer, and I'm delighted to be with you again. I'm joined by Mr. Andrea Guerra and Mr. Lorenzo Bertelli. The agenda for today's presentation is on Page 4, and as always, it will be followed by Q&A.

As a reminder, during today's call, we may discuss forward-looking statements, which are subject to risks, uncertainties and factors beyond our control that could cause the actual outcome and returns to differ materially from such statements. Please refer to the disclaimers included on Slide 2 of our presentation.

With that, I will hand over to Mr. Guerra.

Hello, and welcome also by my side. Obviously, we are here today during a very peculiar moment, a period of turmoil in Middle East. We do not know what will happen, but we hope it will be short. And let me be -- let me say something. Let me be very close to all our associates and all our people on the ground today in Middle East to all our stakeholders in the region in this specific moment of pray, reflection and community, we're very close to all our people in the region. Having said so, and I think this is paramount. I would love to start off saying that 2025 for our industry has been a very challenging year.

I can state, and we can state that during the last 3, 4 years, the industry lost something like 1 consumer out of 5. In this long period, the Prada Group has been very solid and not only for the past years, but also in 2025. Retail sales in 2025 have grown again throughout the year, mostly or mostly entirely again, like-for-like, marking another plus 8% at the end of the year.

We have been able against strong comps of 2024 to keep Prada on a breakeven like-for-like and most importantly, a sequential improvement through second half compared to first half. Miu Miu finished Q4 at a plus 20% on a plus more than 80% of a year ago. And it's obvious looking to the trend in the last 4 quarters that we have begun our growth normalization journey that will continue during 2026.

2025 has been for our both brands, a very interesting journey. Why interesting? Because we were able to showcase a lot of novelties, a lot of new ways of doing things, utilizing new tools, really upgrading our capability on digital technology and artificial intelligent tools to do what, to become closer, to upgrade significantly product intrinsic value, to be sure to allow all our consumers to understand and therefore, to tell them the stories around products that were coming out of the market, upgrading significantly our hospitality inside the stores and outside the stores and in the redefinition of new stores, flows. On the other side, always in this new normal we have been very clear and very focused on enterprise products and ranges.

During this year, we did not only perform solidly, but we continued investing on our people on their know-how on their motivation. We have continued investing on our strategic digital plans and AI tools. We continued investing over proportionally on desirability and awareness of our brands.

And we have continued to invest over proportionally versus sales on our stores to upgrade aesthetics and even more important to increase our hospitality standards. And even if the level of investments on all these cost lines have been overproportionate, we were able to keep a steady profitability, which means that what we committed upon which was being more productive and be more efficient, we have been able to do it in all other profit and loss lines.

And do not forget, and Andrea will be obviously much more detailed of me on this, the amount of FX headwinds, we have been leaving and we will continue to experience in 2026. Last but not least, we began during December, our journey, closing the acquisition of the Versace brand.

What does all this mean? We have been talking about a new normal. We have been talking about digital tools really coming to a standard use. We have been discussing about hospitality. It's obvious that we are entering a new journey now together with Versace.

And this means that on one side, we have new achievements to be accomplished during 2026, '27 and '28. And on the other side, also the commitment to constantly grow over market range. During this next period, we feel that the Prada performance will be solid and to really reaping all benefits of desirability first and all actions and investments in place.

We are consolidating Miu Miu's success, enhancing awareness and driving growth through 2026 with very different weights on the 2 halves. The first half is more challenging because we were yet in a plus 40%, 45% range a year ago. Therefore, we expect a first half to be in the single-digit growth, but yet being able to show a much solid trajectory for the full year.

We are beginning the journey with Versace, a year of consolidation, a year of synergies and a fantastic start to shape the creative vision. The journey will go through a first phase of channel repositioning, supporting high-quality full prices and distribution. And we will see what this means for the numbers of Versace and for the overall performance of the group.

I will now turn the word to Lorenzo and Andrea to give you a full view of Prada and Miu Miu brands, numbers, performance and also an initial view of Versace first steps in 2026.

Good afternoon. Thank you, Andrea. First of all, I would like to highlight how Prada continues to strengthen its position as a cultural and creative leader, not only by setting trends but also by consistently elevating the brand experience across all touch points.

All the core of this performance is authentic creativity. Throughout the year, our fashion shows reaffirmed Prada's ability to anticipate and shape contemporary culture, translating a deep understanding of the present into a clear, distinctive aesthetic language. This creative strength was equally evident in our communication. We delivered highly impactful campaigns that combined cultural relevance with strong brand desirability.

At the same time, we continue to build a multifaceted brand universe throughout unique experiences and long-term partnerships. A key milestone was the opening of Mi Shang Prada Rong Zhai, our first stand-alone restaurant in Asia, considered by renowned director Wong Kar-wai. This project perfectly represents our approach to hospitality as a cultural expression where fashion, cinema and lifestyle intersect in a meaningful way.

Enhanced retail concept contributed to strengthening the client engagement. New hospitality venues in Shanghai and Singapore, the landmark retail opening in New York and the refined setting of Prada Alexandra House in Hong Kong are some of the key milestones in the evolution of the store footprint over the year.

In parallel, our long-standing partnership between Prada Linea Rossa and Red Bull allowed us to engage new audiences through high-performance sportswear projects, reinforcing the brand's connection to innovation, performance and contemporary lifestyle.

Finally, Prada continued to play an active role in shaping the contemporary cultural debate with signature initiatives in London, Osaka, Abu Dhabi and Milan. These events were complemented by special projects and activations such as Days of Summer and The Sound of Prada, which further expanded the brand reach. All of this reflects our ongoing commitment to creativity as a strategic driver of value.

This slide illustrates how Miu Miu continues to stand out as one of the most desirable and relevant brands in the luxury landscape, driven by a language that is both distinctive and highly distinctive.

At the heart of Miu Miu's performance, is a vibrant disruptive creativity, which consistently fuels the brand desirability. Throughout the year, Miu Miu maintained an exceptionally high level of buzz supported by fashion shows that were widely acclaimed and strongly resonated with both the fashion community and broader cultural audiences.

This creative energy was amplified by our campaign, which features the diverse and influential cast of talent reinforcing Miu Miu connection with the new generations of consumers. Special projects played a key role in engaging and expanding Miu Miu's ever-growing community such as our collaboration with New Balance and the American Tennis Champion, Coco Gauff as well as the exploration of new creative territories through Catherine Martin's Upcycled collection accompanied by her directorial debut short film, Grande Envie.

In addition, the launch of Miu Miu's first fragrance with L'Oreal Miutine marked an important step in expanding the brand's universe. Experiential activations such as the Atheneum and Gymnasium pop-ups further enriched Miu Miu's signature codes, transforming retail into spaces of discovery and cultural exchange. In parallel, Miu Miu continued to reinforce its distinctive cultural positioning throughout event initiatives that deepens its long-standing dialogue with arts.

Finally, all the initiatives were accompanied by a mix of openings and renovations that elevated the store network for enhanced customer journey. One, London and Tokyo were among the most significant projects embedded over the period. Overall, Miu Miu's strength lies in its ability to combine strong desirability with authentic cultural relevance, a balance that continues to fuel growth and engagement.

Let's move now to ESG. Over the past year, we continued to execute our sustainability strategy across our 3 pillars: planet, people and culture. On the environmental front, we made tangible progress across both our operations and supply chain. Investment in green energy and low impact solutions enabled us to exceed our approved science-based target for Scope 1 and 2 greenhouse gas emissions, a result that confirms the strength and discipline of our decarbonization pathway. At the same time, we advanced our raw materials conversion plan, strengthened environmental data collection across the supply chain, expanded our water stewardship initiatives and further improved responsible chemical management.

Equally important is our commitment to people. During the year, we reinforced our efforts to foster a fair and inclusive workplace. We achieved the gender equality certification in Italy, rolled out our worldwide people culture forums and delivered D&I awareness training programs in line with our global D&I road map.

This year also marked the 25th anniversary of the Prada Group Academy, a milestone that reflects our long-standing dedication to preserving artisanal excellence and supporting generational transitions. Culture remains a defining element of our identity. Through our partnership with UNESCO and SEA BEYOND projects, we further strengthened our commitment to ocean education, opening the first Ocean Literacy Center in Venice, launching a dedicated Multi-Partner Trust Fund and Ocean Educational Exhibition in Shanghai. We also renewed important partnerships supporting Urban biodiversity and cancer research. Overall, the year reflects consistent progress and a clear commitment to creating a sustainable long-term value.

I will now leave the floor to Andrea for the financial review. Thank you.

Thank you, Lorenzo. Before we dive into the numbers, let me remind you that we completed the acquisition of Versace on December 2, and therefore, we consolidated one month of contribution from the brand into our financials. In the presentation, we will also provide growth rates excluding this impact, to which we refer as organic growth.

With this in mind, let's now move to the key financials. The group reported net revenues of EUR 5.7 billion, up 9% versus fiscal year '24 at constant FX. On an organic basis, revenues grew 8% year-on-year. This performance delivered against high comps throughout fiscal year '24, marks the fifth consecutive year of growth at group level. Exchange rates had a negative impact of 380 basis points on revenues and the increase at current exchange rates is therefore plus 5%.

Retail sales for the period totaled EUR 5.1 billion, up 8% organic versus fiscal year '24 and up 28% versus fiscal year '23 at constant FX. EBIT adjusted reached EUR 1.32 billion in fiscal year '25 with margin of 23.2%, including the dilutive impact of Versace. Pre-Versace consolidation, EBIT-adjusted margin was steady versus 2024, in the context of significant investments across functions and FX headwinds. On a constant currency basis, EBIT adjusted margin improved year-on-year.

Finally, thanks to the significant cash generation we maintained a healthy balance sheet, closing the year with a net debt position of EUR 466 million after EUR 620 million of CapEx cash out, including real estate, EUR 1.2 billion for Versace acquisition and EUR 420 million of dividends.

Moving on to the next slide. Retail continues to be the key driver of the top line performance, up 9% versus fiscal year '24 at constant FX, 8% on an organic basis, driven by like-for-like full price sales and with a positive contribution from both average price and full price volumes.

The fourth quarter delivered a solid performance, up 6%, notwithstanding the challenging comparison base. As a reminder, in 2024, retail channel growth was remarkably consistent at plus 18% in all quarters. Contribution from space remains limited in the low single-digit region. Wholesale was up 4% year-on-year, 3% on an organic basis, reflecting the usual selective approach with independents. Q4 at minus 1% organic was impacted by our cautious stance on shipments to Saks Global, and we are pleased that business with this important strategic partner has now resumed. Royalties were up plus 19% year-on-year, plus 14% organic, supported by both eyewear and fragrances.

Turning to next slide, retail sales by brand. We are pleased with the performance of our brands as they continue to enjoy high desirability and relevance in a challenging context. Prada showed good resilience, closing the year at minus 1%, with Q4 delivering further sequential improvement and turning positive despite the more difficult comps supported, in particular, by Mainland China, Korea, Japan and Americas.

Miu Miu delivered sustained growth throughout the period against exceptionally high comps. Retail sales grew by 35% to reach EUR 1.6 billion. Growth was well spread across all product categories and regions. Q4 sales were up by 20% against plus 84% in 2024, with growth remaining well balanced. As a result, the brand contribution to group retail sales increased to 31% against 25% in fiscal year '24. As for Church's, the strategic efforts of the past years continue to keep the brand on a positive trajectory, driven by like-for-like sales.

Moving to the next slide, retail sales by geography. We are pleased to report that the group achieved growth across all regions. Asia Pacific showed a good progression over the year at plus 11%, plus 10% organic with Q4 broadly in line with Q3, notwithstanding the higher comps. Positive performance in Europe, up 5% over the year, plus 4% organic.

We saw softer trends in the second part of the year with strong multiyear comps and lower tourism weighing on the region. Consistent double-digit growth in the Americas, with sales up 18% plus 15% organic, driven by local demand. Japan delivered growth notwithstanding the exceptionally high touristic flows of the last year, closing the year at plus 3%. Q4 showed some improvement versus Q3, driven by both solid local demand and increased traveler flows, notwithstanding the geopolitical tensions in the region. And lastly, the Middle East also delivered a solid performance at plus 15%, we're moderating trends in the second part of the year on high comps.

Turning to the next slide. Gross margin reached 8.3% in fiscal year '25, up by 50 basis points, thanks to operating leverage and channel mix, while the dilutive impact from Versace consolidation for only one month was negligible. Excluding the consolidation of such and strong FX headwinds, EBIT adjusted margin improved, driven by slightly higher gross margin.

G&A savings coming from efficiencies and operating leverage which more than offset higher marketing and selling costs. Including the dilutive impact of Versace consolidation, as shown in this page, EBIT adjusted reached EUR 1.32 billion, corresponding to an EBITA adjusted margin of 23.2%. And finally, net income reached EUR 852 million, an increase of 2% versus fiscal year '24.

Moving to the next slide. CapEx for fiscal year '25 was EUR 617 million, EUR 535 million excluding real estate as we continue to invest across retail, industrial capabilities and technology. On the retail side, as you've heard from Andrea, investments were concentrated on the enhancement of the store presence with renovation projects and control new openings and enlargements at both Prada and Miu Miu in line with the objective of furthering the relationship with clients.

Aside from retail, we continue to strengthen our industrial capabilities, investing into our infrastructure and to progress on the digital evolution journey as we started to reap the benefits from our multiyear system upgrade plan. We expect CapEx as a percentage of sales to start reducing from the current fiscal year.

Moving to the next slide. We are very pleased with the evolution of net working capital and the control of the inventory, showing further improvement year-on-year on an organic basis, with incidents on net sales declining from 15% to 14%.

And lastly, we retain a healthy balance sheet post acquisition with net debt of EUR 466 million. The Board of Directors has proposed a dividend per share of EUR 0.166, which compares to EUR 0.164 last year, which would result in a total dividend of EUR 425 million and a stable payout ratio of 50%.

I'll now pass it back to Lorenzo for an update on Versace.

Thank you, Andrea. As we have said in the past, we are very excited about this new chapter. With Versace, we welcome a brand that has made the history of fashion and glamor as we know it today. It's estate is bold unique, represent modern elegance and constitutes highly complementary addition to Prada Group's existing portfolio.

We started this journey being able to count on a lot of strengths. First of all, remarkable and long-standing awareness; second, resonance across a diversified client base, which has limited, if not overlap with our customer base.

Third, strong legitimacy in haute-couture and across product categories, balanced across men and women. Lastly, strong cultural relevance, rich archive and solid brand equity. Because of this, we believe the brand offers multiple untapped levers of growth.

We are aware that this won't be an overnight task, but a passionate journey towards the brand's full potential, and that's why the timing of our initiatives will be of the essence. In terms of priorities, the following slide highlights the key actions we are going to implement in the next months.

Creativity will be the foundation of our work, and we have taken a first important step into this direction with the appointment of Pieter Mulier as Chief Creative Officer. Pieter will join in July, and we are very excited to have him on board.

In the meantime, we will continue to assess the core collection and product lines to identify areas of improvement in terms of quality and structure. The second building block of our plan will be a gradual channel repositioning. We will progressively shift the focus towards quality, full-price sales and distribution.

At the same time, instilling a retail excellence mindset will be essential for improving in-store execution. In parallel, we will progress with the integration process across functions, and we expect to complete the separation from Capri Holdings in H2. Looking at 2027 and beyond, we will essentially bring all of these areas to the next level as we lay down the basis for the building long-term desirability.

At the beginning of the year, we'll present Pieter's first collection showcasing the new creative vision rooted in the brand's original spirit and DNA. The collection will also continue to evolve as we progressively reposition the brand and relaunch special project like Atelier Versace.

We also continue with the network optimization as we progressively rationalize the off-price channel and the markdown practices while focusing on driving in-store productivity with self-help initiatives in terms of retail execution. All these actions will be supported by a further integration of activities and processes across the organization to unlock synergies opportunities.

Now back to Andrea for some financial considerations.

Thank you, Lorenzo. In terms of financials, as already explained, we consolidated only one month of the business in 2025. On a full year basis, the brand generated revenues of approximately EUR 680 million. Looking ahead, 2026 will be a year of transition for the brand as we navigate the change in creative leadership. We also want to commence the path towards a healthier, more sustainable and more profitable business conscious that we have to move back to go forward.

Therefore, we will further clean up the collections discontinuing Versace Jeans Couture and leaving no sub-brands in existence in ready-to-wear and other core categories. At the same time, we will start to implement a greater discipline in terms of discounting while remaining mindful of the commercial needs.

On the wholesale front, we expect progressive stabilization, and we will start implementing some actions to rebalance the commercial relationships on healthier terms. All in all, we expect this to translate into a mid-single-digit top line contraction at constant FX, which is likely to become high single digit at current FX.

Turning to profitability. First of all, let me point out that the company's initial margin is at a good level in relative terms to our industry. However, we believe that quality must be improved and also that initial margin is diluted by significant discounting. Therefore, we'll progressively invest in quality. On the other side, we will start implementing greater discipline on discounting.

All considered, in fiscal year '26, we expect gross margin to be relatively stable with a caveat on duties as the situations remain fluid. In terms of OpEx, we have acted decisively, and we will see the benefit of initial synergies and savings. This will be partially reinvested in strategic areas like visual merchandising and marketing, while we maintain cost discipline on all other nonstrategic items.

All in all, we expect to be able to mitigate the negative impact coming from the top line reduction, and the EBIT loss will not be too dissimilar from the one incurred in fiscal year '25. The target is to limit that to a 2-digit figure.

Now moving to the next slide. Let's translate that into a group view. On top line, for 2026, our ambition is to continue to generate solid, sustainable organic growth at Prada, Miu Miu and group level. Prada turned positive in Q4, and our expectations are for a solid year. Miu Miu is now lapping the fourth consecutive year of very significant growth, and we have continued to observe normalization.

As Andrea mentioned at the beginning of the call, H1 is particularly challenging with Q1 at plus 60%, and Q2 at plus 40%. Nonetheless, we aim for another year of growth. We already discussed Versace in the previous slide, so it doesn't require any further comments. Last point on top line. We expect to continue facing meaningful FX pressure in fiscal year '26, similar to 2025.

Turning to profitability. Let me first discuss expectations excluding Versace. We remain committed to continue to deliver some degree of organic margin progression on a yearly basis. Marketing spend will slightly increase as a percentage of sales, and we expect to continue to achieve efficiencies in labor, rent and G&A.

So leaving aside the impact of Versace, as long as the group top line growth in reported terms remains in mid-single-digit territory, we can deliver a steady EBIT margin without acting more drastically on investments or costs. Versace's consolidation will result in EBIT margin dilution in fiscal year '26, and our target is to resume progressive improvement from 2027.

With that, I'll hand over to Andrea Guerra for closing remarks.

We're very happy to have shared with you our 2025 performance and to share with you our initial thoughts on future journey. Years ago, we committed to an upgrade an evolution of our ability to have a stronger and more proactive relationship with all our clients and potential clients, to be more efficient and productive in our retail network and overall in our company, to empower and upgrade our people, wherever they are in the group, aligning them constantly to their brand missions.

We achieved solid constant growth. We significantly improved in all our consumer-faced activities. We have seen profitability increase year-by-year, working capital sequentially improving and therefore, cash flow. So obviously, we are pleased for all these achievements and all these activities. Now we're entering a new journey, which is made by all the things that we have already talked about in constant evolution plus Versace.

We are committed. We're working hard. We will be patient to have the right pace. Obviously, in this new normal world, agility and efficiency remain nonnegotiable. I will try to anticipate some of your questions now. How are these first months? Trajectory for Prada is improving. As Andrea said, we are expecting a solid year for Prada.

And we had a solid Chinese New Year full period, like-for-like on last year's and in the whole Asian region, except Japan, where Chinese tourists were much less present. But on the other side, fortunately, in Japan, we are winning with our beloved Japanese local clients. Europe started January slow and improved with Milan Olympic Games and Fashion Weeks.

Obviously, Europe for Prada and Miu Miu are challenged by very high double-digit comps for the past years, not year. Korea is still strong. North America is still very strong. And obviously, I will repeat that we are here to challenge ourselves to keep a growth rate higher than market average with trajectories which are different from our different brands as stated during our presentation.

With this, I would like to thank all of you for listening and we are now open to your questions and comments.

[Operator Instructions] We are now going to proceed with our first question. The questions come from the line of Ed Aubin from Morgan Stanley.

So the first one is going to be on top line to Andrea Guerra. So you mentioned that you expect -- or sorry, maybe it was Andrea Bonini mentioning that you expect a solid growth for Prada in 2026. Could you please kind of define solid? Should we understand that you expect to grow kind of low single digit at constant FX for Prada after a minus 1 in '25 or would that be even higher than that? And if so, what kind of is going to drive the reacceleration from '25 to '26 and then regarding Miu Miu, do you think a double-digit growth at constant FX is something which is achievable or given the difficult comp that might be difficult to achieve? So that would be question number one.

Hello. Yes, we -- you're asking for a guidance, and we are not giving guidance, especially in this world today where, I mean, in the last -- only last 6 months, we have been living any positive and negative and side effects. So I hope that we use the proper words. We have been very careful on adjective we were using, and I will not comment further. The only comment I would do is that if everything goes well, we will be double digit on Miu Miu. But with this world, things could be different.

Got it. But maybe Andrea, if I can just follow up. Not asking for a guidance, but again, you talked about your expectation for a solid growth for Prada brand in '26. Again, without quantifying you were down 1% in '25. So if you could please elaborate on why you think you're going to reaccelerate in '26 versus '25?

Sure. We had a peak down in central months of the year and the central months of 2025 or else we would have been pretty positive in 2025 as well. I think that we can cover those months with a positive rate. We have been positive since August. August, September, October, November, December were positive. In December, it's a question sometimes of calendar where a year, you've got a couple of days gift a year, you got a couple of days back. And this was a case where we gave it back or else in a kind of organic manner, we were a little bit more positive.

Having said so, I think we have a rhythm of product innovation, of product evolution of activities, of events. We -- I think we have reached a level of maturity on a number of retail activities and hospitality activities. And we're also beating our own sometimes mind effects on very high transactions. So these are all the reasons why I feel solid as we said.

Got it. And my second and last question, and maybe for Lorenzo on Versace. So you've been appointed Executive Chairman. Congratulations. You also mentioned that you've hired Pieter Mulier, which is -- who is obviously very well regarded in the industry. Is the team in place now? And did you hire mostly from the Prada Group, you had transfer? Or did you hire external people. And again, how fast it seems that you want to not rock the boat, so to speak, too quickly with the rationalization of the store estate and the outlets. But how do you -- how fast are you ready to move on kind of shrinking to grow the business longer term, yes?

Thank you for the question. No, I would say it will be balanced. Let me start from the end of your question, then I go back to the other. So the priority for sure is at the full price in the retail network and then also the rationalization of the outlet also thinking that with the new collection coming out from Pieter from next year, you will have previous collection that, of course, they will need to accelerate to the outlet. So outlet will come later for sure, for the full price. Then regarding to the question organization, I think it's quite a hybrid because we have some of the functions that have been absorbed in the group function typical back office function like IT and others. And so it's more like efficiency, poor efficiency, other function.

We simply had streamlined a bit the organization, so not like key significant outside role except that you heard on journal like the shift of the supply chain that was coming from Valentina was a former Prada historic employee. So external but let's say, part of the family in the past. And at the moment, more or less, we are happy like this also with Emmanuel and a CEO. So -- then we will take for sure, the next 6, 8 months to even better understand the organization and we will see. But at the moment, we are for sure happy. Of course, with Pieter, we will have some changes in the design offices, but I would say, normal stuff and that's it.

We are now going to proceed with our next question. And the questions come from the line of Thomas Chauvet with Citi.

I have two, one on revenue and one on the Middle East. The first one on Versace revenue contraction that you anticipate for this year from EUR 680 million last year. We understand it's largely self-inflicted due to the channel repositioning. Can you give us an idea of the magnitude of the store closures you are planning? Are there also some wholesale rationalization or is it just retail closures through '26 and '27? And you said earlier, the expected operating loss won't be much higher than '25. Can you indicate what was the Versace EBIT loss in calendar '25, it seems to be around EUR 10 million, EUR 20 million, if my math is correct, if we assume, as you said that the Prada Group -- the old Prada Group EBIT margin was flat at 23.6% ex Versace. That's my first question.

Thomas, [Foreign Language]. So on revenue, I said it that the expectation is for mid-single-digit constant FX, which is likely to become high single digit or we will be because, I mean, with the FX, you never know on a reported basis. That's on the top line of Versace.

And on the second question, likewise, I mean, not much to add to what I already said. The -- I said that the -- our target is to limit the operating loss to a 2-digit figure. And if the number you were referring to, i.e', the -- I think you mentioned EUR 10-ish million for fiscal year '25, I assume that number is for -- you were referring to a number that is the one that we consolidated for the fact of December into our numbers, and it's not of mile, let's say that it's a single-digit number, but it's around there.

Is that clear?

Yes, that's very clear. And my second question on the Middle East, which you disclosed separately in your segment reporting 5% of your sales. Can you remind us how many Prada and Miu Miu stores you operate in the region? And how many of them are currently closed, given the complex situation? And what is your overall exposure to the Middle Eastern clientele, if you take into account the sales to locals in the Middle East, but also sales to Middle Eastern tourists traditionally in Europe and other markets?

Regarding Middle East, in terms of opening and closing stores, it's a daily evolution and a daily activity. The most difficult situations are in Qatar, in Bahrain and in Kuwait. Having said that Middle East is very different places, very different regions because, I mean, basically, Saudi nothing happened and it's, I would say, 100% local clientele. The Emirates, I would say, is 1/3 locals, 1/3 expat, 1/3 tourists. And I mean, we will see what's going on.

We are now going to proceed with our next question. And the questions come from the line of Chris Gao from CLSA.

Yes. I have two. So firstly, regarding the progressive improvement in 2027 regarding Versace, I just want to follow up a bit on that. So does it mean that we expect Versace will go back to a growth territory? And also for the margin, can we expect turnaround or...

Excuse me, your line is very, very disturbed. We can't -- there's a huge noise.

Can you hear me now?

Hopefully, let's see.

Can you hear me now? Okay. So first question is about Versace improvements in 2027...

Excuse me. No, your line is a mess. Try later, please. Thank you.

We are now going to proceed with our next question. And the questions come from the line of Oriana Cardani from Intesa Sanpaolo.

The first one is on the wholesale channel. What are your expectations for this year? And my second question is on the retail network. Can you give us an idea on the store openings you expect this year and the perimeter effect you expect due to these openings?

Yes. On wholesale, more or less, we're having the same kind of percentage growth in these last years, and more or less, we will keep on with the same percentages. As we said, we had the necessity to keep back some inventory not to be shipped to Saks at the end of 2025. And we resumed and Andrea was saying our shipments beginning of '26. This is also why in Q4, we were a little bit less in our normal standard average. So I would say that we will keep on having more or less the same average growth that we had in these years.

In terms of retail network, for Prada, I would say it will be between some pluses and negatives, some opening and some closures. We will remain with the same kind of square meters, but I think we will close more stores than what we will open during 2026.

With Miu Miu, we will add another 5 to 10 stores during 2026. And then as we said 2 years ago, and we will also close some with Miu Miu. But at the end of 2026, the big progression in terms of space expansion for Miu Miu is basically over. That is we will be with something around 170, 175 stores, and we will remain there for a while.

We are now going to proceed with our next question. And the questions come from the line of Chris Huang from UBS.

I have three, if I may. Starting with the first one, just a clarification on the Prada brand cluster. I think in the previous calls, you always provide some color. So if you can do the same for Q4 in terms of Americans, Europeans, Chinese cluster trends for Prada brand retail, please?

Chris, so clusters for the Prada brand, the Chinese -- starting from Chinese cluster, there was a significant quarter-on-quarter improvement which is driven by positive domestic consumption and better travel spending. Europeans was flattish for the year, slightly softer in Q4 versus Q3 with local demand remaining more resilient than travel spending.

The North Americans was positive mid-single digit for the year and further improved in Q4 to positive, I'd say, high single-digit, mostly domestic. And Japanese was positive low single digit in Q4 and full year with no major differences versus Q3, mainly solid local demand.

Okay. Perfect. And then secondly on Miu Miu, if I caught it correctly, you were saying that given the very tough comps, I guess, on a multiyear basis, you're expecting single-digit growth in H1 before an acceleration into H2. I'm just trying to square the math here because in theory, we do start to see more meaningful space contribution from 2026. I think you were mentioning 10 to 15 stores. So going from 20% in Q4 to single digit, and if you can also quantify a bit if it's going to be like a low, mid-, high single digit. Are you assuming very cautious volume assumptions to get to that kind of guidance target, please?

Yes, we are. Exactly what you're saying.

So you're assuming volumes decline in H1 for Miu Miu?

No, no, no. We are being cautious.

Okay. So you don't rule out the potential scope for positive surprises. That's what you're saying?

I think that time has arrived, and we are happy with the journey we have done and with the journey we have in front of us. But we are now in an everyday competition and gaining our opportunities and wins and battles. I think it's a journey that it's especially the first 1, 2, 3, 4 months pretty complicated because we were in a plus 60% range last year. And then it's a little bit easier. Obviously, on the other side, when you open a store, you also need to allow the business to go where it has to go. So we're extremely happy of the new stores we opened. I think that we didn't really make any real mistake. And let's go. I mean this is -- I think this is a very important year for Miu Miu and we are into it and on to it every single day of our life.

Okay. Perfect. That's very helpful. And last but not least, on Versace. I think in the press release, you mentioned that 2026 obviously would be dilutive to the group, and you expect '27 onwards to start to see some gradual improvement. If I remember correctly in the past, when you were executing the Prada turnaround, I think the EBIT margin pressure kind of lasted for a longer period of time because of the acceleration in investments. But is it fair? Or can you kind of outline the underlying assumptions you have here for Versace to already start to see margin improvement in 2027, unless I'm misunderstanding anything here?

Well, first, I mean, I would start -- it's Andrea Bonini. I would start saying that the two situations are very different. So comparing the Prada turnaround to Versace, and so would not really take that as a comparable. As we look forward, there's an element, of course, of reinvestment into the business, into the brand and accelerating on certain areas of spending that will move margins in a certain direction. At the same time, I mean, we will continue to look for synergies and efficiencies that should help in the opposite direction. And most importantly, as we always say, a lot depend from the top line. And on the top line, we will see from '27 on really the results of the actions that we will be taking.

On retail, at the same time on wholesale, you know that we already talked about the fact that we already said, we anticipate some sort of stabilization already starting from '26. So there's elements going in the two directions that make us believe that things are going according to plan. Yes, we can indeed start seeing an improvement from '27.

We are now going to proceed with our next question. And the questions come from the line of Daria Nasledysheva from Bank of America.

This is Daria from Bank of America. I actually just have one. On Versace, when will Pieter Mulier present his first collection for the brand? And what will be the time line of collections change given currently Dario Vitale collections, I think, have started to arrive online and in stores so that we just understand the cadence of the collection rollout.

As we said, the first show of Pieter will be beginning of next year. And on the collection first has to arrive and has to work on it, so I cannot answer to that question. Honestly, for sure, it's going to be different from the one of Dario.

We are now going to proceed with our next question. And the questions come from the line of Anne-Laure Bismuth from HSBC. Due to no response, we are now going to carry on with the next question. The questions come from the line of James Grzinic from Jefferies.

Yes. I just had two quick ones. The first one is, Andrea, can you be perhaps a little bit more specific on what keeping losses at Versace to double digit in '26 looks like? Are you basically gaining for EUR 80 million, EUR 90 million of losses basically? That would be helpful. And secondly, perhaps more fundamentally, you seem to have gone a huge supplier rationalization process in recent weeks. Can we perhaps understand what comes out of that process? What you'll gain out of that dynamic, please?

If I -- thank you. And Andrea, you always have to be more specific, but I suppose it's for me, it's Andrea Bonini. On the Versace, did I understand correctly the question that what's keeping it at that level?

No, it's more, if you can be a little bit more specific on what double digit -- keeping at double-digit level means. I mean, I appreciate you gave us that, the 1 month was a minus 8%, minus 9% contribution. But are we basically looking for '26 keeping that loss at EUR 80 million, EUR 90 million. Is that the quantum of magnitude?

Yes, no, but not going to be. I think we said a lot, and I'm not going to be more specific than that for today. And second question, Andrea.

So regarding our -- what you said about supplier rationalization, I think this is a journey that really began with COVID. And this has gone in parallel on one side in creating more internal manufacture infrastructure. We created three factories from that moment to today, and we are working on two other, one is renovation and one is a new one.

And on the other side, I think that in our journey, we have cut the weaker. We have given more work to more organized players. And I think this is the journey that has been the characteristic of our history since we were born. So I wouldn't consider this as a special year or a special moment. No, it's the journey we're doing.

We are now going to proceed with our next question. And the questions come from the line of Chris Gao from CLSA.

And hope the sound looks better now. So first question from me is regarding the performance during Chinese New Year, we have seen a very solid one. So just wondering if you see any differences between high net worth consumer as well as aspirational consumer? Do you see which category of consumer group can drive the growth more? Or actually they are both performing very well. And we can see you have been launching quite a good line of product expansion into home categories, et cetera, with entry level price. So we wonder if we actually are expanding more categories that can maintain the dialogue with aspirational customers in the coming year.

So first of all, I take the opportunity to say that we have been really happy and grateful to all our Chinese and Asian teams during this last 6 weeks. They worked day and night. And I think that we have been successful on all lines. This is what I'm happy about.

I mean, we have been very successful on new customers, which is something that we were not seeing for quite a while in China. So that was a good one. And we improved on all our segments from VIC to aspirational customers.

And what was good about this Chinese New Year is that we had a positive outlook from travelers and from locals before Chinese New Year. So I don't want to say that China is back. I don't want to say that, but the steps and the progression have gone in the proper direction.

So my second question is still about Versace. So it is actually about the progressive investment -- improvement in the year of 2027. So just want to understand more about this progressive improvement. Does it mean that Versace brand will go back to the positive growth trajectory in terms of sales? Or will we actually see the profitability improving to breakeven or actually profit making? So how can we expect a mid-term outlook, especially regarding the improvement in 2027?

I think at the moment, honestly, to have a clear outlook on the next year, Versace, especially in China's market is too early. And as we said, we are looking to reduce losses next year and to improve marginality and for sure, start the journey of steady pace to grow with Versace. But at the moment, it's too early to have more precise outlook than that.

Okay. So congratulations on the new journey with Versace.

I think we have one last question and then -- so let's move with that.

We are now going to proceed with the next question. And the questions come from the line of Paola Carboni, Equita SIM.

Most are about Versace. I will start asking you if you can touch base on what are your plans in terms of supply chain for the brand? What are you going to change in this respect and the possible integration with your supplier base?

And the second question still on Versace. If you can elaborate on what are your plans in terms of category mix, if you envisage any change in the architecture of collections already with Pieter next year?

And the third one, on the profitability of Versace, whether your stance on margins for full year '26 also takes into account of some write-down of inventories which would clearly not be probably repeated to the same extent in full year '27. Then I have another one on Miu Miu. I will go ahead after your answers.

So it's obvious that we will follow with Versace the same attitude we follow with our two brands. So a vertical integration -- vertical organization for what regards all face activity -- clients face activities. So total independence and verticalization and responsibility from that point of view. And we will use our Prada Group platform for all potential and possible manufacturing.

Obviously, we have already started planning it and probably even first step of execution it will take time because, I mean, nonetheless, we also have some IT things to be done as well. So it will take some time. But for sure, all the supply chain will be integrated inside the Prada Group facilities.

In terms of categories, I think that it's too early. I mean, it's obvious that Versace is incredibly strong and has a huge heritage on ready-to-wear. So -- I mean, to improve on the other categories, from a theoretical point of view, it's easy because we are really starting from small numbers, and we will see how and when -- how the different collections will evolve.

In terms of margins, Andrea, I don't know if you want to answer.

No, but I wouldn't add anything in the sense that, look, when we wanted to give an order of magnitude and the order of magnitude is that also take into consideration, as we always do and when we budget and so on, I mean, what we need to do on the inventory. At the same time, there may be other one-offs that come up or not. But the point was more to give you, as I said, I mean, an order of magnitude of what we're talking about. I believe you had, Paola, an additional question, correct?

Yes. Another question is about Miu Miu. My feeling is that you have turned a little bit more prudent on the expansion of the network. My understanding before was that the pace of new opening could have continued for maybe a few years more. If my feeling is right, I'm just wondering what is probably driving this stance from your side? Is a matter of overall market conditions? Is a matter of competitive environment in...

No, no. I will -- I think you got it wrong at the beginning. No, no. We gave you the opportunity that we had and we still have and we wanted to have an increase last year of a 10 to 15 stores and closing some and the same thing we're going to do this year and closing some and enlarging others. So nothing has changed.

I think we are finished now. So thank you, everyone, for attending. And hopefully, next time, we will discuss in a more peaceful world.

This concludes today's conference call. Thank you all for participating. You may now disconnect your lines. Thank you.

Good afternoon, everyone, and thank you for joining the Prada Group's 9 months 2025 Revenue Update. With me today is our Group CEO, Andrea Guerra. We will start with some remarks and then move to Q&A.

Before we start, please be reminded that during today's call, we may discuss forward-looking statements, which are subject to risks, uncertainties and factors beyond our control, and the actual outcome and returns may differ materially from such statements. Please refer to the disclaimer included in Slide 2 of our presentation.

With that, I will hand over to Andrea Guerra.

[Foreign Language], Andrea. [Foreign Language] and thank you to all to be with us today. As we stated in our press release, our performance has been solid, has been on the same pace of the year, also comparing with very different comps and tough comps of last year and with some precious improvements that we'll talk about.

We all know by now, hopefully, that we are all working in a different world and in a different industry. To continue with this rhythm, after 2 years of the beginning of this new world, it means that we have been able to attract and please with our brands and products, our clients. Considering the extent and duration of our like-for-like improvement during so many quarters, now it means that all the work we have been able to do so far, all the effort, all the commitment that we have put on our people, organization and retail excellence is finally beginning to really pay off, and we are happy about this.

Prada performance, I would define it resilient with a twist. That is, we have seen a negative sign in the second part of Q2, as we all remember, and in the very initial part of Q3. Then we have had -- we have been observing a slow and continuous and steady improvement of Prada results. Obviously, not helped by traffic. I would say that traffic is normalizing, is leveling off, but really reaping benefits from all the work done on retail activities, brands, product together with our people in the stores across the world. So we have seen an improvement Prada.

On the other side, Miu Miu was really against an impossible quarter. If I recall well, it was basically plus 100 on '23. We obtained another solid quarter. And what is good and nice to observe about Miu Miu is that our attitudes, behaviors are growing with the dimension of the brand. And I think has to be stated that the growth of Miu Miu has been very well balanced between price points, in the price/mix volume across the different product categories and throughout all regions. This is why I'm saying that the journey is continuing pretty solid.

Having said this, I will pass the word to Andrea to give you some more details on our number and performance.

Thank you, Andrea. Starting with net revenues by channel. In total, the group recorded net revenues of EUR 4.1 billion in the first 9 months of the year, up 9% against the same period last year at constant FX. The performance was driven by high-quality retail growth sustained by like-for-like full price sales and limited contribution from space. The third quarter confirmed a consistent and solid growth trajectory with retail sales up 8% against the same comparatives in the prior year period. As a reminder, in 2024, retail channel growth was remarkably consistent at plus 18% in all quarters.

Wholesale was up 4% in the first 9 months and up 19% in Q3. The channel was impacted by some degree of phasing in Q2, Q3, but our strategy remains unchanged as we maintain a selective approach with independents. Royalties continue to grow, up 11% over the period, supported by both eyewear and beauty.

Exchange rates had a negative impact on group revenue of circa 260 basis points during the first 9 months and 470 basis points over the quarter. And the impact is expected to be even more meaningful in Q4.

Turning to the next slide, retail sales by brand. All our brands continue to show healthy trajectories. Prada delivered a resilient performance, minus 2% in the 9 months with the third quarter edging closer to flat, supported by all key regions. Miu Miu reported sustained growth throughout the period at plus 41% and plus 29% in the quarter, with widespread appreciation across all regions and categories, as Andrea mentioned. As a result, the brand contribution to the group retail sales increased to 32% against 25% in the same period of last year. Church's was also back in double-digit territory in the quarter.

Moving to the next slide, retail sales by geography. Asia Pacific delivered double-digit growth over the first 9 months at plus 10%. Growth was also up double digit in Q3 with some sign of improvements in trends in Mainland China extending into October. Positive performance in Europe, up 6% in the 9 months. Trends were similar between Q2 and Q3 as local demand proved resilient and tourism softer.

Good progression in the Americas, where retail sales were up 15% in the 9 months with Q3 at plus 20% in further sequential acceleration. Japan grew against exceptional high tourism in 2024, delivering plus 3% over the 9 months period. Q3 was down 1%, but improving quarter-on-quarter, driven by solid local demand and increased traveler spending. Lastly, Middle East delivered a solid performance, up 21% in the 9 months, with Q3 moderation at 10% on high comps.

With that, I will hand back to Andrea Guerra for some closing remarks.

[Foreign Language], Andrea. Now we're entering in the usual holiday period and not only, I think in the next 3, 6 months, we will observe in our industry a lot of novelties, all these new entries, all these new products, shows and news.

We have shown our pace and rhythm so far. We are here yet very committed on our creative leadership. We are standing and being authentic to contemporary art, culture and craft. We will continue in our solid journey. We will continue to invest in our creativity and desirability. We feel home in this new normal. And we have started reaping fruits from all our investments on people, organization, processes and retail.

Our flexibility and velocity will obviously continue to be our -- one of our primary characteristics. We have entered the usual Q4 where the last 6 weeks of the year become paramount. In these 4 weeks of October, Prada [indiscernible] continue to improve. Miu Miu continues its journey and obviously, it's long-term normalization. So we are happy so far.

With this, [Foreign Language], and we now turn the word to you. So I will give back the word to the operator.

[Operator Instructions] We are now going to proceed with our first question. And the questions come from the line of Chiara Battistini from JPMorgan.

So my first question is on Versace. Now that the deal has closed, I was wondering if you could share your initial take on sort of your first -- the first priorities that you have identified, investment needed that you see, distribution strategy from here? Any initial take you can share with us on Versace integration, please? That's my first question.

Thank you for the news, but the transaction is not closed. No, no. We're still waiting authorizations, hopefully, in the next 15 days. So it's not closed.

Okay. My bad. I thought it was -- okay. Second question on Prada, and the improvement you've seen -- that you mentioned you've seen through Q3. And you mentioned briefly that this seems to have continued also in the first few weeks of October, if I got that right. Could you share in terms of current trading -- maybe if you can expand on current trading, what is driving that? Is that a comment on the broader environment? Or it's really the company-specific initiatives that are supporting that ongoing improvement?

So I am not observing very different things happening in the world now. What we have seen in the last 3 months is basically the same. That is we have seen a kind of plateau in China, holidays were better than what we expected. But I would keep the word plateau.

What we had observed was that we had less Americans in Europe and obviously, nowadays are less influent on our performance in Europe. And we obviously had noticed that after a strong tourism inflow in Japan, strong, it's probably even small, but huge. I think that first half last year, the group realized something like plus 60% in Japan.

What we have seen is a very strong work also by our Japanese team on local customers. And I think we have been pretty resilient there. And now we're seeing our normal journey and performance.

In United States, I think on some part of it is Americans that have traveled less. And on the other side, if you remember, we also talked about the fact that we didn't do any big revolutions during these years. One that we did a little bit was in United States, where we decided to be a little bit more aggressive in changing behaviors, attitudes and culture. And I think we had a great reaction by people that have been long time with us. We had some new entries, and I think that we are accelerating in North America. So this is how I see it so far. Always, and I always will repeat, in Q4, October has a very little meaning compared to the last 6 weeks of the year.

Indeed. And maybe last question, just a clarification on the wholesale trends in Q3 was a very [ big ] number. Anything exceptional in terms of timing of shipments, and I guess, we should not -- yes.

Nothing. No -- I mean it's -- sometimes it's a little bit up, sometimes it's a little bit down, but there is no -- nothing.

And the questions come from the line of Chris Huang from UBS.

I have 3, please. Starting with the first one. You've been historically very helpful in providing some color on the cluster trends for the key Prada brands. So could I please ask for some flavor as well when it comes to the Chinese, Americans, Europeans and Japanese? That's my first one.

Okay. Chris, Andrea Bonini. So all clusters were positive at group level in the 9 months and Q3, including Chinese. Leaving aside Miu Miu. Prada brand, the improvement quarter-on-quarter, has been mainly driven by local transactions across all key regions, I would say.

Tourism, overall marginally better. But if you get into the specifics of the different clusters, again, only Prada brand. The Chinese, better quarter-on-quarter, but still negative. As I said, improvement driven by both locals and travelers. Europeans, flattish on the 9 month, Q3 positive, and again, better quarter-on-quarter driven by local demand. The North Americans was positive low single digit in the 9 months, improving in Q3 and sustained by domestic demand. And on the Japanese, positive low single digit in the 9 months, improving again in Q3, supported mainly by very solid locals.

Okay. Perfect. That's super helpful. The next one I have is actually space because I remember earlier in the year, we were talking about, maybe in H2 this year, we'll start to see a little bit more space growth kick in. What's your latest thinking around the store expansion when it comes to both Prada and Miu Miu? Should we expect something to kick in, in Q4? Or is it mostly going to be in 2026?

No, no. In -- we have executed what we were thinking on Miu Miu. So we have something like 10 or 12 stores more, and we have enlarged some square meters in another 8 to 10 stores. So that execution, that plan has moved as planned.

On Prada, we have taken a more cautious journey. More cautious, I mean that is we want to have stores in other great locations, but we want also to close stores that have got no meaning. So yes, we had a couple more. But in reality, in the next 12 months, probably with even 24 months, with Prada, we will have 6, 7, 8 more, but probably 10 less or 12 less.

So we constantly -- I think that our journey with Prada will continue to be a reshuffle. And I think that there is an opportunity to, again, to be even more productive. I think that Prada is being more productive nowadays, even more productive going forward. So we keep on with our 80%, 85% like-for-like and 10%, 15% on new space or enlarge space.

Okay. Perfect. And lastly, on margins. I know this is a revenues call, but it will be very helpful to hear about what you're thinking about the full year margins. I think you've always stated the ambition of delivering a steady margin improvement into the midterm. But just looking at the growth profile you managed to deliver in H1 and also so far Q3 and in light of the very tough comps in Q4, are you still expecting, on a full year basis, margins to see some expansion? Or should we start to see a little bit of more investments into the year-end and hence, putting some pressure on your margin development?

Nothing to add, to be honest, I mean, vis-a-vis what we said in H1. The only part of your comment, Chris, that I didn't get is when you say, did you mention light comps in Q4, if -- I don't know if I got it...

No, I said tough comps in Q4. In light of the tough comps, sorry.

Yes, yes. So yes. No, because indeed, I mean, I was going to say, no, they were not light because, again, 2024 for us was very consistent in terms of group growth because it was stable at plus 18%, with Prada higher in Q4 and Miu Miu moderating a little, but we're still talking plus 84% in Q4 '24 for Miu Miu.

So nothing to add on the margin front. I mean, so far, we are on track to deliver on what we always said. But as Andrea mentioned earlier, Q4, from mid-November onward is really, really relevant, what happens then. And yes, we have a bit more of -- in terms of phasing of advertising, communication is a bit more heavy. But as I said, I mean, so far, nothing to highlight.

And the questions come from the line of Ed Aubin from Morgan Stanley.

So Andrea, Bonini, so just to follow up on the margin, apologies. I know it's -- again, it's a sales call. But on the FX, your friends at Kering mentioned yesterday, I don't know if you had time to listen to the call, about the headwinds, they quantified about EUR 50 million for them on a net basis in H2. I'm not going to ask you to quantify anything, but how are you thinking about the FX headwind for H2? And a little bit of color in terms of '26, to what extent it could be or not be an issue for you? So that would be my first question.

Ed, look, I would only say that for 2025, the hedging strategies will do the job. So not so much an issue. 2026 maybe -- clearly, I mean, maybe a headwind. But I think we all know also that the situation can be very volatile when it comes to FX. So we shall see.

Okay. Understood. And then the next question, sorry, I don't mean to allocate the question, but it's more for Andrea Guerra, is that you've been asked, Andrea, for over the past few months and the past few years about the industry, the price point and the middle income being priced out or not. But by raising prices quite aggressively, some of your competitors over the past 5 years have kind of provided oxygen for more aspirational brands to grow.

And in terms of your product offering, and I know you got the question in the past, but just wanted to get an update from you is to what extent does that represent an opportunity for you for the Prada Group to play with the mix and maybe launch a bit more accessible bags and leather goods? I know you guys have been relaunching in nylon, also the Croisière bag and so on. But at GBP 1,500 per bag for the Croisière, there is -- people will debate if it's accessible or not. But yes, on the leather good more specifically, category when it comes to bags, if you could comment on the pricing architecture and if you're happy with what you have now?

Obviously, the 2 brands are different. My philosophy is not changing. That is, on one side, we have to be very solid on our entry price, which does not mean to reduce entry price, but to keep it and to be credible on our entry prices. So to have an offer there. So I think that this is the first point.

The second point, I always push our merchandising activities to be a little bit half, people that are doing an architectural world and on the other side, people that are doing a more artistic world. So we have constantly to work on the different price levels, on the different product segments, understand season by season how we can move from one to another, how we can insert some new products and how can we move, let's say, in the mid-level upwards.

Then there is a world where I think that we have been not serious enough and maybe not courageous enough sometimes, which is high price. So -- and we're credible. And this is what we are proving ourselves. And we had an exceptional last week in New York presenting our high jewelry Couleur Vivante collection. And we had a success that somehow also surprised many of us, not all of us. But the thing is we have to be more bold. We have to be more serious because the consumer is ready for us at those price levels, and we have to deliver. So I think that in terms of price and mix, I would give you this answer divided into 3 segments.

Okay. Wonderful. And so the last one for me, and apologies, it's a bit of a big picture question on the sales call, but I think investors would be really curious to have your views on the topic. And the topic is there is a bit of a debate in the fashion industry and amongst investors if kind of the so-called fashion pendulum is shifting away from kind of more minimalist to a bit more maximalist and a bit more color and less understated and so on and so forth.

I'd be curious to have your views on that. I mean, obviously, it's always difficult to assess these trends and to know when they start and for how long they could last. But what's your view on -- you guys are the fashion experts, so what's your view on the topic?

I think the following. On one side, we have the shows, which are the -- which are shows, which are allowing people to express, people to deliver the future, people that are giving their sense of that moment. Then there is the world and life. And the 2 have to be connected. The 2 sides have to be on tension.

But nowadays, I would say that I don't see major pendulums. What I think that it's proving to be very correct and to proving to be very successful is people that are authentic to their history, to their cultural pillars and to their creative hearts. This is what I see.

And the questions come from the line of Charles-Louis Scotti from Kepler Cheuvreux.

I have 3 questions, please. The first one, one of your competitors said that the e-commerce business is stabilizing, which is generally a good sign for the aspirational clientele. Do you also see a slight comeback from aspirational customers who have now reduced their luxury spendings over the past few years?

It's what I was saying at the beginning. We are living in a new normal, and we are living on a plateau. Let's see from this plateau, we go upwards or again downwards, but it's a plateau. It's a plateau now of 4, 5, 6 months. And if there are any sign, what I would call weak signals, I would consider them more positive than negative, but very weak signals.

Okay. My second question, it seems that you have ambitions to build a larger multi-brand Italian conglomerate with the acquisition of Versace. An iconic brand could change hands in the coming months. I know you haven't been mentioned among the potential bidders. But would you be open to considering an offer if your beauty partner were to acquire Armani and seek a partner to manage the fashion division a little bit like what Estée Lauder did with Zegna on TOM FORD?

I don't think time is coming up. I don't think -- I mean, we were not invited, let's say. But I mean, we have always been looking to the world, looking to the brands, having great respect for that brand. But I would not consider this question realistic today.

Okay. And last question, I know it's a bit premature because you have not closed the deal on Versace. And I don't know if you have access to the numbers, by the way. But if yes, could you tell us also for modeling purposes and to assess the potential impact of the consolidation of the brand on your numbers, whether the brand current performance is in line with the latest target given by Capri? I think it was EUR 800 million for fiscal year ending March '26. And how do you assess also the medium- to long-term target that were previously set by Capri?

So we have access to the same public figures you have. And be careful to not mix up dollars with euros, because they are reporting in dollars so they being an American company, okay? So -- but we have the same access you have. We are competitors, so authorities are very precise on this.

Okay. So you have no numbers to communicate?

No, we don't. We are only -- obviously, we will, but not today.

And the questions come from the line of Chris Gao from CLSA.

I have 3. Firstly is a quick follow-up on China's sequential improvement. So basically, in the third quarter reporting season, some of your peers highlighted the improvement in China is mainly on traffic and volume. So just wondering if you also see the same trend or which of the retail metrics in your view is improving more? Is it foot traffic, it's conversion or price or mix? And also, if there's any categories that have been seeing more explicit improvement, is it ready-to-wear or bags, accessories seeing more improvement?

We had given before an outlook and what we have seen recently in China. I will repeat, on one side, we plateaued. On the other side, we have seen some good signs during holidays. And this is what we stated before, and this is what I will repeat now. Holidays were a little bit better than what we expected. And I think that the worst is over, but I don't think that we will ever see again in the near future what we have seen in the last decade.

Okay. So the second question is regarding the acceleration on American cluster. So just wondering if there could be any highlights on if Prada core brand is improving more on -- or if Miu Miu brand has been mainly driving the acceleration for Americans?

Always keep in mind that Miu Miu in United States is marginal. So Miu Miu is constantly increasing. And I think that we are doing a good job with Miu Miu joining the brand to many different city and city clusters, even where we don't have stores through omni-line projects. I think that we are really doing a good job there.

So the sequential improvement is obviously coming specifically from Prada. I mean both are growing, but Prada is big, is much bigger.

Okay. Understand. So maybe also from a retail matrix perspective, what could be the main supporting on the Prada core brands recovery in the U.S.? Is it traffic or it's more coming from the price/mix?

Again, I mean, sometimes -- all my conversation on Prada was to allow you to understand where we are. I just said that, I mean, traffic is not helping that we are reaping the benefits of our retail investments and that our product launches were good. So this is what I'm saying. It's a like-for-like growth. We had no real growth, but the improvement is all like-for-like. And hopefully, we will see positive results soon.

So -- basically the last question, yes, last question is regarding the development of other categories like jewelry. Right now, we see gold price has been going in a very good trend. And we also know that Prada has been launching very good sustainable gold collections. So just wondering how the jewelry categories is performing.

Again, I will repeat, we just launched a new collection. The name is Couleur Vivante. We had a fantastic first week in New York, and now we will tour the most important cities in the next 3, 4 months with this collection. And we're very proud of it. We're really very proud of it.

And the next questions come from the line of Luca Solca from Bernstein.

My first question focuses on the very significant creative environment that we have now in the industry with more than 15 brands launching on the catwalk with new creative directors. There's going to be a lot of new products hitting the stores starting next year. Are you thinking about that? And are you sort of planning anything that could help you ensure your fair share of consumer attention? And are you at all thinking about the environment that could become more competitive?

I think that this is what will happen. This is what I'm saying when I'm saying that the next 6 months will be a change. So first of all, with all this [indiscernible] happening, I hope that we will also attract some traffic back. So we will all be benefited by some more traffic, which I think we would all love. And I think that much of this is also trying to help this industry to come back to be more desirable.

So our fair share, I can tell you that during the shows, we had our fair share. So -- I mean, we were not a novelty. We were not something new, but we had our very similar fair share of contacts, gratitudes, happiness and reactions to our show. So the first step of that was very positive. And the second, I think that we are very, very focused on the first 6 months of next year, very, very focused.

Understood. My second question is on eyewear. Prada, the Prada Group, together with Armani is 1 of the 2 cornerstones of the EssilorLuxottica licensed business. EssilorLuxottica has been very proactive in coming to the market with new products. I'm thinking about smart glasses. Are you planning to innovate with them? And what do you foresee in this important license of yours?

So what I can tell you is that Prada has always been on the forefront of innovation. And we will continue to be through all our partnership and obviously, our partnership with Luxottica is paramount on this.

All right. I will take that as an endorsement that you're about to do something new possibly.

And then my last question was on retail. Prada has been a pioneer in establishing high-profile flagship stores. I'm thinking of downtown New York or Omotesando. Is part and parcel of your strategy to potentially trim the long tail of stores and reduce the overall number of stores for the brand? Also, to beef up and build even more impressive and bigger stores in your flagship locations? And is that something that we need to take into account when thinking about your cost profile as far as supporting these stores is concerned?

I agree with you. This is our thinking. And before, I was saying that maybe a year ago, we're also considering some increase in numbers of Prada. Today, I think there is a [ remix ]. Our long tail is too long. And on the other side, the benefits we are having, especially nowadays where we are including so much hospitality, we're including privacy, we're including love, these bigger places are what we need. So we are working on at least 5 or 6 projects. And on the other side, we're also working on trimming the long tail as you were calling it.

And the questions come from the line of Thomas Chauvet from Citi.

I have 3. The first one, on next year's...

We don't hear you. We don't hear you. You're very disturbed.

Is it better now?

Yes.

Apologies for that. I have 3. The first one, I was looking at consensus next year where the market is expecting another year of slight EBIT margin pressure. I think 70, 80 bps. Andrea, you mentioned earlier the FX headwind on margins. But beyond that, it looks like the total OpEx next year is expected to grow at around 11%, 12%, so likely to grow faster than sales. You talked about how your efforts are starting to pay off. So I was trying to understand how you think about the major cost and CapEx plans for next year. You talked about retail earlier. Is there anything else that would justify another year of double-digit OpEx growth? That's my first question.

Thomas, I wouldn't get into that now. I mean let's talk about 2026 as we always do when we report the full year results. Also, consensus at the moment, I believe, maybe not entirely accurate due to the fact that some may already have included Versace, some others may have not. So let's -- as I said, let's push this discussion to later. And let me reiterate again that vis-a-vis what we always said in terms of priorities, but also how we want to handle our profitability, nothing new to report.

Okay. My second question, on the Prada brand retail performance. Any color you could provide on qualitatively perhaps on full-price stores versus outlets [ at the time ] aspirational consumer seems to be coming back in some geographies, we see traffic improvement? Is that benefiting maybe a bit more your full-price stores? Any color on that would be useful.

The color I'd give is that outlet for us has remained a bit of a drag. So when we look at the retail overall performance, yes, bear in mind that full price is above the total number because you know the path that we took on outlets, and that has been continuing.

And finally, on beauty. I think earlier this week, L'Oréal CEO said Prada had reached over EUR 500 million in beauty sales only in 4 years, I think after you began the partnership, I think it was 2021. How much bigger do you see the opportunity there considering -- Nicolas Hieronimus also said that Saint Laurent was achieving nearly EUR 3 billion of sales, so 6x more than Prada for a fashion brand, which is quite smaller than the Prada brand.

And just would be very helpful, within the royalty line, you had 100 million in 9 months, a very good number. I guess maybe 130 million annualized. Could you give us a very rough idea of the revenue split of that royalty stream between beauty and eyewear? I know eyewear is the majority, but what kind of majority, please?

So the beauty market is obviously much, much bigger than the eyewear market. We have come to the beauty market probably at last. We're gaining huge ground. The launch of Paradigme, the new men's fragrance in August, September has been a real hit and a real success. We're very happy of the partnership with L'Oréal. You should have asked a question to them if they see us larger than Saint Laurent in the long term or not.

But having said that, we are constantly growing. We are not in a hurry. Luxury is patience, and we love the work we're doing together. And I think that we have a long journey of growth together. And during our -- during Q3, I think, we also launched the first Miu Miu fragrance. And even that was [ Miu team ] -- even that was a great success. So the only thing I can say that is we are very happy of the partnership with L'Oréal.

And the split perhaps, Andrea, Bonini, anything you can share? Is it 80-20, 75-25 ballpark between eyewear and beauty? Or it's something you don't want to share?

No, it's not something that we disclose, but you said it, eyewear is a bit bigger, the share.

Okay. Only a bit bigger. Okay.

And the questions come from the line of Oriana Cardani, Intesa Sanpaolo.

I've got 2 ones. The first one is on pricing policy for next year. Do you expect price increase in 2026 to be lower than in 2025 or similar? And do you plan differences among the regions?

We have kept a kind of method, a rule with 2 moments of the year where we do a kind of maintenance on prices and maintenance of differences between regions. And we -- I think we will keep on doing similar things in 2026.

Okay. And my second question is on the growth by category in Q3. Which product categories grew the most in the quarter for Prada and Miu Miu?

On Miu Miu, the category which has grown the most, as I was saying before, we had a very balanced growth of product categories across the world and across products. So I wouldn't argue too much. And I would continue saying that, obviously, ready-to-wear is the cornerstone of Miu Miu.

Similar, on Prada where we have seen an acceleration on leather goods, I think that this is the most important thing we have seen. Great resilience on the rest. We have seen a good growth on -- an acceleration on leather goods.

And the questions come from the line of Liwei Hou from CICC.

I have only one question. Building on what you said, Mr. Guerra, China may not have as fast a growth as before. That's my understanding with plateau. So with that judgment, I wonder about Prada Group's future commitment to China, especially when the new generation comes in. And more specifically maybe, I want to understand our license or lease agreement with Rong Zhai. I've read about it, we have signed a 10-year agreement in 2011. So I wonder, have we extended that? And are we going to continue to invest heavily in China going forward?

China is relevant. China has been always progressing and evolving during the last 15 years. It's not a 12 or 18 or 24 months that make your strategic plans change. Obviously, some CapEx may have been diluted, but nothing special. And Rong Zhai, our 17th century building in Shanghai has become -- for Prada, it is and it's becoming every day more our place, our epicenter. And I would suggest every one of you, when you're in Shanghai, to go to the Prada cafe, to the Mi Shang cafe in Rong Zhai. And I would rate it the most beautiful cafe in the world.

Thank you. This concludes the question-and-answer session. I will now hand back to you for closing remarks.

[Foreign Language].