Earnings Transcript for ESLOY - Q4 Fiscal Year 2020

Operator: Hello, and welcome to the EssilorLuxottica's Full Year 2020 Results Call. My name is Patrick, and I will be your coordinator for today's event. [Operator Instructions] I'm now handing you over to your host, Paul du Saillant, Deputy CEO of EssilorLuxottica to begin today's conference. Thank you.

Paul du Saillant: Thank you, Patrick. Sorry for this little delay. We had a little technical issue. Good morning. I'm delighted to welcome you to our 2020 earnings con call. Together with our Co-CFO, Stefano Grassi; and David Wielemans, as well as our IR team. I'd like to start by paying a tribute to Bernard Maitenaz, the former Chairman and CEO of Essilor, an inventor of the various progressive lens was recently passed away at the age of 94. He was an inventor but true pioneer and always curious. His achievements are a great symbol of the use and potential of our industry. And this is what I would like you to keep as a symbol of Bernard. So let's talk about our topic of today 2020. 2020, a pivotal year for EssilorLuxottica. During which we showed our resilience, our fighting spirit, the relevance of our combination and our ability to build a strong group. Of course, we had to manage COVID-19. Francesco Milleri and I are extremely grateful to our employees and customers for their outstanding adaptability during this period. In H1, they displayed the resilience and agility. And in H2, they quickly moved back to reinvestment mode with a significant growth in revenue and results. Ultimately, COVID-19 has proven to be a clear catalyst for EssilorLuxottica in terms of customer intimacy, supply chain flexibility, new consumer habits and strict financial discipline. Our solid results and cash generation, especially in the second semester, demonstrate the strength of our company and business model. 2020 was a pivotal year in which we accelerated the building of EssilorLuxottica. I would like for you to remember 5 key achievements. We outperformed our industry in lenses, optometry, optical frames, retail and e-commerce. We have a great performance in strategic countries like the U.S., China, Australia, France. And despite the environment, products well aligned with consumer need managed to grow. This is the case, for instance, of Eyezen for connected life and Blue Cut protection, which both grew double-digit in 2020. Second, we have a solid pipeline of innovation and series of launches in major categories, complete payers with Ray-Ban Authentic, myopia management with Stellest, precision optometry with the VR800 measuring instrument and the AVA lens, smart glasses with our Facebook collaboration. Third, we accelerated our digitalization in all aspects of our business. The most visible 1 being our 40% increase in e-commerce, which represent now EUR 1.2 billion and 8% of total group revenues in 2020. We deepened our integration and delivered the plant synergies. So we can confirm cumulative synergies of EUR 300 million to EUR 350 million by the end of 2021. And EUR 420 million to EUR 600 million by end of 2023. And finally, we did all this in full respect of our mission of sustainability and of our strong human values. For example, I can mention the success of our recent employee shareholding campaign. 44% of our employees worldwide are now shareholders. With all these achievements, EssilorLuxottica is coming out of the crisis stronger and well positioned to outperform and transform the eyecare and eyewear industry. I will come back to this later. But first, I would like to hand over the call to Stefano and David for more details on our results.

Stefano Grassi: Thank you, Paul, and good morning, everybody. Welcome to our earnings call. Let's start with a recap of our 2020 financial results that you see listed in this page, beginning with our top line. Our revenue for the full year 2020 declined 17% on a current FX basis. On a constant FX, you're looking at revenue down approximately 15%. But we have very different speed, as you all know, between the first and the second half of the year. The company in the first half for the year show revenue declining on a constant FX basis at 29%. While on the second part of the year, our revenue were substantially flat to 2019 level. From a profitability standpoint, our adjusted operating profit is 9.5% from a margin rate standpoint but again very different speed between the first and the second half of the year, where despite revenue declining 5% on a current FX basis, we were able to be margin accretive. We're leveraging a strong balance sheet. Our net debt-to-EBITDA ratio is just above 1 and our free cash flow generation has been EUR 1.8 billion for the full year 2020, just above 2019 levels despite currency headwinds. So overall, we are pleased with the recovery pace that we have seen in the second half of the year as well as our sound profitability and our strong free cash flow generation. But now let's start our journey. Beginning with our top line. And I would jump into Page 4 of the presentation, focusing on the fourth quarter revenue broken down by segment. And I would draw your attention on the bottom of the page where you can see our top line growing 1.7% on a constant FX basis for the fourth quarter. If you look at our results on a current FX basis, you look at a negative 4.4% for the fourth quarter. From a currency standpoint, clearly, you remember that during the first half of the year, currency fluctuation were substantially neutral in our top line. While we experienced a quite heavy currency headwinds, I would say, probably stronger in the fourth quarter where the U.S. dollar is evaluated against euro, approximately 7%. If currency faces those levels, we do expect those headwinds to continue throughout the vast majority of 2021. But now let's look at our different segments, beginning to the biggest one, lens and optical instruments, where revenue were up on the mid-single-digit territory, 5.3%, all the regions posted positive sales growth during the course of the fourth quarter. North America and Latin America posted high single-digit growth rate in Q4 for the length and optical instruments. The Sunglasses and Readers division were negative 9%, the sunglasses part decelerated in FGX as well as the Bolon business. The reader business in FGX further improved the performance compared to the third quarter one, although still on a negative territory. While the Bolon business on the optical side posted the best quarter of the year in the fourth quarter with a double-digit pace. Moving to wholesale. Our revenues were down on a constant FX basis for Q4 4%. We were positive in North America. And you remember, we were very pleased with the third quarter results, and now we are still positive in the fourth quarter for North America. While in Europe, we felt the results of the -- and the confinement of the second wave of pandemic outbreak. From a price/mix perspective, we were positive. And from the product mix standpoint, our prescription business was positive. While our Sun business was on the negative territory. Retail number was up on the 3% during the course of the fourth quarter, all the regions with except of Europe were positive. On the Retail division, we experienced a strong growth, driven by our e-commerce division that grew in excess of 55% on a constant FX basis during the course of the fourth, while the retail brick-and-mortar would just slightly negative with two different underlying trends positive solid sales on the optical retail business, thanks to optical retial in North America, in Australia, as well as in Latin America, while on the other side, our Sunglass business was more on a negative territory, very much due to the lack of touristic traffic in several locations. But now I will start our journey across the different geographies, and I will begin with the biggest one, ramping -- jumping up directly on Page 8 of the presentation that you... [Technical Difficulty] So I'm on Page 8 of the presentation. Okay. North America revenue were up 4% during the fourth quarter. We are very pleased with this result is an accelerated result compared to the third quarter trend of 2.5%. Our lens and optical instrument division posted high single-digit growth rate in Q4. The ECP channel was very much the driver of the growth in the fourth quarter for North America. Also thanks to the Essilor export program, the program that saw at the end of 2020, a rolled out of approximately 7,800 doors which represents over 30% increase compared to the number of doors we had at the end of 2019. From a branded lens standpoint, all the key branded lens were positive in North America, transition, Crizal and Varilux. We are on track with our synergy deliver. And 1 important pillar for that synergy deliver is represented by the first commercial offer that we undertook in North America, the program called EL360. EL360 represents very much the combination of the threat from Essilor and Luxottica coming together for our ECP. And just to give you an idea, that program, that commercial program saw a rollout of already 1,200 doors at the end of 2020. From an e-commerce perspective, on the lens side, we were very pleased with the double-digit delivery of our EyeBuyDirect.com business in North America, also thanks to enhance assortment of products like Ray-Ban and Oakley. Our wholesale division was slightly positive during the course of the fourth quarter. The key drivers for that growth were the independent channel, the sports channel as well as our third-party e-commerce partners. The optical part of the business was up on the double-digit play, while we experienced very favorable price/mix on the course of the fourth quarter. And from a branding standpoint, I want to draw your attention on the picture that you see on the right-hand side of this page. That page, very much -- that picture very much celebrate the outstanding results that the Oakley brand delivered during the course of the fourth quarter with double-digit pace and positive double digit on both optical as well as Sun. Our Retail business now. Retail was up in the mid-single-digit territory, optical sales were positive on the high single-digit territory in Q4 with all our optical retail chain, LensCrafters, per vision, target optical, all strong positive during the fourth quarter. In particular, in LensCrafters, we are pleased to see comp sales on the positive territory despite the luck or, let's say, the heavily reduced traffic in shopping mall location despite the confinement and the restriction that we experienced in Canada as well as in California, but thanks to a stronger price/mix, thanks to a strong conversion. And thanks to the performance of LensCrafters location in nonshopping mall, we were able to deliver positive comp sales for fourth quarter. The Sunglass Hut division was still on the challenging territory, very much due to a challenged situation on international Sunglass Hut locations, while the Bass Pro location experienced a nice double-digit growth rate during the course of the fourth quarter. Last touch on e-commerce. E-commerce was up in excess of 50% during the fourth quarter, with all our branded eyewear proposition, Ray-Ban, Oakley and Sunglass Hut, all double-digit during the course of Q4. But now let's switch continents. Let's get into, I would say, more challenging territory, Europe. Clearly, the restriction that many of us experienced in the month of November and December had an impact in the region, in particular, on our retail business. From a country mix standpoint, front, that is the biggest country in Europe, who is slightly positive, and this is obviously very pleasing for us, while Spain, Turkey and Russia were in the negative double-digit territory. From a branded lens standpoint, we were happy to see some of our branded lens like Eyezen up double digit. The transition business up on the mid-single-digit territory, both sustaining a very good price/mix for the lens business. So our Wholesale division was negative and very much impacted by the Sun business. That was down double-digit by the optical parts of the business, proven to be more resilient once again and sales were slightly positive. From a channel mix standpoint, the independent channel was very much the channel sustaining top line on our Wholesale division, in particular, in France as well as in the Dutch region. From a retail perspective, we do see top line declining in retail. But with the underlying trend that is very different between the brick-and-mortar that was negative and the e-commerce business that was solid positive. So just to give you an idea about the challenge that we have to face in Europe from a retail perspective I will share with you a couple of data points. The retail footprint in Sunglass Hut ran on about 95% of stores opened at the end of the third quarter in September. If we look at our store footprint between November and December, we were running at about 70% of store opened during that period. Another data point to share with you is the number of trading hours. Sunglass Hut was operating in the month of November as well as December, with a decrease of 30% of the trading hours. Salmoiraghi & Viganò, our optical retail chain with 25% decrease in trading hours during, again, the month of November and December, where there was a larger impact of those restrictions. But now let's move to another continent. Let's move East, and let's touch Asia, Oceania and Africa. As top line here, was negative 1%. And I would say I'm clearly pleased with that performance because you might remember, in the third quarter, Asia was negative 8%. So we had a pretty solid and strong rebound during the fourth quarter. Mainland China as well as Australia, were double-digit base, while Hong Kong, India, Southeast Asia were more on the challenging territory due to the restriction for the COVID-19 outbreak. The lens business in Asia with solid positive, close to mid-single digits, thanks to the Stellest lens, the myopia management lens after initial rollout is in test is now progressively rolling out through the ECP to our retail partners and also in our own retail network with very encouraging results. The Sunglasses & Readers division is a solid positive during the course of the fourth quarter. The Bolon brand was up double-digit on the optical side of the business in both Retail as well as Wholesale, more challenging, probably on the Sun side, also due to a different timing of collection shipment between this year and last year due to a different timing of the Chinese New Year in 2021 versus 2020. From a wholesale perspective, we see and observed a widespread and negative trend due to the COVID restrictions. But on the positive side, our Mainland China was up double digit on both optical as well as Sun. From a retail perspective, our revenue in Asia were a solid positive, and I have a great story to share here today. That story is optical retail Australia, where our revenue were up on the double-digit territory during the course of the fourth quarter. I would say that very much all the stars were aligned here. We have positive traffic trends. We experienced favorable price/mix. We improved our conversion, thanks to enhanced training of our associates in the stores, thanks to enhanced assortment of lenses in partnership with Essilor. And thanks to the favorable volume, is very much provided and outstanding results during the course of the fourth quarter. Our optical business in Mainland China was slightly positive, while we were still challenged on our Hong Kong side due to the COVID restriction. And honestly I couldn't finish in a better way our journey throughout the different geographies without closing with Latin America. And I'm very pleased about this number. You see on the top of the page, 7% top line increase on the fourth quarter, but I'm even more pleased, remembering where we came from. In the third quarter, you might remember, we commenced revenue declined approximately 22% in Q3. And now we have a strong rebound on the high single-digit territory. All the divisions improved versus the third quarter trend in Latin America. From a country standpoint, Brazil as well as Argentina stood out with double-digit growth rates. Our lens business was solid positive on the high single-digit territory, pretty much all the key countries were positive here

David Wielemans: Thank you, Stefano, and good morning, everyone. So from a P&L and free cash flow perspective 2020 has been a year with very -- too many different profiles. As we know, H1 heavily impacted by the COVID and very solid H2, as we will see on the next slide. Overall, on the full year, the gross profit decreased from 62.6% to 58.9% this is driven by -- mostly by a lower level of fixed cost absorption due to the lower volumes we had, especially in H1. It is also due to 2 negative mix effects. One is the Sun category underperforming, the optical category, as well as the wholesale channel overperforming the retail channel. Those 2 headwinds have been partially compensated by a good product mix on value-added lenses by manufacturing efficiencies programs and by procurement synergies. The OpEx are EUR 771 million below 2019 at constant FX in vanity, thanks to a combination of COVID related measures as well as structural integration and restructuring activities. COVID related action, as we know, where, for instance, the follow merger implemented start in Q2. The Stellest negotiation, the reduction of discretionary costs like consulting, travel, et cetera. Nonessential marketing expenses has been canceled or postponed in H1 during the peak of the crisis. However, H2 was almost back to 2019 level on marketing spend as key product launches and key customer program have been maintained. In terms of structural measures, we have executed several organization and transformation projects in the fields of distribution, field service and transfers organization. We are also actively work on G&A rationalization and procurement initiatives. All this led to an adjusted operating profit of almost EUR 1.4 billion or 9.5% of the revenues negatively impacted by foreign currency translation effect of EUR 74 million. The cost of debt increased by EUR 10 million compared to 2019, and this is directly due to the 2 bonds we issued in November '19 and in May 2020. Then the income tax decrease of EUR 258 million is logically driven by the lower profit and the ETR increase is due to the geographical mix of the earnings of the group. All that gives us an adjusted net profit lending at EUR 788 million or 5.5% of the revenues, which includes also EUR 46 million negative FX impact. If we move to the next slide, just to illustrate what we mentioned, as I said, H2 P&L has been very, very solid. Sales and adjusted operating profit were above last year at constant FX. The gap on gross profit narrowed in H2 at 60.4% compared to 62% in 2019 even if it was in a lower extent, H2 was still affected by the volume and mix effect I previously covered. OpEx stayed very low, EUR 237 million below 2019 at current FX and about EUR 150 million down at constant FX. This -- thanks again to the complement on the efficiency measures put in place, and most importantly, without compromising the investment needed to fuel the reason. In percentage of revenue the adjusted operating profit landed at 15.2% of 15.4% at constant rate compared to 15.1% in H2 2019, so respectively, 10 and 13 basis points above last year. The adjusted net profit decrease of 6.5% at constant rate is driven by the income tax rate increase versus 2019, as mentioned on the previous slide. If we move to the next slide, looking at liquidity and debt. So I said, the free cash flow generation has been very high in H2, leading to a full year free cash flow at the same level as 2019. This good result is due to 3 main factors

Paul du Saillant: Thank you, David. Thank you, Stefano. I would like now to take you through our momentum in terms of integration, innovation, digitalization and sustainability. Francesco Milleri and I, with a strong management team around us, lead and decide together with clear goals. First, we are building EssilorLuxottica. The integration of the 2 operating companies has accelerated during the year 2020, as we understood. Today, 28 work streams are active, generating both revenue and cost synergies. Revenue synergies first. We launched Ray-Ban Authentic, our complete pair combining Ray-Ban frames and Essilor lens. First in Italy in July and now in North America. We deployed the new EssilorLuxottica 360 program. Our new ECP partnership program covering all the products of the group. And we leverage cross-selling opportunities with increased penetration of Essilor lens in Luxottica retail and the increased penetration of Luxottica frames at Vision Source members and on Essilor's frames are in platform. We are also structuring our supply chain with new labs in Columbus and Denver, the deployment of the key technology of the group in Luxottica labs, creating an integrated network and the implementation of complete pair integrated manufacturing capabilities and more in-sourcing. And last, we are building our infrastructure by starting the deployment of the single IT platform under SAP throughout the group and progressively integrating our back office and our procurement capabilities. Innovation. Innovation is at the heart of EssilorLuxottica DNA and continues decisively in several key areas. Disrupting innovation in new categories such as myopia management, where we are building a portfolio of very promising technologies with Stellest and sunglass vision. This is a segment with significant potential, particularly among children. We successfully launched in China in July. And as of February, our Chinese teams changed the lives of 1,000 children per day with Stellest plan. We also are embarking electronic capabilities into our products with the upcoming Facebook Ray-Ban smart glasses or the exciting electrochromic capability. Second, increased -- improved eye exam with teleoptometry and the deployment of 1,400 high-precision VR800 measuring instrument already. Third, we continue to launch new generation of products in our flagship brands for instance, Varilux Comfort Max launched in China in Q1 in Brazil later in this year. Crizal Rock in the U.S. and China in Q2, the new transition extractive in North America in Q3 and the whole Eyezen platform, Eyezen Start, Eyezen kids in LatAm in Q1. So a very rich portfolio of products going to market. Digitalization. We accelerated our digitalization of the business in significant ways, as you understood. First, our e-commerce revenues grew 40%, as we said, to EUR 1.2 billion and is margin accretive. This was driven by Brand.com platform and prescription eye glasses. In parallel, we enhanced the digitalization of our entire business from consumer to production. Starting with the consumer journey. It leverages in-store digital tools like smart shopper and frame adviser as well as strong omnichannel and CRM with appointment booking system and drive to store models. The patients own benefits from teleoptometry and digital measurement. In B2B, we are adding, selling digital platform like Red Carpet and the winter suite as well as digital services like virtual trials, smart shopper digital windows. And in operation, we digitalized our supply chain with our platform, staff and frame team and with digital product brand owning. Finally, we digitalize the way our company functions, both internally with digital processes throughout the group, operating 150,000 people organization. And even more importantly, externally, for instance, a transition post last month, early February, we had 10,000 customers connected around the world. 10,000 people from customers and connected around the world. So totally transform way of interacting with our consumer and customers. Social impact and sustainability. With Francesco, we are building EssilorLuxottica with a deep culture of responsibility and a clear commitment to sustainability. We are very proud to have a natural intrinsic and inspiring mission, which is to help people see more, be more and live to its fullest. It gives everyone at EssilorLuxottica, a solid sense of purpose. It drives all the dimension of our business and organization. It strengthened the ties within our group and with our stakeholders, giving vision of voice. For example, what we did with the FIA, with the United Nation, or Tencent in China. Despite COVID, the company has created sustainable access to Vision Care for 420 million people in developing communities since 2013. Second, I want to say a word about sustainability, both Essilor and Luxottica had deep sustainability anchorings. So we are now combining them in common sustainability road map on compacting key topics. Climate change related initiative, environmental impact, sustainable offering and a simplified, efficient and responsible supply chain. Last, we have strong human values, covering topics ranging from human rights to diversity. And a strong employee shareholding culture with now, as I said earlier, 44% of our employees being shareholder in 80 countries of the group. This creates strong alignment with all stakeholders. To conclude, as a result of all these initiatives, the company's ambition is to generate a performance comparable to pre pandemic levels at constant exchange rate. This takes into account the uncertainties around COVID-19, the momentum already visible in Asia Pacific and the hopes that vaccination campaign will gradually normalize the business environment in other regions to -- from the second quarter onwards. EssilorLuxottica is well positioned to outperform and transform the eyecare and eyewear industry, as you understood. Our integrated model has proven to be resilient and a great asset in the face of an unprecedented sanitary and economic prices. So we look at 2021 and the years ahead with great confidence. Thanks a lot. And with this, I am happy that Stefano, David and I will take now your questions. Operator, back to you.

Operator: [Operator Instructions] And our first question comes from the line of Cedric Lecasble from Stifel.

Cedric Lecasble: I have 3, if I may. The first 1 on your '21 outlook, just to be sure, should we understand that you consider 2019 sales level, you deflate for negative FX impact and you consider a similar operating margin? Is it the way we should read it? The second question is on the synergies reached, you are mentioning adjusted amounts of synergies, what are the adjustments and what was the associated cost to reach these synergies. And the last 1 is a typical one. It's about current trading in January and February.

Paul du Saillant: So Stefano, if you're okay, you want to take the 1 and 2?

Stefano Grassi: Yes, sure, absolutely, Paul. So from an outlook standpoint, again, we clearly stated that the company's ambition is to deliver a performance that is comparable to pre pandemic 2019 level. With the hope, and this is an important variable that the vaccination campaign that we've seen accelerating and we hope to accelerate in the second quarter will normalize the business environment around the world. So if we take 2019 as a reference point, broadly speaking, as -- from a top line perspective. And if we get there on a constant FX basis, this implies then from a profitability standpoint, as a base case, we do expect a broadly similar profitability to 2019 on an adjusted basis, obviously, on a constant FX. The other question with respect to synergies. Well, our synergies are very much the 1 that we deliver on our adjusted operating and net results. With respect to January, February trends. I don't know, Paul, do you want to take it and then I can.

Paul du Saillant: No, no. Stefano, keep going.

Stefano Grassi: Yes. So January and February started on track. I mean, we've seen certain trends to continue. So an optical business, more resilient than some business. We see a strong delivery of our e-commerce. Clearly, we were also impacted by further restrictions that we've seen in observing in Europe. And we're obviously are observing very close the performance of what we've seen in Latin America as well. But again, overall, Jan, Feb, very much on track with our expectation.

Cedric Lecasble: If I may, just a position on your synergies, would it be possible to have the landing point at the end of 2020, probably COVID on some revenue synergies, put some headwind. So maybe a little below plan in 2020, but you maintain the '21 target. What are the main drivers to meet these targets, if I may?

Stefano Grassi: Yes. I mean, let me say, the synergy for 2020 were where we expect them to be, and they're very much in line with our trajectory to deliver the first milestone of our synergy delivery, that you might remember was shared at the Capital Markets Day with EUR 350 million of net synergy delivered on the adjusted EBITDA by 2021. So we are exactly on track with that. The mix is slightly changer. We accelerated certain initiatives, which we believe we have more track and like, for example, the EL360 was very much a joint decision between Paul, Francesco and the rest of the team in North America to very much accelerate on the synergy delivery offer commercial proposition. Certain other activities from a cost point of view were accelerated. We further boosted our procurement activities on the lens side. As a matter of fact, we pretty much old lens assortment provided today in LensCrafters that is a lens assortment from Essilor, you've seen a further penetration of Luxottica frames with the dotcom proposition in some of the absolute websites, for example, EyeBuyDirect.com is a perfect example. And those are some of the things that which we give a further acceleration with very encouraging results, I would say.

Operator: Our next question comes from the line of Anne-Laure Bismuth from HSBC.

Anne-Laure Bismuth: Yes. It's Anne-Laure Bismuth from HSBC. Actually, I have -- most of my questions are on Stellest. I'm just wondering if you can give us an irrigation or how fast do you plan to roll out Stellest in China? And will it be -- and/or do you plan to roll it up to second-tier cities, so city -- 3 or 4 tier cities? Because I assume that in the first phase, it would be mostly to first tier cities. And my last question is about the rollout of this product that slowed down the progression of myopia in Europe and in the U.S., when do you plan to do that?

Paul du Saillant: Thank you, Anne-Laure. So maybe -- this is Paul. Maybe I will take that one. So Stellest -- so the myopia management is, as we already talked in some of those calls, is a major pandemia that we are addressing. And with a totally new approach with new kind of lens technology but this is a journey that started, that we pioneered in the '18 already with some first myopia control lenses. So we have been learning and progressively going to 1 generation, 2 generation, 3 generation and Stellest is the fourth generation, very disruptive approach, as you understood. In China, the myopes, today, you have 700 million myopes, of which kids of 5 to 19 years old, myopi kids of 120 million. So we have started by China, as you pointed, to launch this new technology in July, and we have started with hospitals and added to that optical store. And you have to see that this is a journey where you really have a totally new way of dispensing or following the children as they wear this kind of lenses, which are very easy to adapt to. But that the children are going to wear from the age of 3, 4 years old until being a teenager. And it does slow drastically the myopia, we have seen 67% slowdown of myopia progression by the wearing of those lenses through our children that we follow in China. So today, we have been rolling out very rapidly to 1,000 hospitals growing inland progressively and a few thousand optical stores. But what is very important is to do the proper training, the proper dispensing and the proper follow-up with the children. As we do that, we are learning a lot we are launching in other countries like Singapore currently. And we will progressively launch in the macro market we are working on that. As you have seen, we have also decided to JV with supervision to acquire another technology platform, providing similar effect of myopia slowdown which is called sunglass vision. So we have now a complementary technology portfolio that we will roll out progressively in 2021, '22, in the U.S., of course, verity milestone will be the FDA approval, which we are already working on. So that's in a short few minutes, a few words on the whole myopia topic, which is 1 of the very big opportunity and challenge and responsibility we have to address this myopia phenomenon that will be concerning 50% of the population by 2015. So 4 billion to 5 billion people on Earth will be myopes, major challenge. Thank you, Anne-Laure.

Operator: Our next question comes from the line of Veronika Dubajova from Goldman Sachs.

Veronika Dubajova: I have 3, please, if that's okay. One, I just want to follow-up on the guidance comments that you have made. If I'm understanding you correctly, it sounds like January and February are already largely trending in line with 2019. And so I'm just kind of curious what concerns you have looking through to the rest of the year that explain the relative degree of cautiousness that's embedded within the guidance? And is this just you taking a view today, given the amount of uncertainty that is out there. But fundamentally, you feel pretty confident that the market will recover and return back to growth at some point in time this year. If you can talk to that, that would be very helpful. And sort of related to that, clearly, the margin will achieve a fairly sizable number this year. I appreciate there's a lot of reinvestment into the business. But also in that context, if you can give some color around the margin being the same as 2019 in spite of the big step-up in synergies. So that's my first question. My second question is just on comp growth in LensCrafters, big acceleration and congratulations on that. It's great to see. Do you think this is sustainable? And are you now happy with how the franchise and the banner is positioned and looking forward, feeling more confident about your ability to maintain this outperformance versus the market? And then my third question is if you can share an update on where we are with GrandVision and your commitment to the transaction, that would be very helpful.

Paul du Saillant: Thank you, Veronika. So Stefano, maybe you can take the guidance one. Maybe -- and the LensCrafters one, maybe David margin and Pierluigi have connected the GrandVision. Would you like to take, Stefano?

Stefano Grassi: Sure. Absolutely. Perfect. Paul, I'll go ahead. So with respect to LensCrafters, we are pleased to see this trend, this underlying trend despite some quite big challenges that we faced in the United States during the course of the fourth quarter. Is that sustainable? I think that some of the work that we have done in recent times in LensCrafters are going into the direction and not necessarily get better in 1 single quarter. But to really elevate the quality and the consumer experience in LensCrafters. One example that I mentioned before is the further announcement of the lens assortment. Another important example is the renovation of our LensCrafters store footprint. But in particular, in 2021 is going to go through an impressment effort, of very much elevate the quality of the store that we have in North America. So some of those investments are very much structural to ensure the sustainability of that trend. And obviously, it's going to go beyond deceleration due to call it restrictions and other things. So this is something of which I believe we have a degree of confidence. The market environment is very competitive in North America. I must say that there is a strong competition, especially on pricing. But what we're trying to do with LensCrafters is kind of stand separately from that kind of competition and focusing more on the things that we believe make us stronger compared to the rest of the competition. With respect to Jan, Feb trend, what could derail I mean, you can clearly see that there is an independent variable here that is the virus situation. So we clearly need to look at very closely. The rollout of the vaccination campaign across the different countries. And obviously, we see that wherever there are, let me say, sales pockets, countries where there is people that are de-confined. There are very limited amount of cases, our business is solid. Our business is doing well, like optical Australia. It's a perfect example. We see that every now and then, we suffer some local closure. But then as soon as the -- there is a deconfinement of the population business starts up again and with very positive results. So we have that as an independent variable, obviously, that we observe very closely. But again, we have a high degree of confidence in the initiatives that we undertake, including the synergies one. So I pass it over to Pierluigi for the GVI question.

Pierluigi Longo: Thank you, Stefano. On the GVI, there is not much we can add on top of what we already disclosed in our press release. We are actively working in order to obtain all the relevant authorization from the anti frost authorities, which are still pending. So we are working with Chilean, Turkish and European authority. As you know, the European authority is planned, is expected to release an opinion by mid of April, so in 1 month from now. On the other side, we are also working on the legal proceedings, which are ongoing.

Veronika Dubajova: And sorry, just as a follow-up on the synergy side, I just want to make sure that doesn't get lost, how the synergies flow through to the margin and why the margin is the same as 2019 in spite of the synergy step up?

David Wielemans: Yes, Veronika, maybe -- David here speaking. I can try to answer your question. Yes, you have seen the H2 '20 was very solid in terms of margin above 2019. The question is should we expect that to continue and to have a '21 above '19 as well. I would say, yes, with 2 carve outs here, 1 is the FX. So when we took comparability to 2019, we have also to keep in mind that at constant FX, the performance is good, but we are still having headwinds with currency effect. And for the time being, we should expect that to continue in 2021. But at constant FX, we have put in place, H2 was driven, as I explained by one-off, I would say, measures that we put in place for the COVID, but also by all the structural initiatives we have taken on integration, on procurement. And that, we should obviously expect that to continue to annualize and even to increase as we just discussed on the '21. So there is no reason not to reach the level of 2019 in profitability once the business normalizes. And when I say the business normalize, it's very important because we know, for instance, that on the Sun activity, the Sun activity will get back to the normal level once the COVID situation will normalize the Sun activity, it's very much leading to the travel, et cetera, as Stefano already covered. So the normalization of the business is key, but once that done, we should be confident on the margin that the company is able to deliver.

Operator: Our next question comes from the line of Graham Renwick from Berenberg.

Graham Renwick: I just have 3 things. Just firstly, on the strong ASP driven growth. You're saying it's something you're also seeing across the industry more broadly. To what extent do you think that's being driven by consumers trading up for higher-value products because they do have more money to spend and are not spending on holidays, leisure and things like that. Is there a risk that some of our ASP driven growth to reverse a little bit into 2021? Or do you think the ASP growth is largely structural and something you can build on in 2021? And then secondly, just as we emerge from the pandemic, is there anything in the 2019 CMD strategy you think now leads the change or be realigned in this post pandemic world, whether we sort of areas or you're focusing on more or any new opportunities that have emerged? And could we actually expect another strategic update after the new Board is confirmed?

Paul du Saillant: Okay. Thank you, Graham. Maybe I will take the first one. On the CMD, we will see if we plan well, we have to discuss that with Francesco and our IR team. Because at some point, we would certainly want to do an update and give you the way forward. But nothing planned at this point. And if I stand the CMD of September '19, I think some of the key levers that we walked you through at that time which were innovation, which was digitalization, which were the whole integration synergies, the whole integration of the supply chain leveraging both company supply chain. I think everything that we walked you through at that time and the ambition in terms of growth and profitability that actually, Stefano, at the time, shared with you are still the right ones. Now I think 2020 has accelerated some of those trends, namely digitalization. The need for good vision and all the innovation that we put forward for addressing this new for good vision has been reinforced. I'll come back to on your question on the mix. And the work on integration and synergies, if anything, in 2020 has been accelerated and depend like we have been sharing with you, despite the very, very complex environment in which we had to operate these programs. Actually, the teams have done an amazing job at working on the work streams, opening new work streams and delivering on them. Of course, the more top line related 1 in the first half were less impacting. But then in the second half, the top line synergies got to work. So now I go to your question on the mix and the consumer of trading. Some of the key learnings of the second half is the way the need for good vision has been strong at the consumer level and that some of our key categories, like we -- I talked about earlier, the Blue Cut protection, Eyezen despite the pandemia, those categories, those products have been growing throughout the entire year, delivering double-digit growth. So there is a real consciousness at the consumer level everywhere in the world that has increased because we are all living completely through a connected life. So the strain on the eye, the solicitation on the eye is very strong. Second, our customers addition chains or our own stores have been extremely reactive to adapt the consumer experience in the store and to provide them with better products, more adaptive products. So actually, we have seen a good behavior of the mix but clearly in the second half in the rebound in the restart. So I think that these trends are strongly anchored in the sales channel and in the consumer being more aware. So we should -- and the product portfolio of innovation that we are putting to market is clearly well aligned with that. So this would be my few comments on the mix. Stefano or David, you want to add some color on it.

Operator: Our next question comes from the line of Susy Tibaldi from UBS.

Susy Tibaldi: I'll ask 3, please. So 1 follow-up on the synergies. When you discussed about the benefit from the synergies, you're often also talking about how, at the same time, there is a strong need to reinvest and to continue to develop the industry. So from AMERA, let's say, practical point of view when we think about it. Does it mean that, thanks to the synergies, the synergies will enable you to continue to invest and reinvest more and therefore, keeping your level of profitability or also slightly increasing it. But if these synergies were not there, then the underlying margins would be a little bit under pressure. Is this the right way to think about it? Second question on the store footprint. And you state that you expect the online growth trajectory to remain strong. So I would like to ask you if this is making you rethink your store footprint and if so, if there is any specific region that you are looking at? And then thirdly, on the lenses side more spatially, if you look historically, Essilor has been quite acquisitive in nature. And now we know that the bolt on acquisitions have slowed down given other priorities. But if we think longer term, should we expect this bolt-on again to contribute 3%, 4% per annum on the Essilor side.

Paul du Saillant: Thank you, Susy. So David, do you want to take the question on the synergies? Maybe Stefano on the store footprint? And I would say a word on the M&A Essilor side bolt-on.

David Wielemans: Yes, sure. Good morning, Susy. David, here. I will answer on your question on the synergy. Yes, of course. Yes, the synergies are enabling the group to invest and to invest in the future and to invest on the building of Essilor and Luxottica, what we have done in 2020 already in a large extent. So yes, it does. We have many fronts here, investments on our brands. We have Nike also quite robust IT road map. So that we work at the EssilorLuxottica channel on the conversion systems. We have many things around the operation and the supply chain that Paul already mentioned on the introduction. So yes, there are a lot of things that we are already ongoing and in the pipe to build the company and the synergies are helping on that. Would we be able to do was investment if we don't achieve the synergies we strongly believe we will achieve the synergies, but that's not the question we have so far discussed on the management. We are achieving, and we will strongly believe that we'll continue to do to reach our target. So we don't see any, I would say, problem ahead here.

Paul du Saillant: Stefano?

Stefano Grassi: On the -- yes, on the store footprint. I mean, we believe that good stores very much have a reason for existing. And very much have a reason to support our business, our products, frames and lenses and our initiatives. We have a process that is very well-structured to reassess continuously our store portfolio, understanding profitability, reviewing store by store, the performance. And that is a very diligent process that we undertake periodically. As a result of that, we closed certain stores in 2020. And we will be closing stores that we believe that is the progress to do. But we also believe, at the same time, that it's important to invest in stores. To make it up to the latest and greatest technology, and that's exactly what we're doing in LensCrafters. That's what we've done in optical retail in Australia. And you have seen the great results coming from that investment. And that's what we have done in Sunglass Hut as well. I mean, in recent times, we -- just to give you an example, invested quite heavily to roll out across all the Sunglass Hut locations in North America. The frame advisory technology. Now it's available in more than 1,000 Sunglass Hut location in North America. So we believe that those further digital enhancements in our retail footprint will really allow us to elevate the consumer experience throughout the future months and years.

Paul du Saillant: Thank you, Stefano. So on the M&A, you are right to remind us that Susy, that it has been a core element of the bolt-on so-called M&A acquisition at Essilor. There is still, and there is always -- we are -- don't forget, in a fragmented industry in all of its different components, whether it's the labs, whether it's the retail, whether it is online, whether it is some technology companies. There is -- it's a very fragmented industry. And so the company, our EssilorLuxottica is well positioned vis-à-vis this M&A opportunities and actually Pierluigi was connected, and who will lead the M&A program for the group is constantly monitoring the pipeline of opportunity. That's what I can say on it. It's part of the model.

Operator: Our next question comes from the line of Piral Dadhania from RBC Capital Markets.

Piral Dadhania: Two from me, please. If I could perhaps just start with the 2021 guidance in relation to gross margins. Do you see any reasons why your gross margin can't return to 2019 levels or even slightly higher given some of the positive mix effects that are helping the business, particularly in relation to channel mix? And then the second 1 is just around -- it's around sort of the synergies, again, I'm sorry. But I still don't feel like I've got a clear answer as to why you wouldn't have a higher-margin in 2021 on a similar revenue number to 2019 with the benefit of synergies to Susy's earlier question, is there underlying pressure in the operational business that is partly offsetting that? Or is the synergy delivery of EUR 300 million to EUR 350 million that you're guiding for to the end of '21, mostly being reinvested into the business. Because if we look at the synergy targets or expectations, at the time there was struck, you guided the market to EUR 300 million to EUR 350 million of adjusted EBIT synergies between 2019 and 2021. When we're looking at 2021 numbers, the 2021 EBIT number is pretty much in line with '19, which means that none of it is actually visible. But any further clarification there would be very helpful.

Paul du Saillant: Thank you, Piral. So David, you take the questions?

David Wielemans: Yes, I can start to answer, Piral. And Stefano, just you can step in and complete. But on the gross margin question, there are a few things. Yes, again, to my previous comment, we should expect to have the gross margin to come back at the 2019 level. We are still having some headwinds in terms of mix effect. I mentioned already that retail activity is still below the wholesale activity. And we know that the retail activity is relative to the gross margin rate. And same effect with the mix of the business line, the sunglass activity is still not back at the level. So today, it's underperforming in the optical segment. And we have higher-margin on the sunglass activity. So we should expect those to, I would say, to normalize and go away once the COVID will normalize. I would say and those mix effects should disappear. But right now, it's impossible for us to have certainty on the timing of the way the COVID will be solved. So that really the point. I would add maybe 1 thing is that right now, we see an increase of the distribution cost on all markets that all the industries are impacting by that. Though that also may be the price and the distribution cost freighting and freight out will normalize as well when the COVID will stop. But for the time being, that also have a slight impact on the gross profit. To your second point, but again, why should we not target 2021 to be higher with the equivalent number of sales because we have some investment that I was touching on the previous question. So at this point, the synergies, which are long-term benefit for the company are also used for the group to invest. And on the short-term, things we need to execute in order to believe Luxottica and to put in place our efficiency programs. So 2021 will continue to be a year of investment from that perspective on several activities that I quickly comment with Susy's questions. So that's why I think we should not over cover target of the '21 gross margin objective.

Piral Dadhania: Okay. That's very clear. If I can maybe just follow-up and ask in a slightly different context. By the end of '21, do you think that the balance between revenue and cost synergies relative to what you've guided will be similar? Or do you expect sort of an over proportion of contribution from perhaps cost relative to revenue, given the difficult or challenging trading environment that we're all facing?

David Wielemans: I think on that question, Piral, we always said that the synergy will be pretty balanced in between the top line and the cost synergies. And so I think that it's still, overall, the ambition that we have. And actually, I'm pretty pleased to see the results that we have had despite the COVID on some of our top line synergies. So it's good news because cost synergies are more clearly -- more easy to clearly identify top line synergies often are more potential. And I think our teams are doing a very good job, for example, I mentioned earlier, the cross selling that's quite impressive. The new programs like EL360 has been deploying a very active fluid. So we have some, I think, good programs that will progressively accelerate amplify themselves. While we work on the cost program, the back office, the integration, the lab, IT, the simplification of the overall structure of the EssilorLuxottica company around the strength of Essilor and Luxottica. So I think, overall, it's a balanced synergy program that is on track. Where the teams have, despite the read, work very efficiently together. And so for Francesco and I, it's very encouraging to see that going on despite the complex environment.

Operator: Our next question comes from the line of Julien Dormois from Exane.

Julien Dormois: I have 3, 1 relates to the guidance, but just trying to extend the scope to the next few years, you had indicated at the Capital Markets Day in September '19 that you were expecting the margin to grow let's say, probably to the tune of 10 to 30 bps per annum, that was -- what was implied in your financial guidance. So does that target -- if that target is still valid despite the more complex environment that you just alluded to? So that would be question number one. Question number two, this time coming back on GrandVision. It seems that you could get the anti frost approval from the European Commission in the coming days. So I'm just wondering what the next key milestones are when it comes to closing the transaction and more specifically, in case you get an unfavorable ruling on the appeal in early April. Could that lead you not to close the transaction before the deadline of July 31. And then the last 1 is on -- is a follow-up on myopia management. I'm just trying to understand how this sunglass activities is complementary to Stellest. So I'm not quite sure I understand why it is a complement and not competition to Stellest. And your friends at Cooper have indicated that their myopia management contact lens is meant to generate sales of approximately $50 million in 2022. And this is that going to several hundreds of millions beyond 2025. So do you believe there's any chance that Stellest or any sunglass could reach similar levels of sales, which are obviously pretty impressive in an nascent field like this?

Paul du Saillant: Thank you, Julien. So maybe, Stefano, do you want to take the Capital Market Day related?

Stefano Grassi: Yes. Yes, absolutely.

Paul du Saillant: Obviously, I'll take myopia one, and Pierluigi I can make 1 or 2 comments on GrandVision or you take it as you prefer. But Stefano to you.

Stefano Grassi: Okay. So for the guidance, we're confirming our outlook from the top line, mid-single-digit as well as from our profitability impact that you might remember, it's anywhere between 1 to 1.4x top line growth. Pier, do you want to take that the GVI?

Pierluigi Longo: Yes. On GVI, as we said earlier on, we have a pre outstanding authorization in the pipe one from the European authority in mid-April and then in Turkey and in Chile, on which time line is less -- it's less clear, but we are working hard in order to get those approval by the long stop date. With respect to the appeal, it's early to say what's going to happen next, but we have to, let's say, we are waiting for the Court of Amsterdam to rule on our appeal. And then there is obviously the outcome of the arbitration proceeding.

Paul du Saillant: Thank you, Pierluigi. So on myopia, just to try to make it simple. What is very important is to make sure that we have the key solution to successfully slow down the myopia development for children. And the 2 technologies of sunglass and the 1 of Stellest are 2 different approach to create that effect, 1 which is through -- let me focus and one, which is through a contract reduction and the way you put those 2 effects and you create them 2 different approach on the lens. And we sold and Norbert Gorny, who heads all of our R&D and innovation as -- so that this is very key that we have a portfolio of solutions. And that is what we do through sunglass with Coopers patients. The lens approach, that the contact lens approach, and we'll clearly to slow down myopia, the whole platform of wearing eyeglasses for children has a very, very large potential and is already quite developed actually in China. So we have not yet given any outside number on the potential that we see for it. But of course, we have -- it's a way to characterize it's as important of a breakthrough as progressive lens where 60 years ago when it was invented. It's creating a totally new category platform and way to address myopia on, as you saw, hundreds of millions of people starting by children that are concerned with it. So -- but I will not give you any number there yet.

Operator: Our next question comes from the line of Luca Solca from Bernstein.

Luca Solca: I have a question on your breakeven point. If we look at the second half numbers, we see that while if we look at the constant exchange rates, while the revenue was flat, operating expenses were down 4%, more or less. Is that a sign that you have implemented structural actions to reduce your operating expenses and that, therefore, you would be looking at operating profit margin expansion going forward? And do I understand correctly from what Stefano was saying before, but that is indeed the new guidance looking forward 3 or 5 years, never mind the synergies, which may be relevant for you internally. But when we look at the things from the outside we would just be interested in the dynamic of this EBIT margin performance metric. I would also wonder if the LensCrafters retail network rationalization and the removal of install laboratories, for example, as well as the rationalization of the laboratories network are already included in the synergies that you exposed or whether they would come on top as they would take significantly longer time, I would expect to achieve? And then a third question about some of the technologies that you were explaining and that would potentially open the opportunity to diagnose eyesight remotely. Could that open the door to fiercer competition from digital players? And would you have a strong enough innovation pipeline within the company for the next 3 to 5 years, to stand out and differentiate against the price focused competitors? Maybe just a last one, if I may. When would you pay EUR 400 million to HAL relating to the contract that you have signed in relation to the potential acquisition of GrandVision. And what would be the deadline?

Paul du Saillant: Thank you. Do you want Stefano to take the first 2?

Stefano Grassi: Yes. Yes. Yes.

Paul du Saillant: I'll take 1 on technology and maturity on HAL?

Stefano Grassi: Yes. Let me say, Luca, good morning. We had -- we acted from 2020 with several lesson learned. And I believe with few certainties. One of them is that we have a pretty good cost control in place across the organization. So our exiting velocity implies a very good around control of our cost base for the months to come. And we'll -- obviously, we can resume investment as needed and as we believe are necessary to sustain our growth in top line, not only in the short term, but more on the structural way. So from a longer term, what we can expect to see is still what we share with you at the Capital Markets Day. So the leverage and an improvement of the gross margin with the top line that is in the mid-single-digit territory. That is our goal, that is our guidance over the longer run. And I don't think we have a reason for now to change that.

Paul du Saillant: For the other question.

Pierluigi Longo: Yes. On the EUR 400 million, it's related to the closing by the long stop date. So the long stop date is at the end of July '21. So 2 years from the signing of the contract. If we're not going to be able to sign to close by that day, there is the payment of the obligation to pay the EUR 400 million. Obviously, there are a number of events, which might delay that. But for the time being, we do not have any visibility. So the contractual obligation is due on July -- end of July.

Paul du Saillant: Thank you, Pierluigi. There was a question, Stefano on whether or not the lab, the in-store lab rationalization at LensCrafters was included in the synergies. And the answer is no, it's not included. It's not a work stream.

Stefano Grassi: Yes. That's correct, Paul.

Paul du Saillant: Yes. No, just to provide it. So on your technology question on remote refraction, I think to help you get a bit the differentiation or the way we are approaching it. It's not just a matter of having the instrument or the teleoptometry or capability. So definitely, EssilorLuxottica as an instrument suite with some very innovative instrument as part of it. I mentioned 1 was the VR800 that we are deploying in our own store and outside. Then you have to have the full digital suite to in the store, interconnect all the instruments with the practice and then to remotely operate them, so you can have this tele medicine or teleoptometry capability. And we have our own software platforms and integrating platform to do so. Then you need third to have, and that's a great asset. You need to be able to do that for your own store, in our case, which gives us a great platform to take the pilot, to operate and also for our customers, the independent practice our Essilor expert partner. We give them access progressively to those technologies. So I think the group is uniquely positioned to have the instrument. The software capability in an open model, so we can offer them to our customers as deploy them into our own store or for some of those capabilities in our online channel, and I think that is differentiating us in this problematic, which is quite complicated to manage. I think the size of the group, our omnichannel positioning and the fact that we have internal capabilities does give us a very good position to address this new teleoptometry and transformation of the eye exam that is going on. Hope I clarified a bit the matter.

Operator: Our next question comes from the line of Domenico Ghilotti from Equita.

Domenico Ghilotti: Three very quick questions. The first is on the current trading. I'm trying to understand if -- how do you see Q1 compared to Q4. So overall, from your speech, the feeling is that it's a bit more impacted by the pandemic compared to Q4, but I wanted to add your color and on this topic. Second question, very briefly on the level of CapEx that we should expect and the key drivers for the CapEx. And well last question is on the Facebook partnership. When should we expect to have some update in terms of timing and product?

Paul du Saillant: So Stefano, do you want to take the -- at least the Q4 one.

Stefano Grassi: Yes, yes, absolutely. So with respect to first quarter trading, a couple of Domenico sort of concern represented by, for example, Europe, right? We operated January and February with our Sunglass Hut footprint at 50% of stores they were operating. And some of them with a reduced number of trading hours. So that's clearly something that it's probably more deteriorated than what we've seen at the end of last year. The other item, the other, let's say, regions, that is a source of concern at this stage is Brazil. We're observing the situation of the biggest country for us in Latin America. And obviously, the news that we get there are quite concerning. Conversely, on the positive side, we continue to see that e-commerce being very strong. Australia, it's continuing that trend. And obviously, we are observing very closely the evolution of vaccination campaign that has been started by the new U.S. President and obviously, we very much look forward to see the results of that campaign. But as we stated before, this is kind of an independent variable that we're closely looking at. From a capital expenditure standpoint, we are looking at carefully resuming CapEx to what we had in the past as a percentage of revenues. We know that we're going to undertake important investment on manufacturing and lab manufacturing to very much rationalize our footprint there. We know that we are taking an important investment on the retail side. To further enhance our retail footprint, in particular, in LensCrafters, with over 100 stores that are going to be remodeled just in the course of 2021. So we could expect if we exit progressively from the pandemic outbreak, to resume furthermore our investment than what we've seen in 2020, for example. Paul, do you want to take the third one?

Paul du Saillant: Well, you can take it as you prefer.

Stefano Grassi: Yes. We're not at the stage of resuming day for the Facebook. We are actively working on the partnership. And obviously, as soon as we are in a position to share a time line on launch in the market, we'll definitely do so.

Operator: Our next question comes from the line of James Grzinic from Jefferies.

James Grzinic: I had 2. The first 1 is, you've completed your SAP rollout in Italy. Can you perhaps illustrate how that will be rolled out globally, what the timetable for that looks like expect for you, it's a big underpin to a chunk of the future synergies? And secondly, Paul, you talked to market share growth pretty much across platforms and categories, product categories. Can you perhaps give us more details on that, I'm particularly interested in perhaps market share performance by regions and products where performance has been strongest and weakest?

Paul du Saillant: So on the SAP, David, do you take it?

David Wielemans: Yes, of course, I can answer. Good morning, James. On SAP, so we have, as you know, started down the SAP rollout with Italy successfully this year. Then we have a global road map in place, putting in front of the road map, I would say, the key entities of the group in U.S. and in Europe to start with. But after rolling out, I would say, on the next couple of 3 years, the overall company, but already a very, I would say, intense road map to start with on the key region of the group and the team as we speak, actively working on it, everywhere. So that is really definitely at the top priority list of the group for this year and the next.

James Grzinic: Can I just follow-up on that. So basically, a 3-year program, front-end load in the U.S. and the U.S. rollout itself will be how long, 2 years?

David Wielemans: We expect that to be shorter than 2 years. We look at also -- I won't go into details here, but we are implementing also in different steps. So that we can move already very quickly all the transactional and P2P functionalities and then take a bit more time for the controlling and the more, I would say, business related functions. But overall, it should be a max of 2 years. We expect to do better, but already -- with already some implementation done even this year.

Paul du Saillant: Then your question, James, on market share gains is one that you have to look at the way the group is positioned. We are acting in a given market with many different channels, product categories, capabilities. So when we say together with Stefano and David today to you, for example, that we have a strong performance in the U.S., it means that we have, through the different channel, we consider that we are overall gaining market share with independence with our position in the online, where we have some very powerful platform, whether they are the sunglasshut.com or rayban.com or EyeBuyDirect.com. So we act in the market with many different levels. If I take you to China, we have a very strong performance in our lens activity, but at the same time, our brand, Bolon, which is active in optical frame and sunglasses is now the largest sunglass and optical frame actor in China, doing very well, mid-tier position. Australia, you heard from Stefano, the very good performance of our retail activity. If I take you to France, in 2020, we had a very good performance of our lens business with a different subsidiaries that we have in France that have been extremely well addressing the French market in the recovery. So it's a large question. And what we look at with Francesco and our team, when we look at a given country is how do we develop the market in all of its different channels, product categories and that we are gaining market share, whether it is in lens, in frame, in optical frame, in retail, partnering with independent or in the online, if there is an online channel already developed. So it's a multi-dimensional thing, and that is what is so unique about Essilor and Luxottica. If you look at us is that in this industry, we are positioned in a totally unique way with unique assets.

Operator: I can now confirm that the Q&A session has ended, and I will pass the call back to your hosts.

Paul du Saillant: Okay. Thank you, Patrick. Well, thank you very much for being on the call today with us. Always a pleasure. I hope we gave you good color on the results of 2020 and on our confidence looking forward. We look forward to see you for the Q1 call which is on the 6th of May and where we will update you further on how is the business doing. Thanks a lot, and see you soon. Have a good day. Bye-bye.

Operator: Thank you for joining today's call. You may now disconnect your handsets.