Hugo Boss AG
Q2 2021 Earnings Call Transcript

Published: 7 Aug 2021

[Operator:]

Dear ladies and gentlemen, welcome to the HUGO BOSS Second Quarter 2021 Results Conference Call. At our customers' request, this conference will be recorded. As a reminder, all participants will be in a listen-only mode. After the presentation, there will be an opportunity to ask questions via the telephone lines. May I now let you over to Yves Müller. Please go ahead.

[Christian Stoehr:]

Thank you, operator. And this is not Yves Müller. This is Christian Stoehr speaking and I would like to welcome everybody who dialed in for today’s Q2 conference call. So, thanks for dialing in ladies and gentlemen. Good morning to all of you and welcome to our second quarter 2021financial results presentation. Today’s conference call will be hosted by Yves Müller, CFO of HUGO BOSS. In light of our pre-announcement from mid-July, as well as today’s upcoming Capital Markets Day, we will keep our Q2 conference call somewhat shorter than usual and focus on the financial performance during the three-month period. Before we get started, allow me to recall that all revenue-related growth rates will be discussed on a currency-adjusted basis, unless otherwise specified. Let me also remind you that during the Q&A session we kindly ask you to limit your questions to a maximum of two. Please also keep any more strategic questions for today’s Capital Markets Day. So, let’s get started and over to you, Yves.

[Yves Müller:]

Thank you Christian, and welcome everybody from my side. In the next 15 minutes, I will present to you our Q2 operational and financial performance, before discussing our outlook for the 2021 fiscal year. After that, we will open the floor to your questions. As announced already back in July, we have seen a strong acceleration in our business recovery during the second quarter, both from a top and bottom-line perspectives. In particular, growth was well balanced across all geographies, channels, and both brands, as the gradual easing of pandemic-related restrictions and temporary lockdowns over the course of the quarter, as well as further progress made along vaccination campaigns, fueled consumer sentiment across the globe. On average, around 20% of our global store network was temporarily closed during Q2 with the vast majority of own retail stores back in operations towards the end of the quarter. Consequently, revenues more than doubled, up 133% as compared to the prior year period, with Group sales totaling EUR 629 million. This represents a strong rebound of our top-line, as it translates into Group sales remaining only 4% below the pre-pandemic level of Q2 2019, and a strong acceleration quarter-on-quarter. As our recovery was broad based and clearly noticeable across all regions, let’s take a quick look at our geographies first. While sales more than doubled in Europe and even more than quintupled in the Americas, revenues in Asia-Pacific were up by more than 50% in Q2. On a two-year-stack basis, sales in Europe therefore remained only 4% below 2019 levels, as the lifting of lockdowns and temporary store closures over the course of the second quarter supported the business recovery. On average, only 25% of our store base in Europe was closed in Q2, as compared to a closing rate of up to 50% in the first quarter. Performance was particularly strong in the UK, where stores reopened mid-April, enabling our business to even exceed 2019 levels, up 7% on a two-year stack basis. And while both Germany and France also recorded strong sequential improvements, I am all the more encouraged that several markets in Eastern Europe, above all Russia, as well as the Middle East continued their strong double-digit growth trajectory, compared to pre-pandemic levels. Also in the Americas, sales remained only 5% below 2019 levels, with the important U.S. market benefitting from a further uptick in local demand, limiting the market’s sales decline to 6%. In this context, it is particularly encouraging that our U.S. retail business returned to growth in Q2, posting mid-single-digit growth versus 2019. This development was strongly supported by our initiatives to change the overall brand perception and product assortment at our point-of-sale, which is increasingly skewed towards casual wear. In order to complete the picture on the Americas, sales in Latin America accelerated to mid-double-digit growth on a two-year-stack basis, while business in Canada continued to be impacted by temporary store closures also in Q2. Finally, on Asia/Pacific, where sales were down only 3% as compared to 2019. In particular, mainland China continued its strong double-digit growth trajectory, with revenues up 28% against the year - prior year period, and 33% on a two-year-stack basis. This implies a further acceleration as compared to the performance in the first quarter and while also Australia exceeded pre-pandemic levels by mid-single-digits, business recovery in markets such as Japan and Southeast Asia progressed comparatively more slowly, reflecting temporary lockdowns as well as the ongoing lack of international tourism. Let’s now turn to our sales channels, and starting with own retail, where sales more than doubled as compared to the prior year. Consequently, own retail sales remained only 5% below 2019 levels, with a sequential improvement recorded throughout the quarter. And with the vast majority of our own retail stores back in operations towards the end of the quarter, our own retail business even returned to growth in the month of June. Moving over to our online business, which continued its strong double-digit growth trajectory also in Q2. Sales on hugoboss.com and on partners’ websites operated in the concession model recorded growth of 27% against a particularly strong comparison base, translating into a triple-digit growth on a two-year stack, with revenues up 122% as against 2019. Finally, on wholesale, where sales also more than doubled, up 170% versus the prior year, translating to a slight decline of 2% against 2019 levels. This performance first and foremost reflects our partners’ strong demand for the Pre-Fall and Fall Winter 2021 collections of both BOSS and HUGO and is a great testimony to the success of our collections. In addition to that, a considerable share is attributable to additional business generated with a small number of selected high-quality off-price retailers in Europe, amounting to sales in a low double-digit million euro range. Entering into these additional partnerships not only allows us to further improve our inventory situation, but also to introduce our brands to a new, younger consumer. Now, make no mistake, as with any partner we work with, also here we will ensure that our brands and products are presented in a truly premium brand environment. Carefully selecting the right partners is, and will continue to be, a clear prerequisite also going forward. This is no different in the case of these partnerships. Let’s conclude on our top-line with a brief review of the performance by brands. Revenues for both BOSS and HUGO more than doubled compared to Q2 2020. On a two-year-stack basis, sales for BOSS declined 5%, while HUGO returned to growth, posting 2% growth versus 2019. Momentum for both brands’ casual wear offerings further accelerated in the three months period, with revenues up double-digit on a two-year-stack. Formalwear sales also recorded a sequential improvement quarter-on-quarter, benefitting from some pent-up demand for occasions and business wear. With this, let’s now move on to the main P&L items. Starting with the gross margin, which totaled 61.2% in the second quarter. While this represents an increase of 670 basis points year-on-year, mainly reflecting the non-recurrence of negative inventory valuation effects recorded in the prior year quarter, gross margin remained 470 basis points below the level of 2019. In addition to higher sourcing costs, as well as some ongoing promotional activities in the marketplace, it was also the aforementioned wholesale off-price business that limited the gross margin recovery to some extent. Moving over to the operating expenses which grew by 25% on an underlying basis, when excluding the prior year’s impairment charges. The increase is mainly attributable to the non-recurrence of rental and payroll cost savings that we realized in the course of last year’s global lockdowns. And while selling and distribution expenses increased 33% to last year also reflecting higher marketing expenses, administration expenses were only up 4%. As compared to 2019 levels, however, operating expenses decreased 6%, as we continued to tightly manage our costs in the quarter. Overall, our strong top-line growth, as well as the ongoing strict cost control led to significant bottom-line improvements, with EBIT totaling plus EUR 42 million in the second quarter, as compared to minus EUR 250 million one year ago. Obviously, and for the sake of transparency, the earnings development was also supported by the non-recurrence of impairment charges, as well as negative inventory valuation effects recorded in the prior-year quarter. Finally, net income totaled EUR 25 million in the second quarter. Let’s now turn quickly to the balance sheet, starting with trade net working capital, which declined 12% versus the prior year. An increase in trade receivables, mainly reflecting the recovery of our wholesale business in the second quarter was more than compensated by higher trade payables, as well as a lower inventory position. The latter saw a decrease of 3%, reflecting ongoing tight inventory management, as well as positive effects resulting from the additional off-price business. Moving over to capital expenditure, where investment activity picked up noticeably over the course of the quarter. As a result, investments totaled EUR 27 million in Q2, which is almost 70% above the prior-year level. As in previous quarters, investments were primarily related to our global store network as well as our digital capabilities. In this context, the particular highlight has been the opening of our first BOSS flagship store in Tokyo’s popular Ginza district back in June. This brings me to free cash flow. Driven by the strong bottom-line increase, as well as the improvements in trade net working capital, free cash flow significantly improved and returned to pre-pandemic levels, totaling EUR 134 million in Q2. To finish on our financial position, net financial liabilities decreased 42% to EUR 138 million, when excluding lease liabilities in the context of IFRS 16. Finally, I would also like to highlight that the additional loan commitments totaling EUR 275 million that we secured back in 2020, expired in June without having been drawn at any point of time. Now, ladies and gentlemen, before opening the floor to your questions, allow me to briefly comment on our outlook for the remainder of the year. In light of the strong performance in the second quarter, we are confident that our overall business recovery will continue also in the second half of 2021. This said, we must not forget that the environment we operate in continues to be confronted with elevated uncertainty. Accurately predicting the further course of the pandemic and its impact on our business during the next six months is virtually impossible, in particular with regard to the ongoing global spread of the delta virus variant. Right as we speak, the global resurgence of COVID-19 has led to renewed store closures in several markets in Asia-Pacific, and no one knows which markets around the world might experience similar restrictions during the next couple of months. Now, while our guidance for fiscal year 2021 might be perceived as rather conservative by some of you, it reflects our confidence of continuing our strong business recovery also in the second half of 2021, while at the same time factoring in the uncertainty that remains elevated for the time being. Overall, we anticipate Group sales in fiscal year 2021 to increase by between 30 and 35%, with a strong contribution expected from all regions. At the same time, EBIT is forecast to amount to between EUR 125 million and EUR 175 million. To complete the picture, CapEx is set to increase to a level of between EUR 100 million and EUR 130 million, while we expect trade net working capital as a percentage of sales to improve to between 21% and 23%. Ladies and gentlemen, this concludes my prepared remarks for today. I am already very much looking forward to welcoming all of you at our virtual HUGO BOSS Investor Day later on today. But first of all, I am now happy to take your questions.

[Operator:]

The first question is coming from Elena Mariani from Morgan Stanley. Please go ahead.

[Elena Mariani:]

Hi. Good morning. Thanks very much. I will stick to two questions as requested. My first question is on gross margin. So, in the second quarter, you’ve talked about quite a few moving parts. Of course, we have had the non-recurrence of the inventory valuation effects from last year which we know about. But I was wondering whether you could elaborate a little bit more on the higher sourcing costs and the higher level of markdown activity, because of course, gross margin remains quite a lot below 2019 levels. So, how much do what have to think about the different weightings for these elements? And then, is this headwind going to continue in the second half of the year? And is this the reason why your second half of the year EBIT guidance was not upgraded when you've upgraded your top-line? And then, my second question is about, still your guidance for the second half of the year, but more on the top-line. As you mentioned in your remarks, some of us might have perceived the guidance to be slightly conservative. And of course, it implies a slowdown in your top-line development in the second half. Is this the result of you being quite conservative given the macro picture? Or have you already observed some sequential slowdown in the first weeks of the third quarter? Thank you.

[Yves Müller:]

Yes. Good morning, Elena. Thank you very much for your questions. So, talking about the gross margin first, so, if you would say or clearly we have this kind of improvements versus 2020 that were related of course, because of the inventory devaluations that we did last year. So, that had of course, a tremendous effect. But if you compare the deterioration versus 2019 and I would assume that two-thirds of the effect of the deterioration versus 2019 is coming from our wholesale business and one third is coming from higher sourcing costs mainly related to higher freight costs. Regarding the top-line development for the second half of the year, I think, like I said during my short presentation, I think we have to view the second half of the year, because you all know that the uncertainty still remains. You might have noticed from other competitors that especially in Asia-Pacific regions, we have noticed some lockdown situations in countries like Thailand, like Malaysia and some parts of Australia. So, for the time being now, these store opening rates for us in Asia-Pacific is around 90%. So, I think we have to be prudent because the pandemic is not yet over. I think we have to always consider this in our guidance. On the other side, I can say, that regarding our current trading, if we see the month of July, we said in my short presentation that the developments in retail was even positive in the month of June in terms of exit rates and I can confirm today that we kept this kind of development in July.

[Elena Mariani:]

Great. Thank you. Just a small follow-up, on the gross margin moving parts, should we expect the same headwinds to affect the second half of the year as well? And is this incorporated in your guidance? Thank you.

[Yves Müller:]

So, like we always said, in terms of where we see it overall in terms of 2021 margin, we see that - we come in between the gross margin of 2020 and 2019 and this has somewhat not changed after the call we had back in May. So, this is back in the overall orientation that we have because we see that actually the higher freight costs that this will not disappear in the next six months to come.

[Elena Mariani:]

Understood. Thank you very much. Thank you.

[Yves Müller:]

Thank you, Elena.

[Operator:]

The next question is coming from Thomas Chauvet from Citi. Please go ahead.

[Thomas Chauvet:]

Good morning, Yves and Christian. My first question on your admin expenses, they’ve been down versus 2019 level in each of the four quarters of last year, and also in Q1. In Q2, they are returning to slightly above 2019 level. Is this the way we should think about H2 and also going forward that your admin costs now have reached the floor and they are going to start to increase slightly again, as obviously the business recovers and you need to also invest in from central costs? Secondly, on wholesale performance, Q2 was broadly in line with the 2019 levels, well, don’t forget. You are talking about new business with European on and off-line retailers. Can you indicate, which are these key new accounts? And perhaps how much they contribute to the EUR 190 million in sales in the period? And just a follow-up on Elena's question on gross margin, you've reiterated the guidance halfway between 2019 and 2020 level, 61% and 65% was those two limits. So the consensus is halfway and exactly in the middle at 63%, looking at H1 gross margin is marginally above 2020 levels. That looks perhaps the 50% a little bit high. Would you agree it? Thank you.

[Yves Müller:]

Thank you very much, bonjour Thomas. Thank you very much for your question. So, first of all regarding admin expenses, first of all, you have to consider that in these kind of lockdown periods that we are alluded to in Q1 and in the prior year period, we had some short-time work, and so, these kinds of effects helped. On the other side, rest assured that we expect overall going forward that we keep tight cost control as well in administration expenses. And if you can see it from an absolute point of view, it’s just a slight increase in comparison to the prior year period. There might be some effects coming from higher share prices that relates some bonus payments, as well as you might expect. So, these were the drivers actually of the cost increase in Q2. So, nothing that I worry about a more kind of a reflection of the share price development that we had to include because of our LTI program. And then, regarding Q2, in terms of new business regarding wholesale, so, two dominant players that we had is - was BestSecret and Vente-Privee. So, these are the two major off-price wholesalers, which are new and we – like we said we recorded a low-double-digit number with this regard in the wholesale. And regarding gross margin, I just can repeat myself, we are guiding to between 2019 and 2020. It’s a rough number, because you know the second half of the year there will still a lot of moving parts especially when it comes to the business that we expect a strong holiday season in the back of the year. So, there are still ongoing moving parts, and for the time being, we stick to this orientation number between 2019 and 2020.

[Thomas Chauvet:]

Thanks Yves.

[Yves Müller:]

Thank you.

[Operator:]

The next question is coming from Jürgen Kolb from Kepler Cheuvreux. Please go ahead sir.

[Jürgen Kolb:]

Yes. Good morning, guys. Thanks very much. Two questions. First one, again coming back on these off-price retailers. Is this that rather a short-term strategy in order to get – in order to clear excess inventories which - or where you have actually done a good job in Q2? Or is that something where you want to be positioned longer term as well as a kind of an additional distribution channel for inventories? And secondly, I was wondering, you talked about a good demand and a good order book for Fall/Winter. Have you noticed already retailers asking for pre-shipments, or earlier shipments especially for the Fall/Winter collection? Thank you.

[Yves Müller:]

Yes. Good morning, Jürgen. Thank you very much for your questions. So regarding off-price wholesale business, I think that there is two major effects. One is clearly that we want to clear excess inventories, which has been the case because of the situation of the unexpected long-lasting lockdown in Europe, this is point one. But point two is, I mean with these two customers that I just alluded to, you clearly have the possibility as well to have the opportunity to sell products to younger customers. So we can broaden our customer base there as well and for the time being we had good experience and no negative repercussions on other customers and actually working in a good premium brand environment. And secondly, regarding the wholesale preorders, yes, I can confirm that we had really very strong preorders for the second half. And for now, not all the wholesale partners that are requesting earlier shipments. So, we are more or less what we have planned so far in order to when it comes to deliveries.

[Jürgen Kolb:]

Very good. Thank you very much. Looking forward to hear from you later on again.

[Yves Müller:]

Thank you very much, Jürgen.

[Operator:]

The next question is coming from Antoine Belge from Exane BNP Paribas. Please go ahead.

[Antoine Belge:]

Yes. Good morning. It’s Antoine at Exane. Two questions. And first of all, I'd like to follow-up sorry on this – previous number if you could - leveraging in Q2. Looking to want to quantify them to an extent on the performance and maybe that would be the reason why I expect the huge acceleration in the second half. And yes, so, maybe some kind of quantification and how much they accounted and again to what extent it was really a way of clearing inventory and then it would be – that will be used to – in a more moderate way. And my Second question relates to the online performance, up 27%. Is that a good number? So, is it or is it just because that, I mean the slowdown is more that you no longer have the sort of external factor which would be the conversion from wholesale account to e-concession?

[Yves Müller:]

Yes. Bonjour, Antoine. Thank you very much for your questions. First of all, regarding Vente-Privee and BestSecret, I just can repeat myself that this was a low double-digit million euro number and the wholesale number and clearly this was related to excess inventories. And I expect that we continue the cooperation with those partners, but that we will reduce the scale in the ongoing quarters. So, this is, I think the qualitative remark that I can do. Regarding online sales, I think you always have to consider that we have had very, very strong comparison base. If you might recall, Q2 2020 was the quarter of the lockdown. So that was actually the only quarter, the only channel where we could sell. If you might recall that that was plus 74% versus 2019. So, if we compare our performance versus on a two year stack, there is a slight deceleration from 133% to 122%. So, clearly, I think a very high number. But rest assured that really we want to push the pedal to the metal regarding our online net sales. We always said, we want to increase at least at 40% CAGR each year and this actually is the direction that we are taking and for the time being we are above this mark. If you take the first half year results. So, overall, I think much more potential regarding online. If you talk to the managing board, and I think we make big progress. I think one number that has to be considered and you will see this during our Capital Markets Day as well, this afternoon, I think, digital online sales will be of great importance. And you can see that already our digital sales. So, our wholesales combining retail was as 21% of Group net sales. So, clearly, we more than doubled the net sales in comparison to 2019 to increase here our digital performance and I think we are making big steps regarding, but on the other side, we still see a lot of potential when it comes to digital sales in both channels.

[Antoine Belge:]

And maybe just one follow-up or a small clarification of what you said earlier, regarding July, you say it was positive. I mean, do you mean it was positive versus total sales in July were above 2019 level? Is that how we should understand it?

[Yves Müller:]

When we talk about retail, it was I can confirm that this was positive versus 2019.

[Antoine Belge:]

Thank you very much.

[Operator:]

The next question is coming from Volker Bosse from Baader Bank. Please go ahead.

[Volker Bosse:]

Yes. Hello. Thanks for taking my question. Volker Bosse, Baader Bank. Congratulations on a good second quarter. First, on China, so, have you seen a sales down-swing in April on the back of the consumer and as some other Western brands? And for clarification, are your influencers in the moment allows to promote HUGO BOSS products again as normal? And is your growth dynamic in China is as of today in line to your normal expectations? Just put it that way to get a feeling where do we stand here in regard to China. And the second question would be on your partnerships and capsule collections with Russell Athletic and the NBA in the second quarter not just in regards to sales, also with regards to brand awareness. Do you have any results or data on hand which underpins the success of the capsule orders in order to strengthen the relationship with younger consumer group for example? Thank you.

[Yves Müller:]

Yes. Good morning, Volker. Thank you very much for your questions. Regarding mainland China, I can just clearly confirm and you have seen our numbers in the second quarter that the positive momentum that we all have is continuing. If you look at as a kind of Q2 or if you look at our growth rate, our growth rate in Q2 was even higher in comparison to Q1. So, on a two year stack basis, we were growing by 33%. So we view this as very positive. This is above our own expectations, and we still have very positive momentum when it comes to China. Regarding the partnership with Russell and the NBA, what we can clearly say is that we – for example, with the NBA in U.S., we had a full price sales to above 60%. I think this was very positive in terms of commercial success of this NBA. So, there is more to come in the second half of the year. We have a new second capital together with NBA that will not only be sold in the U.S., but also in Europe, because basketball especially in the younger audience is on work. So, we expect more sales with this regard. And actually if you look especially to the new cohorts, the new customers that we generate, clearly, especially with NBA and Russell, we see that more than two-thirds of the net sales that we are doing are below 35 years. So, this is clearly I think a positive result. And you can see – if you talk about the U.S., this is simply because that was related to the NBA. You can see that actually our retail sales were mid-single-digit growing in the U.S. also in Q2 whereas wholesale was still clearly negative. So, you can see that in retail, we can react much faster in terms of what we can sell and this kind of change towards casual wear can be very fast executed with retail. And so, we believe that NBA was as well a trigger and Russell was a trigger that we return to mid-single-digit growth in the U.S. in this market. So a big contributor for us.

[Volker Bosse:]

Okay. Thank you very much. And I am looking forward to your data again. Thank you.

[Yves Müller:]

Thank you, Volker.

[Operator:]

The next question is coming from Rogerio Fujimori from Stifel. Please go ahead.

[Rogerio Fujimori:]

So, Yves and Christian. Rogerio from Stifel. And thanks for taking my question. I have just one on marketing expenses, which were EUR 86 million in H1 or 7.6% of sales, obviously higher than H1 2020. How should we think about marketing to sales in H2 to drive brand heat and the top-line? Is 8% be a reasonable level for the full year? Or should we expect any intensification of marketing activities? And your thoughts will be appreciated. Thank you.

[Yves Müller:]

Yes. Good morning, Rogerio. I think for your questions, regarding marketing to sales, I think to take the kind of marketing expenses to net sales, I think it’s for the time being still difficult because in the first half of the year, you might know of course, there is lot of lockdowns in brick-and-mortar business. So, I think it's a question of the denominator. But clearly, I mean, in the second half of the year, we want to invest into our brands. And you will hear this afternoon actually where we are going in terms of our brand expenditures for the next five years. So you will notice already in the second half of the year that we invest – that we can expect some further marketing investments and I think you will see a kind of regular development from the former 6% to this 8% over the next five years to come. But more to come this afternoon.

[Rogerio Fujimori:]

Understood. Thank you.

[Operator:]

The next question is coming from Philipp Frey with Warburg Research. Please go ahead.

[Philipp Frey:]

Hello gentlemen. Just one question. Can you elaborate a bit on the extent to which temporary cost savings reduced your cost base in the second quarter? So, how much, said otherwise, how much would your cost base gave up just if we – if we back our temporary savings for store closures, short-term labor, whatsoever through temporary rent reductions all this kind of stuff?

[Yves Müller:]

Good morning, Philipp. Morning.

[Philipp Frey:]

Morning.

[Yves Müller:]

So, and actually what we can say is, that of course, this kind of short-term work is very short-term related cost savings that were already fading out already at the end of Q1 and only – there were only in the beginning of Q2. So, it’s actually, it’s getting to a kind of neglectable amount. So, you can see that this is already nominal runrate that we have seen. As a matter of fact, for example, in our headquarters, we stopped the short-time work with the 1st of April. So you could see that here, we were already back on full speed actually on 1st of April through the second quarter. But if you look for example in our retail in Germany, it was still closed for the first six weeks. So the people were still on short-term work regarding – for example in Germany. This is now completely fading out and the effects getting more and more neglectable.

[Philipp Frey:]

Great. Thanks a lot.

[Yves Müller:]

Thank you.

[Operator:]

The next question is coming from Manjari Dhar with RBC. Please go ahead.

[Manjari Dhar:]

Hi, morning. Thank you for taking my questions. I just have a couple. Firstly, you’ve mentioned the new customer cohorts for the NBA and Russell collaboration. Are you seeing those new customers also buying the main BOSS collection? And secondly, on the dividend, is there a likelihood of a dividend payment this year? Thank you

[Yves Müller:]

Yes, good morning, Manjari. Thank you very much for your questions. Yes, we can clearly see that the younger customers that they put a lot of units into their baskets, because it’s very much online-related, as well. So, the good thing, is we know the data. We know how the consumer behaves. And actually after their first purchase, where we are retargeting them and they are now becoming very satisfied BOSS customers. So we are very happy with this new cohort that we generate new and fresh momentum into our brand and actually this was the full intention that we were doing. And regarding dividend, I think this is something we will talk about this afternoon. So, please be a little bit patient for in order to put this into the context of the full strategy.

[Manjari Dhar:]

Thank you.

[Operator:]

The last question for this session is coming from Karina Shooter with Goldman Sachs. Please go ahead.

[Karina Shooter:]

Hi. Thank you. Just two follow-up questions from me please. First, you've talked a little bit about the U.S. and how it’s gone back to positive growth in the retail channel in the quarter. Can you just give us a little bit more color on the trends by sort of category, casual wear versus formalwear? And also an update on the retail conversions that you're doing in the region? And then, secondly, on online, you've already talked about the triple-digit growth on a two-year stack. Could you give us any more color in terms of what your own website versus marketplace partners and the performance? Thank you.

[Yves Müller:]

Yes. Good morning, Karina. Thank you very much for your questions. So, the first question was related to retail trends, right? U.S. retail trends, right? Casual versus formal. So, what you can clearly see is, and this is - we want to be a clear 24/7 brand in the U.S. and overall globally. I think this is what we intend to do. But in the U.S. we – we are – we – and this is what we did already in the past. We changed our product offering in retail. So, if you now look at the sales that we have especially in the U.S., we reduced our offering in formalwear and increased our casual wear. And there have been really some tectonic shifts because this is regarding retail 50% to 25% and casual wear is now at around 50%, coming from 25%. So, it’s just – we just flipped these kind of numbers in the U.S. markets. So - and this was a big driver of growth of the performance that we are having in retail. I have to conclude that wholesale is lagging behind because the people because there were still buying this formal wear like six, nine months ago. But right now, when I look at the sell-in periods going further what we sold now in terms of PreSpring and Spring/Summer 2022, we are very satisfied with the wholesale orders that we received and they clearly – just clearly underlines that we are on the right way regarding the U.S. markets. And regarding online, we have overall, market concession. The overall business in the high-teens like-for-like.

[Christian Stoehr:]

Very good. Thank you, Yves, very much for your detailed answers and thanks ladies and gentlemen for dialing in and we are running out of time because in 15 minutes from now, we will distribute our press release on our strategic and priorities and ambition for the years to come. And so, please look at that and as we sort already mentioned, we are very much looking forward speaking to you again later today as part of our Virtual Investor Day this afternoon. So thanks very much. And speak to you later. Thank you.

[Operator:]

Ladies and gentlemen, thank you for your attendance. This conference has been concluded.