Half Year 2023 Ermenegildo Zegna NV Earnings Call
Speaker 1: Thank you for standing by, and welcome to the GeoGlobe Xenia Group 2023 First Huff Results Conference.
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Speaker 1: After the speaker's remarks, there will be a question and answer session.
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Speaker 1: Thank you.
Speaker 1: I'd now like to hand over to Francesca to start the conference. Francesca, over to you.
Speaker 2: Hi, good morning, everyone, and thank you for joining us as we discuss the Zegna Group results for the first half of 2023. Today's presentation materials are available on our website. You can find the materials and the related press release under the investors page of our group website. Joining us today are Chairman and CEO Gilles de Zegna, CEO and CFO Gianluca Tagliabue, and Rodrigo Bazan, CEO of Thom Browne.
Speaker 2: Before we begin, I need to point out that we may make certain forward-looking statements during the call. Our actual results may be materially different from those expressed or implied by the forward-looking statements. All such statements are subject to a number of risks and uncertainties, including those discussed in our SEC filings. I refer you to the Safe Harbor Statement, which is included on page 2 of today's presentation.
Speaker 2: and this call will be governed by that language. I am pleased to now hand the call over to Gildo Zegna.
Speaker 3: Thank you, Francesca, and welcome to everybody who's joining us today. As you saw from our revenue when we shared them back in July , the first half of this year showed that our brands continue to resonate strongly with customers worldwide.
Speaker 3: Today, we are excited to share further details from that data that shows that we are on the trajectory to meet our mid-term financial targets and that our strategy is working to get us there.
Speaker 3: The past year has been marked by a dynamic operating environment, which has made many of us around the world more cautious about our outlook on mainland China. However, even amid those circumstances, our strategy and the trends we see across our business continue to be encouraging. We can be particularly proud of a number of milestones that we have achieved. We are a stronger player today, and thanks to our strong management team, we have been sharpening our execution. Today we also have a diversified portfolio of brands and activities, and an increasingly more balanced geographical mix. The geographic diversity of our business across all our brands is one of the main reasons for the trends we are seeing.
Speaker 3: While the recovery in mainland China may be milder than expected, our business in different markets remains very healthy. Europe , the Middle East, and the U.S. are particular areas of strength for us, both in the last six months and with speed going forward. You've seen the number of customers from different regions, including Middle Eastern, Latin Americans, and certain Southeast Asian nationalities doubling.
Speaker 3: American customers stayed very dynamic after more than doubling since 2021.
Speaker 3: Operating in the ultra luxury segment, our customer continue to demand the highest quality products. Zinnia, Tom Brown, and Tom Ford all offer the best quality across all categories and style we operate.
Speaker 3: and showing sign of resilience across the board.
Speaker 3: JMA to measure has now exceeded the 2019 levels which were our previous peak.
Speaker 3: And after a few years consolidating its footprint and performing stores right-sizing, the Xenia brand is now leveraging its new positioning by assuming a gradual expansion of its store network with seven new direct stores in the first half of the year in the selected location, including Saks New York Concession Store in East Hampton, Kuwait, Copenhagen, Xenia, Fuzhou, and Lanzhou.
Speaker 3: and performing stores right sizing, the Xenia brand is now leveraging with new positioning, but assuming a gradual expansion of its store network with seven new direct store in the first half of the year in the selected location, including Sachs, New York, Conception, store in East Hampton, Kuwait, Copenhagen, Jinan, Fuzhou, and Lanzhou, China.
Speaker 3: But the bulk of our growth comes from the substantial increase of our store productivity. And I'm very, very pleased to say that we are well, well ahead of the plans we shared with you, which, as we recall for you, were off a 50% increase by 2025 in store productivity.
Speaker 3: We keep animating the Xenia brand with new ideas and initiatives. Last week, we celebrated a partnership between Xenia and the L.A.-based Enderstatement specialist in Kashmir, as we created a one-of-a-kind colorful and playful Kashmir collection with our yarn, largely inspired by Aussie Xenia traceable Kashmir and a great example of how we are using Aussie Kashmir beyond Xenia brand.
Speaker 3: For Tom Brown, this year brings around the brand 20th anniversary, commemorated in a comprehensive monography that celebrates the legacy of his incredible brand and the men behind it. This year also saw Tom Brown's very first Haute Couture show in Paris, bringing Tom's vision and creativity to new heights.
Speaker 3: And we are investing in the brand's awareness, but also in the expansion of the store footprint, taking advantage of the wide space available. Finally, our newest addition, Tom Ford Fashion. We have its debut collection under new creative director Peter Hawkins shown at Milan Fashion Week just over a week. And a few days before that, Lelio Gavazza will join us, our CEO of Tom Ford Fashion. And we are very excited for the future of Tom Ford Fashion as part of the ZENIA group. In a moment, we will discuss the financial results for this half of the year. But first, I would like to underscore that our result not only reflects all the achievement that I have just summarized, but also illustrates that we are investing for long-term, sustainable growth across our brands. Through our marketing as well as growing our network of directly operated stores. And I'm particularly proud of the significant increase recorded by the ZENIA segment profitability as the segment adjusted EBIT margin rose by 310 business point to 15.4%, reflecting the strength that I have just described, which led the group's adjusted EBIT margin to enjoy a 200 basis point, jump to 13.3%, even though we are investing for growth. Now, please turn to slide number five.
Speaker 3: for key financial highlights. During the first half of 2023, we saw a 23.9 year over year increase in revenue, reaching 903 million Euro of revenue. 21.5% of that year over year growth was organic. We also caught a strong profit in the first half of the year reaching 52.1 million Euro, an increase of 147.9% year over year from 21 million last year. Our profit margin also increased, reaching 5.8% in the first half of 2023 compared to 2.9 last year. Our adjusted EBIT rose by 45% year over year for a total of 119.9 million in the first half and an adjusted EBIT margin of 13.3%.
Speaker 3: Finally, we are pleased to reaffirm our guidance and midterm targets as outlined during our first Capital Market Day on May 17, 2022 in Austin, GA. However, I'm very, very excited to invite you all at our next CMD Day, Capital Market Day, to be held on 5th of December in none other than the New York Stock Exchange in Manhattan. This will be the opportunity for us to update you.
Speaker 3: on our strategy and financial targets, and introduce you to our vision and expectation for tone for fashion.
Speaker 3: Now, let me turn to JNU Group CFO and CEO Gianluca Tagliabue to talk through the numbers from the last six months. Thank you.
Speaker 3: Thank you Gildo. I take it from page 7. We have seen six exciting months and now we have so much more to look forward to. As Gildo mentioned earlier, the group saw robust revenue growth over the past six months in both cost and currency and organic growth, respectively at 24.7 and 21.5 percent. I remember what organic growth means. It means
Speaker 3: not just constant currency, but also means neutralizing the delta perimeter from acquisitions, dispositions, or changes in the license agreement, which translated means neutralizing the effect of in and out of Tom Ford, which last year was in a license of distribution and this year was fully consolidated from April the 28th. So the Xenia segment saw 23.8% organic growth year over year, mainly due to market share gains we witnessed as a result of the execution.
Speaker 3: of our Xenia One brand strategy, while from Brown-Greg segment grew 13.6, thanks to a combination of store expansion and positive comps. Both segments recorded a significant outperformance in the DTC channel, highlighting the strong customers' response to our products and collection. We also saw a positive impact on our revenues after the first consolidation of Tom Ford's action segment, which occurred at the end of April , with 64 million euro in two months and a few days. I remember that the deal was closed on April the 28th.
Speaker 3: Flipping to page 8, I remember as we anticipated that since first half 23 the format of the P&L has been changed from by nature to by function which allows us to present and discuss for example the gross profit.
Speaker 4: and also the marketing expense.
Speaker 4: We are quite pleased to report the progress we have made in the profitability over the course of this year so far. We recorded a profit of $52.1 million with a great increase of 147.9% over last year. Our gross profit increased by 29.2% to $579.8 million and our gross margin came in at 64.2% for the first six months.
Speaker 4: compared to 61.6 over the same period of last year. The improvement in our gross margin is a direct result of the group's strategy, including the strength of the DTC channel, which carries a higher margin compared to wholesale channel.
Speaker 4: Price repositioning, reduction of end-of-season sales, as part of the Zinnia One brand elevated strategy, which started with a throw-out of four Winter 2022 collections prior year. The higher incidence of essential products, which carry a longer lifetime on the shelves, and so therefore a lower burden of obsolescence.
Speaker 4: higher absorption of industrial fixed costs, all these elements drove an increase in gross profit as a percentage of revenues. On the other end, we had the dilutive factor as gross profit in the first half of 2023 reflects.
Speaker 4: The first partial effect of the PPA, the Purchase Price Allocation of Tom Ford, which is quantified in our 6K SEC filing in 3.6 million as a result of the step-up of the fair value of the acquired TFI inventory. It was sold to us as subsequently to the acquisition.
Speaker 4: So, this 3.6 million, which more or less represents 40 basis points, is a dilutive effect on the gross profit.
Speaker 4: Flipping to page 9.
Speaker 4: The continued execution and success of our strategy is evident across all the profitability metrics. Our adjusted EBIT for the first half came in, as Jude was saying, close to $120 million, up 45% from last year. The adjusted EBIT margin grew from 11.3 last year to 11.3 in the first half of 2023, reflecting The continued execution and success of our strategy is evident across all the profitability
Speaker 4: the success of the brand strategy, the store productivity is the main factor, the leverage on cost, more of setting the efforts and the investment to grow the business, namely an increase in the cost to expand the Tom Brown VTC network and the effects of integrating the Tom Ford fashion business.
Speaker 4: for which by the way we pay royalties and we have the amortization of the license agreement which in the first two months is charging to the P&L for an amount of 500,000 euro.
Speaker 4: Our FG&E expenses were up 24.9% over last year, driven by the consolidation of Tom Ford.
Speaker 4: driven by higher variable rents in our stores around the world as well as higher personnel costs as we continue to invest in expanding and strengthening the business.
Speaker 4: Marketing expenses which include both activities and personnel were also up growing 37.4% in line with our strategy which we shared the capital market late day last year. We will continue to invest in marketing and we expect a similar or higher
Speaker 4: pending incidents for Xenia and Tom Ford fashion segments during the second half of 2023.
Speaker 4: After the step-up experienced last year, the corporate costs were stabilizing at $15.6 million, which is 1.7% of revenues compared to 2.3% last year.
Speaker 4: Despite these rising expenses, our profitability increased, cementing our faith in our trajectory and our strategy for the future.
Speaker 4: For second half, we need to be mindful of the timing profile of some of the costs which we may be unevenly allocated to the different semesters. For instance, as I pointed out, some marketing expenses might be presenting a similar or higher incidence on the second half.
Speaker 4: Now, let me share some details by segment, flipping to page 12.
Speaker 4: Starting with the Zinnia segment.
Speaker 4: In the first half of the Zegnet segment we recorded a 17.9% increase in revenues coming at €651 million. Adjusted EBIT for the period was up 47.8%, landing €200.5 million, while the adjusted EBIT margin increased from 12.3 to 15.4. So, as Jill was mentioning before,
Speaker 4: The overall profitability improvement reflects our pricing strategy, reflects the well ahead of the curve improvement on the DTC store productivity, which is a particular area of focus for us, and the fact that there is a positive scale on industrial fixed cost by the effect of the growth.
Speaker 4: These positive factors were partially offset by increased personnel costs and by our investment in advertising and marketing.
Speaker 4: This will remain an important area of investment for us for the rest of the year and in the future.
Speaker 4: Page 14.
Speaker 4: On Tom Brown, we recorded revenues of 208 million euro, an increase of 11.9%.
Speaker 4: compared to last year. The minor decrease in adjusted EBIT down 0.1 from last year to $31.5 million compared to $31.6 was due to cost associated with the store network expansion, which we expected to see, and some strengthening of central costs.
Speaker 4: in a phase of consolidation of the growth of SunBrown. We have added 13 store openings in the 12 months and that June the 23rd, which resulted in increased personnel.
Speaker 4: Similar to Zegna, we're also investing in marketing and advertising for Tom Brown with a focus to raise brand awareness, including the impressive debut of the Haute Couture collection in Paris earlier this year. Moving to page 16.
Speaker 4: Tom Ford Fashion, which was fully consolidated on a pro-rate attempt basis, starting from the deal as of April the 28th, in this two months and a few days, we recorded 64 million euro for the segment and an adjusted EBIT of 3.7 million. The adjusted EBIT reflects
Speaker 4: 4.4 million related to the preliminary purchase price allocation process resulting from the TFI acquisition.
Speaker 4: Also, it's important to recall the profitability for TFS, discount royalties, which we can
Speaker 4: indicating the range of...
Speaker 5: Fair market value.
Speaker 6: value. Page 18.
Speaker 4: Let's touch quickly on the balance sheet items. Our net financial indebtedness stood at $17 million as of June , largely due to the cash flow outflow stemming from the Tom Ford fashion acquisition. The outflows related to the buyback of Thorn Brown Korea will affect the second half of the year. The acquisition was effective starting from July 1st. We also recorded $34.5 million in CapEx, mostly due to the store network expansion across both Zegna and Thorn Brown brands, which represents 4% of revenues. We expect slightly higher CapEx in the second half of this year. Zegna saw seven net store openings in the first half.
Speaker 4: including the ones that Gilda mentioned in New York's sixth concession, Copenhagen and St. Moritz in Europe and a few smaller stores in China. Tom Brown saw three net store openings in the same six months, such as Luangshan and Nagoya. Some of the CAPEX were also due to the Zenia store renewals and relocations, so not really openings, but we knew they relocated some stores like Beverly Hills where they would arrive, Vienna in Austria and Florence. Trade work in capital increased by $148 million, of which $86 million reflects
Speaker 4: including the ones that you mentioned in New York, six concession Copenhagen, St. Moritz in Europe and a few smaller store in China. And Brown saw three net store openings in the same six months, such as one Shenzhen, Nagoya. Some of the CAPEX would also due to the Zenia store renewals and relocations, so not really openings, but we have renewed or relocated some stores like Beverly Hills, where they would arrive, the end in Austria and Florence. Trade working capital increased by 148 million of which 86 million reflects the consolidation effect of Tom Ford.
Speaker 4: trade working capital as of June 23rd. Net of the effect of Tom Ford fashion addition, we point out to the inventory increase and we call it as a healthy inventory increase because part, most part of the increase was a planned increase on the essential Xenia One brand collection products which are the ones that we aim to be never out of stock and where we see a good sales.
Speaker 4: capital as of June 2020. Next of the effect of Tom Ford fashion addition, we point out to the inventory increase and we call it as a healthy inventory increase because part most part of the increase was a planned increase on the essential genuine brand collection products which are the ones that we aim to be never out of stock and where we see a good sales strong performance.
Speaker 4: So now flipping to page 20. Lastly let's close 21-22. I close with a brief overview of the outlook. I remember that we set the guidance in May 22 when we didn't have on the horizon Tom Ford so that this guidance needs to be read as neck of Tom Ford fashion and we indicated the two billion.
Speaker 4: and adjusted the EVID margin of 15% at least. By 2025, we anticipate that we continue on the trajectory to meet our medium-term target.
Speaker 4: and we will be more explicit on revised targets in December in the coming bite.
Speaker 3: Now, back to Gildo to close. Yeah, thank you Gianluca for a very thorough explanation. And as you can see, I think it has been an impressive six months. Really, we are looking forward to the rest of the year, you know, on a continuous positive ground. Before we turn to Q&A, again, I want to flag that we'll be hosting our second ever Capital Market Day on December 5th.
Speaker 3: in New York of this year, and we really look forward to being back at the New York Stock Exchange for the first time since listing day, and to sharing more details about our medium and long-term target, which will be updated to include tall fashion. So I hope to see you in good numbers then. Thank you.
Speaker 2: Thank you very much Gianluca and Gildo. We will now open up the call for any questions. I would like to hand over to the operator to provide instructions and manage the Q&A session. Thank you very much. Of course Francesca, not a problem at all and thank you all for the presentation.
Speaker 1: At this time, I would like to remind everyone in order to ask a question, please press star then the number one on your telephone keypad and we'll pause for just a moment just to make sure that we get everybody into the queue.
Speaker 1: And your first question comes from the line of Chris Hong from UBS. Your line is open.
Speaker 7: Hello, hi, good afternoon. Thank you for taking my questions.
Speaker 7: This is Chris Hong from UBS and I have three questions please. Firstly, can you comment on the growth by consumer nationality, excluding Tom Ford and how the third quarter has so far evolved compared to Q1 and Q2? So mainly focusing on the Americans, the Europeans, and especially the Chinese, maybe on a two-year stack, which you kind of mentioned in the press release that the recovery seems to be a little bit more mild. So any quantification on that will be super, super helpful. My second question is on margins.
Speaker 7: It seems like there will be some phasing effect of margins in H2 versus H1. You mentioned earlier that you expect a higher marketing spend for H2, but can you kind of quantify that a little bit maybe more on how much percentage of sales for H2 should we expect versus the 5.3% in H1? And lastly on Tom Ford, can you just comment on if the H1 profitability
Speaker 7: is a good representation for the full year. And maybe before your CMD in December , can you just share some first high level thoughts on the brand's potential, if possible? Thank you very much. So I take it. Yeah. You can start and maybe Cildo will follow. The group by nationality.
Speaker 4: So we have seen, we have seen some nationalities extremely exploding for us. So if we look on a two-year stack, some nationalities like Americans, like Middle Eastern, like Latin Americans, like Southeast Asia, we see
Speaker 4: ballpark doubling, so the tremendous success of the brand strategy across the board and also Europeans probably they didn't reach the doubling level but had a significant step up. On the Chinese cluster we are seeing
Speaker 4: Chinese cluster so whatever they spend compared to 2021 we are seeing a slakish year-to-date situation with a softer
Speaker 4: softer
Speaker 4: appetite on the third quarter than the average of the year to date.
Speaker 4: It's uneven actually because we are seeing a good fraction in Hong Kong, Macau. We are seeing some rebound in Asia.
Speaker 4: We are seeing within mainland China some areas which are less affected, for instance Shanghai, and we are seeing some others, namely tier 2 and 3 cities, which are more affected.
Speaker 4: So, it's hard to make, to draw a line, but to give you the helicopter view is year-to-date flattish to 2021. And in this last...
Speaker 3: weeks, some softer performance. Gildo probably has been in China more than me recently, so he can ask. I was in China two weeks ago and actually it was a quite apparent difference in mood between Hong Kong and the rest of China, so I can confirm that we are looking for a sign of softness in Mainland.
Speaker 3: some softer performance. Gildo probably has been in China more than me recently, so you can ask. I was in China two weeks ago and actually it was a quite apparent difference in mood between Hong Kong and the rest of China, so I can confirm that we are looking for a sign of softness in mainland short term.
Speaker 3: but with strong, strong comeback both in Hong Kong and Macau. I can tell you by meeting several landlords, we remain positive, meet to long term in China and we will continue our penetration. There are lots of new projects, very, very exciting, not only for Zegna, for the three brands. As a matter of fact, I did a trip with Leo Doraz, our new Tom Ford CEO in preparing the ground.
Speaker 3: for a stronger in road of Tom Ford as Rodrigo will tell you more of the several opening of Tom Brown in China. I think that it's important to stress this incredible resilience superior than our expectation in particular by the American customer that probably our new strategy and the fact that we hit Wall Street at the right time
Speaker 3: It's proven to be correct and we are becoming very, very popular with lots of new customers, repeat buying. We just had an incredible event in Los Angeles with Delta State in Kashmir and very, very exciting in terms of innovation, in terms of welcoming new customers. So I think that I believe that this resilience of the American customer, regardless of, you know, our economy, I think we stay and we remain positive on that.
Speaker 3: to be correct and we are becoming really very, very popular with lots of new customer, repeat buying. We just had an incredible event in Los Angeles with the understatement cashmere and very, very exciting in terms of innovation, in terms of welcoming new customers. So I think that I believe that these resilience of the American customer, regardless of, you know, our own economy, I think we stay and we are the main positive on that. Without saying.
Speaker 3: The Middle Eastern also will become more and more popular on there. That's why we are going strong from Hawaii also to Saudi and we do still opening again with more than just one brand. And so overall, you know, positive. Last Europe , Europe , I think that has been a very hot summer, not only for the climate but also for the retail and we are seeing good productivity gain. And I would say, you know, the fact that we anticipated, you know,
Speaker 3: also. We are becoming more and more popular on there. That's why we are going strong from UAE also to Saudi. And we do strong opening again with more than just one brand. And so overall, positive. Last, Europe . Europe , I think that has been a very hot summer, not only for the climate, but also for the retail. And we are seeing good productivity gain. And I would say, you know, the fact that we anticipated, you know, our goal.
Speaker 3: I cannot be more specific, but I can tell you that it's really moving quickly in that direction. Surely, the help of Europe was material, and plus the fact that in Europe , we are seeing new grounds for store opening, there are opportunities. So if three years ago we would have said, okay, our distribution in Europe is good enough, we think that we can open more stores over there. So overall, a positive thing. Last question on Tom Ford, unfortunately, we cannot be more specific than we have been so far. Just be patient and leave your study in a couple of days before the show, and we will be talking surely a lot about Tom Ford brand, and what we want to do, and how far we want to go with capital market. But you have to be patient. I think we are on the right trajectory. We have prepared a strong team led by him, and you will see yourself the reaction of the glittering fashion show, the 21st, of
Speaker 4: September in Milano. Thank you. And Gianluca for the margin expenses question. Margin, as I said before, we have more weight of marketing activation on the second half, starting from the other statement last week and now we have events also in Singapore and Chengdu. So to give you a sense, I believe that probably the increased marketing spending could be half a point percentage, slightly more, and that reflects on the fact that all things being equal, you need to expect the second half to be that overburden of half a point that is not being spent in the first half moving into the second half.
Speaker 7: For the rest, there is no major difference apart from the addition of Tom Ford for six months instead of two months. Okay, thank you. That's super helpful. And just to follow up, if I may, can you maybe also a little bit quantify how the Europeans and American consumers have, if they accelerated or decelerated in Q3 so far? Imagine that you commented that all Americans versus 2021 has broadly doubled. So that is a very positive sign. But if we just kind of focus on the sequential trends, can you share more color on that? Thank you.
Speaker 4: We are not seeing a change. We are seeing steady performance. We have been seeing July and August good demand from Americans, no different than the first half. We continue seeing the same interest for the brand.
Speaker 4: from Europeans. We are seeing the same interest from Middle Eastern.
Speaker 3: So we are not seeing a change in inflection point on that side. On the contrary I think that you know if in August and July they were vacationing abroad they spend a lot abroad now they are back and you know start spending in the States and I must say that one area that is a part is made to measure. Made to measure we are back to the peak of 19 and in America we are far more than that and there is the other positive things no price resistance whatsoever.
Speaker 3: If you offer them a top-range exclusive product as we do, now we have all the Aussie Zinnia, the Ender Statement, the 12mm collection, the Uber Luxury, no price assistance. This is incredible. And it means that there is appreciation of what we do, and there is a lot of money to spend. And we have the right location. And I must say that the staff, we have renewed the staff of our shop immensely. And the outreach is the highest that we reached in America. And they're doing a fantastic job to reach out to the customer in the office, whenever they are around the world at home.
Speaker 3: you offer them a top range exclusive product as we do. Now we have all the authors in Zinnia, the understatement, the 12-minute meal collection, the Uber luxury, no price assistance. This is incredible and it means that there is appreciation for what we do and there is a lot of money to spend and we have the right location and I must say that the staff, we ever knew the staff of our shop immensely and outreach, their outreach is the highest that we reached in America and they're doing a fantastic job to reach out the customers office and whenever they are around the world at home and they come back and they come back so I think that you just
<unk> I would say in Europe , ensuring that in your other states.
Uh huh.
How long will this continue.
Continually it started to tell about as I said that.
We remain positive on the ore there.
It's Jeremy.
The comeback of.
The entire region as a matter of fact im leaving today for Southeast Asia and there is another area that we are.
Following up.
Great attention I must say that even southeast Asia and it would go.
<unk>.
This first part of the year and we surely.
One two to become a stronger part of the award.
Since we have not penetrated yet the market as we could.
So.
I just had the.
To remind everybody last year Q3 was a fairly normal period Q4, looking ahead was a month a quarter last year.
For us very much affected by closings of stores.
In the range of double digit base of closing so looking ahead, we are seeing easier comparison.
<unk>.
As Jason was mentioning its mainland China the areas of softness by the way not across the board in some cities more subsidies less.
And we are seeing on the opposite we are seeing good results beyond Hong Kong Macao, but also in.
In the rest of Asia.
We need to Orient the number out of West of Asia, We are still seeing Chinese 50% then the volumes we used to see in 2019 before COVID-19.
That is more market indication, we are not yet at the levels of 2019, while we are very close to the level of 2019 in Asia.
Thank you very much can I, just confirm you're seeing Chinese 50% of volumes of 2019, Dod is just volumes to the overall cluster.
Chinese purchasing in Europe , compared 2019 compared to Chinese purchasing in Europe . This year, we are not yet to the level of 19.
Just China very much purchasing in Europe .
Just to be sure that it is not misunderstood and nothing Chinese overall, Chinese overall flat and means that.
So only we are not seeing yet.
The demand of Chinese in Europe , as it used to be before Covid, which is that in line with either way for our brand is not so you might see for other brands is not so huge sites.
Okay.
Okay partial and which is in line with the global view.
By the way, it's very much in line with.
The data that you see from global global travel retail. So we are not seeing Chinese yet the levels of 2008.
In Europe .
Thank you and is it volumes or value.
Both both.
Okay both.
We are seeing.
Value so its value.
I'm counting revenues revenue revenue.
Thank you.
Alright.
And that burn cash through the end of the Q&A session I'd like to hand over to the team for any closing remarks, I would like to make.
Thank you very much everyone for.
Joining us today.
He will be back.
On the 27th of October with our Q3 revenues.
See you then and hopefully see you in New York on the 15th of December Goodbye.
This concludes today's conference call you May now disconnect. Your lines. Thank you for joining us today.
Okay.
Yeah.